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Rightmove PLC

Rightmove Plc Another strong year extended market leadership and reinforced position

Rightmove Plc (LON:RMV), today announced Final results.

Financial highlights

2018

2017

Change

Revenue

£267.8m

£243.3m

+10%

Operating profit

£198.6m

£178.3m

+11%

Underlying operating profit(1)

£203.3m

£184.4m

+10%

Basic earnings per share(3)

Underlying basic earnings per share(2)(3)

Final dividend(3)

17.8p

18.3p

4.0p

15.7p

16.3p

3.6p

+13%

+12%

+11%

 

· Revenue up 10% year on year with growth driven by our Agency and New Homes businesses

· Underlying operating profit(1) up 10% and operating profit up 11%

· Underlying basic earnings per share(2) up 12% and basic earnings per share up 13%

· £168.5m (2017: £140.4m) of cash returned to shareholders through dividends and share buybacks in the year

· Final dividend of 4.0p (2017: 3.6p(3)) per ordinary share making a total dividend of 6.5p for the year (2017: 5.8p(3)), up 12%

Operational Highlights

· Stable membership with Agency and New Homes customers up slightly to 20,454

· Virtually the whole of the property market in one place with one million UK residential properties advertised on Rightmove, which is more than any other UK portal

· Continued traffic growth with visits up over 4% averaging nearly 132 million visits per month(4) and time on site up 5% at over 1 billion minutes per month(4)

· Average Revenue Per Advertiser (ARPA)(5) up £83 to £1,005 per month

· Progress made towards making renting easier and more efficient with the first phase of the innovative Rightmove Tenant Passport in early roll out

(1) Before share-based payments and NI on share-based incentives.

(2) Before share-based payments, NI on share-based incentives and no related adjustment for tax.

(3) 2017 comparatives have been restated for ease of comparability to reflect the 10:1 share subdivision effective
31 August 2018.

(4) Source: Google Analytics.

(5) Revenue from Agency and New Homes advertisers in a given month divided by the total number of advertisers during the month, measured as a monthly average over the year.

Current trading and outlook

We believe the UK online property advertising market will continue to grow, despite the continuing uncertainties stemming from the result of the EU referendum. Consumers and customers are becoming increasingly digital and customer spend continues to transition online from traditional advertising channels as they take advantage of the efficiencies we bring.

Our clear market leadership coupled with the value of our digital solutions and our unrivalled data positions us well for the future. We remain vigilant to the macro environment, but Rightmove is not materially impacted by the property market cycle except in the most extreme circumstances. With ARPA continuing to grow and our commitment to further innovation, the Board remains confident of making further progress in 2019.

Peter Brooks-Johnson, Chief Executive Officer, said:

“2018 was another strong year for Rightmove. We extended our market leadership and reinforced our position as the place consumers turn to first when thinking about moving home. In doing so, we demonstrated that Rightmove is a business which can continue to grow strongly even in uncertain times. We focus relentlessly on creating a more efficient marketplace, constantly innovating to provide deeper insights to our agent and developer customers, and an even simpler, more intuitive user experience for home hunters.

Visits and time spent on site both continued to grow, with over 1.5 billion visits from consumers over the year. The resilience of our customer base is shown by our stable membership numbers, with particularly notable growth coming from New Homes developments. I’m excited by our plans for 2019 as we continue to focus on innovation to make home moving easier.”

STRATEGIC REPORT – Chairman’s Statement

I am pleased to present Rightmove plc’s results for the year ended 31 December 2018.

Having completed our thirteenth year as a listed company, our founding principles remain the same despite the pace of innovation and technological change.

We remain easy to use and free to home hunters. Our leading online brand entertains, informs and helps a consistently growing and industry leading audience across every local housing market in
Great Britain.

We are advocates for the professional estate agency and new home developer sectors; which the public rely on for local knowledge and quality service. Our value proposition is clear as in addition to delivering an unrivalled and relevant audience every year, crucially, we invest and provide digital innovations to our customers that enable them to compete for transactions and operate more efficiently.

As the marketplace for UK property, our customers are assured that our aim is to support them. Our business model is robust because the majority of our revenue comes from the subscriptions our customers pay to be part of that marketplace. As such, we are not directly linked to housing transaction volumes and neither participate in the upside nor downside of all but the most extreme events of the cyclical home sales market.

Our ambition to remain a sustainable growth company for the benefit of all stakeholders is undeterred as we continually evolve our value proposition for the benefit of our customers, consumers and shareholders. Our model and approach has historically worked well and we believe it will continue to underpin our future success.

Highlighting one example that underscores Rightmove’s vision and ethos, an increased propensity to rent in the UK is leading the industry to increase its focus on the lettings market. This industry shift increases the demand for digital tools focussed on improving the lettings experience for a large addressable market of renters, landlords and estate agents. After thoughtful research and development throughout 2018, Rightmove launched a Tenant Passport proposition designed to improve the reliability and completeness of information required to rent a home; thereby reducing the administrative burden and wasted time for all involved in the process.

The Tenant Passport is the first in a number of innovations serving the lettings market and one of many useful digital tools in our product pipeline that serve both home hunters and housing professionals. We look forward to many more years of providing increasing value to these audiences as well as our supportive shareholders.

Financial results
The strength of our business model and core value proposition once again underpins a healthy set of financial results in 2018. Underlying operating profit(1) was up 10% to £203.3m (2017: £184.4m) and operating profit was up 11% at £198.6m (2017: £178.3m) driven by revenue growth of 10% to £267.8m (2017: £243.3m) and a disciplined approach to cost control. Underlying basic earnings per share(2) and basic earnings per share were up 12% and 13% respectively at 18.3p (2017: 16.3p (3)) and 17.8p (2017: 15.7p (3)), even greater than the percentage increase in profits and in part as a result of 25.0m shares bought back during the year at a cost of £113.5m as part of our policy of returning free cash flow to shareholders.

Returns to shareholders and dividend

Our commitment to return excess cash promptly to investors continues to be as strong as ever and in 2018 we returned a further £168.5m (2017: £140.4m) to shareholders through dividends and share buybacks, bringing our total cash returned to shareholders as a listed company to over £1bn. Operating cash conversion(4) was again very strong and remains in excess of 100% of operating profit.

The Board increased the interim dividend to 2.5p (H1 2017: 2.2p(3)) per ordinary share, which was paid on 2 November 2018. We are confident in our ability to deliver sustainable returns to shareholders and consistent with our policy of increasing the total dividend for the year broadly in line with earnings per share, the Board recommends a final dividend of 4.0p (2017: 3.6p(3)) per ordinary share. This brings the total dividend for the year to 6.5p (2017: 5.8p(3)), an increase of 12%. The final dividend, subject to shareholder approval, will be paid on 31 May 2019 to all shareholders on the register on 3 May 2019.

Corporate governance
One of the Board’s responsibilities is to ensure that the Group applies good governance to facilitate effective management of a high growth business. As the Company’s Chairman I am pleased to note that the Group is continuing to foster an environment of entrepreneurial leadership and innovation in a framework of responsible governance and risk management as set out in the Corporate Governance Report on pages 43 to 51.

Board changes

Lorna Tilbian was appointed as a non-executive director on 1 February 2018, bringing with her a wealth of capital markets experience, following a distinguished career in the media sector. Lorna’s appointment is also noteworthy in that our Board now has 50/50 gender representation and we have been prominently recognised for our focus on diversity within the Hampton Alexander FTSE 100 rankings.

At the AGM in May 2018, a significant minority of votes were received against the re-election of myself as Chairman and Peter Williams, our Senior Independent Director. During the Autumn I actively consulted with a majority of shareholders in relation to our plans for orderly Board succession and to address concerns about the Board commitments of both myself and Peter. Following these conversations, I believe that we have consensus support for an orderly succession plan that contemplates the further development of Chair candidates on the Board and the recruitment of up to two non-executives with appropriate profiles, prior to the May 2020 AGM, on which date I intend to resign from the Board as Chairman.

Peter Williams, after more than five years of exemplary Board service, will not stand for re-election at the May 2019 AGM, to make room for a potential Chair candidate with the ability to serve as Board Chair for a longer tenure. Jacqueline de Rojas will be appointed as Senior Independent Director in May 2019 and has agreed to oversee the committee process of appointing a new Chair prior to the 2020 AGM. Lorna Tilbian will chair the Remuneration Committee following an understudy year of active committee participation.

I’d like to personally thank Peter for his support and sage advice to me as Senior Independent Director as well as his valuable contributions to the Rightmove Board and all committees over the past five years.

Looking forward

Once again, the Board and I are grateful for the confidence and support of all our customers and for the talent and dedication of our employees. We are clear that our goal is to continue to work together to maintain Rightmove’s position as the essential marketplace for home hunters and for property advertisers to reach by far the widest possible audience.