Full Year Results for the year ended 31 December 2019 28 February 2020
Agenda 1. FY 2019 Highlights Peter Brooks-Johnson, CEO 2. Financials Robyn Perriss, FD 3. Housing market update Peter Brooks-Johnson, CEO 4. Strategic update Peter Brooks-Johnson, CEO 5. Outlook 6. Appendix 2
1. FY 2019 Highlights Peter Brooks-Johnson, CEO 3
Highlights Revenue: Profit: EPS: Dividend: +8% +8% +10% +11% Revenue up to £289.3m Underlying operating profit 1 Underlying basic EPS 2 Total dividend of 7.2p (2018: £267.8m) increased to £219.7m increased to 20.2p (2018: 6.5p) per ordinary share. Final dividend increased by (2018: £203.3m) (2018:18.3p) 0.4p to 4.4p (2018: 4.0p) Advertisers 3 : Site traffic 4 : ARPA 3 : Cash returned: £148.8m 19,809 12.13bn £1,088 Free cash flow returned Membership as at 31 December Time in minutes down 1% Per month, up £83 to shareholders through 2019 down 3% year on year year on year (2018: 12.28bn) (2018: £1,005 ) dividends and buybacks (2018: 20,454) (2018: £168.5m) 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 4 4. Source: Google Analytics 4
Strategic Highlights Innovating Innovating Innovating in property advertising for agent efficiency for future growth • Auto Featured Property • Launch of a new version of our • Two further iterations of Tenant launched in May Best Price Guide in June Passport experiment • Next generation digital • New algorithm powered • Acquisition of Van Mildert, a marketing solution ‘Rightmove intelligent tool ‘Opportunity tenant referencing company in Active Extension’ launched in Manager’ launched in November September June • Launch in September of • New Optimiser 2020 package mortgage tools with Nationwide launched in November Building Society • New intelligent product ‘Sold by Me’ launched in November 5
2. Financials Robyn Perriss, FD 6
Revenue Revenue Revenue Bridge 289.3 300 267.8 243.3 250 220.0 £ millions 200 £ millions 150 100 50 0 2016 2017 2018 2019 Number of customers 7 Source: Rightmove 7
Membership and ARPA 1 Membership Membership numbers down 3% • Agency branches down 6% since the start of 22 20,454 19,809 20,121 20,427 20 the year to 16,347 18 16 • New Homes developments up 11% to 3,462 14 Thousands 12 10 • We continue to be the only place to see 8 virtually the whole UK property market with 6 4 900,000 properties 2 0 2016 2017 2018 2019 Continued ARPA growth 2 1 ARPA £83 £83 £1,100 £ per branch/development per year 12,000 £1,088 £80 +8% £1,080 £1,005 £1,088 +9% 10,000 £922 £1,060 +10% £842 LTM ARPA £1,040 8,000 £1,020 6,000 £1,000 4,000 £980 £960 2,000 0 2016 2017 2018 2019 8 Source: Rightmove1: For Agency and New Homes customers 2. Last 12 Months 8
Cost, profit and margin Costs 1 Underlying operating profit 1 Margin : 75.5% 75.8% 75.9% 75.9% 80 250 69.6 219.7 70 64.5 203.3 58.9 200 60 184.4 53.8 166.2 £ millions £ millions 50 150 40 100 30 20 50 10 0 0 2016 2017 2018 2019 2016 2017 2018 2019 Source: Rightmove 9 1. Before share-based payments and NI on share-based incentives 9
Income statement Year ended Year ended Growth YOY 31 December 2019 31 December 2018 £m £m Revenue 289.3 267.8 Operating costs (69.6) (64.5) Underlying operating profit 219.7 203.3 8% Underlying operating profit margin 75.9% 75.9% Share-based payments (4.9) (4.3) NI on share-based incentives (1.1) (0.4) 8% Operating profit 213.7 198.6 Net financial expense (0.1) (0.3) Profit before tax 213.6 198.3 Income tax expense (40.5) (37.8) 8% Profit for the year 173.1 160.5 10 Source: Rightmove 10
Summary balance sheet As at As at 31 December 2019 31 December 2018 £m £m Property, plant and equipment 12.8 15.2 Intangible assets 21.9 2.9 Deferred tax assets 2.7 2.8 Total non-current assets 37.4 20.9 Trade and other receivables 24.0 22.5 Contract assets 0.4 0.4 Cash and money market deposits 36.3 19.9 Total current assets 60.7 42.8 Trade and other payables (19.5) (18.1) Contract liabilities (2.1) (2.1) Lease liabilities (12.2) (13.0) Income tax payable (18.9) (16.8) Deferred tax liabilities (0.9) - Provisions (3.2) (1.1) Total liabilities (56.8) (51.1) Net assets 41.3 12.6 11 Source: Rightmove 11
Cash bridge and dividend Full year 2019 • £148.8m (2018: £168.5m) returned to shareholders in the year • 16.3m (2018: 25.0m) shares bought back at an average price of £5.45 and £millions cancelled • Closing cash and money market deposits of £36.3m (2018: £19.9m) • Final dividend increased by 0.4p to 4.4p bringing the full year dividend to 7.2p (2018: 6.5p) up 11% Cash EBITDA Working Tax Capex Acquisition Share Dividends Lease Other Cash before Dec 2018 capital payments of buybacks payments incl net Dec 2019 IFRS 2 Van Mildert (incl costs) interest Source: Rightmove 12
3. Housing market update Peter Brooks-Johnson, CEO 13
The UK housing market is resilient, but the leading indicators were slow in H2 Housing Transactions 2006-2019 (UK) 1 1,800 1,600 Transaction (thousands) 1,670 1,613 1,400 1,200 1,230 1,235 1,219 1,220 1,191 1,000 1,174 1,073 800 933 900 886 885 858 600 400 200 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 New Sales Listings Compared to 2018 2 • The number of housing transactions in 2019 was only 1.4% lower than 2018 100% • Notable slow down in new listings in Q3 reduced the amount 95% of available stock by 10% at the end of the year compared to 90% 2018 85% • Reduction in available stock yet to be apparent in transaction numbers, but limited choice may hamper transaction 80% numbers in early 2020 if it does not reverse Source: 1. HMRC 2. Rightmove (adjusted for working days) 14
Increasing time to sell led to a cash flow impact in H1 2019 for low stock branches Estate Agency membership compared to 2017 • Buyer hesitancy increased time to sell notably at the end of 2018 and into 2019 160% 140% • Anecdotal evidence that time to complete also Proportion of 2017 increased 120% 100% • Low-stock branches more vulnerable to cash flow 80% impact of increased transactions times 60% • Slow down in Agency leavers in second half of 2019 40% Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Leaver Rate Joiner Rate Branch distribution by sales stock 25% 20% 15% 10% 5% 0% 1-10 11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-100 100+ Branch stock level December 2018 December 2019 Source: Rightmove 15
New Homes development flow was consistent in the second half of 2019 New Homes development numbers indexed to 2017 250% New listings/site sold Developers brought forward rates balanced in H2 2019 listings in late 2018/early 2019 to 200% Proportion of 2017 leading to small growth in combat sales rate decline developments listed 150% 100% 50% 0% Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Site Sold Rate New Development Listing Rate Developments numbers in second half of 2019 4,000 3,000 2,000 1,000 0 July August September October November December Source: Rightmove 16
Early 2020 market Consumer demand January 2020 vs January 2019 encouraging, but demand outstripping supply • Respite from uncertainty leading to significant increase in activity post election: • Record traffic in January, over 150m visits in a month for the first time with consumers spending nearly 1.2bn minutes on Rightmove • Demand up on a year ago in most regions • New property listing numbers are slower to recover: • New listings in January 2020 at the same level as January 2019, February looking more positive • Fewer and smaller price reductions than last two years Source: Rightmove 17
Early 2020 market encouraging, but some agents will be impacted by H2 2019 overhang • Market fundamentals remain positive: • Commission rates slightly increased and the overall Agency revenue pool is at least stable • Employment rates remain at record high • Mortgage interest rates remain low • Sales agreed up over 12% on January 2019 • Certainty, for now • Sale fall through rate at its lowest since 2014 January sales agreed (indexed to 2014) 105% 100% 95% 90% 85% 80% 2014 2015 2016 2017 2018 2019 2020 • Looking forward, slower H2 2019 will impact some agents in early 2020: • Some smaller agents will continue to struggle with lack of cash flow from the slower activity • Slower listings market has an impact on hybrid agents Source: Rightmove 18
4. Strategic update Peter Brooks-Johnson, CEO 19
Making home moving easier in the UK Our aim is to create a simpler and more efficient property marketplace Buyers Agents Sellers Developers Renters Landlords SIMPLICIT ITY The place consumers turn to first Unrivalled exposure, leads and and engage with most products for our customers 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 20
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