23 February 2018 Full Year Results for the year ended 31 December 2017
Disclaimer This presentation may contain forward- looking statements, including ‘forward - looking statements’ within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Group. They are not historical facts, nor are they guarantees of future performance. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Further details of potential risks and uncertainties affecting the Group are described in the Group’s filings with the London Stock Exchange including the Prospectus. These forward-looking statements speak only as of the date of this presentation. This presentation and a press release will be posted on the investor section of the Rightmove website. 2
Highlights Revenue: Profit: EPS: Dividend: +11% +11% +14% +14% Revenue up to £243.3m Underlying operating profit 1 Underlying basic EPS 2 Final dividend increased by 4p to 36p (2016: 32p) making (2016: £220.0m) increased to £184.4m grew to 163.3p (2016: £166.2m) (2016:142.8p) a total dividend of 58p (2016: 51p) per ordinary share Advertisers 3 : ARPA 3 : Cash returned: Site traffic: £140.4m 20,427 11.7bn £922 Free cash flow returned As at 31 December 2017, Time in minutes flat year on Per month, up 10% to shareholders through up 2% (2016: 20,121) year (2016: 11.7bn) (2016: £842 ) dividends and buybacks (2016: £131.3m) 3 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. For Agency and New Homes customers
Revenue Revenue bridge Revenue 275 2.9 243.3 0.8 250 19.6 243.3 220.0 250 £ millions £ millions 220.0 225 200 192.1 200 167.0 175 150 150 125 100 100 75 50 50 25 0 0 2015 2016 ARPA Customer Other 2016 2017 2014 2015 2016 2017 growth growth growth 4
Profit and margin 1 1 Costs Underlying operating profit Margin: 74.6% 75.1% 75.5% 75.8% 70 200 £ millions £ millions 184.4 180 58.9 60 166.2 53.8 160 144.3 47.8 50 140 124.6 42.4 120 40 100 30 80 60 20 40 10 20 0 0 2014 2015 2016 2017 2014 2015 2016 2017 5 Source: Rightmove 1. Before share-based payments and NI on share-based incentives.
Income statement Year ended Year ended 31 December 2017 31 December 2016 £m £m Revenue 243.3 220.0 Operating costs (58.9) (53.8) Underlying operating profit 184.4 166.2 Underlying operating profit margin 75.8% 75.5% Share-based payments (4.9) (4.1) NI on share-based incentives (1.2) (0.5) Operating profit 178.3 161.6 Net financial expense (0.1) (0.1) Profit before tax 178.2 161.5 Tax (34.1) (32.0) Profit for the year 144.1 129.5 6 Source: Rightmove
Balance sheet As at As at 31 December 2017 31 December 2016 £m £m Property, plant and equipment 2.7 2.3 Intangible assets 3.3 3.5 Deferred tax assets 5.7 7.0 Total non-current assets 11.7 12.8 Trade and other receivables 35.1 29.9 Cash and money market deposits 25.0 17.8 Total current assets 60.1 47.7 Trade and other payables (38.9) (35.8) Income tax payable (14.7) (16.3) Provisions (0.7) (0.2) Total current liabilities (54.3) (52.3) Provisions being non-current liabilities (0.3) (0.2) Net assets 17.2 8.0 Share capital 0.9 1.0 Other reserves 0.5 0.4 Retained earnings 15.8 6.6 Total equity 17.2 8.0 7 Source: Rightmove
Cash bridge and dividend Full year 2017 185.1 • £140.4m (2016: £131.3m) 200 200 returned to shareholders in (1.3) the period £ millions • 2.2m (2016: 2.2m) shares (33.2) (2.2) 150 150 bought back and cancelled • Closing cash and money market deposits of £25.0m (2016: £17.8m) 100 100 • Final dividend increased by 4p to 36p (2016: 32p) (91.6) 50 50 25.0 17.8 (49.6) 0 Cas ash Dec 2016 EBITD TDA bef efore re Wo Work rkin ing cap apital ital Tax pay Tax ayments Cap apex Share are buy y bac acks Div ivid iden ends ds Cas ash Dec 2017 IFRS 2 in incl costs Source: Rightmove 8
Making home moving easier in the UK Our aim is to create a simpler and more efficient property marketplace The three pillars of our strategy: • The place consumers ‘turn to first’ and engage with most • Offer unrivalled exposure, leads and products for our customers • Innovate to create a better marketplace 9
More customers, more choice Agency and New Homes Further growth in customer numbers, up 2% to over 20,400 22 Thousands sands ousands • Growth driven by both Agency and New Homes 20,427 20,121 19,752 • Agency branches up 164 20 19,304 Thou • Agency retention rates in line with historical highs 18 • New Homes developments at their highest level since 2009 • Customers advertising 1 million UK residential 16 properties on Rightmove • We continue to be the only place to see virtually 14 the whole UK property market 12 10 2014 2015 2016 2017 10 Source: Rightmove
The place consumers ‘turn to first’ and engage with most 1 Traffic Over 1.5 billion visits in 2017, up 4% 11.7 11.7 12 1.6 Billions of Visits • Growth driven by continued mobile adoption with over 11.1 Billions of Minutes 10.2 1.4 70% of time spent on mobile 10 1.2 • Traffic to our research tools grew 15% with consumers 8 1 spending over 420 million minutes on features such as 6 0.8 sold prices 0.6 4 • We sent over 43 million leads to our customers, 7% down 0.4 on 2016 as we continue to focus on quality over quantity 2 0.2 • The quality of our leads continue to stand out. We 0 0 2014 2015 2016 2017 generate six times as many sales and lets for our Agency Time Visits customers as our nearest competitor 2 Market share of top 4 property portals 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Rightmove Zoopla.co.uk Primelocation OnTheMarket 11 Source: 1. Google Analytics & Rightmove 2. comScore
The housing market is stable at a macro level Housing Transactions 1986-2017 and House Prices 2001 - 2017 2,200 £350,000 2,000 £300,000 1,990 1,800 1,744 1,600 £250,000 1,628 1,600 1,400 1,467 1,476 1,450 1,430 £200,000 1,368 1,342 1,200 1,327 1,297 1,283 1,260 1,225 1,220 1,205 1,168 1,000 1,114 1,123 1,101 1,105 1,111 1,091 £150,000 1,047 1,031 969 800 844 798 800 790 772 £100,000 600 400 £50,000 200 - £0 HMRC Housing Transactions in England & Wales (000's) Rightmove Asking Prices • The number of housing transactions in 2017 was the same as 2016, 2015 and 2014 • Housing transactions are 40% higher than the lows of 2008 – 2011 and house prices are up by 45% in the same period • Despite the softening in commission rates the estate agency revenue pool is now above 2005 levels • Two-thirds of our estate agency customers also generate recurring revenue from lettings 12 Housing transactions for England & Wales – all of UK data only available from HMRC 2005 onwards
However, the property market is local Annual transactions 2017 vs 2014 +30% 0% -20% 13 Source: HM Land Registry & Rightmove
Agents’ priorities change at the extremes of the market Agents’ priorities where there is more demand than supply: Under Supply Getting in front of potential sellers first • • Finding the opportunities in buyer leads Being the one chosen on first round of market appraisals is vital • • Marketing their points of differentiation and value proposition Agents’ priorities when there is more supply than demand: Building reputation and fees in a more challenging market • Over Supply • Finding motivated sellers • Spotting the secondary market opportunities which might now be “right priced” • Realigning vendor’s pricing expectations to meet the market Finding buyers • 14
15 * H2 2018 structure Driving efficiency regardless of market Over Supply Under Supply Value to customer Value to customer Instruction Generate new business lead products opportunities Branding products Local market summary Opportunity manager* Win business Best price guide Property products Retain business Marketing report Property products Sell properties Property products
Driving efficiency regardless of market structure Local Market Summary Branding Products 16 * H2 2018
Driving efficiency regardless of market structure Best Price Guide Marketing Report 24 Acacia Avenue 17 * H2 2018
Driving efficiency in rental Tenant fee ban likely in 2019 • Much of the process of referencing can be streamlined with data • • Currently executing a low volume trial, assessing potential with view to roll out by end of 2018 18
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