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Rightmove plc
33 Soho Square
RIGHTMOVE plc
Rightmove plc, the UK's number one property website, today announces its Full
Year results for the year ended 31 December 2008.
* Revenue grew 31% from £56.7m to £74.0m
* Underlying operating profit* increased 33% from £30.7m to £41.0m*
* Underlying EPS up 27% to 23.8p (2007: 18.7p)
* Restructure completed which will provide an estimated £5m savings in 2009
* Success of Rightmove Choice - more than 30% of customers now use one or
more Rightmove Choice products with over 11,000 products currently in use
* Average revenue per advertiser rose 26% to £307 per month at the end of
2008 (2007: £243)**
* 11.9m shares bought back at a total cost of £45m
* Net debt of £16.9m (2007: net cash of £11.8m)
* Proposed final dividend of 7.0p, making a total dividend of 10.0p for the
year (2007: 8.0p), up 25%***
Ed Williams, Managing Director, said:
"These are tough times in the property market. It is becoming clearer and
clearer that those serious about selling are doing more and more on Rightmove."
For more information please contact:
Ed Williams and Nick McKittrick 020 7087 0605
* Before share-based payments, NI on share options under issue and capital
reconstruction costs.
** Calculated as an average of period end ARPA over 12 months.
*** For the year.
A PDF copy of the 2008 Full Year results can be downloaded from www.rightmove
This Annual Report contains forward looking statements. These forward looking
statements are not guarantees of future performance. Rather they are based on
current views and assumptions and involve known and unknown risks,
uncertainties and other factors that may cause actual results to differ from
any future results or dev
elopments expressed or implied from the forward looking statements. Each
forward looking statement speaks only as of the date of the particular
Chairman's statement
It is my pleasure to present Rightmove plc's financial results for the year
ended 31 December 2008.
2008 was another year of growth for Rightmove despite difficult economic
conditions and the worst UK housing market in modern history. With new build
starts at an 85 year low in 2008, record low home sales resulting in 2,500 to
3,000 estate agency office closures and widespread job losses, 2008 has been a
challenging marketplace. Nevertheless, a combination of clear online market
leadership, management dedicated to providing continuously improved customer
value and a strong financial position has enabled Rightmove to continue to
perform and deliver for customers and home hunters.
Financial Results
General property advertising spend will prove to have fallen dramatically
during 2008. However, the compelling benefits of internet advertising and the
continued migration of people online have allowed us to deliver another
outstanding set of results with revenue, profits and earnings per share all
increasing year on year. Revenue increased by 31% to £74.0m (2007: £56.7m).
Operating margins of 55.4% (2007: 54.2%) resulted in underlying operating
profit* up 33% to £41.0m (2007: £30.7m).
At the beginning of 2008, we completed a Scheme of Arrangement to establish a
new holding company creating significant distributable reserves to allow return
of surplus capital to shareholders for many years to come.
In April 2008, Rightmove entered into a revolving loan facility of up to £40m
with the Bank of Scotland for the specific purpose of facilitating share buy
backs. Following the repurchase of 11.9m shares at a cost of £45m, which was
funded in part by operating cash flow, the Group's net debt position as at 31
December 2008 is £16.9m. Under the terms of the loan agreement there are
committed bank funds for the conversion of the loan facility into a term loan
at maturity in April 2009. In February 2009 the Board agreed to term out a
minimum of £25m at maturity.
The Board announced a 3.0p (2007: 2.0p) per ordinary share interim dividend
which was paid on 10 October 2008. The Board proposes to pay a final dividend
of 7.0p per ordinary share which gives a total dividend for the year of 10.0p
(2007: 8.0p) an increase of 25% year on year. The final dividend, subject to
shareholder approval, will be paid on 12 June 2009 to members on the register
on 15 May 2009.
Management and employees
The success of the Group owes much to the commitment, strength and passion of
all our employees. Nevertheless, 2008 was a difficult year for our staff. Our
substantial market penetration led us to convert our sales organisation into a
more relationship management structure. Simultaneously, the Group undertook a
programme of job reductions that are reflective of the current economic
environment. Accordingly, we announced a 23% reduction in staff in November
2008. I would like to thank our former and current employees for their
dedication, performance and the way in which they conducted themselves during
this difficult time.
The Board of directors
As previously announced in October 2008, Nigel Cooper has completed his term as
a non-executive director and will not seek re-election at the 2009 Annual
General Meeting. I would like to thank Nigel for his wise counsel as chair of
the Audit Committee during our first three years as a public company and for
his support in recruiting his successor.
As part of the organisation restructure, in early January 2009, we announced
the merger of the finance and other head office functions with Rightmove's main
property advertising business under the leadership of Nick McKittrick who
assumes the role of Chief Operating Officer and Finance Director. As a result
Graham Zacharias, who joined the business in 2006, prior to the IPO, will stand
down as Group Finance Director in the spring of 2009 and will not stand for
re-election to the Board at the 2009 Annual General Meeting. I would like to
thank Graham for building a strong finance team and systems and generally for
his major contribution to transforming Rightmove from a private to a public
Annual General Meeting and resolutions
The majority of the resolutions being proposed at the Annual General Meeting
are general in nature, a summary of which is described in the Directors' Report
and in the Notice of Annual General Meeting which will be sent to shareholders
in March 2009. I hope that shareholders will approve these resolutions and I
and the rest of the Board look forward to answering any questions and updating
shareholders further on the development of the business at our Annual General
Meeting which will take place at 10am on 6 May 2009 at the offices of UBS
Limited at 1 Finsbury Avenue, London, EC2M 2PP.
On behalf of shareholders, I would like to thank Ed Williams and his entire
team for the achievements of the past year. My thanks also go to the Board for
their guidance during challenging economic times.
Scott Forbes
* Before share-based payments, NI on share options under issue and capital
reconstruction costs.
In 2008, Rightmove extended its leadership position in online property
advertising. With the property industry focused on the need for buyers, our
ability to deliver enquiries at levels comparable to 2007 has allowed us to be
far more resilient than traditional print advertising. The overall cost
effectiveness of our service, together with products which allow our customers
to target specific potential home buyers with offers and price reductions,
contributed to revenue growth.
Despite the strength of our 2008 performance, the housing market downturn and
the credit crunch has been and will continue to be too pronounced to insulate
Rightmove. However, we believe the underlying strength of the business, and our
ability to invest in marketing and product development in the tough times, will
reward us with a substantial share of the industry's marketing spend as the
housing market starts to return towards more normal levels of activity.
As we start 2009, our objective is to communicate unequivocally to home hunters
that we remain the place to look for property and to the property industry that
we are the place to advertise. Though optimism is challenging amidst the gloomy
economic news, we are confident of maintaining cash flow at or ahead of 2007
levels and have the enormous benefit of a strong financial position.
Our 2008 results are the strongest possible evidence of our belief that
Rightmove will be the biggest beneficiary of the structural shift of
advertising spend from traditional media to online.
We wish to thank all our customers for their loyalty at a time when the
dramatic fall in number of housing transactions has led them to reduce staff
levels and their other marketing spend to an extent not witnessed in living
memory. We also wish to express our thanks to the many former Rightmove
employees who made such a big contribution to the growth of our business but
who also lost their jobs as a result of the collapse of the UK property market.
Our 2008 results
2008 was a record year for Rightmove. Revenue increased by 31% to £74.0m (2007:
£56.7m) and underlying operating profit* increased by 33% to £41.0m (2007: £
* Before share-based payments, NI on share options under issue and capital
reconstruction costs.
Although the second half of the year was tougher than the first, both revenue
and profits in the second half of the year were only slightly lower than in the
first half and were substantially ahead of the second half of 2007.
Our results also reflect £0.7m of costs in relation to the headcount reduction
of 78 employees (23% of the workforce), which will provide an estimated £5m of
savings in 2009.
The UK property and property advertising sector
In the context of the 2008 housing market, these results bring into focus the
key advertising industry question:
To what extent is the downturn in classified newspaper advertising cyclical or
Regional newspaper group results in recent trading and reporting periods have
pointed to greater than 50% reductions in property advertising revenue compared
to the same periods a year earlier.
We believe that around 20% of estate agent offices have left the industry since
the start of the downturn in July 2008. In many, though by no means all cases,
these were smaller businesses that always spent less on advertising. Therefore
the majority of the overall decline in property advertising spend has come from
a reduction in newspaper spending by agents who continue to trade and not as a
result of agents leaving the industry.
This scale of decline reflects the realities of the current trading environment
for estate agents and new homes developers. We estimate, based on conversations
with estate agents, that the total number of housing transactions in 2008 was
around half the level seen in more normal market conditions and even further
down on the peak level of activity. Given that the start to 2008 was far better
than the end, the current run rate may well be around a third of that in a
normal market.
The overall decline in the number of agents, coupled with a sharp reduction in
house building across the UK in 2008, has inevitably resulted in shrinkage in
our advertiser base. This had an impact on revenue in the second half of 2008
and will inevitably impact 2009 as we experience the full-year financial
consequence of the disappearance of these advertisers.
Nonetheless, during 2008 we gained more than 2,200 individual estate agent and
letting agent offices, with lettings representing an area of particularly rapid
growth. Setting aside the substantial contraction in the overall base of agents
in the market, the gains in agents far
out-weighed the loss of agents who remain in business.
At the time of writing we have 24 of the top 25 new homes developers
advertising with us. We have witnessed a decline in the total number of new
homes developments being marketed across the country. One impact of extremely
tough trading conditions facing developers has been both a marked increase in
their willingness to spend on all Rightmove's online services during those
months that they see as key sales months, coupled with decisions to stop
advertising through most or all media in other months such as December.
What we do and the keys to success
Rightmove's success in 2008 in adverse conditions arises directly from what it
is we do and how that differs from others.
The most effective property advertising medium
By using the Rightmove.co.uk website our advertisers reach by far the largest
audience of prospective home movers in the country and in turn home movers see
more properties than anywhere else. During a period of decline in circulation
for local and regional newspapers, activity on the Rightmove website continued
to increase, with page impressions up by 8% to 5.3bn (2007: 4.9bn). According
to Hitwise, which monitors over a thousand property-related websites, Rightmove
has started 2009 with as many pages of information being viewed as all other
property websites put together.
Rightmove generates enquiries from prospective home buyers whether via phone,
email or by other means that we cannot directly track. In the current trading
environment buyer enquiries are the life-blood of agents and property
The key performance indicators that we monitor are:
Page impressions Email enquiries Properties displayed
+400m Down 6% +4.5%
Number of page Number of emails down Number of properties
impressions in the year by far less than the displayed on
grew from 4.9bn (2007) decline in number of Rightmove.co.uk at 31
to 5.3bn (2008), up 8% agents and developers December 2008 was
1,085,000 (2007:
Rightmove's ability to out-perform newspapers in these challenging times
* our increasing audience - at a time when newspapers are declining;
* the need for enquiries from home buyers - as opposed to the overwhelming
focus on winning the right to sell a house during the good times;
* measurability - with all our customers seeking to reduce costs and yet make
sales, measurability has been thrust to the fore;
* the belated recognition that what sellers of homes expect from their agent
is that they market their property in the places that they themselves look
- increasingly now the internet as opposed to the local paper as
circulation declines and online users come of age.
Long-term sustained investment
The high level of site activity and enquiries is the result of our historic
cash investment and the effort put into the development of the Rightmove.co.uk
website and the marketing of it. 2008 has seen that investment sustained.
We have extended our range of Rightmove Choice products and widened their
availability. Now our lettings advertisers and overseas homes advertisers can
benefit from the increased response and branding our Choice products offer.
The site has also been redesigned to make it more visible to Google™ and
thereby to increase our organic rankings across a range of search terms. This
investment is already paying dividends and should continue to strengthen our
Our "See More" media campaign represents our biggest investment ever in
marketing. Indeed it may well represent the biggest marketing investment into a
single campaign made by any property-related advertiser. The campaign launched
on Boxing Day with heavy-weight TV advertising across Britain running through
to the start of February. This has been accompanied by outdoors advertising in
high profile city centre sites, advertising on video panels on London
underground and extensive online advertising.
A consequence of this is that, the Rightmove.co.uk website has generated record
numbers of enquiries in January 2009. Enquiry levels have doubled in comparison
to a year ago peaking at 44,250 email enquiries in a single day, equating to
one email enquiry every two seconds. Our share of the home moving audience
online has also increased dramatically with, on many days in January, more
activity on the Rightmove website than on all the other 1,200 or so property
websites put together (property websites monitored by Hitwise).
We believe that the current state of the housing market gives us an opportunity
to use our financial resources to demonstrate to the home moving public and the
property industry alike Rightmove's pivotal role and reinforce our market
leading position.
Service and infrastructure
We have maintained the size of our customer service teams. As the burdens
placed on us by the rapid growth in membership numbers eased we have been able
to devote more time to talking with our customers and working with them at an
individual level to improve the quality of their advertising with us (and hence
its effectiveness).
In preparation for 2009 we have reshaped our sales force into a more focused
team of relationship managers able to work with our customers to maximise the
value they get from Rightmove and offer them wider advice on marketing
effectiveness. This is supported with a programme of local seminars.
Our online reports and tools give our customers effective ways to target all
their marketing activity. This has been demonstrated by the rapid growth of our
email campaign service to new homes developers, allowing them to target people
who have already registered an interest with us regarding the price, type and
location of property.
We have also taken the opportunity in 2008 to replace the majority of our IT
platforms and hardware systems. The whole of the technology platform which
powers our Rightmove.co.uk website, from very technical layers, the database,
through to the business logic which handles the way in which users search for
properties has been upgraded. Following on from the redesign of the
Rightmove.co.uk interface which was launched in December 2007, there is hardly
any part of the technology that the public see and use which dates back to
before then. A less obvious, large investment has been in a complete
replacement of our billing systems which have needed to handle increasing
volumes and sophistication of product and pricing options.
We believe that the focus we have had on the core UK online property
advertising market has been a vital ingredient of our success. Any investments
or acquisitions which we might have made that would have extended the scope of
our business into areas which are directly coupled to the level of housing
activity would have been far more adversely affected by the events of the last
During 2008 we took the decision to stop selling general banner advertising
around our AboutMyPlace mapping website. The volume of web pages available to
advertisers continues to grow while generic online display advertising spend
declines. Our own experience only serves to confirm the challenges faced by any
property website based on a free-to-list model with revenue derived from other
We continue with two business areas that are not part of our core
Rightmove.co.uk website business: Holiday Lettings Limited and our Automated
Valuation business.
Holiday Lettings, which we acquired early in 2007 has grown rapidly and ahead
of expectations, albeit that this is not reflected in the like-for-like
statutory results due to the way in which the revenue recognition policy was
applied. With the UK public seeking to economise on luxuries we believe the
holiday rentals market will prove one of the most resilient aspects of the
travel industry. An increased focus since 2007 on UK properties should provide
some protection against the consequences of a weaker pound sterling. Meanwhile,
ownership of a holiday home is no longer a one-way ticket to appreciating asset
values, making the need for securing high occupancy rates by owners that much
Our Automated Valuation business has faced a market where the number of
valuations carried out for mortgage lending purposes fell dramatically.
However, we had started the year from a very low base so this did not lead to a
decline in business. Concerns about asset quality and risk have led to the
growth of the use of automated valuations to revalue properties for a variety
of other applications. During the year we have been working with 4 out of the
top 6 mortgage lenders. We have also been selected by Experian as their
strategic partner, offering further evidence of the superiority of the
Rightmove AVM product and technology. These relationships should prove valuable
as transaction volumes recover.
Focus does not preclude innovation. Earlier in 2008 Rightmove introduced its
first Local Edition, a down-loadable magazine format, weekly online property
paper. Over the course of the year we have increased the number of Local
Editions to nine and intend to extend this over time. The Local Edition gives
estate agents and house builders the opportunity to follow tried and trusted
advertising formats, including display advertising, but for the publication to
be produced ahead of the weekly newspaper and delivered to thousands of
subscribers at virtually no cost.
A tough market does not preclude areas of growth in customers. In addition to
the increase in number of lettings agents on Rightmove, we now have
relationships with far more Housing Associations than a year ago.
The completion of our major IT investment in replacing our underlying
technology will free up more time in 2009 for visible and commercially focused
product development. Indeed one of the key benefits of the investment we have
made in the infrastructure is to speed up development time for new products,
benefits we are already seeing in our current projects.
Protecting shareholder value
How the Board monitors performance
Our Board reviews performance at Board meetings and on a monthly basis through
a detailed monthly management report, which covers all the key performance
indicators featured in this report. The primary method by which risks are
monitored and managed is by the monthly Executive Board, which reports to the
main Board on such matters bi-annually or as the business requires. With the
assistance of the Audit Committee, the Board reviews the effectiveness of
internal controls at least annually.
Uncertainties, threats and risks
Thus far the Rightmove business model has proved remarkably resilient in the
face of an unprecedented down-turn affecting the customers we serve.
Nonetheless the business is inevitably exposed to the general uncertainty of
the housing market and particularly to transaction volumes.
Rightmove, from its inception, has experienced a large number of new entrants
in terms of property websites, often exhibiting a range of business models and
frequently involving the offer of free advertising to agents. The new entrants
who attracted the most attention over the last two years have failed to make
any actual material impact in spite of big claims at the start. We cannot rule
out the appearance of a completely new entrant or business model. However, we
believe that the tougher market conditions reinforce the view that the
long-standing competitor property portals, all owned by larger media groups,
represent the most tangible source of competition.
Looking further ahead, Rightmove's success as the preferred alternative to
local newspapers as property advertising spend recovers will depend on our
ability to develop and commercialize an appropriate range of products and
services. These may be enhanced advertising products on the Rightmove.co.uk web
site, other online advertising services (such as our Local Edition) or the
extension of our services from pure advertising into other aspects of marketing
(such as our email campaigns for new homes developers).
We believe there are limited risks relating to operational failures, to
financial and legal exposures, to fraud or embezzlement or from onerous
commercial obligations or liabilities. The business has few tangible assets and
the major intellectual assets are tied up in the design of our website and in
our brand identity, recognition and reputation.
Financial position
Margin growth
The underlying operating margin for the year increased from 54.2% to 55.4% as a
consequence of strong revenue growth and a more modest increase in overhead.
Year ended Year ended Year ended
31 December 2008 31 December 2007 31 December 2006
Underlying 55.4% 54.2% 52.1%
operating margin %*
* Based upon operating profit before share-based payments, National Insurance
(NI) on share options under issue, capital reconstruction costs and flotation
Bad debt
During the year a bad debt charge of £1.4m was incurred (2007: £0.3m). The
largest single amount written off in respect of any one customer was £44,000 in
respect of an estate agency group. The bulk of the charge related to smaller
amounts owed by estate agents and developers who either left the site without
paying or went into administration during the year. This adversely impacted
margin during the year by 1.8% and if adjusted for the margin would have been
The consolidated tax rate for the year ended 31 December 2008 was 33% (2007:
31%). The difference between this and the standard rate of tax at 28.5% relates
chiefly to the reversal of the deferred tax asset on share options and
disallowable expenditure charges, notably share-based payments expense.
Share-based payments (IFRS 2)
In accordance with IFRS 2, a non-cash charge of £2m (2007: £2.3m) is included
in the income statement representing amortisation of the fair value of share
options granted, including Sharesave options, since 2006.
Net interest
Net interest payable was £1.3m (2007: net interest receivable of £0.7m). The
Group has moved into a net interest payable position as a result of entering
into a revolving loan facility in April 2008. The loan bore interest at LIBOR
plus 150 basis points since its inception.
The Group's interest cover ratio at 31 December 2008 was 31:1, well above the
minimum level of 4:1 specified in the related bank covenant.
Earnings per share
Basic earnings per ordinary share of 22.5p (2007: 15.2p) is based on profit
after taxation and a weighted average of 113,405,224 shares in issue (2007:
123,023,728). Underlying basic earnings per ordinary share on continuing
operations and before share-based payments, NI on share options under issue and
capital reconstruction costs was 23.8p (2007: 18.7p).
Balance sheet
Total shareholders' deficit amounted to £15.5m at 31 December 2008 (2007:
retained earnings of £12.4m). The Group's net liability position at 31 December
2008 has arisen entirely as a result of the draw down of the revolving loan
facility of £39.7m and the application of the funds to buy back shares during
the year. It is anticipated that £25m of this facility will be converted into a
five year term loan by April 2009. This is explained in detail in Note 1 to the
financial statements.
Trade and other receivables increased from £11.2m to £12.6m in part due to the
strong growth in revenue but also as a result of £1m of marketing related
Trade and other payables decreased from £14.7m to £12.4m principally due to a
reduction in payroll related accruals and the 2008 payments of capital
reconstruction costs accrued as at 31 December 2007 during the year.
Cash flow and net debt
Cash generated from operations was £38.7m (2007: £29.9m) and cash flow
conversion remained high at 98% in line with our historical record. Net cash
from operating activities was £11.5m lower at £27.2m (2007: £25.6m) due to the
payment of taxes of £10m and interest of £1.5m. Capital expenditure was lower
than the previous year at £1m (2007: £1.8m) as 2007 included £0.4m
non-recurring spend in relation to the investment in the new finance billing
A total of £45m was invested during 2008 in the repurchase of our own shares
(2007: £19.4m) while a further £10.4m was paid by way of dividends (2007: £
Net debt at 31 December 2008 was £16.9m (2007: net cash of £11.8m).
The Board's priorities for the usage of cash are: investment in the business;
payment of the dividend; and the return of excess cash to shareholders via
share buy backs. We believe that the future working capital and capital
expenditure requirements of the business will continue to be low and that the
business will be in a position to return surplus capital to shareholders during
2009 through sustained dividends.
Current trading and outlook
2009 has started with the Rightmove.co.uk website experiencing high levels of
site traffic and enquiries, including several of the busiest days ever in terms
of email enquiries generated to our advertisers. We have seen an initial
decrease in the rate of estate agents leaving the industry and more marketing
activity from developers compared to late in 2008.
We believe that the outlook for the UK residential housing market as a whole
will be driven by the wider economic environment in the UK. The current levels
of housing transactions are unsustainably low, the equivalent of people on
average never moving from the first home they buy for the rest of their
life-time. Given the dramatic reduction in the cost base of the property
industry, we believe that relatively modest increases in transaction volumes
even if only to the levels seen early in 2008 will transform the viability of
many of the most threatened estate agents and developers. The number of
developments available to be marketed is likely to decline given the reduction
in housing starts, though with transaction levels so low this may be a gradual
So is the downturn in property advertising in traditional media cyclical or
There can be no doubt that the current situation represents a huge cyclical
downturn. Our results in 2008 and our start to 2009 suggest that online
property portals are also bringing about a major structural shift. The ultimate
answer to the question will become clear as property advertising spend starts
to increase again.
Hence, our strategy is to remain the clear leader in the UK online property
advertising market, to continue to invest in our product and brand and to
continue to prepare for the market recovery. In many ways we believe the
opportunities to build on our market share of the industry spend on advertising
will be considerable in the future as the trend to use traditional media in the
UK property market fails to return.
The Board is confident of meeting its expectations for the coming year.
Ed Williams Managing Director Graham Zacharias, Finance Director
27 February 2009
Scott Forbes, Chairman
Scott Forbes was appointed Chairman of Rightmove plc in July 2005. He is also
the Chief Executive of Bridge Capital Advisors Ltd which he founded in 2007.
Scott has nearly 30 years' experience in operations, finance and mergers &
acquisitions which includes 15 years at Cendant Corporation. Cendant was
formerly the largest provider of residential property services worldwide. Scott
established the international headquarters in London in 1999 and led this
division as Group Managing Director until he joined Rightmove. He was Chairman
or Chief Executive of various residential property and travel industry
businesses during his tenure at Cendant and held similar roles for other
companies in other sectors, including National Car Parks and Green Flag. Prior
to his time at Cendant, Scott was a certified public accountant. (Appointed
13 July 2005.)
Ed Williams, Managing Director
Ed Williams was appointed to the Board of Rightmove plc in December 2000,
shortly after joining the newly founded business as the then Group Managing
Director. Ed formed the senior management team that continues to run Rightmove
and leads the day-to-day operational management of the Group. He is Chairman of
Holiday Lettings Limited in which Rightmove has a two-thirds ownership stake.
His prior experience is in business strategy and IT consulting with McKinsey & Co,
Accenture and JPMorgan.
(Appointed 19 December 2000.)
Nick McKittrick,
Chief Operating Officer
Nick McKittrick joined Rightmove plc in 2000. He led the development of the
Company's original website and then went on to build the new homes, lettings
and overseas businesses. At the start of 2005 Nick became the Managing Director
of the main Rightmove.co.uk operating subsidiary overseeing a trebling of
revenue in three years. In January 2009, he was promoted to the role of Chief
Operating Officer and Finance Director in preparation for the retirement of
Graham Zacharias who retires from the Board in April 2009. Before joining the
Company he worked in Accenture for eight years in the technology consulting
division. (Appointed to the Board on 5 March 2004.)
Graham Zacharias FCA, Finance Director
Graham Zacharias was appointed Finance Director of Rightmove plc in
January 2006. He is also a non-executive director of Umeco plc. He qualified as
a chartered accountant with Coopers and Lybrand, working in Spain for several
years before joining Schlumberger where he held a number of finance roles in
Dubai and London. He then moved to Singapore as Managing Director of a small,
publicly-quoted company before returning to the UK as Finance Director of BTR's
Aerospace Group. Graham was formerly Group Finance Director for over nine years
at Spectris plc, a process and control and instrumentation company in the
FTSE 250. (Appointed 17 January 2006. Graham will retire from the Board in
April 2009.)
Jonathan Agnew, Non-executive Director
Jonathan joined the Board in January 2006 as Senior Independent Director. He is
Chairman of Beazley Group, LMS Capital, The Cayenne Trust and Ashmore Global
Opportunities. Jonathan was an investment banker for over 25 years, including
being a Managing Director of Morgan Stanley and Group Chief Executive of
Kleinwort Benson. He has been Chairman of Nationwide Building Society, Limit
and Gerrard Group and has served on the Council of Lloyd's. (Appointed
16 January 2006.) (Chairman of the Remuneration Committee, member of the Audit
and Nomination Committees.)
Nigel Cooper, Non-executive Director
Nigel joined Rightmove plc in January 2006 as a non-executive director and also
as Chairman of the Audit Committee, where he provides oversight of the
financial reporting practices, internal control environment and compliance with
the various listed company regulations. He is also a member of the Remuneration
Committee. Nigel is a non-executive director of Metro International S.A. (a
Nordix OMX listed company) where he also chairs the Audit Committee. Nigel was
formerly a senior partner at KPMG LLP and was Lead Audit and Advisory Partner
for KPMG's Information, Communications and Entertainment Group based in London.
(Appointed 16 January 2006. Having completed his three year term, Nigel will
retire from the Board in March 2009.) (Chairman of the Audit Committee and
member of the Remuneration Committee.)
Colin Kemp, Non-executive Director
Colin Kemp was appointed to the Board in July 2007. He is Managing Director of
Halifax Bank of Scotland (HBOS) Retail Network, North Division covering bank
branches across Scotland, Northern Ireland and the North of England. With over
25 years' experience in high street retail banking, Colin has worked for HBOS
companies since 1979. His roles have included running the HBOS Retail Contact
Centres, one of the largest call centre operations in Europe, and heading up
the Halifax Employee Share Services business administering employee share plans
to over 400 UK companies, including 27 of the FTSE 100. Colin is a Cranfield
MBA and an Associate of the Chartered Institute of Marketing. (Appointed
3 July 2007.)
Stephen Shipperley, Non-executive Director
Stephen Shipperley joined the Board on its formation in 2000. Stephen has over
30 years of experience in the property industry. He is Group Executive Chairman
of Connells Limited, which has grown to become the second largest estate agency
business in the UK with interests in residential estate agency, surveying,
financial services, relocations and conveyancing. (Appointed 30 June 2000.)
Judy Vezmar, Non-executive Director
Judy is Chief Executive Officer of LexisNexis International. LexisNexis®, part
of the global media group Reed Elsevier PLC, is a leading worldwide provider of
content-enabled workflow solutions designed specifically for professionals in
the legal, risk management, corporate, government, law enforcement, accounting
and academic markets. Judy is responsible for the International group and their
expansion of the range of successful online services to over 100
countries. She is based in London. (Appointed 16 January 2006.) (Member of
the Audit, Remuneration and Nomination Committees.)
Liz Taylor, Company Secretary
Liz Taylor was appointed Company Secretary of Rightmove plc on 4 July 2006. She
is a Fellow of the Institute of Chartered Secretaries and Administrators and
has 20 years' company secretarial experience across a variety of public
companies. Prior to joining Rightmove, she was Company Secretary of The
Berkeley Group Holdings plc.
Miles Shipside, Commercial Director
Miles joined Rightmove as a founding director in 2001 bringing 20 years of
experience at senior levels in independent estate agency and with Halifax
Estate Agency. He has responsibility for estate agency and media relations,
specialising in advising the industry on how the internet is transforming home
moving and the state of the housing market. He qualified as a Chartered
Surveyor in 1982.
Peter Brooks-Johnson , Agency Director
Peter joined Rightmove in 2006 and is responsible for the Estate Agency
business and the development of the Rightmove proposition to customers,
including the development of the Rightmove Choice products and the website.
Peter was formerly a management consultant with Accenture and The Berkeley
Partnership working with clients such as BP, Marks & Spencer and Woolwich.
Peter Armstrong, New Homes Director
Peter joined Rightmove in 2003 as one of the first handful of people developing
the New Homes business, a business which he has run since May 2006. He is now
responsible for 50 people in Rightmove's fastest growing business unit and is
part of the new homes industry community. Prior to Rightmove, Peter worked in
sales and sales management, latterly in directory advertising with Yell.
Alan Gearing, Managing Director, Rightmove AVM
Alan joined Rightmove in 2006 developing new sources of revenue separate from
property advertising. He was appointed as Managing Director of Rightmove's
Automated Valuation Model division in July 2008. Prior to Rightmove he was a
founder of both The Asset Management Group (property disposal and maintenance
services) and The Inventory Exchange (online inventory and property
Kathryn Harris, Marketing Director
Kath joined Rightmove in 2008 as Marketing Director following almost eight
years at Unilever where she was responsible for developing global brands such
as Dove, Persil and Sure. Kath is now focussing on strengthening Rightmove's
marketing and PR efforts to both the home hunters and trade member audiences,
helping to maintain Rightmove's leadership position.
Scott Marshall, Finance Director of Rightmove.co.uk
Scott joined Rightmove in 2001 as Finance Director and was Company Secretary
until the IPO in 2006. Scott led the preparations for the float on the London
Stock Exchange in 2006 and led the recent Scheme of Arrangement to introduce
and list a new holding company for the Group. Scott is a director of Holiday
Lettings Limited. Scott qualified as a Chartered Accountant in Australia with
Ernst & Young.
Simon Hickie, Human Resources Director
Simon joined Rightmove in 2007 following seven years at Bloomberg LP where he
was responsible for HR operations across Europe, the Middle East and Africa.
Prior to moving into HR, he had managed part of Bloomberg's financial research
operation covering new debt and equity security issuance and M&A activity in
Robyn Perriss, Financial Controller
Robyn joined Rightmove in 2007 and has day-to-day responsibility for the
financial operations, based out of Milton Keynes, as well as statutory
reporting and the treasury function. She was formerly Group Financial
Controller at the online media business, Auto Trader. She qualified as a
chartered accountant in South Africa with KPMG.
Corporate Social Responsibility
Our people
Our employees are our largest resource and our most highly valued asset. We are
proud of our people and the mixture of talent and experience that they
represent and we depend on their skills and commitment to achieve our
Throughout 2008, we have taken further steps in ensuring that Rightmove
continues to be an environment in which our employees are nurtured to ensure
that their skills and knowledge are continuously developed. Our cultural
uniqueness is bolstered by an open and honest communication environment and
through investment in ensuring that all employees have a profound understanding
of Rightmove's core values and goals. This is achieved through a combination of
off-site residential training, ongoing coaching and mentoring. Staff opinions
are frequently sought through regular staff forums with senior managers and
employee online surveys. Being an online company, communication with all
employees can easily be achieved by regular emails and the use of the intranet.
Over the course of 2008, we have introduced an internal training academy
designed to provide a structured means for employees to expand and diversify
their skills and knowledge and explore new ways of working with one another.
During 2009 we will continue to focus on developing and rewarding our people.
Rightmove has a strong commitment to equality of opportunity in all our
employment policies, practices and procedures. We take a proactive approach
throughout our recruitment and selection process to ensuring that we attract,
hire and retain a diverse and talented workforce and this is kept under close
and regular scrutiny. No existing or potential employee will receive less
favourable treatment due to their race, creed, nationality, colour, ethnic
origin, age, religion or similar belief, connections with a national minority,
sexual orientation, gender, gender reassignment, marital status, membership or
non-membership of a trade union, disability, or any other classification as
prescribed by law.
Charitable activity
During 2008, our employees continued to support the NSPCC, our Company
nominated charity and we continue to encourage all our employees to devote time
and fundraising efforts to charitable causes of particular importance to them
as individuals. During 2008 a considerable number of staff have been active in
raising money or supporting the fundraising activities of others.
Rightmove actively considers its environmental impact. Since our operation is
primarily office-based, the direct environmental impact is relatively low.
Indeed Rightmove's business creates opportunities to reduce the overall
environmental harm associated with a variety of aspects of the whole home
hunting process and even home ownership more generally.
Traditional ways of finding a home tend to involve large amounts of paper and
printing, whether in the form of newspaper advertising, property particulars
mailed to applicants through the post or leaflet drops by agents. Rightmove
reduces the need for print media and the environmental damage that goes with
them. Rightmove takes care to design the layout of property particulars to
reduce the total number of pages that need to be printed out in those cases
where a home hunter does want a physical copy.
Enhanced information on properties also reduces the amount of time home hunters
waste in visiting properties that rapidly turn out to be inappropriate. As a
high proportion of viewings involve a car journey, any reduction in wasted
viewings has an environmental benefit. Rightmove has worked hard to increase
the number of photographs of each property and has introduced more
comprehensive maps and aerial photographs which help home hunters to identify
the specific location of a property. More high quality information presented
about properties reduces waste.
The Rightmove.co.uk website includes functionality for our customers to display
Energy Performance Certificates which allow prospective buyers to evaluate the
energy efficiency of a property they are considering buying and to identify
opportunities to improve the energy efficiency once they have purchased the
We also take seriously the environmental impact of our own operations. As an
internet-based company with most staff employed in two office locations, we
believe our own environmental footprint is small and that there are no
by-products of our operations which have a clear negative impact on the
environment. Our staff are encouraged to take proactive steps to address our
environmental responsibilities. For instance, we continue to operate
comprehensive recycling schemes which were established in consultation with
local authorities and recycling partners. As an online company, our culture
emphasises a paperless environment. We also recognise that our responsibilities
do not stop just with how we operate internally - we also encourage all our
customers, business partners and suppliers not to unnecessarily print out
emails sent by us in the signature of all our emails. Moreover, we have also
introduced e-communications for our shareholders, including an HTML copy of the
annual report to enable investors and people with an interest in the Company to
print specified pages thereby reducing the quantity of printed material we
Health and safety
The Group considers the effective management of health and safety to be an
integral part of managing its business. During 2008, we continued our fire
safety procedures, first aid skills and work place safety training. The Group's
ongoing policy on health and safety is to provide adequate control of the
health and safety risks arising from work activities, through further
consultation with and training of employees, the provision and maintenance of
plant and equipment, safe handling and use of all substances and the prevention
of accidents and causes of ill health. The Group will maintain safe and healthy
working conditions for employees, visitors and contractors, and keep the policy
on health and safety up-to-date with regular reviews and necessary alterations
to the policy as required.
The directors submit their report together with the audited financial
statements for Rightmove plc (the Company) and its subsidiary companies (the
Group) for the year ended 31 December 2008. The Company is domiciled in England
(registered number 6426485).
Principal activities
The Group operates in the UK residential property industry connecting people to
Its principal business is the operation of the Rightmove.co.uk website, which
is the UK's largest residential property website. Its customers (estate agents,
letting agents, new homes developers and overseas homes agents) pay fees for
the right to display properties on the Rightmove website, which provides home
hunters with property details to search.
Rightmove plc floated on the London Stock Exchange on 15 March 2006 and
subsequently became a member of the FTSE 250 Index.
In March 2007, the Company acquired 66.7% of Holiday Lettings Limited, a
provider of online advertising services to owners of holiday rental properties.
Further information on the Group's activities during the year under review and
of its prospects are contained in the Business and Financial Review on pages 4
to 10.
The following sections inclusive are incorporated by reference into the
directors' report which have been drawn up and presented in accordance with and
in reliance upon acceptable English company law and the liabilities of the
directors in connection with the report shall be subject to the limitations and
restrictions provided by such law:
• Business and Financial Review (pages 4 to 10)
• Board of Directors (pages 11 to 12)
• Corporate Social Responsibility (pages 14 to 15)
• Corporate Governance (pages 21 to 28)
• Remuneration Report (pages 29 to 38)
In compliance with the business review provisions of the Companies Act 1985,
within the Business and Financial Review, principal risk factors are discussed
under the section "Uncertainties, threats and risks" on page 8. Key performance
indicators (KPIs) are given on page 5 and information on the likely
developments of the Group under "Current Trading and Outlook" on page 10.
Scheme of arrangement
In January 2008, pursuant to a Scheme of Arrangement under the Companies Act
1985 (the Scheme), a new parent company was introduced, which on listing on the
London Stock Exchange was called Rightmove Group plc and subsequently renamed
Rightmove plc. The Scheme constituted a share capital reconstruction, whereby
shareholders exchanged their shares on a like for like basis for shares in the
new listed company and has been accounted for as a reverse acquisition.
Therefore, although the reconstruction did not become effective until
28 January 2008, the consolidated financial statements of the new parent
company are presented as if the new company and the previously listed company
had always been part of the Group. Accordingly, the results of the Group for
the entire year ended 31 December 2008 are shown in the consolidated income
statement and the comparative figures for the year ended 31 December 2007 are
also presented on this basis.
Trading results
The Group's consolidated underlying operating profit from continuing operations
(before share-based payments, National Insurance (NI) on share options under
issue and capital reconstruction costs) for the financial year was £41,004,000
(2007: £30,746,000). Further information on the results for the Group is set
out in the Consolidated Income Statement on page 41 and the supporting Notes
and the Business and Financial Review on pages 4 to 10.
An interim dividend of 3.0p (2007: 2.0p) per share was paid on 10 October 2008
to shareholders on the register of members at the close of business on
12 September 2008.The directors are recommending a final dividend for the year
of 7.0p (2007: 6.0p) per share, which together with the interim dividend of
3.0p, paid in respect of the half year period ended 30 June 2008, makes a total
for the year of 10.0p (2007: 8.0p), amounting to £10,919,000 (2007: £
9,529,000). Subject to shareholders' approval at the Annual General Meeting on
6 May 2009, the final dividend will be paid on 12 June 2009 to shareholders on
the register of members at the close of business on 15 May 2009.
The final dividend payment has not been included in trade and other payables as
it was not approved before the year end.
Share capital
The issued share capital (including 2,505,430 shares held in treasury) at the
year end consisted of 120,050,873 (2007: 132,689,361) ordinary shares of £0.01
each being £1,201,000 (2007: £1,327,000). Movements in the Company's share
capital in the year are shown in Note 22 to the financial statements.
Information on the Group's share option schemes is set out in Note 24 to the
financial statements. Details of the share option schemes for directors are set
out in the Remuneration Report on page 37.
Share buy back
The Company announced a share buy back programme in June 2007, which has
continued during 2008. Of the 15% authority given at the 2008 Annual General
Meeting, 7,924,105 shares were purchased in the period from 7 May 2008 to
31 December 2008 being 6.2% of the issued share capital of the Company
(excluding shares held in treasury) at the time the authority was granted. A
total of 11,854,535 shares were purchased in the year to 31 December 2008. The
average price paid per share was £3.78 with a total consideration paid
(inclusive of all costs) of £45,044,000. Of the 11,854,535 shares purchased,
2,505,430 shares were transferred into treasury.
A resolution seeking to renew this authority will be put to shareholders at the
Annual General Meeting on 6 May 2009.
Shares held in trust
As at 31 December 2008, 8,353,700 ordinary shares of the Company were held in
The Rightmove Employees' Share Trust (EBT) for the benefit of Group employees
(2007: 8,353,700). These shares had a nominal value at 31 December 2008 of £
84,000 (2007: £84,000) and a market value of £14,703,000 (2007: £38,761,000).
The shares may be used to satisfy options for all the Group's employee share
The terms of the EBT provide that dividends payable on the shares held by the
trust are waived.
Substantial shareholdings
As at the date of this report, the following beneficial interests in 3% or more
of the Company's issued ordinary share capital (excluding shares held in
treasury) on behalf of the organisations shown in the table below, had been
notified to the Company pursuant to Rule 5 of the Disclosure Rules and
Transparency Rules:
No of shares %
Lone Pine Capital LLC 11,938,107 10.2
Tremblant Partners LP 11,896,449 10.1
Capital Group Companies Inc 11,106,609 9.5
Baillie Gifford & Company Ltd 8,708,438 7.4
The Rightmove Employees' Trust 8,353,700 7.1
Artisan Partners LP 7,825,597 6.7
BlackRock 6,202,630 5.3
Legal and General Investment 4,171,564 3.6
Caledonia Investment plc 4,140,576 3.5
The above percentages are based upon an issued share capital (excluding shares
held in treasury) of 117,545,443.
The directors of Rightmove plc at the year end and as at the date of this
report are named on pages 11 to 12 together with their profiles. All directors
served throughout the year under review.
The Articles of Association of the Company require directors to submit
themselves for re-appointment where they have been a director at each of the
preceding two Annual General Meetings and were not appointed or re-appointed by
the Company at, or since, either such meeting.
Nigel Cooper (non-executive director) and Graham Zacharias (executive director)
are the two directors that would be eligible to seek re-election at the 2009
Annual General Meeting under these provisions. Nigel Cooper gave notice in
October 2008 that he would not be seeking re-election on expiry of his three
year term of office in 2009 due to time commitments to his wider non-executive
directorship portfolio. Nigel Cooper will step down from office on
31 March 2009. Graham Zacharias also retires from the Board on 10 April 2009
and will not stand for re-election.
All other directors of the Company were either appointed or re-appointed at the
2007 or 2008 Annual General Meetings. Therefore, no director is required to
submit themselves for re-election at the 2009 Annual General Meeting.
The interests of the directors in the share capital of the Company at 31
December 2008, the directors' total remuneration for the year and details of
their service contracts and Letters of Appointment are set out in the
Remuneration Report on pages 29 to 38. At 31 December 2008 each of the
executive directors was deemed to have a non-beneficial interest in 8,353,700
ordinary shares held by the trustees of the EBT.
Directors' interests in contracts
Stephen Shipperley, non-executive director, is Group Chairman of Connells
Limited. Colin Kemp, non-executive director, held the position of Managing
Director of Halifax Estate Agencies Limited from January 2005 to December 2007.
Prior to the IPO in 2006 the Group had entered into agreements with Connells
Limited and Halifax Estate Agencies Limited to list all their respective estate
agency properties on Rightmove.co.uk until at least March 2009. In December
2008, the Company announced that the agreement with Connells Limited had been
extended into 2012. Further details of amounts owed by and invoiced to Connells
Limited and Halifax Estate Agencies Limited are disclosed in the section
dealing with Related Party Disclosures in Note 27 to the financial statements
on page 69.
Supplier payment policy
The Group and Company's policy concerning creditors is to agree payment terms
with its suppliers, ensure the relevant terms of payment are included in
contracts and to abide by those terms when it is satisfied that goods or
services have been provided in accordance with the contracts. For the year to
31 December 2008, trade creditors represented 25 days (2007: 50 days) of
average daily purchases. The Group had £1.2m of trade payables at the year end
(2007: £1.7m).
Research and development
The Group undertakes research and development expenditure in view of developing
new products and improving the existing property websites. Further details are
disclosed in Note 2 to the financial statements on page 49.
Charitable and political donations
The Company made no charitable contributions or political donations during the
year (2007: nil).
Annual General Meeting
The Annual General Meeting of Rightmove plc will be held at the offices of UBS
Limited at 1 Finsbury Avenue, London EC2M 2PP on 6 May 2009 at 10am.
The majority of the resolutions being proposed at the 2009 Annual General
Meeting are general in nature including the renewal for a further year of the
limited authority of the directors to allot the unissued share capital of the
Company and to issue shares for cash other than to existing shareholders. A
resolution will also be proposed to renew the directors' authority to purchase
a proportion of the Company's own shares.
There is also one item of special business. The Company adopted new Articles of
Association at the Annual General Meeting in 2008 and therefore most of the
current changes required in relation to the Companies Act 2006 are in place.
The exception to this is the Shareholder Rights Directive, which is intended to
be implemented in the UK in August this year. One of the requirements of the
Directive is that all general meetings must be held on 21 days' notice unless
shareholders agree to a shorter notice period. The Company's existing Articles
of Association already provide the power to call general meetings (other than
annual general meetings) on 14 days' notice and we will therefore be proposing
a resolution at the Annual General Meeting so that we can continue to be able
to do so after the Directive is implemented.
An explanation of these and other resolutions being proposed at the 2009 Annual
General Meeting will be provided in the Notice of Annual General Meeting, which
will be sent to shareholders (where requested) and posted on the corporate
website (www.rightmove.co.uk/investors.rsp) in March 2009.
KPMG Audit Plc has confirmed its willingness to continue in office as auditors
of the Group and separate resolutions for their re-appointment and for the
Audit Committee to determine their remuneration will be proposed at the Annual
General Meeting.
Audit information
So far as the directors in office at the date of signing of the report are
aware, there is no relevant audit information of which the auditors are unaware
and each such director has taken all reasonable steps to make themselves aware
of any relevant audit information and to establish that the auditors are aware
of that information.
Responsibility statement of the directors in respect of the annual financial
We confirm that to the best of our knowledge:
* the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Company and the undertakings included
in the consolidation taken as a whole; and
* the directors' report includes a fair review of the development and
performance of the business and the position of the issuer and the
undertakings included in the consolidation taken as a whole, together with
a description of the principal risks and uncertainties that they face.
Signed by the Board:
Ed Williams, Managing Director Graham Zacharias, Finance Director
27 February 2009
Statement of compliance
The 2006 Combined Code of Corporate Governance (Combined Code) sets out the
principles and provisions relating to good governance of UK listed companies.
In this section we set out how we have applied the principles and complied with
the provisions of the Combined Code during 2008 and explain the reason for one
area of non-compliance.
The Board
During the year and as at the date of this report, the Board comprises nine
directors including the Chairman (Scott Forbes), three executive directors (Ed
Williams, Managing Director, Nick McKittrick and Graham Zacharias) and five
non-executive directors (Jonathan Agnew, who is the Senior Independent
Director, Nigel Cooper, Judy Vezmar, Stephen Shipperley and Colin Kemp). The
Company announced that Graham Zacharias will step down from the Board on
10 April 2009 thereby reducing the number of executive directors to two going
forward and increasing the balance of non-executive directors in the overall
composition of the Board.
Stephen Shipperley is Group Executive Chairman of Connells Limited and in
strict application of the criteria of the Combined Code is not considered to be
independent. Colin Kemp has worked for HBOS companies for 30 years and held the
position as Managing Director of Halifax Estate Agencies Limited from January
2005 to December 2007. The Board considers that both Stephen Shipperley and
Colin Kemp are independent in character and in particular both continue to
challenge rigorously the executive directors and the Board as a whole. Whilst
the composition of the Board for the period under review was not in strict
compliance with supporting principle A3.2 of the Combined Code in that at least
half of the directors (excluding the Chairman) are not considered independent
non-executive directors, the directors believe that the Board currently
operates effectively and that all the non-executive directors are fully
independent of management and that Jonathan Agnew, Nigel Cooper and Judy Vezmar
are free from any business or other relationship that could materially
interfere with the exercise of their independent judgment and advice to the
Graham Zacharias, the retiring Finance Director, is also a non-executive
director of Umeco plc. His remuneration for that position is retained by him
and is set out in the Remuneration Report on page 33. Neither the Chairman nor
any of the executive directors hold any other non-executive directorships or
commitments disclosable under the Combined Code.
Biographical details of the directors appear on pages 11 and 12.
Directors' remuneration
The principles and details of directors' remuneration and contractual
arrangements are contained in the Remuneration Report on pages 29 to 38.
Board and Committee membership and attendance
In accordance with the Combined Code, the Articles of Association require all
directors to seek re-election every three years. In addition all directors are
subject to election by shareholders at the first opportunity after their
appointment. As previously explained in the Directors' Report, no director is
required to seek re-election at the 2009 Annual General Meeting.
The membership of the Committees of the Board and attendance at meetings for
the period under review are set out in the table below.
Board Remuneration Audit Nomination
Committee Committee Committee
Total meetings 8 6 4 2
Scott Forbes 8 6(1) N/A 2
Jonathan Agnew 8 6 4 2
Nigel Cooper 8 6 4 N/A
Colin Kemp 7 N/A N/A N/A
Nick McKittrick 8 N/A N/A N/A
Stephen Shipperley 8 N/A N/A N/A
Judy Vezmar 8 6 4 2
Ed Williams 8 N/A N/A N/A
Graham Zacharias 8 N/A N/A N/A
(1) The Remuneration Committee Chairman has requested that the Chairman of the
Board attends the Remuneration Committee meetings.
In addition to the above meetings, the Chairman conducts meetings with the
non-executive directors without the executive directors being present when
required. Jonathan Agnew, the Senior Independent Director, chaired a meeting of
the Board at which the performance of the Chairman was also reviewed (without
the presence of the Chairman).
Operation of the Board
The Board is responsible to shareholders for the overall direction and control
of the Group. Its key task is to approve strategy, ensuring the successful
implementation of projects and proposals and monitoring the operating
performance of the Group in pursuit of its objectives in the interest of
maximising long-term shareholder value. The Board has adopted a formal schedule
of matters requiring specific approval. These include, amongst other things,
the approval of the annual business plan, capital structure, dividend policy,
acquisitions and disposals, appointment and removal of officers of the Company,
approval of the Half Year and Full Year results, shareholder communication and
responsibility for corporate governance and review of the Company's risks and
system of internal controls.
The Board receives meeting papers one week prior to the meeting to allow
sufficient time for detailed review and consideration of the documents
beforehand. If any director has a concern about any aspect of the business
conducted at any Board meeting, the Company Secretary shall discuss this with
the director concerned and record their concern or comments in the Board
minutes. The Board also receives monthly management and financial reports on
the operational and financial performance of the business setting out actual
and forecast financial performance against approved budgets in addition to
other key performance indicators. The Board also receives copies of broker
reports and press releases relating to the Group. At least once a year the
Managing Director and the senior management team present a strategic review and
an annual plan to the Board for review and approval.
The Board meets formally around eight times each year although meetings can be
scheduled at short notice at the request of any director or if required. In
addition to formal Board meetings, there is regular, informal dialogue between
all directors.
Chairman and Managing Director
There are clear written guidelines to support the division of responsibilities
at the head of the Company with the roles of the Chairman and Managing Director
separately held. The Chairman is responsible for the effective conduct of the
Board, for communication with shareholders and for ensuring that each director
uses their skills and experience to the benefit of the Board's effective
decision making. With the assistance of the Company Secretary, the Chairman
monitors the information provided to the Board to ensure that it is sufficient,
pertinent, timely and clear.
The Managing Director has day-to-day executive responsibility for the running
of the Group, leading the executive and operational teams in developing
strategies and delivering results against defined objectives to enable the
Group to meet its objectives.
Board training
The breadth of management, financial and listed company experience of the
non-executive directors is described in the biographical details on pages 11
and 12, and demonstrates a range of business expertise that provides the right
mix of skills and experience given the size of the Company. There are
procedures in place for individual Board members to receive induction and
training as appropriate and to seek the advice and services of independent
professional advisers, at the Company's expense, where specific expertise or
training is required in the course of their duties.
The directors disclose a qualifying third-party indemnity provision between the
Company and its directors and officers as provided by the Articles of
Association of the Company, which was in force at the date of this report. The
Group has also arranged directors' and officers' insurance cover in respect of
legal action against the directors.
The Group has set out written policies in compliance with a code of securities
dealings in relation to the shares and equivalent to the Model Code published
in the Listing Rules. The code applies to all directors, other persons
discharging managerial responsibility and other relevant employees.
Board evaluation
The Board conducted a Board evaluation exercise in quarter four of 2008 which
was led by the Chairman, assisted by the Company Secretary. All directors
completed a comprehensive questionnaire inviting feedback on the operation of
the Board and its Committees, knowledge of strategy and the business and its
collective performance. The results were discussed at a Board meeting in
December 2008 and it was agreed that the Board was operating effectively.
Actions were mainly administrative in nature and will be followed up by the
Chairman in early 2009. In addition each director completed an individual
questionnaire on the performance of each of their Board colleagues and feedback
was provided at one-to-one meetings conducted by the Chairman. At a meeting
chaired by Jonathan Agnew, Senior Independent Director, the Board provided
input into and reviewed the performance of the Chairman.
Relations with shareholders
The Board is accountable to shareholders for the performance and activities of
the Company and the Chairman ensures that effective communication with
shareholders takes place.
Within the terms of the regulatory framework, the Company has conducted regular
dialogue with shareholders through ongoing meetings with institutional
investors and research firms to discuss strategy, operating performance and
financial performance. Contact in the UK is principally with the Managing
Director and Finance Director. The Chairman also participates in the USA
bi-annual investor road shows. Jonathan Agnew, the Senior Independent Director,
is available to shareholders if they wish to supplement communication or if
contact through the normal channels is inappropriate.
Shareholders are also kept up to date with the Group's activities through the
Full Year and Half Year Reports and the investor relations section of its
website, which provides details of all the directors, latest news, including
financial results, investor presentations and Stock Exchange announcements.
The Board is kept informed of the views and opinions of those with an interest
in the Company through reports from the Managing Director and Finance Director
as well as reports from the Company's joint brokers, UBS and Numis. All
directors receive notification of any changes in the status of substantial
shareholders and at each Board meeting an update is given by the executive
directors on the movements in major shareholdings and on the views and opinions
of those with an interest in the Company.
Conflicts of interest
The Chairman of the Board is responsible for determining, in cases of doubt,
whether a conflict of interest exists. There were no matters discussed at any
Board meeting that gave rise to a conflict of interest.
Annual General Meeting
All shareholders are invited to participate in the Company's Annual General
Meeting on 6 May 2009 where all directors will be available to answer questions
and will also be available for discussions with shareholders prior to and after
the meeting.
The Company will arrange for the Annual Report and Accounts and related papers
to be available on the Company's corporate website at www.rightmove.co.uk/
investors.rsp or posted to shareholders (where requested) so as to allow at
least 20 working days for consideration before the Annual General Meeting.
The Company also complies with the Combined Code with the separation of all
resolutions put to the vote of shareholders. The Company proactively encourages
shareholders to vote at general meetings by providing electronic voting for
shareholders who hold their shares through the Crest system and provides
personalised proxy cards to ensure that all votes are clearly identified. The
Company presently takes votes at general meetings on a show of hands on the
grounds of practicality due to the limited number of shareholders in
attendance. Votes are taken by a poll at any shareholder meeting where legally
required. All proxy votes are counted and the level of proxy votes including
abstentions lodged for each resolution are reported after each resolution and
published on the Company's website.
Board committees
The Board has established three principal committees, the Audit Committee, the
Remuneration Committee and the Nomination Committee, each of which operates
within written terms of reference approved by the Board. No person other than a
Committee member is entitled to attend the meetings of these Committees, except
by invitation of the Chairman of that Committee.
Remuneration committee
The Remuneration Committee consists of the three independent non-executive
directors, Jonathan Agnew (who is Chairman), Judy Vezmar and Nigel Cooper. In
addition, the Remuneration Committee Chairman has requested that the Chairman
of the Board attends the Remuneration Committee meetings. The quorum for
meetings of the Remuneration Committee is two members. The Remuneration
Committee will meet at such times as may be necessary but will normally meet at
least twice a year.
The purpose of the Remuneration Committee is to ensure that the Company's
executive directors and senior executives are properly incentivised and fairly
rewarded for their individual contributions to the Company's overall
performance having due regard to the interests of the shareholders and to the
financial and commercial health of the Company.
The Remuneration Committee's terms of reference are available on the Company's
website, www.rightmove.co.uk/investors.rsp or by request to the Company
The Company Secretary acts as Secretary to the Committee. The Chairman of the
Remuneration Committee reports to the Board on the Remuneration Committee's
behalf after each meeting and copies of the minutes of the meetings are
circulated to the Board as a whole unless a conflict of interest exists.
During the year the Committee appointed Hewitt New Bridge Street, remuneration
consultants, to assist with a review of the remuneration policy and to set the
remuneration for the executive directors and senior management for 2009.
A detailed report on the Company's remuneration policy and the work of the
Remuneration Committee is available in the Remuneration Report on pages 29 to
Nomination committee
The Nomination Committee consists of Scott Forbes (who is also Chairman of the
Board), Jonathan Agnew and Judy Vezmar as independent non-executive directors.
The quorum for meetings of the Nomination Committee is two members. The
Chairman of the Company would not chair the Nomination Committee in connection
with any discussion about the appointment of his successor to the chairmanship
of the Company, when the Senior Independent Director would take the chair.
Appointments are for a period of up to three years, extendable by no more than
two additional three year periods, so long as members continue to be
The Nomination Committee meets at such times as may be necessary and normally
meets at least twice a year. The purpose of the Nomination Committee is to
consider and make recommendations to the Board about the composition of the
Board, including proposed appointees, and whether to fill any vacancies that
arise or to change the number of Board members.
The Nomination Committee's terms of reference are available on the Company's
website, www.rightmove.co.uk/investors.rsp or by request to the Company
During the year the Nomination Committee reviewed the organisation structure,
approved the plans for the succession of the executive directors and the senior
management team, conducted an annual review of its terms of reference and
commenced a search for a new Audit Committee Chairman to replace Nigel Cooper
who will step down from the Board on 31 March 2009.
Audit committee
The Audit Committee consists of the three independent non-executive directors,
Nigel Cooper (who is Chairman), Judy Vezmar and Jonathan Agnew. Nigel Cooper is
a retired senior partner from KPMG LLP (KPMG) with a 33 year career including
21 years as a partner in Milan and London and therefore has relevant financial
skills and experience for the role. As Nigel Cooper had not had any prior
involvement with the KPMG Milton Keynes office or Rightmove plc, his
appointment was considered by the KPMG Ethical Panel to be independent.
The quorum for meetings of the Audit Committee is two members. Appointments to
the Committee are for a period of up to three years, extendable by no more than
two additional three year periods, so long as members continue to be
The Audit Committee meets at least four times a year and more often if
necessary. Two of its meetings are prior to the announcement of the Half Year
and Full Year results of the Group when the external auditor is in attendance.
The Company Secretary acts as Secretary to the Committee. The Finance Director
and Financial Controller are normally invited to attend the meetings.
The Chairman of the Audit Committee reports to the Board on the Audit
Committee's behalf after each meeting and copies of the minutes of the meetings
are circulated to the Board as a whole. The Audit Committee assists the Board
in the discharge of its duties concerning the announcement of results, the
Annual and Half Year Reports and the maintenance of internal controls. It
reviews the scope and planning of the audit and the auditor's findings and
considers the Group's accounting policies and the compliance with those
policies and applicable legal and accounting standards.
The Audit Committee has authority to investigate any areas of concern as to
financial impropriety that arise and to obtain outside legal or other
independent professional advice in connection therewith. The Audit Committee's
principal duties and terms of reference are available on the Company's website,
www.rightmove.co.uk/investors.rsp or by request to the Company Secretary.
During 2008 the Committee has, amongst other matters, approved the appointment
of the external auditors, fixed their remuneration and reviewed the
effectiveness of the external audit process. The Committee has also considered
the need for an internal audit function. Given the simplicity of the
organisational structure, the open and accountable culture with clear authority
limits, the straightforward financial model and systems and the fact that the
management team and Board conduct regular financial reviews, the Committee
recommended to the Board that an internal audit function was not currently
appropriate for the business. This decision is kept under regular review.
The Committee also discussed its responsibilities to safeguard the audit
objectivity and independence as well as the needs of the business and agreed
that it was practical in many cases for the auditors to be assigned to other
non-audit project work due to their knowledge and expertise of the business.
This would usually relate to corporate transaction advice and tax compliance.
Non-audit fees in excess of £20,000 require the prior approval of the Chairman
of the Audit Committee. In 2008 the bulk of the non-audit fees related to tax
advisory fees, the details of which are provided in Note 6 of the financial
In addition to receiving reports from the external auditors, members met with
the external auditors without the presence of the executive directors. The
Committee reviewed the Annual and Half Year Reports. The external auditors also
presented the results of their review of the 2007 Full Year and 2008 Half Year
results as well as their audit plan to the Audit Committee.
The Committee also reviewed the Whistle Blowing policy (which provides the
procedure for staff to report any concerns that they may have independent of
management about suspected misconduct without fear of retaliation) and
conducted an annual review of its terms of reference.
Internal controls
The Board of directors has overall responsibility for the Group's system of
internal controls and has established a framework of financial and other
controls, which is periodically reviewed in accordance with the Turnbull
guidance for its effectiveness.
The Board has taken, and will continue to take, appropriate measures to ensure
that the chances of financial irregularities occurring are reduced as far as
reasonably possible by continually seeking to improve the quality of
information at all levels in the Group, fostering an open environment and
ensuring that the financial analysis is rigorously applied. Any system of
internal control is designed to manage rather than eliminate the risk of
failure to achieve business objectives and can only provide reasonable and not
absolute assurance against material misstatement or loss.
The Group's management has established the procedures necessary to ensure that
there is an ongoing process for identifying, evaluating and managing the
significant risks to the Group. These procedures have been in place for the
whole of the financial year ended 31 December 2008 and up to the date of the
approval of these financial statements and they are reviewed regularly.
The key elements of the system of internal control are:
* Major commercial, strategic and financial risks are formally identified,
quantified and assessed, discussed with the executive directors, after
which they are considered by the Board;
* A comprehensive system of planning, budgeting and monitoring Group results.
This includes monthly management reporting and monitoring of performance
against both budgets and forecasts with explanations for all significant
* An organisational structure with clearly defined lines of responsibility
and delegation of authority;
* Clearly defined policies for capital expenditure and investment exist,
including appropriate authorisation levels, with larger capital projects,
acquisitions and disposals requiring Board approval;
* A treasury function which manages net debt against cash flow forecasts and
is responsible for monitoring compliance with bank covenants; and
* A Whistle Blowing policy of which all employees are made aware, to enable
concerns to be raised either with line management or, if appropriate,
confidentially outside the line management.
Through the procedures outlined above, the Board has considered all significant
aspects of internal control for the year and up to the date of this Annual
Report and Accounts.
Going concern
After making prior enquiries, the directors have a reasonable expectation that
the Group has adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the going concern
basis in preparing the financial statements. Further information is provided in
Note 1 to the financial statements.
Statement of directors' responsibilities in respect of the Annual Report and
financial statements
The directors are responsible for preparing the Annual Report and the Group and
parent Company financial statements in accordance with applicable law and
Company law requires the directors to prepare Group and parent Company
financial statements for each financial year. Under that law they are required
to prepare the Group financial statements in accordance with IFRSs as adopted
by the EU and applicable law and have elected to prepare the parent Company
financial statements on the same basis.
The Group and parent Company financial statements are required by law and IFRSs
as adopted by the EU to present fairly the financial position of the Group and
the parent Company and the performance for that period; the Companies Act 1985
provides in relation to such financial statements that references in the
relevant part of that Act to financial statements giving a true and fair view
are references to their achieving a fair presentation.
In preparing each of the Group and parent Company financial statements, the
directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable and prudent;
• state whether they have been prepared in accordance with IFRSs as adopted by
the EU; and
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group and the parent Company will continue in
The directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of the
parent Company and enable them to ensure that its financial statements comply
with the Companies Act 1985. They have general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the Group and
to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for
preparing a Directors' Report, Directors' Remuneration Report and Corporate
Governance Statement that comply with that law and those regulations.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The directors present their Remuneration Report for the year ended
31 December 2008. This report sets out the policies under which executive and
non-executive directors were remunerated and tables of information showing
details of the remuneration and share interests of all the directors.
The report has been approved by the Board and is prepared in accordance with
section 1 of the 2006 Combined Code on Corporate Governance (Combined Code),
the Companies Act 1985, as amended by the Directors' Remuneration Report
Regulations 2002 (the Regulations), and the Listing Rules of the Financial
Services Authority.
Shareholders will be provided with an opportunity to vote on the Remuneration
Report as set out in this Annual Report at the forthcoming Annual General
Meeting to be held on 6 May 2009.
The Regulations require the auditors to report to the Company's shareholders on
the information in part II of this report (on pages 36 to 38) and to state
whether, in their opinion, those parts of the report have been properly
prepared in accordance with the Companies Act 1985 (as amended by the
Part I
This part of the Remuneration Report is unaudited.
The Committee
The Remuneration Committee's primary role is to make recommendations to the
Board as to the Company's broad policy and framework for the remuneration of
the executive directors and the Chairman of the Board and the Company
Secretary. In accordance with the Combined Code the Remuneration Committee also
recommends the structure and monitors the level of remuneration for the first
layer of management below Board level. The Remuneration Committee is also aware
of and advises on the employee benefit structures throughout the Company and
its subsidiaries.
The Remuneration Committee consists of wholly independent non-executive
directors, these being during 2008 and at the date of this report, Jonathan
Agnew (Chairman), Nigel Cooper and Judy Vezmar. Only members of the
Remuneration Committee have the right to attend Remuneration Committee
meetings. However, the Chairman of the Remuneration Committee has requested
that Scott Forbes, the Chairman of the Board, attends the meetings except
during discussions relating to his own remuneration. The Company Secretary acts
as the Secretary of the Remuneration Committee and normally attends the
Ed Williams, the Managing Director, may also be invited to meetings and the
Remuneration Committee takes into consideration his recommendations regarding
the remuneration of his executive colleagues and the first layer of management
below Board level. No director is involved in any decisions relating to their
own remuneration.
The terms of reference for the Remuneration Committee which are reviewed
annually are available on the Company's website at www.rightmove.co.uk/
investors.rsp and are available on request from the Company Secretary.
The Remuneration Committee will meet at such times as may be necessary but
normally meets at least twice a year. During 2008 the Remuneration Committee
met six times and all members attended all the meetings.
During 2008, Hewitt New Bridge Street (HNBS) was engaged by the Remuneration
Committee to review the executive director remuneration policy established
prior to the IPO in 2006 and to assist the Remuneration Committee in its
determination of an appropriate future remuneration policy for executive
directors and senior managers. They have not provided any other services to the
Review of remuneration arrangements
The remuneration arrangements, which applied to the year under review were
established by the Company's original owners prior to the IPO in 2006. These
arrangements were designed to apply for the first three years following the
IPO. As this three-year period has elapsed, the Remuneration Committee
commissioned the independent review by HNBS noted above. This review was
designed to provide the Remuneration Committee with relevant market data and
guidance on current best practice.
Having considered the HNBS advice and assessed the current needs of the
Company, the Remuneration Committee has agreed a remuneration policy and
framework that it regards as consistent with the Company's short and
medium-term needs and the interests of shareholders.
Remuneration policy
The key principles of the Remuneration Committee's policy are as follows:
* Remuneration arrangements should be designed so as to provide executive
directors with the opportunity to receive a share in the future growth and
development of the Company that is regarded as fair by both other employees
and by shareholders. This approach should allow the Company to attract and
retain the sort of dynamic, self-motivated individuals who believe in and
are critical to the future success of the business;
* As far as possible, remuneration arrangements should be simple to
understand and administer;
* Executive directors should be principally rewarded for overall success for
which they have collective responsibility;
* The Company has key short-term and medium-term strategic goals and
executive directors should be incentivised against both sets of goals;
* Executive directors should have a competitive overall remuneration package
comprising below market levels of fixed pay (salary and benefits) and above
market levels of variable pay potential. This arrangement is designed to
best align the interests of the executive directors with the interests of
Remuneration framework
The Remuneration Committee has agreed a framework for 2009 that is designed to
complement the policy outlined above. Key features of this framework are as
* No increases in base salary levels;
* No increase in the total expected value of the executive directors' annual
remuneration packages;
* A rebalancing of variable pay potential with a reduced emphasis on share
options and an enhanced emphasis on annual bonus potential - the latter to
be paid in a mixture of cash and deferred shares with any increase in the
amount of the overall bonus entirely in deferred shares;
* Annual grants of share options rather than the 'one-off' grant policy
adopted at IPO;
* A challenging performance condition based on relative Total Shareholder
Return (TSR) to be applied to future share option grants.
The principal components of executive directors' remuneration will remain base
salary, performance-related bonus and share options as described below.
Base salary
In accordance with the remuneration policy, the base salaries of the executive
directors have been held (with no increase) at below market levels. The current
salaries for the executive directors with effect from 1 January 2009 are set
out in the table below:
Salary Salary
year ended
1 January 2009 31 December 2008
Executive directors(1)
Ed Williams (Managing Director) £208,884 £208,884
Nick McKittrick £208,884 £208,884
Graham Zacharias £208,884 £208,884
(1) In line with the Company wide salary review, there were no increases to the
basic salaries of the executive directors as at 1 January 2009 (2008: 4.0%).The
executive directors' basic salaries made up 5.0% of the Group's basic salary
cost in 2008.
Annual performance-related bonus
As noted above, the Remuneration Committee has agreed a rebalancing of the
executive directors' variable pay potential for 2009 with a reduced emphasis on
share options and an enhanced emphasis on annual bonus potential.
In 2009 the executive directors will be eligible to receive a bonus of 75% of
base salary in cash with an opportunity of earning up to a further 100% of
salary (Nick McKittrick) or 125% of salary (Ed Williams) in deferred shares.
Shares will be deferred for two years and be potentially forfeitable over that
The bonus will, as in previous years, be determined principally by profit
before tax performance with targets set in relation to a carefully considered
business plan and requiring significant out-performance of that plan to trigger
maximum payments. However, the Remuneration Committee believes that in the
current economic environment the executive directors should also be
incentivised to take steps to maintain and develop the Company's market
position. Accordingly, a significant portion of the bonus will be determined by
reference to pre-set targets for key performance indicators such as website
traffic share and customer retention.
Share-based incentives
The Remuneration Committee believes that it is important for a significant part
of the compensation of each executive director to be tied to ownership of the
Company's shares so that each executive's interest in the growth and
performance of the Company is closely aligned with the interests of
Executive share options were granted to the executive directors in conjunction
with the IPO in March 2006. These options are not subject to performance
conditions and will vest as to one-third of the number of option shares on each
of the third, fourth and fifth anniversaries of the date of option grant.
The Company has established approved and unapproved executive share option
plans for post IPO grants designed to align employees' interests with the
long-term success of the business. The rules of these plans normally allow
awards of options over shares worth up to 200% of salary although up to 400% of
salary may be granted in exceptional circumstances. Options will become
exercisable on or after the third anniversary of the date of the grant subject
to satisfactory performance targets being met and will remain exercisable until
ten years after the date of the grant. Nick McKittrick received a grant under
these plans in October 2007 with the exercise of these options subject to an
earnings per share performance condition.
As noted above, starting in 2009, the Remuneration Committee intends to grant
annual awards of options to the executive directors under these plans. Due to
the low salaries of the directors relative to market levels and the lack of
grants each year since the IPO, the Remuneration Committee intends to make a
grant above the normal 200% of salary limit with a 400% of salary award to
Ed Williams and a 300% of salary award to Nick McKittrick. There will be no
increase in the total expected value of the executive directors' annual
remuneration packages as a result of this grant and the other changes outlined
in this report.
Options will only be exercisable in the event of prior satisfaction of a
performance condition. The Committee believes that an earnings per share growth
target is the most appropriate type of performance condition for the business
in normal operating conditions. However, given the current market uncertainty,
the Committee is not confident in setting an appropriate three-year earnings
target at this time. Consequently for the 2009 grant, the Remuneration
Committee intends to apply a relative TSR performance condition measured over a
three year performance period.
TSR performance of the Company relative
to the FTSE 250 Index % of options exercisable
Less than the Index 0%
Equal to the Index 25%
25% higher than the Index * 100%
Intermediate performance Pro-rata on a sliding scale
* e.g. If the FTSE 250 Index's TSR was 50% over the three-year period, then the
Company's TSR would have to be at least 75% for all options to be exercisable.
All existing executive share options can be satisfied from shares held in the
Rightmove Employees' Share Trust (EBT) without any requirement to issue further
shares. It is intended that the 2009 grant would also be settled from shares
currently held in the EBT.
The non-executive directors do not participate in or benefit from any of the
Company's share incentive or bonus plans except that Scott Forbes received
Pre-admission options in consideration for the work involved in the IPO and in
accordance with his contractual agreement on appointment in 2005.
Executive directors are also eligible to participate in the Company's employee
Sharesave scheme. Messrs. Williams, McKittrick and Zacharias have all
contributed the maximum amounts permitted under the scheme.
Shareholding requirement
To be consistent with best practice, a formal share ownership guideline will be
introduced for executive directors requiring them to retain at least half of
any future share awards vesting as shares (after selling sufficient shares to
meet the exercise price and to pay tax due on the vesting of the shares) until
they have a Rightmove shareholding worth at least 200% of salary for the
Managing Director and 100% of salary for the other executive directors. The
value of the current shareholdings held by the executive directors as a
percentage of salary is shown in the table on page 38.
Other benefits
The executive directors are entitled to private healthcare insurance and life
assurance cover equal to four times basic annual salary.
Until 31 December 2007, the Company operated a stakeholder pension scheme,
which was contracted in to the State S2P Pension Scheme. Executive directors
were permitted to join the Company's stakeholder plan, however no pension
contributions were made by the Company on behalf of employees or directors.
During 2008, the Company launched a new Company stakeholder plan for all
employees with effect from 1 January 2008. The Company contributes 6% of basic
salary (to a maximum of £3,000 each year) subject to the employee contributing
a minimum of 3% of basic salary. The executive directors are eligible to
participate in this arrangement from 1 January 2009.
The Company does not contribute to any personal pension arrangements.
External appointments
With the approval of the Board in each case executive directors may accept one
external appointment as a non-executive director of another company and retain
any fees received. Graham Zacharias is a non-executive director of Umeco plc
and he retains his remuneration for that role. In the year ended
31 December 2008, he received fees of £35,000 (2007: £27,500).
Chairman and non-executive directors' fees
The fee levels of the Chairman and the non-executive directors have been
reviewed by the Remuneration Committee and the Board respectively and no
changes have been proposed to the fee structure for 2009. The non-executive
directors' fee levels are within the limits set by the Articles of Association
of the Company.
Non-executive directors are entitled to receive £35,000 per annum for their
basic role and an additional £5,000 fee per annum is paid for the chairing of
the Audit and Remuneration Committees. Jonathan Agnew is paid a further £5,000
fee per annum as Senior Independent Director.
Fee year ended
1 January 2009 31 December 2009
Non-executive directors
Scott Forbes (Chairman) £90,000 £90,000
Jonathan Agnew (Senior Independent £45,000 £45,000
Nigel Cooper £40,000 £40,000
Judy Vezmar £35,000 £35,000
Colin Kemp(1) £35,000 N/A
Stephen Shipperley(2) £35,000 N/A
(1) Colin Kemp, non-executive director, is appointed to the Board pursuant to a
Letter of Appointment dated 4 December 2007. He was not entitled to receive
fees in 2008 but was reimbursed for expenses in accordance with the Company's
normal policy. With effect from 1 January 2009 he will be entitled to a fee of
£35,000 per annum in accordance with the fee policy.
(2) Stephen Shipperley, non-executive director, is appointed to the Board
pursuant to a Letter of Appointment dated 1 January 2009. With effect from 1
January 2009 he will be entitled to a fee of £35,000 per annum in accordance
with the fee policy. His appointment to the Board from the IPO until
December 2008 was pursuant to a Relationship Agreement between the Company and
Connells Limited. He was not entitled to receive fees but was reimbursed for
expenses in accordance with the Company's normal policy.
Directors' service contracts and non-executive directors' terms of appointment
The Remuneration Committee's policy on service agreements for executive
directors is that they should provide for 12 months' notice of termination by
the Company and by the executive. Any proposals for the early termination of
the service agreements of directors or senior executives are considered by the
Remuneration Committee.
The service agreements for the executive directors (Messrs. Williams,
McKittrick and Zacharias) allow for lawful termination of employment by making
a payment in lieu of notice or by making phased payments over any remaining
unexpired period of notice. The phased payments may be reduced if and to the
extent that the executive finds an alternative remunerated position.
Scott Forbes' appointment may be terminated by either party giving to the other
not less than three months' notice in writing. The Company may also terminate
by making a payment in lieu of notice. Scott Forbes is not contractually
entitled to any other benefits on termination of his contract other than in
relation to his share options as described in the table on page 37.
The Letters of Appointment for Jonathan Agnew, Nigel Cooper and Judy Vezmar
(the independent non-executive directors) provide for a term of up to two
three-year periods (subject to re-election by shareholders) with a notice
period of three months on either side and also set out the time commitments
required to meet the expectations of their roles. The Letters of Appointment
for Stephen Shipperley and Colin Kemp provide that their appointment may be
terminated by either party upon three month's written notice. Copies are
available for inspection by request to the Company Secretary.
Stephen Shipperley, non-executive director, is Group Executive Chairman of
Connells Limited. His appointment to the Board from the IPO was pursuant to a
Relationship Agreement between Connells Limited and the Company which provided
Connells Limited with the right to a Board seat conditional upon a 15% or more
shareholding in the Company.
Further details of all directors' contracts are summarised page 35.
Directors' contracts
Date of Date of contract/ Notice Length of
appointment letter of (months) service at 27
appointment (4) February 2009
Executive directors
Ed Williams 19 December 2000 7 February 2006 12 8 years 2 months
Nick McKittrick (1) 5 March 2004 7 February 2006 12 4 years 11 months
Graham Zacharias 17 January 2006 7 February 2006 12 3 years 1 month
Non-executive directors
Scott Forbes 13 July 2005 21 February 2006 3 3 years 7 months
Jonathan Agnew 16 January 2006 12 December 2005 3 3 years 1 month
Nigel Cooper 16 January 2006 12 December 2005 3 3 years 1 month
Judy Vezmar 16 January 2006 12 December 2005 3 3 years 1 month
Colin Kemp (2) 3 July 2007 4 December 2007 3 1 year 7 months
Stephen Shipperley 30 June 2000 1 January 2009 3 8 years 8 months
(1) Nick McKittrick joined the Company in December 2000 and was appointed to
the Board on 5 March 2004. His service with the Company at the date of this report is 8
years and 2 months.
(2) Colin Kemp is appointed to the Board pursuant to a Letter of Appointment
dated 4 December 2007. His appointment to the Board from 3 July 2007 to 4
December 2007 was pursuant to a Relationship Agreement between the Company and
Halifax Estate Agencies Limited.
(3) Stephen Shipperley is appointed to the Board pursuant to a Letter of
Appointment dated 1 January 2009. His appointment to the Board from the IPO
until December 2008 was pursuant to a Relationship Agreement between the
Company and Connells Limited.
(4) The contracts of employment and the Letters of Appointment were transferred
from Rightmove Group Limited to Rightmove plc with effect from 28 January 2008
on completion of the Scheme of Arrangement.
Part II (Audited)
Directors' remuneration
The remuneration of the directors of the Company during the year for time
served as a director is as follows:
Basic Pay in lieu 2008(1) Benefits 2008 2007
salary / of notice Bonus in kind total total
fees £ £ (3) payable £ £ (2) £ £
Executive directors
Ed Williams 208,884 - 66,843 990 276,717 352,814
(Managing Director)
Nick McKittrick 208,884 - 66,843 709 276,436 334,503
Graham Zacharias(3) 208,884 208,884 66,843 1,214 485,825 352,719
Scott Forbes 90,000 - - - 90,000 94,575
Jonathan Agnew 45,000 - - - 45,000 45,000
(Senior Independent
Nigel Cooper 40,000 - - - 40,000 40,000
Judy Vezmar 35,000 - - - 35,000 35,000
Colin Kemp(4) - - - - - -
Stephen Shipperley(4) - - - - - -
(1) Bonus relates to the accrued payment in respect of the Full Year results
for the year ended 31 December 2008. Despite achieving the Group's best ever
level of underlying operating profit (before share-based payments, National
Insurance (NI) on share options under issue and capital reconstruction costs)
in 2008 of £41,004,000, as the Remuneration Committee had set a challenging
target range by reference to the business plan to trigger maximum bonus
payments, executive directors only received a bonus worth 32% of basic salary.
(2) Benefits in kind for all executive directors relates to private medical
(3) Pay in lieu of notice relates to the contractual accrued payment payable
for pay in lieu of notice and compensation for loss of office on the
termination of employment.
(4) Colin Kemp and Stephen Shipperley, non-executive directors, were not paid
any fees. They were reimbursed for expenses in accordance with the Company's
normal expense policy.
Directors' interests in options to purchase ordinary shares
Date granted Options Granted Exercise Exercised Price at Lapsed Options Date Expiry
held in year price in year date of in held exercisable date
1 exercise year 31
January December
2008 2008
Executive directors
Ed Williams 14/3/2006 7,317 - £4.10 - N/A - 7,317 One third 13/3/2016 Managing (Approved) on each of
Director) 14/3/2009,
2010 & 2011
15/3/2006 1,981,412 - £3.35 - N/A - 1,981,412 One third 14/3/2016
on each of
(Unapproved) 15/3/2009,
2010 & 2011
Nick McKittrick 14/3/2006 7,317 - £4.10 - N/A - 7,317 One third 13/3/2016
(Approved) on each of
2010 & 2011
15/3/2006 987,047 - £3.35 - N/A - 987,047 One third 14/3/2016
(Unapproved) on each of
2010 & 2011
Graham 14/3/2006 7,317 - £4.10 - N/A - 7,317 One third 13/3/2016
Zacharias (Approved) on each of
2010 & 2011
15/3/2006 987,047 - £3.35 - N/A - 987,047 One third 14/3/2016
(Unapproved) on each of
2010 & 2011
Scott Forbes 15/3/2006 1,738,729 - £3.35 - N/A - 1,738,729(2) One third 14/3/2016
(Chairman) (Unapproved) on each of
2008 & 2009
(1) These options are exercisable, subject to the basic earnings per share per
the audited consolidated financial statements for the Group for the year ended
31 December 2010 being not less than 30p.
(2) Pre-admission options granted to the Chairman, Scott Forbes, vest as to
one-third of the number of option shares on each of the first, second and third
anniversaries of the date of the option grant. These options can benefit from
accelerated vesting if the Chairman's Contract for Services is terminated by
the Company in circumstances not amounting to cause, if he leaves the Company
because he is not re-elected as a director at the Company's Annual General
Meeting, or if he resigns in circumstances that amount to constructive
Directors' interests in shares
The interests (both beneficial and family interests) of the directors in office
at 31 December 2008 in the share capital of the Company were as follows:
At 31 December 2008 At 31 December 2007
ordinary shares of £0.01 ordinary shares of £0.01
each each
Executive directors
Ed Williams (Managing 2,407,995 2,407,995
Nick McKittrick 129,000 900,000
Graham Zacharias 4,000 895
Non-executive directors
Scott Forbes (Chairman) 619,300 619,300
Jonathan Agnew (Senior 30,000 40,298
Independent Director)
Nigel Cooper 2,820 35,820
Judy Vezmar 31,343 31,343
Stephen Shipperley - -
Colin Kemp - -
(1) The issued share capital of the Company (including 2,505,430 shares held in
treasury) as at 31 December 2008 comprised 120,050,873 (2007:132,689,361)
ordinary shares of £0.01 each.
(2) The mid-market share price of the Company was 464p as at 1 January 2008 and
was 176p as at 31 December 2008. The mid-market high and low share prices of
the Company were 540p and 160p respectively in the year.
(3) The executive directors are regarded as being interested, for the purposes
of the Companies Act 1985, in 8,353,700 ordinary shares in Rightmove plc
currently held by the EBT as they are, together with other employees, potential
beneficiaries of the EBT.
(4) There have been no changes to the above interests between the year end and
the date of this report.
The interests of the executive directors in office at 31 December 2008 in the
share capital of the Company in relation to the basic salary were as follows:
Basic Number of Value of Value of
salary shares held shares at shares as a %
at 31 31 December of basic
£ December 2008 2008 salary
Executive directors
Ed Williams (Managing 208,884 2,407,995 4,238 2,029
Nick McKittrick 208,884 129,000 227 109
Graham Zacharias 208,884 4,000 7 3
Jonathan Agnew
Chairman, Remuneration Committee
27 February 2009
We have audited the Group and parent Company financial statements (the
financial statements) of Rightmove plc for the year ended 31 December 2008
which comprise the Consolidated Income Statement, the Consolidated and Company
Balance Sheets, the Consolidated and Company Statements of Cash Flow, the
Consolidated and Company Statements of Changes in Shareholders' Equity, and the
related notes. These financial statements have been prepared under the
accounting policies set out therein. We have also audited the information in
the Directors' Remuneration Report that is described as having been audited.
This report is made solely to the Company's members, as a body, in accordance
with s235 of the Companies Act 1985. Our audit work has been undertaken so that
we might state to the Company's members those matters we are required to state
to them in an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company and the Company's members as a body, for our audit work, for
this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the Annual Report, the Directors'
Remuneration Report and the financial statements in accordance with applicable
law and International Financial Reporting Standards (IFRSs) as adopted by the
EU are set out in the Statement of Directors' Responsibilities on page 27 and
Our responsibility is to audit the financial statements and the part of the
Directors' Remuneration Report to be audited in accordance with relevant legal
and regulatory requirements and International Standards on Auditing (UK and
We report to you our opinion as to whether the financial statements give a true
and fair view and whether the financial statements and the part of the
Directors' Remuneration Report to be audited have been properly prepared in
accordance with the Companies Act 1985 and, as regards the Group financial
statements, Article 4 of the IAS Regulation. We also report to you whether in
our opinion the information given in the Directors' Report is consistent with
the financial statements. The information given in the Directors' Report
includes that specific information that is cross referred from the Principal
activities section of the Directors' Report.
In addition we report to you if, in our opinion, the Company has not kept
proper accounting records, if we have not received all the information and
explanations we require for our audit, or if information specified by law
regarding directors' remuneration and other transactions is not disclosed.
We review whether the Corporate Governance Statement reflects the Company's
compliance with the nine provisions of the 2006 Combined Code specified for our
review by the Listing Rules of the Financial Services Authority, and we report
if it does not. We are not required to consider whether the Board's statements
on internal control cover all risks and controls, or form an opinion on the
effectiveness of the Group's corporate governance procedures or its risk and
control procedures.
We read the other information contained in the Annual Report and consider
whether it is consistent with the audited financial statements. We consider the
implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the financial statements. Our responsibilities do
not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements and the part of the Directors'
Remuneration Report to be audited. It also includes an assessment of the
significant estimates and judgments made by the directors in the preparation of
the financial statements, and of whether the accounting policies are
appropriate to the Group's and Company's circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
and the part of the Directors' Remuneration Report to be audited are free from
material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements and the part of the
Directors' Remuneration Report to be audited.
In our opinion:
• the Group financial statements give a true and fair view, in accordance with
IFRSs as adopted by the EU, of the state of the Group's affairs as at 31
December 2008 and of its profit for the year then ended;
• the parent Company financial statements give a true and fair view, in
accordance with IFRSs as adopted by the EU as applied in accordance with the
provisions of the Companies Act 1985, of the state of the parent Company's
affairs as at 31 December 2008;
• the financial statements and the part of the Directors' Remuneration Report
to be audited have been properly prepared in accordance with the Companies Act
1985 and, as regards the Group financial statements, Article 4 of the IAS
Regulation; and
• the information given in the Directors' Report is consistent with the
financial statements.
KPMG Audit Plc
Chartered Accountants
Registered Auditor
Milton Keynes
27 February 2009
Year ended Year ended
31 December 2008 31 December 2007
Note £000 £000
Revenue 2 74,046 56,712
Administrative expenses (34,555) (30,285)
Operating profit before
share-based payments, NI
on share options under
issue and capital 41,004 30,746
reconstruction costs
Share-based payments 24 (1,998) (2,331)
NI on share options under 24 240 (298)
Capital reconstruction 6 245 (1,690)
Operating profit 6 39,491 26,427
Financial income 8 630 891
Financial expenses 9 (1,955) (199)
Net financial (expenses)/ (1,325) 692
Profit before tax 38,166 27,119
Income tax expense 10 (12,663) (8,472)
Profit for the year 25,503 18,647
Attributable to:
Equity holders of the 25,503 18,647
Earnings per share (pence)
Basic 11 22.49 15.16
Diluted 11 22.48 14.19
Dividends per share 12 9.00 5.00
Total dividends 12 10,358 6,176
Note 31 December 2008 31 December 2007
£000 £000
Non-current assets
Property, plant and equipment 13 1,883 2,042
Intangible assets 14 11,123 7,580
Deferred tax assets 21 164 1,336
Total non-current assets 13,170 10,958
Current assets
Trade and other receivables 16 12,627 11,202
Income tax receivable - 163
Cash and cash equivalents 17 23,059 11,807
Total current assets 35,686 23,172
Total assets 48,856 34,130
Current liabilities
Bank overdraft 19 (172) -
Loans and borrowings 19 (39,750) -
Trade and other payables 18 (12,418) (14,714)
Income tax payable (5,787) (4,413)
Deferred consideration 28 (6,133) -
Provisions 20 (13) (130)
Total current liabilities (64,273) (19,257)
Non-current liabilities
Deferred tax liabilities 21 (92) (110)
Deferred consideration 28 - (2,328)
Provisions 20 - (43)
Total non-current liabilities (92) (2,481)
Net (liabilities)/assets (15,509) 12,392
Share capital 22 1,201 1,327
Share premium 23 - 105
Other reserves 23 231 -
(Deficit)/retained earnings 23 (16,941) 10,960
Total equity attributable to
the equity holders of the (15,509) 12,392
The financial statements were approved by the Board of directors on 27 February
2009 and were signed on its behalf by:
Ed Williams
Graham Zacharias
Note 31 December 2008 31 December 2007
£000 £000
Non-current assets
Investments 15 537,668 -
Total non-current assets 537,668 -
Current assets
Trade and other receivables 16 - 50
Cash and cash equivalents 17 17,050 -
Total current assets 17,050 50
Total assets 554,718 50
Current liabilities
Bank overdraft 19 (172) -
Loans and borrowings 19 (39,750) -
Trade and other payables 18 (36,828) -
Total current liabilities (76,750) -
Non-current liabilities
Redeemable preference shares 19 - (50)
Total non-current liabilities - (50)
Net assets 477,968 -
Share capital 22 1,201 -
Other reserves 23 104,271 -
Retained earnings 23 372,496 -
Total equity attributable to
the equity holders of the 477,968 -
The financial statements were approved by the Board of directors on
27 February 2009 and were signed on its behalf by:
Ed Williams
Graham Zacharias
Note Year ended Year ended
31 December 2008 31 December 2007
£000 £000
Cash flows from operating activities
Profit for the year 25,503 18,647
Adjustments for:
Depreciation charges 13 648 503
Amortisation charges 14 452 390
Financial income 8 (630) (891)
Financial expenses 9 1,955 129
Share-based payments charge 24 1,998 2,331
Income tax expense 10 12,663 8,472
Operating profit before changes in 42,589 29,581
working capital
Increase in trade and other (1,462) (8,023)
(Decrease)/increase in trade and (2,296) 8,337
other payables
Decrease in provisions (160) (35)
Cash generated from operations 38,671 29,860
Interest paid (1,480) (3)
Income taxes paid (net) (9,972) (4,250)
Net cash from operating activities 27,219 25,607
Cash flows from investing activities
Interest received 667 891
Acquisition of property, plant and 13 (491) (1,157)
Acquisition of intangible assets 14 (464) (643)
Proceeds from disposal of property, 1 -
plant and equipment
Acquisition of subsidiary (net of 28 - (3,177)
cash acquired)
Net cash used in investing activities (287) (4,086)
Cash flows from financing activities
Dividends paid 12 (10,358) (6,176)
Purchase of shares for treasury 23 (11,917) (19,362)
Purchase of shares for cancellation 23 (32,840) -
Share buy back expenses 23 (287) -
New shares issued 23 - 105
Proceeds from borrowings 19 39,750 -
Debt issue costs 9 (200) -
Proceeds on exercise of share options - 838
Net cash used in financing activities (15,852) (24,595)
Net increase/(decrease) in cash and
cash equivalents 11,080 (3,074)
Cash and cash equivalents at 11,807 14,881
1 January
Cash and cash equivalents at 17 22,887 11,807
31 December
Note Year ended Period ended
31 December 2008 31 December 2007
£000 £000
Cash flows from operating
Loss for the period 23 (5,637) -
Adjustments for:
Financial income (253) -
Financial expenses 2,758 -
Share-based payments charge 23 1,339 -
Operating loss before changes in (1,793) -
working capital
Decrease/(increase) in trade and 50 (50)
other receivables
Increase in trade and other 35,602 -
Cash generated from/(used in) 33,859 (50)
Interest paid (1,332) -
Net cash used in operating 32,527 -
Cash flows from investing
Interest received 253 -
Net cash from investing activities 253 -
Cash flows from financing
Dividends paid 12 (10,358) -
Purchase of shares for treasury 23 (11,917) -
Purchase of shares for cancellation 23 (32,840) -
Share buy back expenses 23 (287) -
Proceeds from borrowings 19 39,750 -
Debt issue costs 9 (200) -
Issue of redeemable preference - 50
Redemption of redeemable preference (50) -
Net cash (used in)/from financing (15,902) 50
Net increase in cash and cash 16,878 -
Cash and cash equivalents at - -
beginning of period
Cash and cash equivalents at 17 16,878 -
31 December
EBT own Reverse
Share Share shares Treasury Other acquisition Retained Total
capital premium reserve shares reserves reserve earnings equity
Group Note £000 £000 £000 £000 £000 £000 £000 £000
At 1 January 1,327 - (17,663) - - - 32,345 16,009
Profit for the - - - - - - 18,647 18,647
Dividends to
shareholders 12 - - - - - - (6,176) (6,176)
Equity settled
share options 24 - - - - - - 2,331 2,331
New shares - 105 - - - - - 105
Purchase of
shares for 23 - - - (19,362) - - - (19,362)
EBT own shares - - 514 - - - - 514
Gain on exercise
of share options - - - - - - 324 324
At 31 December 2007 1,327 105 (17,149) (19,362) - - 47,471 12,392
Capital reconstruction (33) (105) - 19,362 - 138 (19,362) -
Profit for the year - - - - - - 25,503 25,503
Equity settled share
options 24 - - - - - - 1,998 1,998
Dividends to
shareholders 12 - - - - - - (10,358) (10,358)
Purchase of shares 23 - - - (11,917) - - - (11,917)
for treasury
Purchase of own 23 - - - (32,840) - - - (32,840)
Cancellation of own 23 (93) - - 32,840 93 - (32,840) -
Share buy back
expenses 23 - - - - - - (287) (287)
At 31 December 2008 1,201 - (17,149) (11,917) 93 138 12,125 (15,509)
Share Treasury Other acquisition Retained Total
capital shares reserves reserve earnings equity
Company Note £000 £000 £000 £000 £000 £000
At 1 January 2008 - - - - - -
Share for share 433,490 - - - - 433,490
Capital (432,196) - - 103,520 432,196 103,520
Loss for the year - - - - (5,637) (5,637)
Dividends to 12 - - - - (10,358) (10,358)
Equity settled 24 - - - - 1,339 1,339
share options
Capital 15 - - 658 - - 658
Purchase of shares 23 - (11,917) - - - (11,917)
for treasury
Purchase of own 23 - (32,840) - - - (32,840)
Cancellation of own 23 (93) 32,840 93 - (32,840) -
Share buy back 23 - - - - (287) (287)
At 31 December 2008 1,201 (11,917) 751 103,520 384,413 477,968
1 General information
Rightmove plc (the Company) is a company registered in England (Company no.
6426485) domiciled in the United Kingdom (UK). The consolidated financial
statements of the Company as at and for the year ended 31 December 2008
comprise the Company and its interest in its subsidiaries (together referred to
as the Group). Its principal business is the operation of the Rightmove.co.uk
website, which is the UK's largest residential property search website.
The address of the Company's registered office is 4th Floor, 33 Soho
Square, London, W1D 3QU.
Statement of compliance
The consolidated and Company financial statements have been prepared and
approved by the directors in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union (Adopted IFRSs) and issued
by the International Accounting Standards Board (IASB).
The consolidated financial statements were authorised for issue by the Board of
directors on 27 February 2009.
Basis of preparation
On publishing the Company financial statements here together with the Group
financial statements, the Company is taking advantage of the exemption in s230
of the Companies Act 1985 not to present its individual income statement and
related notes that form a part of these financial statements.
The accounting policies set out below have been consistently applied to all the
periods presented, unless otherwise stated.
The financial statements have been prepared on an historical cost basis.
Going concern
The Group's business activities, together with the factors likely to affect its
future development, performance and position are set out in the Business Review
on pages 4 to 10. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described on pages 8 to 9. In
addition Note 4 to the financial statements includes the Group's objectives,
policies and processes for managing its capital; its financial risk management
objectives; details of its financial instruments and its exposures to credit
risk and liquidity risk.
The Group has significant cash balances of £23,059,000 at 31 December 2008
(refer Note 17). As described in
Note 19, the Group entered into a revolving loan facility of up to £40,000,000
during the year. As at 31 December 2008 £39,750,000 was drawn down and has been
classified as current liabilities. At a Board meeting on 25 February 2009, the
directors confirmed their intention to convert £25,000,000 of the revolving
loan facility into a five year term loan by 17 April 2009 as provided for by
the existing agreement, subject to standard terms and conditions. The directors
have received written confirmation from the Company's bankers that there are
committed bank funds for the conversion at maturity.
The Group's forecasts and projections, taking account of reasonably possible
changes in performance show that the Group should be able to operate within the
level of its current facility and related bank covenant requirements.
After making enquiries, the directors have a reasonable expectation that the
Group and the Company have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the annual report and accounts.
Capital structure
The Company was incorporated and registered in England and Wales on
14 November 2007 under the Companies Act 1985 as a private company limited by
shares with the name Rightmove Group Limited, registered no. 6426485. The
Company was re-registered as a public limited company under the name
Rightmove Group plc on 29 November 2007. On 28 January 2008 the Company became
the holding company of Rightmove Group Limited (formerly Rightmove plc,
Company no. 3997679) and its subsidiaries pursuant to a Scheme of Arrangement
(the Scheme) under s425 of the Companies Act 1985. The shares in the Company
were admitted to trading on the Official List of the London Stock Exchange on
28 January 2008 and it immediately changed its name to Rightmove plc. Details
of the share capital are disclosed in Note 22.
This corporate restructure has been accounted for as a reverse acquisition.
Therefore, the consolidated financial statements as at and for the year ended
31 December 2008 of the Group are prepared as a continuation of the previously
listed company's consolidated financial statements. The comparative numbers
presented in the consolidated financial statements are those reported in the
consolidated financial statements as at and for the year ended 31 December 2007
for the previously listed company, Rightmove plc (Company no. 3997679)
(subsequently renamed Rightmove Group Limited). The comparative numbers
presented for the Company are those of the Company incorporated on
14 November 2007.
There was no change to the Board of directors, management and corporate
governance arrangements as a result of the Scheme. The consolidated assets and
liabilities of the Group immediately after the Scheme were substantially the
same as the consolidated assets and liabilities of the Group immediately prior
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the
Group has the power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
In assessing control, potential voting rights that are currently exercisable or
convertible are taken into account. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that
control commences until the date that control ceases.
The minority shareholders of Holiday Lettings Limited (HLL) have a put option
which if exercised requires Rightmove Group Limited to purchase their remaining
33.3% shareholding in HLL. In accordance with IAS 32, the option for the
purchase of the remaining 33.3% shareholding along with the existing investment
in HLL of 66.7% has been accounted for at a consolidated level as if the Group
holds 100% of the ordinary share capital in HLL and consequently no minority
interest is recognised. The earliest opportunity HLL management has to
exercise the put option is 1 July 2009 based on either a multiple of EBIT per
the audited accounts for the 12 months for the year ended 31 December 2008 or
HLL's market value if higher. The impact on the consolidated balance sheet is
to recognise a liability of £6,133,000 which is based upon the directors' best
estimate of likely market value for the business. This has resulted in an
increase of £3,531,000 in deferred consideration and a corresponding increase
in goodwill. In addition an interest charge of £274,000 has been adjusted
against deferred consideration in the year as a result of an increase in the
present value of the liability.
Judgments and estimates
The preparation of financial statements in conformity with Adopted IFRSs
requires management to make judgments, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expenses. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to
be reasonable under the circumstances. Actual results may differ from these
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty
and critical judgments in applying accounting policies that have the most
significant effect on the amounts recognised in the financial statements is
included in the following notes:
Note 10 Utilisation of tax losses
Note 14 Measurement of the recoverable amounts of cash generating units
containing goodwill
Note 15 Carrying value of investment in subsidiary
Note 16 Impairment of trade receivables
Note 24 Measurement of share-based payments
2 Significant accounting policies
(a) Investments
Investments in subsidiaries are held at cost less any provision for impairment
in the Parent company financial statements.
(b) Intangible assets
(i) Goodwill
All business combinations are accounted for by applying the purchase method.
Goodwill represents amounts arising on acquisition of subsidiaries. In respect
of business acquisitions that have occurred since 1 January 2004, goodwill
represents the difference between the cost of the acquisition and the fair
value of the net identifiable assets acquired.
In respect of acquisitions prior to this date goodwill is included on the basis
of its deemed cost, which represents the amount recorded under previous UK
Generally Accepted Accounting Principles (GAAP). The classification and
accounting treatment of business combinations that occurred prior to
1 January 2004 was not reconsidered in preparing the Group's opening IFRS
balance sheet at 1 January 2004.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is
no longer amortised but is tested annually for impairment. This applies to all
goodwill arising both before and after 1 January 2004. IFRS 1 permits goodwill
on acquisitions made before this date to be brought on to the balance sheet at
1 January 2004 at its carrying value under UK GAAP.
(ii) Research and development
The Group undertakes research and development expenditure in view of developing
new products and improving the existing property websites. Expenditure on
research activities, undertaken with the prospect of gaining new technical
knowledge and understanding, is recognised in the income statement when
Expenditure on development activities, whereby research findings are applied to
a plan or design for the production of a new product or substantially enhanced
website, is capitalised if the new product or the enhanced website is
technically and commercially feasible and the Group has sufficient resources to
complete development.
The expenditure capitalised includes subcontractors and direct labour.
Capitalised development expenditure is stated at cost less accumulated
amortisation and impairment losses. Subsequent expenditure on capitalised
intangible assets is capitalised only when it increases the economic benefits
embodied in the specific asset to which it relates. All other expenditure is
expensed when incurred.
(iii) Computer software
Computer software is capitalised and is stated at cost less accumulated
amortisation and impairment losses. Amortisation is charged from the date the
asset is available for use. Amortisation is provided to write off the cost less
the estimated residual value of the computer software by equal annual
instalments over its estimated useful economic life as follows:
Computer software 20% - 33.3% per annum
(iv) Customer relationships
Customer relationships are identified on the acquisition of a business and
valued using discounted cash flows based on historical customer attrition
rates. Amortisation is expensed in the income statement on a straight line
basis over the estimated useful economic life as follows:
Customer relationships 16.7% per annum
(c) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and impairment losses. Depreciation is provided to write off the cost less the
estimated residual value of property, plant and equipment by equal annual
instalments over their estimated useful economic lives as follows:
Office equipment, fixtures & fittings 20% per annum
Computer equipment 20% per annum
(d) Impairment
The carrying value of the property, plant and equipment is reviewed at each
balance sheet date to determine whether there is any indication of impairment.
If any such indication exists, the asset's recoverable amount is estimated.
An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable amount of non-financial
assets is the greater of their fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. For
an asset that does not generate largely independent cash flows, the recoverable
amount is determined for the cash generating unit to which the asset belongs.
Intangible assets that have an indefinite useful life and intangibles which are
not available for use are not subject to amortisation but are tested for
impairment annually and whenever there is an indication that they might be
impaired. An impairment loss is recognised for the amount by which the carrying
value of the asset exceeds its recoverable amount.
Goodwill was tested for impairment at the IFRS transition date; no impairment
was deemed necessary. An impairment test is performed annually at 31 December
on goodwill regardless of the existence of impairment indicators.
Investments are assessed for possible impairment when there is an indication
that the fair value of the investments may be below the Company's carrying
value. When such a condition is deemed to be other than temporary, the carrying
value of the investment is written down to its fair value and the amount
written off is included in net income. In making the determination as to
whether a decline is other than temporary, the Company considers such factors
as the duration and extent of the decline, the investee's financial performance
and the Company's ability and intention to retain its investment for a period
that will be sufficient to allow for any anticipated recovery in the
investment's market value.
(e) Financial instruments
Trade receivables are recognised at fair value less any impairment loss. A
provision for impairment of trade receivables is established when there is
objective evidence that the Group will not be able to collect all amounts due
according to the original terms of receivables.
Trade payables are recognised at fair value. Trade payables are classified as
current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the balance sheet
All loans and borrowings are initially recognised at cost, being the fair value
of the consideration received net of issue costs associated with borrowings.
After initial recognition, loans and borrowings are subsequently measured at
amortised cost and any difference between the proceeds and the redemption value
is recognised in the income statement over the period of the borrowings using
the effective interest method.
(f) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank
overdrafts that are repayable on demand and form an integral part of the
Group's cash management are included as a component of cash and cash
equivalents for the purpose of the statement of cash flow.
(g) Provisions
A provision is recognised when the Group has a legal or constructive obligation
as a result of a past event and it is probable that an outflow of economic
benefits will be required to settle the obligation. If the effect is material,
provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time value of
money and, where appropriate, the risk specific to the liability.
A provision is maintained in respect of vacant leasehold properties where the
lease is considered to be onerous to take account of the net present value of
residual lease commitments over the remaining term of the lease.
(h) Employee benefits
(i) Pensions
The Group provides access to a stakeholder pension scheme (defined contribution
plan) into which employees may elect to contribute via salary deduction.
Obligations for contributions to defined contribution pension plans are
recognised as an employee benefit expense in the income statement when they are
(ii) Employee share schemes
The share option programme allows certain senior management employees to
acquire shares in the Company.
An expense is recognised in the income statement, with a corresponding increase
in equity, over the period to which the employees become unconditionally
entitled, on equity settled share-based payment schemes granted after
7 November 2002 and which have not vested by 1 January 2005. Awards made before
this date are not accounted for under IFRS 2, as permitted under the
transitional rules of IFRS 1. For awards made after 7 November 2002 and not
vested by 1 January 2005, the charge is based on the fair value of the option
granted as at the grant date, calculated using an option pricing model.
(iii) Own shares held by The Rightmove Employees' Share Trust (EBT)
The EBT is treated as an agent of Rightmove Group Limited and as such EBT
transactions are treated as being those of Rightmove Group Limited and are
therefore reflected in the Group's consolidated financial statements. In
particular, at a consolidated level; the EBT's purchases of shares in the
Company are debited directly to equity.
(i) Treasury shares and shares purchased for cancellation
When share capital recognised as equity is repurchased, the amount of the
consideration paid, including directly attributable costs, is recognised as a
deduction from equity. Repurchased shares are either held in treasury or
(j) Revenue
Revenue principally represents the amounts, excluding value added tax (VAT),
receivable from customers in respect of properties advertised on the website.
Revenue relating to properties advertised on the website is recognised in the
month to which it relates. Estate agency and Overseas branches are billed in
advance with net revenue deferred until the service commencement date. The VAT
liability is recognised at the point of invoice. New homes developers are
typically billed monthly in arrears. Where invoices are raised on other than a
monthly basis, the amounts are recognised as deferred or accrued revenue and
released to the income statement on a monthly basis in line with the provision
of services as stipulated in the contract terms. HLL revenue is billed in
advance. The majority of the HLL revenue relates to a 12 month period although
some is billed quarterly. This revenue is spread equally over the period with
any deferred revenue held on the balance sheet.
(k) Segmental reporting
A business segment is a distinguishable component of the Group engaged in
providing products and services that are subject to risks and returns that are
different from those of other business segments. The Group's primary format for
segmental reporting is by business segment.
(l) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional
currencies of Group entities at exchange rates at the dates of transactions.
Monetary assets and liabilities denominated in foreign currencies at the
reporting date are retranslated to the functional currency at the exchange rate
at that date. Foreign currency differences arising on retranslation are
recognised in the income statement.
(m) Leases
Operating lease rentals are charged to the income statement on a straight line
basis over the period of the lease. Where cash is received in exchange for
entering into a lease with rates above market value, this upfront payment is
deferred and released on a straight line basis over the lease term.
(n) Financial income and expenses
Financial income comprises interest receivable on cash balances and deposits.
Interest income is recognised as it accrues, using the effective interest
Financial expenses comprise debt issue costs, preference dividend interest,
interest payable on bank loans and the unwinding of the discount on the HLL
deferred consideration. Interest payable is recognised on an accruals basis.
(o) Taxation
Income tax on the results for the year comprises current and deferred tax.
Income tax is recognised in the income statement except to the extent that it
relates to items recognised directly in equity, in which case it is recognised
in equity.
Current tax is the expected tax payable on the taxable income for the period,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous periods.
Deferred tax is provided using the balance sheet liability method, providing
for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation
purposes. The following temporary differences are not provided for: the initial
recognition of goodwill, the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a business
combination and the differences relating to investments in subsidiaries to the
extent that they will probably not reverse in the foreseeable future. The
amount of deferred tax provided is based on the expected manner of realisation
or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantially enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
In accordance with IAS 12, the Group policy in relation to the recognition of
tax on share-based payments is to include the income tax effect of the excess
tax deduction in the income statement to the value of the income tax charge on
the cumulative IFRS 2 charge. The remainder of the income tax effect of the
excess tax deduction is recognised in equity.
(p) Dividends
Dividends unpaid at the balance sheet date are only recognised as a liability
(and deduction to equity) at that date to the extent that they are
appropriately authorised and are no longer at the discretion of the Company.
Unpaid dividends that do not meet these criteria are disclosed in the notes to
the financial statements.
(q) Earnings per share
The Group presents basic, diluted and underlying earnings per share (EPS) data
for its ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the period. Diluted EPS is
determined by adjusting the profit or loss attributable to ordinary
shareholders and the weighted average number of ordinary shares outstanding for
the effects of all potential dilutive instruments, which comprise share options
granted to employees. The calculation of underlying EPS is disclosed in
Note 11.
3 IFRSs not yet applied
A number of new standards, amendments to standards and interpretations are not
yet effective for the year ended 31 December 2008 and have not been applied in
preparing these consolidated financial statements. The standards and
interpretations to be adopted include:
Effective date
IFRS 8 Operating Segments 1/1/2009
Revised IFRS 2 Share-Based Payments - Vesting Conditions and 1/1/2009
Revised IFRS 3 Business Combinations (2008) * 1/1/2010
Revised IAS 1 Presentation of Financial Statements (2007) 1/1/2009
Amended IAS 27 Consolidated and Separate Financial Statements 1/1/2010
(2008) *
* Not yet endorsed by the EU
IFRS 8 Operating Segments introduces the "management approach" to segment
reporting and will require a change in the presentation and disclosure of
segment information based on the internal reports regularly reviewed by the
Group's Chief Operating Decision Maker in order to assess each segment's
performance and to allocate resources to them.
Amendment to IFRS 2 Share-Based Payments - Vesting conditions and Cancellations
clarifies the definition of vesting conditions, introduces the concept of
non-vesting conditions to be reflected in grant date fair value and provides
the accounting treatment for non-vesting conditions and cancellations.
Revised IFRS 3 Business Combinations (2008) incorporates the following changes
that are likely to be relevant to the Group's operations:
* The definition of a business has been broadened, which is likely to result
in more acquisitions being treated as business combinations;
* Contingent consideration will be measured at fair value, with subsequent
changes therein recognised in profit or loss;
* Transaction costs, other than share and debt issue costs, will be expensed
as incurred;
* Any pre-existing interest in the acquiree will be measured at fair value
with the gain or loss recognised in profit or loss;
* Any non-controlling (minority) interest will be measured at either fair
value, or at its proportionate interest in the identifiable assets and
liabilities of the acquiree, on a transaction by transaction basis.
Revised IFRS 3, which becomes mandatory for the Group's 2010 consolidated
financial statements, will be applied prospectively and therefore there will be
no impact on prior years.
Revised IAS 1 Presentation of Financial Statements (2007) introduces the term
total comprehensive income, which represents changes in equity during a period
other than those changes resulting from transactions with owners in their
capacity as owners. This is expected to have a significant impact on the
presentation of the consolidated financial statements. The Group plans to
provide total comprehensive income in a single statement of comprehensive
income for its 2009 consolidated financial statements.
Amended IAS 27 Consolidated and Separate Financial Statements (2008) requires
accounting for changes in ownership interests by the Group in a subsidiary,
while maintaining control, to be recognised as an equity transaction. When the
Group loses control of a subsidiary, any interest retained in the former
subsidiary will be measured at fair value with the gain or loss recognised in
profit or loss. The amendments to IAS 27, which become mandatory for the
Group's 2010 consolidated financial statements, are not expected to have a
significant impact on the consolidated financial statements.
4 Financial risk management
The Group has exposure to the following risks from its use of financial
* credit risk
* liquidity risk
* market risk
This note presents information about the Group and Company's exposure to each
of the above risks, the Group's objectives, policies and processes for
measuring and managing risk, and the Group's management of capital. Further
quantitative disclosures are included throughout these consolidated financial
The Board of directors has overall responsibility for the establishment and
oversight of the Group's risk management framework. The primary method by which
risks are monitored and managed by the Group is through the monthly Executive
Management Board, where any significant new risks or change in status to
existing risks will be discussed and actions taken as appropriate.
The Group's risk management policies are established to identify and analyse
the risks faced by the Group, to set appropriate risk limits and controls and
to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Group's
activities. The Group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control environment
in which all employees understand their roles and obligations.
The Audit Committee oversees how management monitors compliance with the
Group's internal controls and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer fails to
meet its contractual obligations.
The Group's exposure to credit risk is influenced mainly by the individual
characteristics of each customer. The Group provides credit to customers in the
normal course of business. The demographics of the Group's customer base,
including the default risk of the industry and country in which customers
operate, has less of an influence on credit risk. The Group provides its
services to a wide range of customers in the UK and overseas and therefore
believes it has no material concentration of credit risk.
More than 69% of the Group's customers pay via monthly direct debit, minimising
the risk of non-payment. The Group establishes an allowance for impairment that
represents its estimate of incurred losses in respect of trade and other
receivables based on individually identified loss exposures.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group and Company's approach to
managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage to
the Group's reputation.
The Group's revenue model is largely subscription-based which results in a
regular level of cash conversion allowing it to service working capital
The Group and Company ensures that they have sufficient cash on demand to meet
expected operational expenses excluding the potential impact of extreme
circumstances that cannot reasonably be predicted, such as natural disasters.
As at 31 December 2008, the Group had sufficient cash on demand to meet
operational expenses, before financing activities, for a period of 113 days
(31 December 2007: 220 days).
As at 31 December 2008 the Group had bank borrowings of £39,750,000, which have
been classified as current liabilities, however it is anticipated that £
25,000,000 will be converted into a long term loan as set out in Note 1 Going
Market risk
Market risk is the risk that changes in market prices such as foreign exchange
and interest rates will affect the Group's income. The objective of market risk
management is to manage and control market risk exposures within acceptable
parameters, while optimising the return on risk.
Currency risk
99% of the Group's sales are Sterling denominated, with the balance being Euro
denominated. As the value of Euro denominated trade receivables is low in
relation to total receivables, no amounts are hedged.
Interest rate risk
The Group and Company have interest bearing financial liabilities. The Group
and Company are exposed to interest rate risk on the bank loan facility, cash
balances and the deferred consideration in relation to the acquisition of HLL.
Capital management
The Board's policy is to maintain an efficient balance sheet with an
appropriate level of leverage for the size of the business so as to maintain
investor, creditor and market confidence and to sustain future development of
the business. The Board monitors the spread of the Company's shareholders, as
well as the return on capital and the level of dividends to ordinary
As at 31 December 2008 the directors and senior managers hold 3.4% of the
ordinary share capital of the Company (excluding shares held in treasury). In
addition the executive directors are regarded as being interested, for the
purposes of the Companies Act 1985, in 8,353,700 (7.1%) ordinary shares in the
Company currently held by the EBT as they are, together with other employees,
potential beneficiaries of the EBT.
The Company purchases its own shares in the market; the timing of these
purchases depends on market conditions. In April 2008 the Company entered into
a revolving loan facility in order to support its continuing share buy back
programme. Of the 11,854,535 shares bought back during 2008, 9,349,105 have
been cancelled, with the balance transferred into treasury, providing
flexibility for future share option issues.
There were no changes in the Group's approach to capital management during the
year. Neither the Company nor any of its subsidiaries are subject to externally
imposed capital requirements.
5 Segmental reporting
The Group does not have geographical segments with substantially all revenue
derived from external operations in the UK in both years. Revenue derived
outside the UK is not material in either 2007 or 2008.
All activities in the year relate to the property advertising segment and there
were no other separately identifiable business segment income statement or
balance sheet items.
6 Operating profit
Year ended Year ended
31 December 2008 31 December 2007
Operating profit is stated after charging/
Depreciation on property, plant and 648 503
Amortisation of computer software 368 327
Amortisation of customer relationships 84 63
Bad debt impairment charge 1,353 318
Operating lease rentals
Land and buildings 1,038 691
Other 668 573
Capital reconstruction (credit)/costs* (245) 1,690
* Included in capital reconstruction costs are fees receivable by the auditors
of £nil (2007: £179,000) in respect of other services incurred in connection
with the capital reconstruction. Following clarification of the VAT treatment
on professional fees incurred in connection with the capital reconstruction
£245,000 was released to the income statement in the current year.
Auditors' remuneration
Year ended Year ended
31 December 2008 31 December 2007
£000 £000
Fees payable to the Company's auditors and
their associates in respect of the audit
Audit of the Company's financial statements 15 131
Audit of the Company's subsidiaries pursuant 115 4
to legislation
Total audit remuneration 130 135
Fees payable to the Company's auditors in
respect of non-audit related services
Tax advisory 20 39
Transaction services 14 179
All other services 13 10
Total non-audit remuneration 47 228
Included in the current year's auditors' remuneration is an amount of £nil
(2007: £16,000) relating to the prior year audit and £9,000 (2007: £11,000)
relating to finalisation of the prior year tax computation.
7 Employee numbers and costs
The average number of persons employed (including directors) during the year,
analysed by category, was as follows:
Group Company
Year ended Year ended Year ended Period ended
31 December 31 December 31 December 31 December
2008 2007 2008 2007
Number of Number of Number of Number of
employees employees employees employees
Administration 346 303 - -
Management 14 10 3 -
360 313 3 -
The aggregate payroll costs of these persons were as follows:
Group Company
Year ended Year ended Year ended Period ended
31 December 31 December 31 December 31 December
2008 2007 2008 2007
£000 £000 £000 £000
Wages and 15,200 13,130 827 -
Social security 1,674 1,145 104 -
Pension costs 295 1 - -
17,169 14,276 931 -
8 Financial income
Year ended Year ended
31 December 2008 31 December 2007
£000 £000
Interest income on cash balances 551 891
Interest income on over payment of 79 -
630 891
9 Financial expenses
Year ended Year ended
31 December 2008 31 December 2007
£000 £000
Debt issue costs 200 -
Interest expense 1,367 -
Unwinding of effective interest rate
on deferred purchase consideration 274 126
Other financial expenses 113 73
Preference dividend interest 1 -
1,955 199
10 Income tax expense
Year ended Year ended
31 December 2008 31 December 2007
£000 £000
Current tax expense
Current year 11,718 9,272
Prior year adjustment (209) -
11,509 9,272
Deferred tax
Origination and reversal of temporary 1,155 (896)
Reduction in tax rate (1) 96
1,154 (800)
Total income tax expense 12,663 8,472
Reconciliation of effective tax rate
The Group's income tax expense for the year is higher (2007: higher) than the
standard rate of corporation tax in the UK of 28.5% (2007: 30%). The
differences are explained below:
Year ended Year ended
31 December 2008 31 December 2007
£000 £000
Profit before tax 38,166 27,119
Current tax at 28.5% (2007: 30%) 10,877 8,136
Current tax movement in respect of (209) -
prior years
Non deductible expenses 859 460
Change in tax rate (1) 96
Small companies relief (2) -
Share-based payments 1,252 (322)
Deferred tax movement in respect of (113) 102
prior years
12,663 8,472
The Group's consolidated effective tax rate for the year ended 31 December 2008
is 33% (2007: 31%). The difference between the standard rate and effective rate
at 31 December 2008 is attributable mainly to the reversal of the deferred tax
asset on share options (3%) and disallowable expenditure (2%).
Income tax recognised directly in equity
Year ended Year ended
31 December 2008 31 December 2007
£000 £000
Deferred tax
Tax losses - 689
Current tax
Income tax for the year - (689)
Total income tax recognised directly in - -
11 Earnings per share (EPS)
Weighted average Earnings
Number of shares £000 Pence per share
Year ended 31 December 2008
Basic EPS 113,405,224 25,503 22.49
Diluted EPS 113,449,416 25,503 22.48
Underlying basic EPS 113,405,224 27,016 23.82
Underlying diluted EPS 113,449,416 27,016 23.81
Year ended 31 December 2007
Basic EPS 123,023,728 18,647 15.16
Diluted EPS 131,431,538 18,647 14.19
Underlying basic EPS 123,023,728 22,966 18.67
Underlying diluted EPS 131,431,538 22,966 17.47
Weighted average number of ordinary shares (basic)
Year ended Year ended
31 December 2008 31 December 2007
Number of shares Number of shares
Issued ordinary shares at 1 January less
ordinary shares held by the EBT 121,046,278 124,054,318
Effect of own shares held in treasury (2,146,388) (1,242,710)
Effect of own shares purchased for (5,494,666) -
Effect of share options exercised - 195,890
Effect of new shares issued - 16,230
113,405,224 123,023,728
Weighted average number of ordinary shares (diluted)
For diluted EPS, the weighted average number of ordinary shares in issue is
adjusted to assume conversion of all dilutive potential shares. The Company has
one potential dilutive instrument being those ordinary shares held by the EBT
to satisfy share options granted to employees.
Year ended Year ended
31 December 2008 31 December 2007
Number of shares Number of shares
Weighted average number of ordinary shares 113,405,224 123,023,728
Dilutive impact of share options 44,192 8,407,810
113,449,416 131,431,538
Underlying EPS is calculated before the charge for share-based payments,
capital reconstruction costs
and Employer's National Insurance (NI) on share options under issue. A
reconciliation of the basic earnings for the year to the underlying earnings is
presented below:
Year ended Year ended
31 December 2008 31 December 2007
£000 £000
Basic earnings for the year 25,503 18,647
Share-based payments 1,998 2,331
Capital reconstruction (credit)/costs (245) 1,690
NI on share options under issue (240) 298
Underlying earnings for the year 27,016 22,966
12 Dividends
Dividends declared and paid by the Group are as follows:
2008 2007
Pence per £000 Pence per £000
share share
2006 final dividend - - 3.0 3,729
2007 interim - - 2.0 2,447
dividend paid
2007 final dividend 6.0 7,082 - -
2008 interim 3.0 3,276 - -
dividend paid
9.0 10,358 5.0 6,176
After the balance sheet date a final dividend of 7.0p (2007: 6.0p) per
qualifying ordinary share being £7,643,000
(2007: £7,119,000) was proposed by the directors. The 2007 final dividend paid
on 12 May 2008 was £7,082,000. The difference of £37,000 was due to a reduction
in the ordinary shares entitled to a dividend following share buy backs made in
the period between 31 December 2007 and the 2007 final dividend record date of
11 April 2008.
No provision was made for the final dividend in either year and there are no
income tax consequences.
13 Property, plant and equipment
fixtures & Computer Leasehold Work in
Group fittings equipment improvements progress Total
£000 £000 £000 £000 £000
At 1 January 2008 771 3,224 8 16 4,019
Transfers - 16 - (16) -
Additions 73 394 24 - 491
Disposals - (2) - - (2)
At 31 December 2008 844 3,632 32 - 4,508
At 1 January 2008 (269) (1,708) - - (1,977)
Charge for year (110) (534) (4) - (648)
At 31 December 2008 (379) (2,242) (4) - (2,625)
Net book value
At 31 December 2008 465 1,390 28 - 1,883
At 1 January 2008 502 1,516 8 16 2,042
During the year the development of the new finance billing system was brought
into use and so the associated costs have been transferred from work in
progress to computer equipment.
fixtures & Computer Leasehold Work in
Group fittings equipment improvements progress Total
£000 £000 £000 £000 £000
At 1 January 2007 338 2,511 - - 2,849
Acquisitions through
business 2 11 - - 13
Additions 431 702 8 16 1,157
At 31 December 2007 771 3,224 8 16 4,019
At 1 January 2007 (178) (1,296) - - (1,474)
Charge for year (91) (412) - - (503)
At 31 December 2007 (269) (1,708) - - (1,977)
Net book value
At 31 December 2007 502 1,516 8 16 2,042
At 1 January 2007 160 1,215 - - 1,375
The Company has no property, plant or equipment in either period.
14 Intangible assets
Computer Customer Work in
Goodwill software relationships progress Total
Group £000 £000 £000 £000 £000
At 1 January 2008 6,074 2,359 514 377 9,324
Transfers - 377 - (377) -
Additions 3,531 464 - - 3,995
At 31 December 2008 9,605 3,200 514 - 13,319
At 1 January 2008 - (1,681) (63) - (1,744)
Charge for year - (368) (84) - (452)
At 31 December 2008 - (2,049) (147) - (2,196)
Net book value
At 31 December 2008 9,605 1,151 367 - 11,123
At 1 January 2008 6,074 678 451 377 7,580
During the year the development of the new finance billing system was brought
into use and so the associated costs have been transferred from work in
progress to computer software.
Computer Customer Work in
Goodwill software relationships progress £ Total
Group £000 £000 £000 000 £000
At 1 January 2007 732 2,093 - - 2,825
Additions 5,342 266 514 377 6,499
At 31 December 2007 6,074 2,359 514 377 9,324
At 1 January 2007 - (1,354) - - (1,354)
Charge for year - (327) (63) - (390)
At 31 December 2007 - (1,681) (63) - (1,744)
Net book value
At 31 December 2007 6,074 678 451 377 7,580
At 1 January 2007 732 739 - - 1,471
The Company has no intangible assets in either period.
Impairment testing for cash generating units containing goodwill
For the purpose of impairment testing, goodwill is allocated to the Group's
operations which represent the lowest level within the Group at which the
goodwill is monitored for internal management purposes.
The aggregate carrying amounts of goodwill allocated to each unit are as
31 December 2008 31 December 2007
£000 £000
Holiday Lettings Limited 8,873 5,342
Rightmove Group Limited 732 732
9,605 6,074
The recoverable amount of the HLL cash generating unit was based on its value
in use. Value in use was determined by discounting the estimated future cash
flows generated from the business and was based on the following key
* Cash flows were projected based on actual operating results and the three
year business plan
* Cash flows thereafter were extrapolated into perpetuity applying a growth
rate of 3.0%
* The key assumption is sales growth rate based on historical growth and
future plans for the business
* A pre-tax discount rate of 15.9% was applied in determining the recoverable
amount based on an industry specific weighted average cost of capital
The carrying value of the £732,000 purchased goodwill in Rightmove Group
Limited, arising pre-transition to IFRS, is also reviewed annually for
impairment. Due to its level of significance the disclosures as required by IAS
36 Impairment of Assets have not been made.
15 Investments
The subsidiaries of the Group as at 31 December 2008 are as follows:
Country of
Company Nature of incorporation Holding Class of
business shares
Rightmove Group Limited Online England and 100% Ordinary
advertising Wales
Holiday Lettings Limited Online England and 66.7% Ordinary
advertising Wales
Rightmove.co.uk Limited Dormant England and 100% Ordinary
Rightmove Home Information Packs
Limited Dormant England and 100% Ordinary
All the above subsidiaries are included in the Group consolidated results.
31 December 2008 31 December 2007
Investment in subsidiary undertakings £000 £000
At 1 January - -
Additions in the year - capital 537,010 -
Additions - subsidiary equity settled
share options charge (see Note 23) 658 -
At 31 December 537,668 -
As described within Note 1, Capital structure, Rightmove plc became the new
holding company for the Group on
28 January 2008. The increase in the cost of investment of £537,010,000
represents the purchase of 100% of the ordinary shares in Rightmove Group
Limited (formerly Rightmove plc).
Following the capital reconstruction in January 2008 all employees' share
option entitlements were transferred to the new holding company, Rightmove plc.
In addition certain directors' contracts of employment were transferred from
Rightmove Group Limited to Rightmove plc, whilst all other employees remained
employed by Rightmove Group Limited. Accordingly the IFRS 2 charge has been
split in the current year between the Company and Rightmove Group Limited with
£658,000 being recognised in the Company accounts as a capital contribution to
its subsidiary.
16 Trade and other receivables
Group Company
31 December 2008 31 December 2007 31 December 2008 31 December 2007
£000 £000 £000 £000
Trade receivables 10,194 8,865 - -
Less impairment (383) (91) - -
Net trade 9,811 8,774 - -
Amounts owed by
related parties 154 333 - -
(see Note 27)
Other debtors 260 972 - 50
Prepayments and
accrued income 2,395 1,079 - -
Accrued interest 7 44 - -
12,627 11,202 - 50
Exposure to credit and currency risks and impairment losses related to trade
and other receivables are disclosed in Note 29.
17 Cash and cash equivalents
Group Company
31 December 2008 31 December 2007 31 December 2008 31 December 2007
£000 £000 £000 £000
Bank accounts 5,091 11,807 - -
Deposit accounts 17,968 - 17,050 -
Cash and cash 23,059 11,807 17,050 -
Bank overdraft
used for cash (172) - (172) -
Cash and cash
equivalents in 22,887 11,807 16,878 -
the statement of
cash flow
Bank account balances were placed on overnight and one month deposit during the
year and attracted interest at a weighted average rate of 4.2% (2007: 5.2%).
At 31 December 2006, as a result of a share capital reduction enforced by a
Court Order there was a balance of £3,165,000 held in a blocked trust bank
account. At 31 December 2008 this balance was £72,000 (2007: £822,000) and has
been reclassified from bank accounts to other debtors. The balance at
31 December 2008 represents operating lease obligations at the date of the
Court Order not yet settled.
18 Trade and other payables
Group Company
31 December 2008 31 December 2007 31 December 2008 31 December 2007
£000 £000 £000 £000
Trade payables 1,225 1,696 2 -
Inter-group - - 35,600 -
Accrued interest
on inter-group - - 1,226 -
payables balance
Deferred revenue 6,413 5,894 - -
Other taxation
and social 2,601 3,300 - -
Trade accruals 2,112 3,215 - -
Other creditors 67 609 - -
12,418 14,714 36,828 -
Exposure to currency and liquidity risk related to trade and other payables is
disclosed in Note 29.
19 Loans and borrowings
During the period, the Company entered into a Sterling-denominated revolving
loan facility of up to £40,000,000 to support its continuing share buy back
programme. Under the terms of the loan agreement there is an option at maturity
(April 2009) for the revolving loan facility to convert into a term loan for a
further five years. The loan bears interest at LIBOR (31 December 2008: 3.28%)
plus 1.5% together with a mandatory cost applied by the lender.
Fair value Carrying value Fair value Carrying value
31 December 2008 31 December 2008 31 December 2007 31 December 2007
Group £000 £000 £000 £000
Unsecured bank 39,750 39,750 - -
Bank overdraft 172 172 - -
Cash and cash
equivalents (see (23,059) (23,059) (11,807) (11,807)
Note 17)
Total net debt/ 16,863 16,863 (11,807) (11,807)
Analysis of net debt cash flows
At 1 January 2008 Cash flow At 31 December 2008
Group £000 £000 £000
Cash and cash (11,807) (11,252) (23,059)
loans and borrowings - 39,922 39,922
due within one year
Total net debt/(cash) (11,807) 28,670 16,863
Fair value Carrying value Fair value Carrying value
31 December 2008 31 December 2008 31 December 2007 31 December 2007
Company £000 £000 £000 £000
Unsecured bank 39,750 39,750 - -
Bank overdraft 172 172 - -
Redeemable - - 50 50
preference shares
39,922 39,922 50 50
Cash and cash
equivalents (see (17,050) (17,050) - -
Note 17)
Total net debt 22,872 22,872 50 50
20 Provisions
Group Vacant leasehold property
At 1 January 2008 173
Provision utilised in the year (162)
Provisions made during the year 2
At 31 December 2008 13
Current portion (payable within the next 12 13
At 31 December 2008 13
The provision for vacant leasehold property relates to the former premises
occupied by HLL. The provision represents the total future lease and rate
payments over the remaining term of the lease. In determining the provision for
the vacant leasehold property the cash flows have not been discounted as the
time value of money is not significant.
The Company has no provisions in either period.
21 Deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets Liabilities Net
31 31 December 31 31 31 31
December 2007 December December December December
Group 2008 2008 2007
£000 2008 2007
£000 £000 £000
£000 £000
Property, (91) (84) (87) (82)
plant and 4 2
Tax losses (66) - - - (66) -
Provisions (7) - - - (7) -
Intangible - - 88 108 88 108
Equity (1,252) - (1,252)
settled - - -
Net tax (164) (1,336) 92 110 (72) (1,226)
The net deferred tax asset of £72,000 at 31 December 2008 (31 December 2007:
£1,226,000) is in respect of intangibles, accelerated capital allowances, tax
losses carried forward and provisions.
The deferred tax asset relating to share options at 31 December 2008 is £nil
(31 December 2007: £1,252,000). This decrease is due to the Company's share
price reducing from £4.64 at 1 January 2008 to £1.76 at 31 December 2008.
The Company has no deferred tax assets or liabilities in either period.
Movement in deferred tax during the year:
1 January 2008 Recognised in 31 December 2008
Group £000 income £000
Provisions - (7) (7)
Property, plant and (82) (5) (87)
Intangible assets 108 (20) 88
Tax losses - (66) (66)
Equity settled share (1,252) 1,252 -
(1,226) 1,154 (72)
Movement in deferred tax during the prior year:
Arising on
Recognised Recognised business 31 December
Group 1 January in income in equity combination 2007
2007 £000 £000
£000 £000 £000
Property, plant
and equipment (232) 147 - 3 (82)
Tax losses (689) - 689 - -
Intangible assets - (15) - 123 108
Equity settled
share options (320) (932) - - (1,252)
(1,241) (800) 689 126 (1,226)
The deferred tax asset arising on equity settled share options in 2007 was
recognised in the income statement to the extent that the related equity
settled share options charge was recognised in the income statement.
22 Share capital
31 December 2008 31 December 2007
£000 £000
200 subscriber ordinary shares of - -
£0.01 each
5,000,000 non-voting preference shares 50 50
of £0.01 each
300,000,000 ordinary shares of £4.00 - 1,200,000
300,000,000 ordinary shares of £0.01 3,000 -
Allotted, called up and fully paid
200 subscriber ordinary shares of £ - -
£0.01 each
5,000,000 non-voting preference shares - 50
of £0.01 each
120,050,873 ordinary shares of £0.01 1,201 -
On incorporation, the authorised share capital of the Company was £50,002
divided into 5,000,200 ordinary shares of £0.01 each. Of such shares, one was
subscribed by the subscriber to the memorandum of association of the Company
and was paid up in full in cash.
In connection with the Scheme described in Note 1, the following changes to the
share capital took place:
(i) On 19 November 2007, a further 199 ordinary shares were allotted by the
Company and were paid up in full in cash.
(ii) On 29 November 2007:
the remaining 5,000,000 authorised but unissued ordinary shares of £0.01 each
were reclassified as non-voting redeemable preference shares of £0.01 each in
the Company (the non-voting preference shares). These shares could be redeemed
at any time at the discretion of the directors of the Company or at the request
of the holders upon the earlier of the reduction of capital of the Company
becoming effective or 30 June 2008. Upon such redemption, the Company paid to
the holders the nominal amount paid up on such shares together with all accrued
dividend rights;
the Company authorised and allotted 5,000,000 non-voting preference shares to
Trexco Limited, a company outside of the Group. These shares were deemed to be
fully paid up to their nominal amount by virtue of Trexco Limited giving an
undertaking to pay 5% per annum interest and up to one pence against each share
at a fixed future date. The shares carried no voting rights unless a resolution
to wind up the Company or amend their terms was proposed; and
the two hundred issued ordinary shares of £0.01 each in the capital of the
Company were reclassified as ordinary shares of £0.01 each whose rights were to
be deferred upon the Scheme becoming effective (the
subscriber ordinary shares). These subscriber ordinary shares carried the same
voting rights as ordinary shares in the Company prior to the Scheme becoming
(iii) On 6 December 2007, the authorised share capital of the Company was
increased from £50,002 to £1,200,050,002 by the creation of 300,000,000
ordinary shares of £4.00 each in the Company.
(iv) On 23 January 2008:
(a) the 300,000,000 authorised but unissued ordinary shares of £4.00 each were
cancelled; and
(b) the authorised share capital of the Company was increased from £50,002 to £
1,005,050,002 by the creation of 300,000,000 ordinary shares of £3.35 each in
the Company .
(v) On 28 January 2008, the Scheme became effective and 129,399,978 ordinary
shares were allotted to the former holders of ordinary shares in the capital of
Rightmove Group Limited pursuant to the Scheme, credited as fully paid.
(vi) On 30 January 2008:
(a) the paid up share capital of the Company was cancelled to the extent of £
3.34 on each ordinary share and the nominal value of each such ordinary share
was reduced from £3.35 to £0.01; and
(b) the nominal value of each unissued ordinary share was reduced from £3.35 to
(vii) On 23 April 2008 the 5,000,000 non-voting preference shares held by
Trexco Limited were redeemed and cancelled.
During the period between 1 January 2008 and 31 December 2008, 9,349,105
ordinary shares were bought back by the Group and were subsequently cancelled.
Further details are disclosed in Note 23.
23 Reconciliation of movement in capital and reserves
EBT own Reverse
Share Share shares Treasury Other acquisition Retained Total
capital premium reserve shares reserves reserve earnings equity
Group £000 £000 £000 £000 £000 £000 £000 £000
At 1,327 - (17,663) - - - 32,345 16,009
1 January 2007
Profit for the - - - - - - 18,647 18,647
Dividends to - - - - - - (6,176) (6,176)
Equity settled - - - - - - 2,331 2,331
share options
New shares - 105 - - - - - 105
Purchase of
shares for - - - (19,362) - - - (19,362)
EBT own shares - - 514 - - - - 514
Gain on
exercise of - - - - - - 324 324
share options
At 31 December 1,327 105 (17,149) (19,362) - - 47,471 12,392
At 1 January 2008 1,327 105 ( 17,149) (19,362) - - 47,471 12,392
Capital reconstruction(33) (105) - 19,362 - 138 (19,362) -
Profit for the year - - - - - - 25,503 25,503
Equity settled share - - - - - - 1,998 1,998
Dividends to - - - - - - (10,358)(10,358)
Purchase of shares for
treasury - - - (11,917) - - - (11,917)
Purchase of own shares - - - (32,840) - - - (32,840)
Cancellation of own (93) - - 32,840 93 - (32,840) -
Share buy back expenses - - - - - - (287) (287)
At 31 December 2008 1,201 - (17,149) (11,917) 93 138 12,125 (15,509)
Share buy back
In June 2007, the Group commenced a share buy back programme to purchase its
own ordinary shares. The total number of shares bought back in 2008 was
11,854,535 (31 December 2007: 3,289,383) representing 10.1% (31 December 2007:
2.5%) of the issued share capital (excluding shares held in treasury). Of the
11,854,535 shares bought back in the year 9,349,105 shares were cancelled and
2,505,430 shares were transferred to treasury. The shares were acquired on the
open market at a total consideration (excluding costs) of £44,757,000
(31 December 2007: £19,362,000). The maximum and minimum prices paid were 501p
(2007: 617p) and 215p (2007: 525p) per share respectively.
EBT own shares reserve
This reserve represents the carrying value of own shares held in the EBT.
Further details of this scheme can be found in the Remuneration Report. At the
year end the EBT held 8,353,700 (2007: 8,353,700) ordinary shares in the
Company of £0.01 each representing 7.1% (2007: 6.3%) of the issued share
capital (excluding shares held in treasury) at 31 December 2008. All shares
granted are exercisable subject to certain conditions. The market value of the
shares held in the EBT at 31 December 2008 was £14,703,000 (2007: £38,761,000).
Treasury Other Reverse Retained
Share shares reserves acquisition earnings Total
capital £000 £000 reserve £000 equity
Company £000 £000 £000
At 1 January 2008 - - - - - -
Share for share 433,490 - - - - 433,490
Capital reconstruction (432,196) - - 103,520 432,196 103,520
Loss for the year - - - - (5,637) (5,637)
Dividends to - - - - (10,358) (10,358)
Equity settled share - - - - 1,339 1,339
Capital contribution - - 658 - - 658
Purchase of shares for - (11,917) - - - (11,917)
Purchase of own shares - (32,840) - - - (32,840)
Cancellation of own (93) 32,840 93 - (32,840) -
Share buy back - - - - (287) (287)
At 31 December 2008 1,201 (11,917) 751 103,520 384,413 477,968
Following the capital reconstruction as described in Note 1 Capital structure
and the granting of permission by the High C ourt on 30 January 2008, the share
capital of the Company was reduced in connection with the Scheme by £
432,196,000 and converted into distributable retained earnings .
Reverse acquisition reserve
This reserve resulted from the acquisition of Rightmove Group Limited by the
Company and represents the difference between the value of the shares acquired
at 28 January 2008 and the nominal value of the shares issued.
24 Share-based payments
The Group and Company operate share incentive schemes for certain senior
management comprising the Rightmove Unapproved Executive Share Option Plan
(Unapproved Plan) and the Rightmove Approved Executive Share Option Plan
(Approved Plan). The Group also operates a Savings Related Share Option Scheme
The fair value of services received in return for share options granted is
measured by reference to the fair value of share options granted. The estimate
of the fair value of the services received is measured based on the Black
Scholes model. The contractual life of the options is used as an input into
this model.
All share incentive schemes are granted under a service condition. Such
conditions are not taken into account in the fair value of the services
received. There are no market conditions associated with the above grants.
The total Group charge for the year relating to employee share-based payment
plans was £1,998,000
(2007: £2,331,000), all of which related to share options granted in 2006, 2007
and 2008.
Approved and unapproved plans
Full details of the share incentive plans are set out in the Remuneration
Report. The assumptions used in the calculation are as follows:
Share Exercise Expected Option Risk Dividend Employee Fair
price price volatility life free yield value
at (pence) (%) rate turnover per
grant (years) (%)
date (%) before option
Grant date (pence) vesting (pence)
14 March 413.50 410.00 27 7 4.5 4.0 16.0 92.00
15 March 413.75 335.00 27 7 4.5 4.0 0.0 116.00
15 March 413.75 335.00 27 6 4.5 3.0 16.0 130.00
12 October 348.00 347.00 27 7 4.5 4.0 16.0 76.00
6 September 613.00 597.00 32 7 5.8 2.0 17.0 228.00
6 September 613.00 597.00 32 7 5.8 2.0 17.0 181.00
10 October 525.00 522.00 32 6.75 5.8 2.0 17.0 189.00
Expected volatility is estimated by considering historic average share price
volatility at the grant date.
2008 2007
Group Weighted Weighted
average average
exercise exercise
Number price Number price
(pence) (pence)
Outstanding at 1 January 8,044,439 348.59 8,475,896 336.90
Granted - - 415,161 569.90
Forfeited (739,147) 347.99 (596,618) 342.67
Exercised - - (250,000) 335.00
Outstanding at 31 7,305,292 348.66 8,044,439 348.59
Exercisable at 31 1,075,819 335.00 412,909 335.00
2008 2007
Company Weighted Weighted
average average
exercise exercise
Number price Number price
(pence) (pence)
Outstanding at 1 January - - - -
Transferred 8,044,439 348.59 - -
Forfeited (739,147) 347.99 - -
Outstanding at 31 7,305,292 348.66 - -
Exercisable at 31 1,075,819 335.00 - -
Following the capital reconstruction in January 2008 all employees' share
option entitlements were transferred to the new holding company, Rightmove plc.
In addition certain directors' contracts of employment were transferred from
Rightmove Group Limited to Rightmove plc, whilst all other staff remain
employed by Rightmove Group Limited. Accordingly the IFRS 2 charge has been
split in the current year between the Company and Rightmove Group Limited.
NI is accrued, where applicable, at a rate of 12.8% on the difference between
the share price at the balance sheet date and the average exercise price of
share options. Based on the share price at 31 December 2008 the accrual built
up in prior periods has been reversed resulting in a credit to the income
statement of £240,000. The charge for the year ended 31 December 2007 was £
Sharesave options
The Group operates an Her Majesty's Revenue and Customs approved Sharesave
option scheme under which employees are granted an option to purchase ordinary
shares in the Company at up to 20% less than the market price at invitation, in
three years' time, dependent on their entering into a contract to make monthly
contributions into a savings account over the relevant period. These funds are
used to fund the option exercise. No performance criteria are applied to the
exercise of Sharesave options. The assumptions used in the calculation are as
Share price Exercise Expected Option Risk Dividend Employee Fair
at grant price volatility life free yield value
date (pence) (pence) (%) rate turnover per
(years) (%)
(%) before option
Grant vesting (pence)
2 345.75 259.00 27 3.25 4.5 3.0 16 108.00
3 525.00 490.00 32 3.25 5.8 1.5 84 156.00
2 253.75 255.00 32 3.25 3.0 1.5 25 59.00
2008 2007
Group Weighted Weighted
average average
exercise exercise
Number price Number price
(pence) (pence)
Outstanding at 1 311,470 312.93 272,315 259.00
Granted 122,757 255.00 73,102 490.00
Forfeited (159,234) 346.87 (33,947) 261.66
Outstanding at 31 274,993 267.41 311,470 312.93
Exercisable at 31 - - - -
2008 2007
Company Weighted Weighted
average average
exercise exercise
Number price Number price
(pence) (pence)
Outstanding at 1 - - - -
Transferred 311,470 312.93 - -
Granted 122,757 255.00 - -
Forfeited (159,234) 346.87 - -
Outstanding at 31 274,993 267.41 - -
Exercisable at 31 - - - -
Following the capital reconstruction in January 2008 all employees' Sharesave
option entitlements were transferred to the new holding company, Rightmove plc.
In addition certain directors' contracts of employment were transferred from
Rightmove Group Limited to Rightmove plc, whilst all other staff remained
employed by Rightmove Group Limited. Accordingly the IFRS 2 charge has been
split in the current year between the Company and Rightmove Group Limited.
25 Operating lease commitments
Non-cancellable operating lease rentals are payable as follows:
31 December 2008 31 December 2007
Group Plant & Total Plant &
Machinery Other Machinery Other Total
£000 £000 £000 £000 £000 £000
Less than one 430 978 1,408 504 979 1,483
Between one 294 3,394 3,688
and five years 358 3,591 3,949
More than five - 2,527 2,527 - 3,138 3,138
724 6,899 7,623 862 7,708 8,570
The Company has no operating lease commitments in either period.
26 Capital commitments
As at 31 December 2008 the Group had committed to incur capital expenditure of
£nil (2007: £212,000).
The Company has no capital commitments in either period.
27 Related party disclosures
As at 31 December 2007 there were two principal shareholders, Connells Limited
and Halifax Estate Agencies Limited. Halifax Estate Agencies Limited and
Connells Limited sold their remaining interests in the Company in May and
December 2008 respectively. Consequently as at 31 December 2008, the Company
has no principal shareholders. The Group's transactions and balances with these
former shareholders for both years were as follows:
Year ended Year ended
Group 31 December 2008 31 December 2007
£000 £000
Amounts owed by:
Sequence (UK) Limited (Connells) 55 183
Connells Residential 27 62
Halifax Estate Agencies Limited 72 88
154 333
Amounts invoiced to:
Sequence (UK) Limited (Connells) 581 539
Connells Overseas Property Department 2 3
Connells Residential 333 291
Halifax Estate Agencies Limited 638 543
1,554 1,376
Amounts invoiced by:
Connells Residential - 34
Included within trade and other receivables is £154,000 due from related
parties (31 December 2007: £333,000). Trade and other payables include £nil due
to former shareholders (31 December 2007: £nil).
Group Year ended Year ended
31 December 2008 31 December 2007
£000 £000
Dividends paid:
Connells Limited 1,912 1,251
Halifax Estate Agencies Limited 974 1,065
2,886 2,316
Inter-group transactions with subsidiaries
During the year the Company was charged interest of £1,226,000 by Rightmove
Group Limited in respect of balances owing on the inter-group loan in
accordance with a loan agreement dated 30 January 2008.
Directors' transactions
There were no material transactions with directors in either year other than
those disclosed in the Remuneration Report. Information on the emoluments of
directors, together with information regarding the beneficial interest of the
directors in the ordinary shares of the Company is included in the Remuneration
Report on pages 29 to 38.
Transactions with key management staff
There were no transactions in either year with key management staff.
28 Acquisitions and disposals
On 21 March 2007, Rightmove Group Limited acquired 66.7% of the ordinary share
capital of HLL, a provider of online advertising services to owners of holiday
rental properties, for consideration of £3,216,000, including acquisition costs
of £73,000. From the date of acquisition to 31 December 2007 the acquisition
contributed £1,499,000 to Group revenue and £216,000 to Group profit. If the
acquisition had been completed on 1 January 2007, the acquisition would have
contributed £1,968,000 to Group revenue and £381,000 to Group profit.
All intangible assets were recognised at their fair values. The residual excess
over the net assets acquired is recognised as goodwill in the financial
statements. The adjustments applied to the book values of the assets and
liabilities of HLL in order to present the net assets at fair values in
accordance with Group accounting principles were as follows:
Note Carrying values Fair value
pre-acquisition adjustments Fair values
Net assets acquired £000 £000 £000
Non-current assets
Property, plant and equipment 13 12 1 13
Intangible assets - customer 14 - 514 514
12 515 527
Current assets
Trade and other receivables 279 (16) 263
Cash and cash equivalents 36 - 36
315 (16) 299
Current liabilities (207) (417) (624)
Non-current liabilities
Deferred tax liabilities 21 (3) (123) (126)
Fair value of net assets 117 (41) 76
Purchase consideration - cash 3,213
Purchase consideration - accrued 3
Purchase consideration - 2,202
Total consideration 5,418
Goodwill 14 5,342
Upon acquisition the revenue recognition policy for HLL was changed to align it
with the existing Group policy. Revenue is principally billed annually in
advance. The impact of £422,000 was reflected in current liabilities in 2007 to
recognise the deferral of revenue over the 12 month contract on a straight line
basis as opposed to the previous upfront recognition policy.
Included in the £5,342,000 of goodwill recognised were intangible assets that
did not meet the definition of intangible assets under IAS 38. These items
included an assembled workforce and operating synergies.
Year ended
31 December 2007
Net cash flow on acquisition £000
Cash paid for subsidiary (3,213)
Cash acquired 36
Net cash outflow (3,177)
In terms of the shareholders' agreement, a put and call option exists to
acquire the remaining 33.3%. The earliest opportunity HLL management has to
exercise the put option is 1 July 2009 based on either a multiple of EBIT per
the audited accounts for the 12 months for the year ended 31 December 2008 or
HLL's market value if higher. The deferred consideration in the current year
has been recognised based on the directors' best estimate of likely market
value for the business. This has resulted in an increase of £3,531,000 in
deferred consideration and a corresponding increase in goodwill.
At 31 December 2008, £274,000 (31 December 2007: £126,000) has been charged to
financial expenses representing the unwinding of the effective interest rate on
deferred consideration. This results in a carrying value of £6,133,000
(31 December 2007: £2,328,000) for deferred consideration on the balance sheet.
29 Financial instruments
Credit risk
The carrying amount of financial assets represents the maximum credit exposure.
The maximum exposure to credit risk at the reporting date was:
Group Company
31 December 2008 31 December 2007 31 December 2008 31 December 2007
Note £000 £000 £000 £000
Net trade
receivables 16 9,811 8,774 - -
Amounts owed
by related 16 154 333 - -
Other debtors 16 260 972 - 50
interest 16 7 44 - -
Cash and cash
equivalents 17 23,059 11,807 17,050 -
33,291 21,930 17,050 50
The maximum exposure to credit risk for trade receivables (including related
parties) at the reporting date by geographic region was:
Group Company
31 December 2008 31 December 2007 31 December 2008 31 December 2007
Note £000 £000 £000 £000
Rest of the 86 83 - -
16 9,965 9,107 - -
The maximum exposure to credit risk for trade receivables (including related
parties) at the reporting date by type of customer was:
Group Company
31 December 2008 31 December 2007 31 December 2008 31 December 2007
Note £000 £000 £000 £000
Property 9,229 9,038 - -
Other 736 69 - -
16 9,965 9,107 - -
The Group's most significant customer, a UK house builder, accounts for £
444,000 of the trade receivables carrying amount at 31 December 2008. In 2007
the Group's most significant customer, a UK estate agent, accounted for £
401,000 of the trade receivables carrying value.
Impairment losses
The ageing of trade receivables (including related parties) at the reporting
date was:
Group Company
31 December 2008 31 December 2007 31 December 2008 31 December 2007
Gross Impairment Gross Impairment Gross Impairment Gross Impairment
£000 £000 £000 £000 £000 £000 £000 £000
Not past 4,803 (24) 5,501 - - - - -
Past due 0
- 30 days 2,637 (49) 2,495 (1) - - - -
Past due
30 - 60 1,418 (53) 521 (2) - - - -
Past due
60 - 90 596 (67) 451 (2) - - - -
Past due 894 (190) 230 (86) - - - -
10,348 (383) 9,198 (91) - - - -
Credit risk
The movement in the allowance for impairment in respect of trade receivables
during the year was as follows:
Group Company
31 December 2008 31 December 2007 31 December 2008 31 December 2007
£000 £000 £000 £000
At 1 January 91 28 - -
Provided during 1,353 91 - -
the year
Utilised during (1,061) (28) - -
the year
At 31 December 383 91 - -
The Group has identified specific balances for which it has provided an
impairment allowance on a line by line basis across all ledgers, in both years.
No general impairment allowance has been provided in either year.
The allowance accounts in respect of trade receivables are used to record
impairment losses, unless the Group is satisfied that no recovery of the amount
owing is possible; at that point the amounts considered irrecoverable are
written off against the financial asset directly.
Liquidity risk
The Group has not entered into any derivative transactions in either year. The
following are the contractual maturities of financial liabilities, including
estimated interest payments:
Group Group
31 December 2008 31 December 2007
Carrying Contractual 6 months Carrying Contractual 6 months
amount cash flows or less amount cash flows or less
£000 £000 £000 £000 £000 £000
Unsecured bank 39,750 (39,750) (39,750) - - -
Trade payables 1,225 (1,225) (1,225) 1,696 (1,696) (1,696)
40,975 (40,975) (40,975) 1,696 (1,696) (1,696)
Company Company
31 December 2008 31 December 2007
Carrying Contractual 6 months Carrying Contractual 6 months
amount cash flows or less amount cash flows or less
£000 £000 £000 £000 £000 £000
Unsecured bank 39,750 (39,750) (39,750) - - -
Redeemable - - -
preference shares 50 (50) (50)
Trade payables 2 (2) (2) - - -
39,752 (39,752) (39,752) 50 (50) (50)
As described in Note 1 and Note 19 the directors expect £25,000,000 of the bank
borrowings to convert into a term loan by April 2009.
Currency risk
Less than 1% of the Group's sales are non-Sterling denominated. Throughout the
year the non-Sterling receivables balance has not exceeded £24,000 at any point
in time. As such the Group does not present sensitivity analysis for a movement
in the Sterling to Euro exchange rate, nor does the Group undertake any hedging
of foreign currency exposure.
Interest rate risk
The Group has exposures to interest rate risk on its cash balances and bank
overdraft. As at 31 December 2008 the Group had total cash of £23,059,000
(2007: £11,807,000) and a bank overdraft of £172,000 (2007: £nil).
The Group has exposure to interest rate risk on the revolving loan facility of
£39,750,000 which bears interest at LIBOR (31 December 2008: 3.28%) plus 1.5%.
A change of 100 basis points in interest rates would have increased or
decreased equity by £196,000.
The Group has exposure to interest rate risk in respect of the financial
liability for the deferred consideration payable for the purchase of HLL. At 31
December 2008 the value of this deferred consideration was £6,133,000
(2007: £2,328,000).
Fair values
The fair values of all financial instruments in both years are the same as
their carrying values disclosed in the notes to the financial statements.
Group Group
31 December 2008 31 December 2007
Carrying Fair value Carrying Fair value
amount £000 amount £000
£000 £000
Trade and other 12,627 12,627 11,202 11,202
Cash and cash 23,059 23,059 11,807 11,807
Bank overdraft (172) (172) - -
Trade and other (12,418) (12,418) (14,714) (14,714)
Loans and (39,750) (39,750) - -
(16,654) (16,654) (8,295) (8,295)
Company Company
31 December 2008 31 December 2007
Carrying Fair value Carrying Fair value
amount £000 amount £000
£000 £000
Trade and other - - 50 50
Cash and cash 17,050 17,050 - -
Bank overdraft (172) (172) - -
Trade and other (36,828) (36,828) - -
Loans and borrowings (39,750) (39,750) - -
preference shares - - (50) (50)
(59,700) (59,700) - -
30 Contingent liabilities
The Group and the Company had no contingent liabilities in either year.
Contacts Registered Corporate
office advisers
Managing Director: Ed Williams Rightmove plc Financial
Chief Operating Nick McKittrick 4th Floor UBS Investment
Officer and Bank
Finance Director:
Company Secretary: Liz Taylor Soho Square Joint broker
Website www.rightmove.co.uk London UBS Limited
Email [email protected][email protected]
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