Rightmove plc Final Results 31 December 2015

Highlights

Financial highlights

· Revenue up 15% to £192.1m (2014: £167.0m) with growth achieved across all business areas

· Underlying operating profit(1) up 16% to £144.3m (2014: £124.6m)

· Underlying operating margin(1) of 75.1% (2014: 74.6%)

· Underlying earnings per share(2) up 21% to 121.4 (2014: 100.3p)

· £112.5m (2014: £103.4m) of cash returned to shareholders through dividends and share buybacks in the year

· Final dividend of 27p (2014: 22p) per ordinary share making a total dividend of 43p for the year (2014: 35p), up

23%

Operational Highlights

· Agency and New Homes customers up 448 (+2%) since the start of the year to an all-time high of 19,752(31 December 2014: 19,304)

· Nearly 50%(3) more UK residential properties on Rightmove than on any other portal

· Strong audience growth

o Rightmove's share of traffic of the top four UK property portals has grown across the board(4); on a time basis including desktop and mobile traffic it increased to 77% (January 2015: 74%)

o Visits up 18% year-on-year to a record 1.3bn (2014: 1.1bn)

o Pages viewed up 14% year-on-year to a record 17.5bn (2014: 15.4bn)

· A record 49.8m leads generated for our advertisers, up 16% year-on-year (2014: 42.8m)

· Average revenue per advertiser (ARPA)(5) up £70 (+10%) to £754 per month on the same period a year ago(2014: £684)

(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) Source: AlphaWise, Morgan Stanley Research Jan 2016

(4) Source: Comscore (users, visits, pages and time measures)

(5) For Agency and New Homes customers

Nick McKittrick, Chief Executive Officer, said:

"Rightmove celebrated its 15th birthday in 2015 and together with the support of nearly 20,000 customers, it has changed the way Britain searches and researches property.

Our property stock advantage coupled with our brand strength and innovation have substantially increased our audience size and engagement this year. We attracted 200 million more visits in 2015 as more people came to search and research the only place with a million properties for sale and to rent in the UK.

We help our customers succeed by delivering great value marketing and by helping drive business efficiencies. We have grown our customer base by 2% during 2015 to a record high and continue to build broader relationships to support customers' ambitions. We continue to break records at the start of 2016 having already generated over 9 million leads for our customers."

STRATEGIC REPORT - Chairman's Statement

I am pleased to present Rightmove plc's results for the year ended 31 December 2015.

As we report on our 15th consecutive year of growth, I'd like to pick up on a theme raised in the Strategic Report: 'Doing the right thing'. This uncompromising principle supports the ethos of the Group. The philosophy drives our high achieving network business and what we do for our trade customers on one side of the network and our web and mobile visiting consumers on the other side. It also extends to our focus and behaviours towards all stakeholders including our investors, analysts, employees and our Board.

The team's relentless focus and sensitive examination of our consumer experience has been the catalyst for continual improvements to site navigation and design. We aim for simplicity of use and an engaging experience. Of course our site traffic is in part a natural consequence of the best consumer proposition in the market, with almost 50% more listings than any other UK property portal, but it is in the main driven by the huge trust built up in our brand over the past 15 years. The team works diligently to maintain a site that delivers the desired information when it is wanted and in the form it is wanted and we achieved an enviable 99.997% level of site availability last year.

Our nearly 20,000 customers have benefited from our ever-growing popularity with the British home moving public. We have delivered 15 consecutive years of site traffic growth for our customers and have been consistently ranked in the top ten sites in the UK irrespective of cyclical housing demand. Last year we attracted 200 million more consumer visits than the previous year and generated a record 50 million leads for our customers. Rightmove's popularity is showing no signs of letting up and we have already set new site traffic records this January.

Our customers have also benefitted from a continuous roll-out of additional advertising products to reach their audience of home sellers, landlords and home hunters. There is a wide range of choice and discretion to shape and reinforce brand identity on Rightmove to compete for business and market homes. There is also an increasing range of valuable tools, support and data available to our customers to assist them to operate their businesses more effectively and efficiently.

Since Rightmove's strategy does not depend on capital expenditure or M&A, the Board has a policy of distributing all of its free cash flow each year. In fact, Rightmove has returned all of its free cash flow since inception, totalling nearly £600m, through a combination of increased dividends and share buybacks. Our shareholders benefit from a predictable business model that is buoyed by our growing market leadership, together with clear and refreshingly candid communication from our executives.

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. Together their efforts have positioned Rightmove as the essential marketplace for home hunters to find their next home and for property advertisers to reach by far the widest possible audience.

Financial resultsThe strength of our business model and core value proposition underpin record financial results in 2015. Underlying operating profit(1) was up 16% to £144.3m (2014: £124.6m) driven by strong organic revenue growth of 15% to £192.1m (2014: £167.0m) and continued focus on cost control. Underlying basic earnings per share (EPS)(2) was up 21% to 121.4p (2014: 100.3p), even greater than the percentage increase in profits and in part attributable to £76.1m of share buybacks as part of our policy of returning cash to shareholders.

Returns to shareholdersOur commitment to return excess cash promptly to investors continues to be as strong as ever. Cash conversion remains in excess of 100% of operating profit. In 2015, we returned a further £112.5m (2014: £103.4m) to shareholders through dividends and share buybacks.

DividendThe Board previously announced that it would increase the interim dividend to 16p (H1 2014: 13.0p) per ordinary share, which was paid on 6 November 2015. Consistent with our policy of increasing the total dividend for the year broadly in line with earnings, the Board proposes to pay a final dividend of 27.0p (2014: 22.0p) per ordinary share for a total dividend for the year of 43.0p (2014: 35.0p), an increase of 23%. The final dividend, subject to shareholder approval, will be paid on 3 June 2016 to all shareholders on the register on 6 May 2016.

Corporate governanceOne of the Board's responsibilities is ensuring 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 26 to 42.

Board changes

Jonathan Agnew and Judy Vezmar both retired from the Board at the Group's Annual General Meeting in May 2015 after nine years of service. On behalf of the entire Board, I would like to thank them both for their substantial contributions to the Group, and wish them every success. Peter Williams has ably replaced Jonathan Agnew as Senior Independent Director and Remuneration Committee Chairman.

Outlook

Our results for 2015 show us continuing to outperform expectations. Based upon strong customer numbers and traffic, and healthy growth in average spend per advertiser at the start of the year, the Board remains confident of continued success in 2016.

Scott Forbes

Chairman

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

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

STRATEGIC REPORT - Business model 

Rightmove is the UK's number one property portal and operates a two-sided network. On one side we have the UK's largest and most engaged property audience and on the other side we have the largest inventory of properties. We benefit from strong network effects as our property audience and the properties our customers advertise create a 'virtuous circle' enhancing the Rightmove value proposition.

Rightmove is free to the consumer and is where home buyers and renters turn to first as they can see virtually the whole property market in one place. It is equally compelling to home sellers and landlords as it is where nearly all home buyers and renters are searching and researching the market.

Our customers are primarily estate agents, lettings agents and new homes developers advertising properties for sale and to rent in the UK. We offer the most significant and effective exposure for their brand and properties, the largest source of high quality leads together with best in class software providing market insight and tools that empower their decisions and help drive business efficiencies.

Our principal sources of revenue are the monthly subscription fees paid by customers to advertise all of their properties and the fees paid for additional advertising products and packages. Our additional advertising products enable customers to promote their properties, brands and proposition more strongly and gain a competitive edge.

As the property industry becomes more digital, Rightmove's market leading audience and best in class software is becoming more valuable to customers. Our customers' spend on digital advertising is growing as the property advertising market continues to shift structurally from offline to online and also as customers choose to reinvest the savings from the business efficiencies that our platform and the internet brings. We expect that our growth will continue to come through product innovation and pricing.

We also continue to develop a number of smaller adjacent businesses focussed on advertising overseas and commercial properties and property related data and valuation services.

STRATEGIC REPORT - Chief Executive's review

15 SUCCESSIVE YEARS OF GROWTH

Rightmove celebrated its 15th birthday in 2015 delivering both another record year of results and our 15th successive year of growth. Our customer base grew by 2% to reach an all-time high of nearly 20,000, our property stock advantage increased to nearly 50% more than any other UK portal, we attracted an additional 200 million visits to Rightmove, we generated 16% more leads for our customers and our underlying operating profit grew 16% to a record £144.3m.

It is remarkable how far Rightmove has come. Our progress is testament to our disciplined focus on the UK property advertising market and the huge effort Rightmovers have put in to build this business together with our industry customers. Rightmove has changed the way Britain searches and researches property and we look forward to delivering continued growth and further empowering the UK's decisions around property.

Our Strategy

The place that consumers turn to first and engage with most when searching and researching property

For 15 years we have invested in our brand. However, it is not just the 15 years of investment that makes Rightmove so strong, it is the depth of connection that the British public has with our brand. With our focus on doing the right thing for both consumers and customers, Rightmove has become a trusted and valuable source of property information.

We provide indispensable support for home movers enabling them to feel confident, inspired and more in control. This not only results in more consumers turning to Rightmove first and spending more time on Rightmove, but most importantly, generates more and better quality leads for our customers leading to better outcomes and value. 

We remain relentless in our focus to deliver the fastest, easiest to use and most engaging experience for home movers. At the core of our strategy is to have the largest, most up to date and richest property content together with the best search and research tools, and the most relevant content to support home movers in their journey. We are the digital advertising market leader in the UK for every major property category: sales; rentals; new homes; overseas and most recently commercial property.

This year Rightmove has become even more compelling to consumers and customers as we strengthened our position on both sides of the network. We are the only place to search and research virtually the whole property market in the UK and consumers can view nearly 50%(1) more UK residential properties on Rightmove than on any other portal. Our property stock advantage coupled with our brand strength, innovation and expertise has substantially increased our audience size and engagement.

There were a record 1.3 billion visits to Rightmove in 2015, a year on year increase of 18%, and 17.5 billion pages of property content were viewed. With this substantial increase our share of traffic of the top four property portals has grown across the board (2). Our audience is also compelling to people selling their homes with 85%(3) now ranking us as the most important site for marketing their properties in a recent independent survey.

Traffic to our research tools grew significantly in 2015 as sellers and landlords turned to Rightmove first to help inform their decisions. Our research tools, such as sold prices, are by far the most widely used in the UK and provide the unique benefit of access to our unrivalled catalogue of current and archived properties. Consumers viewed over 350 million pages of research content on Rightmove in 2015 which is up by a third on the previous year.

Our culture of restlessness continues to drive improvement and innovation. In addition to the hundreds of updates to our platforms each month, our new launches in the year included our Valuation Range App, the Rightmove School Checker, mortgage content to further support home movers in their journey and we began to roll-out our new look search results pages and products based on a brand new site architecture. Looking forward, we will be pressing home our advantage with further innovation including a new 'Where can I live?' search.

We continued to invest in our brand in 2015 with our 'find your happy' advertising campaign. This campaign connects with the strong positive emotions that moving home often generates and reflects our position at the heart of it. Our brand building focused on national TV, through our 'always on' partnership with Channel 4 across their property content. We added further weight to our presence in London with more heavyweight TV advertising and through additional outdoor media across the capital. We also became the exclusive property partner with the Evening Standard in addition to our existing exclusive partnership with Time Out.

The popularity of our Overseas property site increased significantly as we launched a new mobile site, added over 500 new customers and increased the number of properties advertised by a third. We now advertise over 230,000 properties across the world with a focus on the most popular British destinations such as Spain, France, USA, Italy and Portugal. Our audience for overseas property set new records in 2015 with searches up over 20% to 98 million and leads up by nearly 50%.

Our Commercial advertising business continues to grow with 55,000 properties now advertised. It has quickly established itself as the UK's largest commercial property portal with engagement up strongly in the period as the number of commercial enquiries grew over 30% year on year.

Provide the most significant and effective exposure for customers' brands and properties, be the largest source of high quality leads and offer high value-adding products and packages

We generated nearly 50 million leads for our customers, up 16% on last year, twice as many as our nearest competitor. The better quality of our leads continues to stand out as they convert to over four times(4) as many sales and lets for our agency customers. This is the 15th successive year we have delivered increased exposure for our customers' brands and properties.

Winning the right to sell a property is the lifeblood of agents. Over a million home movers highlighted they had a property to sell when emailing an agent about another property, creating business opportunities for our customers. We also delivered nearly 200,000 leads from people asking for a valuation on their home, for those customers who bought our Local Valuation Alert product.

From our beginnings as a simple listings business we have developed additional advertising products and now provide our customers with a range of products to promote their brands and properties more strongly to gain a competitive edge.

We launched our first product in 2007 and we now have a suite of products across three categories: display advertising, property promotion and direct response. Product revenue now accounts for 42% of Agency and New Homes revenue with the remainder coming from listing fees.

Revenue from products grew by 20% in 2015 to £73.9m. There is significant headroom to grow product revenue as we have the opportunity to increase the penetration of existing products, evolve their value and pricing, and continue to innovate and introduce new products as customers look to invest more to drive their brand exposure.

This year average monthly revenue per advertiser (ARPA) increased by 10% with around two thirds of the ARPA growth driven by customers spending more on products and packages. ARPA has grown to over £750 as customers choose to spend more online and transition away from the historic use of newspapers where ARPA peaked at circa £2,500(5) per month back in 2007.

Help drive operational efficiencies and empower customer decisions through software, data and insight

Over the last 15 years Rightmove has helped drive significant efficiencies within the property industry by providing our customers with training, support and a suite of software as part of their membership to help them in the day to day running of their businesses.

For example, whereas previously our customers would have manually gathered valuation and comparable data, paid for printing and postage of property or development details and paid a third party to count 'For Sale' and 'Sold' advertising boards for market share information, they can now do this electronically.

Using our software customers can:

· Easily find a range of comparable properties from over one million properties currently advertised on Rightmove and from our archive of over 35 million properties advertised on Rightmove; 

· Upload a new vendor's property onto Rightmove almost immediately and in the same instant alert relevant home movers from Rightmove's database of millions of registered users;

· Easily see the level of interest in a property and provide independent market feedback to their vendors and landlords;

· Monitor their market share and ranking versus their local competition; 

· Identify potential valuation opportunities faster and more efficiently;

· See a map of lead activity by street in their local area to help target potential sellers and landlords; and 

· Ensure leads are dealt with effectively by using our lead reporting and call recording functionality.

The digitalisation of the property industry and the efficiencies these tools bring helps to reduce cost per office and has also enabled the growth in the number of agents. Over the last 12 months our membership base has grown by over 2%.

Our software products have become an integral part of the industry over many years of use and in a recent independent survey(6) 49% of agents said our software was 'crucial' to their business and would be hard to switch from, with a further 39% saying it was 'helpful'. Over 50% of agents also cited that our software makes them more efficient not just in marketing but in other areas of their business too.

In 2015 we introduced the next wave of market share analysis tools to help our customers drive further business efficiencies and make better informed decisions. The new functionality and data, greater flexibility and unique 'whole of market' view has doubled agent use year on year. We are also delighted that the survey found that nearly 60% of agents place their trust in us and only use Rightmove portal software for their insights.

We care about our customers' business success and building strong relationships is vital to support their ambitions, especially in light of the significant digital changes taking place. To that end we are spending more time with customers than ever before by expanding our account management team and increasing the team's efficiency through better tools. We also continued our popular agent seminar programme which covers concepts such as brand building, targeting sellers and customer service in a digital world. Over 2,000 agents attended one of the 35 seminars we ran across the UK in 2015 from Norwich to Swansea and from Truro to Inverness.

To help all agents and developers realise the full benefit from Rightmove we also set up a telephone training team and expanded our webinar offering. Our webinars provide customers with an efficient way to learn about Rightmove and our software without leaving their offices. We ran over 80 webinars in the year with 2,500 agents and developers attending with popular topics including 'Winning Landlords' and 'The Ultimate Property Listing'.

Build great teams and continue to make Rightmove a great place to work

From the first Rightmove team of a dozen people to the current organisation of 435 we are always striving to create one team of Rightmovers with as few barriers as possible to rapid growth and innovation. We believe that this comes from a process-light, highly connected organisation with little constraining hierarchy and bureaucracy. To enable this we need every Rightmover to be both individually empowered and accountable.

To ensure we foster a highly connected organisation, we have taken care to create a physical environment that encourages open and honest discussion, including social spaces for the teams to enjoy each other's company. Our workplace is free from offices and the usual trappings of hierarchy.

We believe in sharing often and early and reinforce this through events such as 'townhalls' which share progress, successes and challenges. In June 2015 the whole Group spent a day and a night under canvas together building and reinforcing cross team connections. The culture is not solely built on these events, but also from the everyday small gestures and the authentic care Rightmovers have for one another. Everything together creates a unique, driven and quirky environment that we believe results in people feeling there's no place they'd rather be. By striving to make Rightmove a great place to work we can attract and retain the best talent and provide the best service for consumers and customers.

Great talent and passion to perform is not enough to make a great Rightmover; the way in which we behave towards each other, our customers and partners is vital. How we go about our work is central to our recruitment, feedback and personal development processes. We also have a scheme to allow the team to recognise their peers who embody the behaviours we aspire to.

The biggest influence in our restless and inquisitive culture, of course, comes from our people. Their actions and behaviours create the sense of belonging and connection and allows the business to continue to thrive and attract great people. In our 2015 'Have Your Say' people survey, again over 90% of Rightmovers think it is a great place to work. To recognise employees who have been part of the journey with Rightmove for ten years we create a gnome in their image. I'm pleased that for such a young company, over 40 gnomes have pride of place in our office.

I am proud of the vibrant culture and business we have built together, I would like to thank everyone for everything they have done to achieve this and look forward to enjoying continued success in the future.

Current trading and outlookThe outlook for the UK online property advertising market remains positive as consumers and customers become ever more digital and the market continues to shift from traditional advertising channels. We are well positioned to benefit from this transition and with our market leading position strengthening, average spend per advertiser continuing to grow and record January traffic numbers, the Board remains confident of making further progress in growing the business organically in 2016 and beyond.

Nick McKittrick

Chief Executive Officer

26 February 2016

(1) Source: AlphaWise, Morgan Stanley Research, January 2016

(2) Source: Comscore, December 2015 (users, visits, pages and time measures)

(3) Source: The Property Academy 2015 Home Moving Trends Survey

(4) Source: Independent software provider to the estate agency industry

(5) Source: Advertising Association Warc report December 2015

(6) Source: Barclays Capital, October 2015

STRATEGIC REPORT - Financial reviewKey performance indicators

STRATEGIC REPORT - Financial review

RevenueRevenue grew strongly in 2015 up 15% to £192.1m (2014: £167.0m). Our Agency business was the main contributor to the absolute revenue growth with a year on year increase of £17.5m to £147.1m(2014: £129.6m). We experienced 3% growth in Agency customer numbers, despite flat year on year transactions in the UK housing market. The majority of the revenue increase came from ARPA growth, through discretionary sales of additional advertising products together with increases to core membership prices. Agency continues to be by far our largest business contributing 77% (2014: 78%) of our total revenue.

Revenue from our New Homes business grew by 15% to £30.5m (2014: £26.4m). The majority of revenue growth was driven by the sale of additional advertising products, including email campaigns and by increases to core membership prices.

Other revenue across our data services, overseas, commercial and non-property advertising streams demonstrated healthy growth, increasing by 32% to £14.5m (2014: £11.0m) and constituted 8%(2014: 7%) of our total revenue.

Underlying operating profitUnderlying operating profit(1) increased by 16% to £144.3m (2014: £124.6m) and underlying operating margin(1) for the year reflected further operating leverage gains, increasing to 75.1% (2014: 74.6%).

This was driven by continued strong revenue growth coupled with a slightly lower percentage increase in underlying operating costs(1). Underlying operating costs(1) increased by £5.5m to £47.9m (2014: £42.4m). £2.4m of the increase related to salary and associated costs attributable to general wage inflation and an increased average headcount of 412 (2014: 388), reflecting investment in sales, customer support and technical heads during the year and the full year impact of staff recruited during 2014. Marketing spend increased by £2.0m in the year as we continued to invest in promoting the Rightmove brand and driving home our competitive advantage.

Share-based payments and National Insurance (NI)

In accordance with IFRS 2, a non-cash charge of £3.8m (2014: £2.7m) is charged to income representing the amortisation of the fair value of share-based incentives granted.

NI is being accrued, where applicable, at a rate of 13.8% on the potential employee gain onshare-based incentives granted. Based on a year on year increase in the closing share price from £22.48 at 31 December 2014 to £41.25 at 31 December 2015 in respect of the outstanding share-based incentives granted, together with the actual NI cost on share-based incentives exercised in the year, there was a charge of £3.3m (2014: credit of £0.2m).

TaxationThe consolidated tax rate for the year ended 31 December 2015 was 20.2% (2014: 21.2%). The effective tax rate was slightly lower than the UK enacted rate of 20.25% due to research and development relief claimed in relation to previous years.

We are committed to being a responsible tax payer acting in a straightforward and open manner in all tax matters. The total tax payable in respect of 2015 was £75.3m (2014: £66.2m). £29.8m(2014: £28.6m) related to corporation tax and Employer's NI borne by the Group while the remaining£45.5m (2014: £37.6m) was collected in respect of payroll taxes and VAT.

Earnings per share (EPS)

Underlying basic EPS(2) increased by 21% to 121.4p (2014: 100.3p). Basic EPS increased by 17% to114.0p (2014: 97.7p). The growth in EPS was driven by the increase in profitability in the year together with the benefit from our continued share buyback programme which reduced the weighted average number of ordinary shares in issue to 96.0m (2014: 98.4m).

Balance sheet

Rightmove's balance sheet at 31 December 2015 showed total equity of £6.6m (2014: £2.4m) reflecting growth in profits and retained earnings less the continued return of capital to shareholders in the form of share buybacks and dividends during the year.

In line with stronger revenue, trade receivables increased by 13% to £24.6m (2014: £21.8m). Trade and other payables increased by £4.0m to £31.6m (2014: £27.6m) primarily due to an increase in deferred revenue in line with trading and an increase in the accrual for NI on share-based incentives outstanding. Our deferred tax asset, representing future tax benefits from share-based incentives, is higher at £6.8m (2014: £4.5m) due to a larger potential tax benefit being recognised in relation to outstanding share-based incentives as a result of the growth in the share price during the year.

Cash flow

Rightmove continues to see strong cash generation and to return all free cash generated to shareholders. Predictable cash flows reflect the subscription nature of the business coupled with low working capital requirements. Cash generated from operating activities was £143.2m (2014: £125.4m) representing an operating cash conversion in excess of 100%.

Tax payments increased to £26.9m (2014: £17.1m) and £0.2m (2014: £0.1m) was paid in relation to bank charges and facility fees resulting in net cash from operating activities of £116.1m (2014: £108.2m).

Capital expenditure of £1.8m (2014: £1.1m) reflects ongoing investment in our website infrastructure.

During the year £4.0m was placed in money market deposits in order to obtain a higher interest rate on cash balances.

Proceeds of £0.4m (2014: £0.2m) were received on the exercise of share-based incentives and £0.5m (2014: £0.9m) was applied to purchase shares to fund the Rightmove Share Incentive Plan which was introduced in January 2015.

During 2015, £76.1m was invested in the repurchase of our own shares (2014: £73.9m) whilst a further £36.5m (2014: £29.5m) was paid in dividends reflecting the increased final dividend for 2014 and the 3p increase in the interim dividend this year. This brings the total cash returned to shareholders in the year to £112.5m.

The closing Group cash and money market deposit balance at the end of the year was £12.4m(2014: £11.2m).

Use of cashThe Board's priorities for the use of cash continue to be: investment in the business; payment of progressive dividends; and the return of cash to shareholders via share buybacks. The Board believes that the future working capital and capital expenditure requirements of the business will continue to be low and that the business will again be in a position to return surplus cash to shareholders during 2016 through a combination of dividends and share buybacks.

Robyn Perriss

Finance Director

26 February 2016

(1) Before share-based payments charge of £3,765,000 (2014: £2,728,000) and NI charge of £3,331,000 (2014: £194,000 credit) on share-based incentives.

(2) Before share-based payments charge of £3,765,000 (2014: £2,728,000) and NI charge of £3,331,000 (2014: £194,000 credit) on share-based incentives and no related adjustment for tax.

 STRATEGIC REPORT - Risk Management

Approach to risk management

The Board has overall responsibility for ensuring that risk is effectively managed across the Group. The primary method by which risks are monitored and managed is through the monthly Executive Committee meetings. The subject of risk is included on each monthly agenda and any significant new risks or change in status to existing significant risks is discussed and actions taken as appropriate.

On a bi-annual basis, risk is reviewed across each business area. This review includes a detailed assessment of identified risks, the likelihood of each risk occurring and the potential impact, together with controls and mitigating procedures in place. This information is combined to form a consolidated risk register which is reported to the Executive Committee for review and challenge, ahead of final review and approval by the Board. A nominated Director has responsibility for each risk. The Board reviewed the risk register at the February 2015 and September 2015 Board meetings.

Key areas of focus

We continue to drive improvements to our risk management process and the quality of risk information generated, whilst at the same time maintaining a simple and practical approach. This year the risk management framework has been reviewed by Rightmove Assurance, our outsourced internal audit function, with a presentation to the Audit Committee on key findings including recommendations to enhance the risk management approach beyond the specific requirements of the 2014 UK Corporate Governance Code (the Code) and to implement principal risk dashboards.

STRATEGIC REPORT- Principal risks and uncertainties

A description of the principal risks and uncertainties faced by the Group in 2015, together with the potential impact and monitoring and mitigating activities is set out in the table below.

We recognise that the Group is exposed to risks wider than those listed, however we have disclosed those that we believe are likely to have the greatest impact on the Group delivering its strategic objectives and those that have been the subject of discussion at recent Board and Audit Committee meetings.

STRATEGIC REPORT - VIABILITY STATEMENT

In accordance with provision C.2.2. of the Code, the directors have assessed the viability of the Group over a three year period, taking into account the Group's current position and the potential impact of the principal risks and uncertainties set out on pages 14 to 16. Based upon the robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity, the directors have a reasonable expectation that the Group and the Company will be able to continue in operation and meet its liabilities as they fall due over the three year period to 31 December 2018.

The directors have determined that a three year period to 31 December 2018 constitutes an appropriate period over which to provide its viability statement, being the period considered under the Group's current three-year strategic plan. The three-year plan is reviewed by the directors at least annually and is developed on a segment by segment basis using a bottom up model. The three-year plan makes certain assumptions about Agency and New Homes customer numbers, ARPA growth and other ancillary revenue streams and considers the Group's profitability, cash flows and dividend cover over the period.

The plan is subject to robust downside sensitivity analysis which involves flexing a number of the main assumptions underlying the plan. Where appropriate, analysis is carried out to evaluate the potential financial impact over the period of the Group's principal risks actually occurring. Furthermore our business model is structured so that the Group is not overly reliant on a small customer base with no single customer constituting more than 3% of Group sales.

Also given our significant free cash flow, our ability to adjust our discretionary share buyback programme further provides long-term comfort around viability in the face of adverse economic or competitive conditions.

Whilst this review does not consider all the risks that the Group may face, the directors consider that this stress-testing based assessment of the Group's prospects is reasonable in the circumstances of the inherent uncertainty involved.

STRATEGIC REPORT - Corporate responsibilityOur peopleOur people are our most highly valued asset, they are critical to our success and growth and we are proud of the mixture of talent and experience they bring. Our open and honest cultural style comes from our people and the environment we have created together. We strive to make Rightmove a great place to work and this enables us to attract and retain the best talent and provide the best service for both our customers and consumers.

Recruitment

Recruiting the "right" talent continues to be an important part of our ability to drive growth. The tightening job market, particularly in technology skills makes our working environment and benefits ever more important in attracting the right people.

Referrals from existing employees are a valuable source of new recruits, typically ensuring a higher quality candidate with a better cultural fit. 20% of new employees in 2015 were introduced to Rightmove by an existing employee.

This year we partnered with MK College and the University of Bedford to offer paid internships to design graduates for up to six months to provide graduates with valuable work experience when looking for their first job. This has proved to be a most successful partnership and Rightmove are looking to extend this into other areas of the business in 2016.

High quality recruiting is supported by long term commitment from Rightmove employees. We are proud to now have 40 people who have celebrated ten or more years' service, which represents 10% of our employees and which we believe backs up our impressive people survey results.

People development and training 

To foster our culture of highly connected and empowered employees every new employee attends two office based "How Rightmove fits together" days to introduce them to the business and our customers. They also attend "Nexton" an off-site residential experience to introduce them to our culture and values.

Beyond induction, Rightmove is committed to investing in our employees through extensive training and leadership programmes that are designed to equip them with the necessary skills to perform to the best of their ability and provide the best possible service to our customers and consumers.

We have also developed a suite of internal development courses for our employees covering both technical and non-technical skills to further invest in our people and in recognition of the benefit in providing continual professional and personal development for Rightmovers.

Employee Benefits

Whilst we believe that that being a great place to work helps us attract the best talent we also reward our employees with a range of additional benefits.

Rightmove contributes towards a group stakeholder pension plan. Opt out rates continue to be low and currently 91% of employees are members of the pension plan. We also offer private healthcare complemented by a cash plan scheme to all employees.

We want our people to directly benefit from the success their talent and hard work brings to Rightmove. All employees can join the Group's Save As You Earn Scheme (Sharesave), which allows employees to save money from their salary with the option to purchase shares at a discount after three years. In November 2015, the Group's seventh Sharesave contract matured allowing employees to benefit from the continued success of the Group over the last three years. 65% of our employees currently participate in the Sharesave.

In January 2015 we made a free share award of 100 shares to all qualifying employees through the Rightmove Share Incentive Plan. In December 2015 we communicated to all employees that we were making a further free share award of 50 shares to all qualifying employees in January 2016.

We also offer flexible working arrangements, supporting part time working and reduced hours to allow our employees to balance their work and family commitments.

Engagement

We encourage employees' involvement and place emphasis on keeping employees informed of the Group's activities via 'townhalls' and business performance updates with senior management and quarterly sales conferences. In 2015 to celebrate our 15th birthday, Rightmove brought the whole Group together for camping, team building and our annual Summer party.

During 2015, our employee recognition scheme, which is based around the 'Rightmove behaviours' which reflect our unique blend of values and ways of working and which is an opportunity to nominate colleagues who have demonstrated these behaviours in action, continued to prove popular with up to eight awards presented every two months at our 'townhalls'.

As it is important to us to know what our employees think and having received such valuable feedback in the past, we conduct an annual 'Have your Say' people survey.

Again in 2015 we are proud of our outstanding results from the survey with highlights including:

· 91% of respondents saying Rightmove is a great place to work;

· 96% of respondents committed to making a real contribution to the success of Rightmove; and

· 92% of respondents enjoy working in their team.

Despite the outstanding results from the survey, the management team is working hard to improve the results in 2016. To recognise the importance of employees in the continuing success of Rightmove an employee engagement score will form part of the senior management bonus criteria in 2016.

Equality and diversity

Rightmove has a firm commitment to equality of opportunity in all our employment policies, practices and procedures. Our recruitment and selection processes are geared to selecting the best candidate regardless of their age, gender, sexuality, full or part-time status, disability and marital status.

We recognise that a diverse workforce will provide a wide array of perspectives that promotes innovation and business success. Drawing on what is unique about individuals adds value to the way we do business and helps us anticipate and provide what our customers want from us.

For the year ended 31 December 2015, one out of three executive directors were female. Our female representation on the Board is 25%, with two out of eight Board directors being female.

The Board continues to focus on the next level of senior management in order to develop potential within this team to step up to Board level at the appropriate time and to identify and develop potential within the wider organisation with a view to strengthening the female representation within the senior management team. In 2015, 24% (2014: 28%) of our senior management team were female.

A breakdown by gender of the number of persons who were directors of Rightmove, senior managers and other employees as at 31 December 2015, is set 

Human rights

Whilst Rightmove does not have a specific human rights policy, it does have policies such as Equal Opportunities and an Anti-bribery policy that adhere to internationally proclaimed human rights principles. There is also a gifts and hospitality policy and an online register to record all gifts and hospitality that are accepted by employees.

Charitable activityWe continue to encourage all our employees to devote time and fundraising efforts to charitable causes that are of particular importance to them as individuals. During 2015 many of our staff have been active in raising money or supporting fundraising activities across a wide range of charities for which Rightmove matches the donations raised. In 2015 we contributed £56,000 to UK charities through matched funding. Our employees are also able to donate directly from their monthly salary to any charity or recognised good cause registered within the UK through the Charities Trust. This provides a tax efficient means of giving.

In 2015, we contributed £41,000 to support customer initiatives via Agents Giving, where we will contribute to the costs of the setting up of a charitable activity carried out by our customers, for example paying for the kit to be used at a charity football match. This allows for more of the money raised by our customers to go directly to the charity through a charitable sponsorship fund we set up in 2014 in conjunction with Agents Giving. In 2015 the fund raising activities by our customers that we have supported will raise nearly £500,000 for UK charities.

EnvironmentRightmove actively considers its environmental impact and we are conscious of playing our part in tackling climate change. Rightmove reduces the need for print media and the environmental damage that goes with it. 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 and size of photographs of each property, improved the size and added functionality to property floor plans and has introduced more comprehensive map searches and aerial photographs which help home hunters to identify the specific location of a property. Rightmove has added information on which schools are closest to the properties listed and the broadband speed for the area, all of which combined, provides high quality information about properties, to reduce the carbon footprint generated by prospective buyers making wasted journeys.

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 property.

As an internet-based Group with most staff employed in two office locations, we believe our own environmental footprint is small. We encourage our staff to take steps to address our environmental responsibilities. For instance, we continue to operate recycling schemes which were established in consultation with local authorities and recycling partners. All waste bins were removed from the desks in our London and Milton Keynes offices which encourages and increases the amount of recycling we do.

As an operator of an online property portal, the main environmental impact is the power usage of our data centres. Our procurement policy is to purchase hardware with the best computational performance which uses the least electrical power.

We encourage our employees to use alternatives to car travel, by promoting the use of public transport in particular when travelling between our two office locations and by encouraging participation in our Cycle to Work scheme.

In 2015, our fuel card provider, Allstar, partnered with Forest Carbon to capture the CO2 emissions from our fleet of company cars and turn it into new UK woodlands, under the Allstar Ecopoint scheme. We pay an amount per month per car to capture all of the CO2 from each vehicle and with that Forest Carbon plant woodlands that are quality assured by the Governments' Woodland Carbon Code to offset the emissions from each vehicle. We are provided an e-certificate annually which shows us how many trees have been planted for us, as well as their location and how much CO2 they are expected to capture.

As an online business, our culture emphasises a paperless environment. We also recognise that our responsibilities do not stop with how we operate internally; we encourage all our customers, business partners and suppliers not to unnecessarily print out emails sent by us in the signature of all our emails. We also continue to focus on streamlining processes and replacing paper-based services with online services and communications, wherever possible. Steps introduced in recent years includee-communications to shareholders and online customer membership forms and product documentation.

Greenhouse gas reporting

Since 1 October 2013, the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 has required all UK quoted companies to report on their greenhouse gas (GHG) emissions, which are classified as either direct or indirect and which are divided further into Scope 1, Scope 2 and Scope 3 emissions.

Direct GHG emissions are emissions from sources that are owned or controlled by Rightmove. Indirect GHG emissions are emissions that are a consequence of the activities of the Group but that occur at sources owned or controlled by other entities.

Scope 1 emissions: Direct emissions controlled by the Group arising from Company cars. Whilst the cars are leased, we are responsible for the emissions and therefore we report these under Scope 1.

Scope 2 emissions: Indirect emissions attributable to the Group due to its consumption of purchased electricity.

Scope 3 emissions: Other indirect emissions associated with activities that support or supply the Group's operations, we include emissions arising from our third party run data centres.

The Group is required to report Scope 1 and 2 emissions for its reporting year to 31 December 2015. Scope 3 is not yet mandatory, however the Group has again chosen to report Scope 3 emissions as it relates to electricity used in data centres, in which the Group rents space to house and operate various servers, which host our website platforms.

Rightmove emissions by scope:

(1) UK emissions factors have been used for all data. All emission factors have been selected from the emissions conversion factors published annually by Defra. https://www.gov.uk/measuring-and-reporting-environmental-impacts-guidance-for-businesses.

Emissions have also been calculated using an 'intensity metric', which will enable the Group to monitor how well we are controlling emissions on an annual basis, independent of fluctuations in the levels of their activity. As Rightmove is a 'people' business, the most suitable metric is 'Emissions per Employee', based on the average number of employees during the year. The Group's emissions per employee are shown in the table below.

Emissions per Employee

(1) Based on 412 (2014: 388) employees taken as the average number of employees in the Group throughout the year.Emissions per employee remain broadly the same year on year. We will continue to monitor and look for ways to improve energy efficiency.

In January 2016, we submitted our first Energy Savings Opportunity Scheme (ESOS) report, a mandatory energy assessment introduced by the Government in 2015. The report has highlighted only one area for improvement and minor potential savings in relation to sub-metering of our office air conditioning units.

Methodology

We have reported on all of the emission sources required under the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013. We have used the GHG's Protocol's Operational Control consolidation method. We do not have responsibility for any emission sources that are not included in the above information.

Health and safetyThe Group considers the effective management of health and safety to be an integral part of managing its business. During 2015, we continued our fire safety, first aid 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.

 GOVERNANCE - DIRECTORS AND OFFICERS

Scott ForbesChairman

Appointment to the Board

13 July 2005 

Committee membership

Nomination (Chairman) 

Current external commitments

Chairman of Innasol Group Limited

Chairman of Ascential plc 

Previous roles and relevant experience

Chairman of Orbitz Worldwide until September 2015. Director of NetJets Management Ltd, a subsidiary of Berkshire Hathaway until October 2009. Chief Executive of Bridge Capital Advisors Ltd. Scott has over 30 years' experience in operations, finance and mergers and acquisitions including 15 years at Cendant Corporation which was formerly the largest worldwide provider of residential property services. Scott established Cendant's international headquarters in London in 1999 and led this division as Group Managing Director until he joined Rightmove.

Nick McKittrickChief Executive Officer 

Appointment to the Board

5 March 2004

Current external commitments

None

Previous roles and relevant experience

Nick is one of the co-founding executives and became Chief Executive Officer in April 2013 having been Chief Operating Officer since 2005 and additionally Finance Director since 2009. His prior experience is in technology consulting with Accenture.

Peter Brooks-JohnsonChief Operating Officer

Appointment to the Board

10 January 2011

Current external commitments

None

Previous roles and relevant experiencePeter joined Rightmove in 2006 and became Chief Operating Officer in April 2013 having been Managing Director of rightmove.co.uk since 2011 and Head of the estate agency business since 2008. Prior to joining Rightmove, Peter was a management consultant with Accenture and the Berkeley Partnership.

Robyn PerrissFinance Director

Appointment to the Board30 April 2013

Current external commitments

None

Previous roles and relevant experience

Robyn joined Rightmove in 2007 as Financial Controller with responsibility for day to day financial operations, was appointed Company Secretary in April 2012 (until July 2014) and promoted to the Board as Finance Director in April 2013. Robyn qualified as a chartered accountant in South Africa with KPMG and worked in both audit and transaction services. Prior to joining Rightmove, Robyn was Group Financial Controller at the online media business, Auto Trader.

Peter Williams

Senior Independent

Non-Executive Director

Appointment to the Board

3 February 2014

Committee membership

Remuneration (Chairman), Audit, Nomination

Current external commitments

Chairman of boohoo.com plc

Chairman of Mister Spex GmbH

Senior independent non-executive director of Sportech plc

Non-executive director of U and I plc

Previous roles and relevant experience

Peter was previously senior independent director of ASOS plc, Chairman of Jaeger, held non-executive director roles in Cineworld Group plc, the EMI group, Blacks Leisure Group plc, JJB Sports plc, GCap Media plc and Capital Radio Group plc. In his executive career, he was Chief Executive at Alpha Group plc and prior to that, Chief Executive of Selfridges plc where he also acted as Chief Financial Officer for over ten years.

Ashley MartinNon-Executive Director

Appointment to the Board11 June 2009

Committee membership

Audit (Chairman), Nomination

Current external commitments

Group Chief Financial Officer of Engine Holding LLC

Previous roles and relevant experience

Ashley qualified as a chartered accountant in 1981 and has a career in finance spanning 30 years. He was previously Finance Director of Rok plc, the building services group, and Group Finance Director of the media services company, Tempus plc.

Colin KempNon-Executive Director

Appointment to the Board3 July 2007

Committee membership

Remuneration, Nomination

Current external commitments

Head of Strategic Projects for the Lloyds Banking Group, Retail Business

Previous roles and relevant experience

With over 30 years' experience in high street retail banking, Colin has worked for Lloyds Banking Group companies since 1979. Between January 2005 and December 2007, Colin was Managing Director of Halifax Estate Agencies Limited. Colin is a Cranfield MBA and an Associate of the Chartered Institute of Marketing.

Rakhi Parekh

Non-Executive Director

Appointment to the Board

28 July 2014

Committee membership

Audit, Remuneration

Current external commitments

Non-executive director of Intu Properties plc

Non-executive director of Be Heard Group plc

Non-executive director of Kingfisher plc

Previous roles and relevant experience

Rakhi was previously Director of UK Media at Amazon to June 2014. She held various other senior positions during her 11 year tenure at Amazon including Media, Entertainment, General Merchandise and Book divisions as well as Product Development. Prior to Amazon, Rakhi previously advised Zappos and held strategy roles at TomTom and Oliver Wyman.

Jenny Warburton

Company Secretary

Appointment to the Board

1 July 2014

Current external commitments

None

Previous roles and relevant experience

Jenny joined Rightmove in 2011 as Assistant Company Secretary and was promoted to Company Secretary in 2014. She is an Associate of the Institute of Chartered Secretaries and Administrators. Prior to joining Rightmove Jenny was the Assistant Company Secretary at Jacques Vert plc and before that held various senior management roles within the Aurora Fashions Group and Mosaic Fashions Group.

CORPORATE GOVERNANCE REPORT

IntroductionThe following sections explain how the Company applies the main provisions set out in the 2014 UK Corporate Governance Code, (the Code) issued by the Financial Reporting Council (FRC), as required by the Listing Rules of the Financial Conduct Authority (FCA) and meets the relevant information provisions of the Disclosure and Transparency Rules of the FCA.

The statement of corporate governance covers the following areas:

· The structure and role of the Board and its committees;

· Relations with the Company's shareholders and the Annual General Meeting (AGM); and

· The reports of the Audit Committee and Nomination Committee including Board effectiveness and evaluation.

The report of the Remuneration Committee is set out separately in the Directors' Remuneration Report on pages 48 to 49 and 60 to 76.

The Group's risk management and internal control framework and the principal risks and uncertainties are described on pages 14 to 16 and 38 to 39. The Directors' Report on pages 43 to 46 also contains information required to be included in this statement of corporate governance.

Statement of compliance

The Code sets out the principles and provisions relating to good governance of UK listed companies. We are pleased to confirm, that for the year under review, the Group has complied fully with the principles and provisions of the Code.

Further information on the Code can be found on the FRC's website at https://frc.org.uk.

The Board's role

The Board is collectively responsible to shareholders for the overall direction and control of the Group and has the powers and duties set out in the relevant laws of England and Wales and the Company's Articles of Association. The Board delegates certain matters to the Board committees and delegates the detailed implementation of matters approved by the Board and the day to day operational aspects of the business to the executive directors. The Board's main responsibilities and the key actions carried out during the year are set out below:

The Board has adopted a formal schedule of matters requiring specific approval. These include:

· The approval of the annual business plan;

· Review of Group strategy;

· Changes to the Group's capital structure;

· Approval of the dividend policy;

· Acquisitions and disposals;

· Appointment and removal of officers of the Company;

· Approval of annual and half-year results and shareholder communications; and

· System of internal control and risk management.

The Board normally schedules seven or eight meetings each year although meetings can be scheduled at short notice at the request of any director, if required. In addition to formal Board meetings, there is regular informal dialogue between all directors.

The Board receives meeting papers sufficiently in advance of the meetings to allow time for 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 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.

Board committees

The Board has established three principal committees, the Audit Committee, the Remuneration Committee and the Nomination Committee, to assist it in the execution of its duties. The Chairman of each Committee provides a report or update of each meeting of the respective Committee to the Board at the subsequent Board meeting.

The Committees' terms of reference are available on the Company's corporate website, plc.rightmove.co.uk or by request from the Company Secretary.

Each of the Committees is authorised, at the Company's expense, to obtain legal or other professional advice to assist in carrying out its duties. 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.

Current membership of the Committees is shown on page 32. The composition of these Committees is reviewed regularly, taking into consideration the recommendations of the Nomination Committee.

Board composition

The Board at the date of this report comprises three executive directors and five non-executive directors, including the Chairman. The three executive directors are Nick McKittrick (Chief Executive Officer), Peter Brooks-Johnson (Chief Operating Officer) and Robyn Perriss (Finance Director). The non-executive directors are Scott Forbes (Chairman), Peter Williams (Senior Independent Director), Ashley Martin, Colin Kemp and Rakhi Parekh.

Biographical details of all directors at the date of this report appear on pages 23 to 25 and details of their Committee membership appear on page 32.

Consideration of the Board size and composition is kept under regular review by the Nomination Committee.

Board changes

In May 2015, Jonathan Agnew and Judy Vezmar retired from the Board and relevant Committees both having served nine years. All other directors served throughout the year. Peter Williams became the Senior Independent Director and Chairman of the Remuneration Committee in May 2015.

Division of responsibilities

The posts of Chairman and Chief Executive Officer are separate and there are clear written guidelines to support their division of responsibilities. The key responsibilities of the Board members are summarised below:

Board diversityWe are committed to a Board comprised of directors from different backgrounds, diverse and relevant experience, perspectives, skills and knowledge. We believe that diversity, including gender diversity, amongst directors contributes towards a high performing and effective Board. We strive to maintain the optimal balance. As at 31 December 2015, 25% (2014: 25%) of Board members were female. Consequently, the Board has met its minimum target representation level to be achieved by 2015, as recommended by the Davies Review

Board independence

The Code provides that the Board should identify in the Annual Report each non-executive director that it considers to be independent. That is, to determine whether the director is independent in character and judgment and whether there are relationships or circumstances which are likely to affect, or could appear to affect, the director's judgment.

The Board reviews non-executive director independence on an annual basis taking into account such factors as their contribution to unbiased and independent debate during meetings. The Board considers that there is an appropriate balance between the executive (37.5%) and non-executive directors (62.5%) and that all non-executive directors are fully independent of management and independent in character and judgment.

To safeguard their independence, a director is not entitled to vote on any matter in which they may be conflicted or have a personal interest. Where necessary, directors are required to absent themselves from a meeting of the Board while such matters are being discussed. In cases of doubt, the Chairman of the Board is responsible for determining whether a conflict of interest exists.

The Chairman is also the Chairman of another publically listed company. The executive directors do not hold any other non-executive directorships or commitments requiring disclosure under the Code.

Board tenure as at 31 December 2015 Balance of directors as at 31 December 2015

Re-election to the Board

Directors are appointed and may be removed in accordance with the Articles of Association of the Company and the provisions of the Companies Act 2006. All directors are subject to election at the first AGM following their appointment and to re-election at intervals of no more than three years in accordance with the Company's Articles of Association. However, following changes to the Code, all directors will seek re-election at the 2016 AGM, in accordance with the Code provision B.7.1.

Board and Committee membership and attendance

The membership of the Committees of the Board and attendance at Board and Committee meetings for the year under review are set out in the table below: 

(1) Jonathan Agnew and Judy Vezmar retired from the Board and relevant Committees on 7 May 2015. They attended all meetings up until that date.

(2) The Remuneration Committee Chairman has requested that the Chairman of the Board attend the Remuneration Committee meetings.

(3) Rakhi Parekh was appointed to the Audit Committee and Remuneration Committee in May 2015. Prior to that she attended those meetings by invitation. She was invited to attend two Nomination Committee meetings on a guest basis.

(4) Peter Williams was appointed to the Audit Committee meetings and Nomination Committee in May 2015. Prior to that he attended the meetings by invitation.

(5) Ashley Martin stepped down from the Remuneration Committee and was appointed to the Nomination Committee in May 2015.

In addition to the above meetings, the Chairman conducts meetings with the non-executive directors without the executive directors being present when required. Peter Williams, 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.

Indemnification of directors

The Articles of Association of the Company allow for a qualifying third party indemnity provision between the Company and its directors and officers, which remains 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. Neither our indemnity nor the insurance provides cover in the event that a director is proven to have acted dishonestly or fraudulently.

The Group has written policies in compliance with an internal code of securities dealings in relation to the process and timing for dealing in shares, which is 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.

Shareholder relations

The Board is accountable to shareholders for the performance and activities of the Company and welcomes the opportunities to engage with shareholders.

Within the terms of the regulatory framework, the Company has conducted regular dialogue with institutional 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 Chief Executive Officer and the Finance Director. The Chairman attends certain investor meetings in the UK and typically participates in the USA investor meetings. The Senior Independent Director is also available to shareholders if they wish to supplement their communication, or if contact through the normal channels is inappropriate.

The Board is kept informed of the views and opinions of those with an interest in the Company through reports from the Chief Executive Officer and the Finance Director, as well as reports from the Company's joint brokers, UBS and Numis.

Shareholders are also kept up to date with the Group's activities through the half year results statement and Annual Report and the investor relations section of its website, at plc.rightmove.co.uk, which provides details of all the directors, latest news including financial results, investor presentations and Stock Exchange announcements.

Annual General Meeting

The AGM is an opportunity for shareholders to vote on certain aspects of the Company's business, and to ask questions of the directors, who will also be available for discussions with shareholders prior to and after the meeting. The AGM will be held on 5 May 2016 at the offices of UBS Limited at 1 Finsbury Avenue, London, EC2M 2PP.

The Company will arrange for the Annual Report and related papers to be available on the Company's corporate website at plc.rightmove.co.uk or posted to shareholders (where requested) so as to allow at least 20 working days for consideration before the AGM.

The Company also complies with the 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 identifiable. 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.

Audit Committee report

Dear shareholder

I am pleased to present the 2015 report of the Audit Committee (the Committee).

The Committee is an essential part of Rightmove's governance framework to which the Board has delegated oversight of the Group's financial reporting, internal controls, outsourced internal audit function and the relationship with the external auditors.

The terms of reference for the Committee were reviewed during the year with the key responsibilities as follows:

A significant change in the Group's internal control framework last year was the appointment in December 2014 of PricewaterhouseCoopers LLP (PwC) to provide an outsourced internal audit function known as 'Rightmove Assurance'. During the year we have established a Rightmove Assurance Terms of Reference and approved a plan for a two year cycle of work focusing on both core financial processes and specialist reviews of certain key risk areas. We will continue to monitor and review the effectiveness of the Group's internal control and risk management systems with the support of this new function.

The Committee welcomes the changes to the revised UK Corporate Governance Code and the Financial Reporting Council's Guidance on Risk Management, Internal Control and Related Financial and Business Reporting, published in September 2014. These changes apply to the Group for the first time this year and have been areas of focus for the Committee.

This report also outlines the significant accounting matters which received our particular focus during the year. It seeks to explain why the issues are considered significant and together with the external auditors' report provides additional context for understanding the Group's accounting policies and financial statements for the year.

In May 2015 Jonathan Agnew and Judy Vezmar retired from the Board and Committee. On behalf of the Committee, I would like to thank them for the wisdom and experience they have brought to the Committee's deliberations over many years. We were pleased to welcome Peter Williams and Rakhi Parekh as members of the Committee from May 2015.

I will be available at the AGM to answer any questions about the work of the Committee.

Ashley MartinChairman of the Audit Committee

 Composition and attendance at meetings

(1) Judy Vezmar and Jonathan Agnew retired from the Board and the Committee on the 7 May 2015.

(2) Peter Williams and Rakhi Parekh were appointed to the Committee with effect from 7 May 2015.

The Committee is comprised entirely of independent non-executive directors, the biographical details of whom can be found on pages 23 to 25. The Board is satisfied that both Ashley Martin and Peter Williams have recent and relevant financial skills and experience. Both have professional qualifications with the Institute of Chartered Accountants of England and Wales.

The Finance Director and the Head of Finance are normally invited to attend the meetings as well as the external auditor, KPMG and the internal auditor, PwC. Other relevant people from the business are also invited to attend certain meetings in order to provide a deeper level of insight into certain key issues and developments. The Committee regularly meets separately with the external and internal auditors without others being present.

The quorum for meetings of the 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 independent.

The Committee Chairman briefs the Board on the matters discussed at each Committee meeting and the effectiveness of the operation of the Committee was reviewed as part of the effectiveness review of the Board and its committees in December 2015.

Principal activities of the Committee during the year

The principal activities of the Committee through the year, and the manner in which it discharged its responsibilities are described below:

Financial reporting

The primary role of the Committee in relation to financial reporting is to review with both management and the external auditor the appropriateness of the half year results statement and the Annual Report and financial statements including, amongst other matters:

· The quality and appropriateness of accounting policies and practices;

· The clarity of the disclosures and compliance with relevant financial reporting standards and governance reporting requirements;and

· Key accounting issues or matters in which significant judgements have been applied.

At the request of the Board, the Committee was asked to consider whether the 2015 Annual Report and accounts, taken as a whole, is fair, balanced and understandable and provides the necessary information for shareholders to assess the Group's performance, business model and strategy, and has concluded that this is the case.

The significant areas of judgment considered by the Committee in relation to the 2015 Annual Report and how these were addressed were:

Revenue recognition

The timing of revenue recognition in relation to the billing of subscription fees and additional products and services and the accounting for any membership offers to customers with discounted or free periods. This was a prime area of audit focus with KPMG performing detailed analytical procedures using computer assisted audit techniques throughout the year on amounts billed to the two largest customer groups (Agency and New Homes), together with the billing of Overseas customers, investigating any anomalies and outliers identified and providing detailed reporting to the Committee in this regard. The Committee discussed any reported anomalies highlighted by KPMG ensuring that adequate explanations were received from management in line with their business understanding.

In addition the Committee received regular updates from management discussing current customer offers and their impact on revenue recognition.

As this area is of higher audit risk the Committee also received detailed verbal and written reporting from KPMG on this matter. The Committee was satisfied with the explanations provided and conclusions reached.

Share-based incentives and the related deferred tax balance

The external auditors and Committee discussed the audit plan and assessed the risks associated with share-based incentives and the related deferred tax balances and concluded that it was no longer a significant audit risk area. It remains an area of judgement for management given the technical complexity of the calculations and the assumptions around the rate at which the related deferred tax asset is likely to reverse. 

Internal audit

The Group established an outsourced internal audit function provided by PwC during 2015 known as Rightmove Assurance. The aim of Rightmove Assurance is to provide independent and objective assurance on the effectiveness of internal control, risk management and governance processes.

During the year and in accordance with the approved internal audit plan, Rightmove Assurance has carried out reviews in respect of: certain core financial processes, the robustness of the risk management framework in the context of the new Corporate Governance Code, options in relation to the provision of mortgage content on the rightmove.co.uk website, the identification and prevention of certain fraudulent online activities by third parties against Rightmove and the systems and controls in place to prevent the loss or malicious publication of Rightmove data. Reports setting out their principal findings and agreed management actions were discussed by the Committee.

External audit

KPMG has been the Group's auditors since 2000. Following the 2012 revision of the UK Corporate Governance Code by the Financial Reporting Council, a decision was made by the Committee to formally tender the provision of audit and taxation services to the Group. A comprehensive tender and review process was concluded in March 2013. The Committee was satisfied that the skills and depth of industry knowledge in the team remained very strong and combined with the fresh perspective of the new audit partner decided that KPMG should be re-appointed as the Group's auditor, with Karen Wightman taking over responsibility as lead audit partner.

The EU Audit Regulations have not yet been formally enacted in the UK, however in October 2015 the Department for Business Innovation & Skills consultation on the legislative implementation of the EU Audit Directive and Regulation, commented that a tender of an audit engagement resulting in the reappointment of the incumbent auditor for an accounting period beginning up to ten years before the application of the new EU Audit Directive and Regulation, effective 17 June 2016 (The EU Regulation), should be treated as a tender for the purposes of the transitional provisions. As KPMG were reappointed in 2013 following a competitive tender process, we therefore anticipate Rightmove's next requirement to tender its audit will be for the 2023 calendar accounting year. These timeframes will also ensure compliance with the provisions of the CMA Statutory Audit Services Order 2014.

The external auditor is required to rotate the audit partner responsible for the Group audit every five years. The current lead partner, Karen Wightman, has been in place for three years.

The Committee also approved the fees of KPMG during the year.

Effectiveness of the external audit process

The effectiveness of the external audit process is dependent on a number of matters. These include the quality, continuity, experience and training of audit personnel, business understanding, technical knowledge and the degree of rigour applied in the review processes of the work undertaken, together with appropriate audit risk identification at the start of the audit cycle.

The Committee evaluated the effectiveness of the audit process in addressing these matters together with input from management. Areas the Committee considered in this review included the quality of audit planning and execution, engagement with the Committee and management, quality of reporting and capability and experience of the audit team. For the 2015 financial year, the Committee were satisfied that there had been appropriate focus and challenge on the primary areas of audit risk and concluded that the performance of KPMG remained efficient and effective.

Non-audit services

The Committee also discussed its responsibilities to safeguard audit objectivity and independence as well as the needs of the business and agreed that it was practical in certain limited cases for the auditor to be assigned to other non-audit project work due to their knowledge and expertise of the business.

In November 2015 the Committee agreed a policy that management be given authority to incur permitted non-audit fees up to 50% of the annual agreed audit fee in any financial year without the prior approval of the Committee. Thereafter all additional fees will be referred to the Committee in advance, subject to a cap on permitted non-audit fees at 70% of the average audit fees over the three preceding financial years, in line with the forthcoming new EU Regulations. Permitted non-audit fees exclude those services prohibited by the EU requirements, in particular all tax services. Non-audit services required by legislation are not subject to the cap.

In 2015 the non-audit fees were £5,000 in relation to other advisory services and were £10,000 in relation to tax compliance and advice and are fully disclosed in Note 6 of the financial statements. As a result of the forthcoming EU regulations on permitted non-audit services, KPMG will no longer be able to provide tax compliance and advisory services and we have therefore appointed PwC to provide these services in 2016.

Internal controls The Board 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 FRC Internal Control: Guidance to Directors publication 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 improving 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 have 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 2015 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, competitive 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 variances;

· 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 comprehensive disaster recovery and business continuity plan based upon:

· co-hosting of the rightmove.co.uk website across three separate locations which is regularly tested and reviewed; and

· the capability for employees to remote work from home or a third party location in the event of a loss of one of our premises which has been tested for both our London and Milton Keynes offices during the year.

· Regular testing of the security of the IT systems and platforms, regular back ups of key data and ongoing threat monitoring to protect against the risk of cyber attack;

· A treasury function which manages cash flow forecasts and cash on deposit and counterparty risk and is responsible for monitoring compliance with banking agreements, where appropriate; and

· Whistleblowing and bribery policies 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, with advice from the Committee, has considered all significant aspects of internal control for the year and up to the date of this Annual Report. No significant failings or weaknesses were identified during this review. However, had there been any such failings or weaknesses, the Board confirms that necessary actions would have been taken to remedy them.

Nomination Committee report

Dear shareholder 

I am pleased to present the 2015 report of the Nomination Committee (the Committee).

The Committee's role is to regularly review the structure, size and composition (including the skills, knowledge and experience) of the Board, with a view to ensuring the continued ability of the Group to compete effectively in the marketplace, and make recommendations to the Board with regard to any changes.

The terms of reference for the Committee were reviewed during the year with the key responsibilities as follows:

In 2015 the Committee reviewed the organisation and succession plans and conducted its tri-annual, externally facilitated Board evaluation and Board skills and composition review. 

The external Board evaluation was conducted by Echelon Compensation Partners (Echelon) and the Board skills and composition review by Korn Ferry International (Korn Ferry). Echelon have no other connection with the Company. Korn Ferry, an executive search firm, conducted a Board review in 2012 and successfully placed Peter Williams and Rakhi Parekh. Further details on the Board skills and composition review can be found in the section on Board effectiveness and evaluation on pages 41 and 42 of my report below.

Following completion of their third term of service to the Board, both Jonathan Agnew and Judy Vezmar retired from the Board and Committees after the 2015 AGM. The Board now consists of eight directors including five non-executive directors, four of which are considered to be independent. Peter Williams was appointed Senior Independent Director and Remuneration Committee Chairman in May 2015.

I will be available at the AGM to answer any questions about the work of the Committee.

Scott ForbesChairman of the Nomination Committee

Composition and attendance at meetings

(1) During the year Rakhi Parekh, non-executive director, attended the meetings by invitation.

Membership

The Committee is comprised entirely of non-executive directors, the biographical details which can be found on pages 23 to 25. As at 31 December 2015 three out of the four members of the Committee were considered by the Board to be independent. The quorum for meetings of the Committee is two members. At the request of the Committee Chairman, the Chief Executive Officer is normally invited to attend the meeting to discuss the annual organisation and succession plan.

The Chairman of the Company may not chair the Committee in connection with any discussion about the appointment of his successor to the chairmanship of the Company. In these circumstances, the Senior Independent Director will 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 independent.

Principal activities of the Committee during 2015During the year the Committee has:

· Reviewed the Board composition;

· Reviewed the Board committees' composition;

· Approved the plans for the organisation and succession of the executive directors and senior management;

· Agreed the process for and considered the outcome of the Board's external evaluation;

· Considered the diversity of the Board and agreed the policy regarding gender composition on the Board; and

· Conducted an annual review of its terms of reference.

Board induction and training

All new non-executive directors joining the Board undertake a tailored induction programme to meet their individual needs. This covers for example: the operation and activities of the Group (including meeting with members of the senior management team, spending a day on the road with a sales director meeting our customers and attendance at an Agency seminar), the role of the Board and the decision making matters reserved to it, the responsibilities of the Board Committees; and the strategic challenges and opportunities facing the Group.

There are procedures in place for individual Board members to receive training and to seek the advice and services of independent professional advisers, at the Group's expense, where specific expertise or training is required in furtherance of their duties.

Board effectiveness and evaluation

The Board is committed to undertaking annual reviews of its own performance and also the performance of its Committees and individual directors. For the past two years, the Board has undertaken an internal self-assessment. This year, Echelon, an external firm of consultants was appointed to undertake an independent review of the performance of the Board and its Committees together with a Board skills and composition review which was undertaken by Korn Ferry.

The external Board evaluation was conducted by Echelon in the fourth quarter of 2015. The evaluation results including anonymous ratings and comments were summarised in a report and discussed by the Committee and Board in December 2015.

The evaluation concluded that the Board and Committees operate at a high degree of effectiveness with all individuals contributing with plenty of open debate and challenge from all directors. Recommendations for continued development included remaining proactive in the search for the right talent, both at the Board and executive level; further enhancing Board diversity by recruiting more female non executives or non-executives from different ethnic backgrounds; and ensuring that the Group strategy continues to be both communicated and understood at levels beyond the executive management team.

An internally facilitated review of the performance of the Board and its Committees will again be conducted during 2016.

The Board skills and composition review involved a series of Korn Ferry independent interviews with each executive and non-executive director. Questions were intended to identify the Group's strategy and the ideal capabilities and experience required on the Board that will best support the Group's effort to achieve its strategic objectives. The Board skills and composition review also explored corporate governance requirements including compliance with the UK Corporate Governance Code, best practice and diversity policies. Priority capabilities and experience were cross-referenced against the profile of the current Board both at the present time and as of the anticipated dates that directors will retire in order to identify gaps against which the Board's recruitment policy is based.

The work of Korn Ferry was substantially complete in December 2015, with the results of the review to be distributed in a report to the Committee in early 2016. The Committee will review the report and discuss its recommendations with the Board as part of an ongoing process to ensure that the Board operates at a high level of effectiveness fortified by the most appropriate resources in support of the Group's business strategy.

DIRECTORS' REPORTRightmove plc (the Company) is incorporated as a public limited company and is registered in England with the registered number 6426485. The Company's registered office is Turnberry House,

30 Caldecotte Lake Drive, Caldecotte, Milton Keynes MK7 8LE.

The directors submit their report together with the audited financial statements for the Company and its subsidiary companies (the Group) for the year ended 31 December 2015.

Pages 43 to 46, comprise the Directors' Report that has been drawn up and presented in accordance with 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.

Strategic report

The Strategic Report can be found on pages 3 to 22. This report sets out the development and performance of the Group's business during the financial year, the position of the Company at the end of the year and a description of the principal risks and uncertainties facing the Company.

DividendAn interim dividend of 16.0p (2014: 13.0p) per ordinary share was paid in respect of the half year period on 6 November 2015, to shareholders on the register of members at the close of business on 9 October 2015. The directors are recommending a final dividend for the year of 27.0p (2014: 22.0p) per ordinary share, which together with the interim dividend of 16.0p, makes a total for the year of 43.0p (2014: 35.0p), amounting to £25,547,000 (2014: £33,884,000). Subject to shareholders' approval at the Annual General Meeting (AGM) on 5 May 2016, the final dividend will be paid on 3 June 2016 to shareholders on the register of members at the close of business on 6 May 2016.

Share capital

The shares in issue, including 2,322,314 shares held in treasury (2014: 2,505,430) at the year end amounted to 97,741,977 (2014: 99,993,317) ordinary shares of £0.01, with a nominal value of £977,419 (2014: £999,933). The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at general meetings of the Company. Movements in the Company's share capital and reserves in the year are shown in Note 22 and Note 23 to the financial statements. Information on the Group's share-based incentive schemes is set out in Note 24 to the financial statements. Details of the share-based incentive schemes for directors are set out in the Directors' Remuneration Report on pages 48 to 76.

Share buyback

The Company's share buyback programme continued during 2015. Of the 15% authority given by shareholders at the 2015 AGM, a total of 2,251,340 (2014: 3,122,418) ordinary shares of £0.01 each were purchased in the year to 31 December 2015, being 2.3% (2014: 3.1%) of the shares in issue (excluding shares held in treasury) at the time the authority was granted. The average price paid per share was £33.79 (2014: £23.66) with a total consideration paid (inclusive of all costs) of £76,604,000 (2014: £74,384,000). Since the introduction of the new parent company in January 2008, a total of 34,163,431 shares have been purchased of which 2,322,314 are held in treasury with the remainder having been cancelled. A resolution seeking to renew this authority will be put to shareholders at the AGM on 5 May 2016.

Shares held in trust

As at 31 December 2015, 386,057 (2014: 596,499) ordinary shares of £0.01 each in the Company were held by The Rightmove Employees' Share Trust (EBT) for the benefit of Group employees. These shares had a nominal value at 31 December 2015 of £3,861 (2014: £5,965) and a market value of £15,925,000 (2014: £13,409,000). The shares held by the EBT may be used to satisfy share-based incentives for the Group's employee share plans. During the year, 184,842 (2014: 182,125) shares were transferred to Group employees following the exercise of share-based incentives. Additionally 12,700 shares were purchased by the EBT for transfer to the Rightmove Share Incentive Plan in January 2016.

The terms of the EBT provide that dividends payable on the shares held by the EBT are waived.

As at 31 December 2015, 37,800 (2014: 38,300) ordinary shares of £0.01 each in the Company were held by the Rightmove Share Incentive Plan Trust (SIP) for the benefit of Group employees. These shares had a nominal value at 31 December 2015 of £378 (2014: £383) and a market value of £1,559,000 (2014: £863,000). The shares held by the SIP Trust were awarded as free shares to eligible employees on 1 January 2015 and are held in trust for a period of three years before an employee is entitled to take ownership of the shares. During the year, 500 (2014: nil) shares were released early from the SIP in relation to good leavers and retirees under the SIP rules.

Substantial shareholdingsAs 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 5.1 of the Disclosure and Transparency Rules. The information provided below was correct as at the date of notification, where indicated this was not in the current financial year. It should be noted that these holdings are likely to have changed since notified to the Company. However, notification of any change is not required until the next applicable threshold is crossed. 

(1) The above percentages are based upon the voting rights share capital (being the shares in issue less shares held in treasury) of 94,990,407.

(2) Date of notification was not in the 2015 financial year.

DirectorsThe directors of the Company as at the date of this report are named on pages 23 to 25 together with their profiles.

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 AGMs and were not appointed or re-appointed by the Company at, or since, either such meeting. Following the changes to the UK Corporate Governance Code in September 2010, all directors who have served during the year and remain a director as at 31 December 2015 will retire and offer themselves for re-election at the forthcoming AGM.

The Board is satisfied that the directors retiring and standing for re-election are qualified for re-appointment by virtue of their skills, experience and contribution to the Board. The executive directors have service agreements with the Company which can be terminated on 12 months' notice. The appointments for the non-executive directors can be terminated on three months' notice.

The interests of the directors in the share capital of the Company as at the date of this report, the directors' total remuneration for the year and details of their service contracts and Letters of Appointment are set out in the Directors' Remuneration Report on pages 48 to 76. At the date of this report all of the executive directors were deemed to have a non-beneficial interest in 386,057 ordinary shares of £0.01 each held by the trustees of the EBT.

Research and development

The Group undertakes research and development activity in order to develop new products and to continually improve the existing property website. Further details are disclosed in Note 2 to the financial statements on page 89.

Political donations 

During the year the Group did not make any donations to any political party or other political organisation and did not incur any political expenditure within the meanings of sections 362 to 379 of the Companies Act 2006.

Annual General Meeting

The AGM of the Company will be held at the offices of UBS Limited at 1 Finsbury Avenue, London, EC2M 2PP on 5 May 2016 at 10am. The Notice of Annual General Meeting will be published in March 2016.

The resolutions being proposed at the 2016 AGM 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.

One of the items of special business to be addressed at this AGM relates to the requirement in the Companies (Shareholders' Rights) Regulations 2009, which came into force on 3 August 2009 that all general meetings must be held on not less than 21 clear days' notice unless shareholders approve a shorter notice period. At the 2015 AGM, a resolution was passed allowing the Company to call general meetings (other than AGMs) on not less than 14 clear days' notice. As this authority will expire at the 2016 AGM, a resolution will be proposed to renew this authority.

The Company is also seeking approval for the disapplication of pre-emption rights up to a maximum ten per cent of issued ordinary share capital of the Company (excluding shares held in treasury), in line with the revised Statement of Principles of the Pre-Emption group.

AuditorKPMG LLP has confirmed its willingness to continue in office as auditor of the Group. In accordance with section 489 of the Companies Act 2006, separate resolutions for the re-appointment of KPMG LLP as auditor of the Group and for the Audit Committee to determine their remuneration will be proposed at the forthcoming AGM of the Company.

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 auditor is unaware and each such director has taken all reasonable steps to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

Greenhouse gas emissions

Our report of greenhouse gas emissions in line with UK mandatory reporting regulation is provided in the Corporate Responsibility section of the Strategic Report on pages 21 to 22.

Fair, balanced and understandable

The Board has concluded that the 2015 Annual Report is fair, balanced and understandable and provides the necessary information for shareholders and other readers of the accounts to assess the Group's position and performance, business model and strategy.

Responsibility statement of the directors in respect of the annual financial reportWe 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 or loss of the Company and the undertakings included in the consolidation taken as a whole; and 

· The management report required by DTR 4.1.8R (contained in the Strategic Report and the Directors' Report) includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the Group taken as a whole, together with a description of the principal risks and uncertainties they face.

Signed by the Board:

Nick McKittrick Robyn PerrissChief Executive Officer Finance Director

26 February 2016

Statement of directors' responsibilities in respect of the ANNUAL REPORT and the 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 regulations.

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.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent Company and of their profit or loss for that period. 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 judgements 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 business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company's transactions and 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 2006. 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 Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies 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.

GOVERNANCE - DIRECTORS' REMUNERATION REPORT

Annual statement by the Chairman of the Remuneration Committee

Dear Shareholder 

I am pleased to present our Directors' Remuneration Report for Rightmove plc (the Company) together with its subsidiary companies (the Group) for the year ended 31 December 2015. The report is divided into two distinct sections, the Remuneration Policy Report and the Annual Report on Remuneration.

In accordance with the new regulations you were asked to vote separately on these two reports at our AGM held on 7 May 2014. The three year remuneration policy received overwhelming support. We do not propose to make any changes to this policy. For ease of reference, we present the policy on pages 50 to 59.

Our remuneration framework is designed to ensure we reward and incentivise our people to deliver our strategy with a clear emphasis on performance-related pay to reflect the culture of the Group. The overall policy provides below market levels of fixed pay but with above market levels of variable pay opportunity, subject to the achievement of challenging performance measures linked to the Group KPIs. Variable pay is biased toward long-term sustainable performance, through a high level of annual bonus deferral into shares, long-term incentive awards and share ownership guidelines. We believe that the remuneration policy which you approved in 2014 continues to remain appropriate.

As described in the Strategic Report, our 2015 results show strong organic revenue and profit growth. The increase in profit achieved this year once again demonstrates the strength of the Rightmove business model and brand and the effectiveness of our management team.

Performance and reward

In light of the combination of strong Group and executive directors' performance during the year, the Remuneration Committee considers the remuneration paid to the executive directors to reflect fairly their performance during the year. As a result of the financial and operational results of the Group, including growth in underlying operating profit before tax(1) of 16%, the annual bonus entitlement for executive directors was 100% of the maximum for 2015. The Company consolidated its market leading position during the year despite increased and new competition and also achieved substantial growth in other revenue streams resulting in a maximum bonus becoming payable. In aggregate, the performance over the year significantly outperformed the business plan and exceeded the maximum incentive plan targets set at the start of the year and therefore the Committee were satisfied that it was appropriate to pay maximum bonuses.

With regard to the Group's longer-term performance, reflecting the successful implementation of its growth strategy over the last three financial years, the 2013 Performance Share Plan awards (measuring performance from 1 January 2013 to 31 December 2015) will vest in full in March 2016 as a result of delivering normalised EPS(2) growth of 79% and TSR growth of 198% over the performance period, which significantly exceeded the respective growth targets set of 40% and Index +25% over the three year period. The Committee having tested the condition, determined that this result significantly outperformed the maximum incentive plan targets set at the start of the performance period placing Rightmove well into the top quartile of performance across the FTSE250 Index, and so was satisfied that the awards should vest in full.

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

(2) Diluted underlying EPS but with a standard UK tax rate applied.

Remuneration policy for 2016

The Committee continues to believe that the current remuneration policy of providing below market fixed pay (base salary, pension and minimal benefits) and above market variable pay opportunity (short and long-term incentives) for delivery of challenging performance targets remains appropriate for a growth orientated Group.

In summary, the key elements to the remuneration policy are as follows:

· We remain committed to a pay model of below comparative median benchmarks on fixed pay and an above median incentive opportunity.

· Executive directors are to receive inflationary adjustments to base salary levels in line with all employees. Up to 6% of base salary is contributed to the Group pension scheme.

· The annual bonus opportunity provides that 60% of any bonus earned is deferred into the Company's shares for a period of two years.

· Annual award levels under the Company's Performance Share Plan are granted at 200% of salary with challenging underlying earnings per share growth targets.

· Clawback will continue to operate in relation to both deferred annual bonus awards and Performance Share Plan awards. The mechanism through which the clawback can be implemented enables the Committee to (i) reduce the cash bonus earned in a subsequent year and/or reduce outstanding DSP/PSP share awards (i.e. withholding provisions may be used to effect a recovery) or (ii) for the Committee to require that a net of tax balancing cash payment be made to the Company.

· The existing share ownership guidelines will be 200% of base salary for the Chief Executive Officer and 100% of base salary for other executive directors. 

Further details in relation to the remuneration policy, which is expected to operate for at least another year are set out on pages 50 to 59. We are committed to maintaining an open and transparent dialogue with shareholders. We have valued the engagement with, and support of shareholders and we remain focused on disclosing clearly how much our executive directors earn and how this is linked closely to performance.

In 2016 the Committee will turn its attention to the new three year remuneration policy framework to be put to a vote at the AGM in 2017.

Peter WilliamsChairman of the Remuneration Committee

Remuneration Policy Report (unaudited)

Introduction

This report sets out the Company's policy on directors' remuneration for the forthcoming year, and so far as practicable, for subsequent years, as well as information on remuneration paid to directors for the financial year ended 31 December 2015. This report has been prepared in accordance with the Companies Act 2006, the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 (together the Act) and the 2014 UK Corporate Governance Code (the Code).

In accordance with the Act this report has been divided into two sections: a Policy Report and an Annual Report on Remuneration. The Policy Report was put to a binding shareholder vote at the 2014 AGM and received more than 98% votes in favour with an 'Effective Date' of 7 May 2014 for the purposes of complying with the Act. In practice, however, the Remuneration Committee (herein referred to as the Committee throughout this report) applied the policy detailed below from the start of 2014 and expects to apply it throughout the three year policy period that commenced from the Effective Date. For ease of reference, the Policy Report has been represented, albeit with some changes to references and with the removal of the performance scenario charts. A copy of the original report can be found on the Company website at plc.rightmove.co.uk. The Annual Report on Remuneration will be subject to an advisory vote at the 2016 AGM. The parts of the report which have been audited have been highlighted as required by the Act.

Remuneration Policy Report (the Policy Report)

This part of the Directors' Remuneration Report sets out the remuneration policy for the Company and has been prepared in accordance with the Act. The policy has been developed after taking into account Rightmove's pay philosophy that our executives should be rewarded with demonstrably lower than market base salaries and benefits and higher than market equity rewards contingent upon the achievement of challenging performance targets in accordance with the 'best practice' principles set out in the Code and the views of our major shareholders.

The key principles of the Committee's policy are as follows:

· Remuneration arrangements should be simple to explain, understand and administer.

· Remuneration arrangements should be designed to provide executive directors with the opportunity to receive a share in the future growth and development of the Group which is regarded as fair by both other employees and shareholders. This approach should allow the Company to attract and retain the dynamic, self-motivated individuals who are critical to the success of the business.

· Executive directors should have below market levels of base salary, minimal benefits (and only benefits which are made available on the same basis to all Rightmove employees), but with above market levels of variable pay potential. This arrangement is designed to best align the interests of the executive directors with the interests of shareholders and to reflect the performance driven culture of the Company. The Company will generally review market levels of remuneration for executive directors with the assistance of external, independent remuneration consultants and with shareholder consultation every three years.

· Having reviewed executive director remuneration against the market every three years, further changes to remuneration should be made infrequently and those changes made each year should, in most instances, be directly linked to the policies applied to all employees (specifically with regard to cost of living rises in base salary and changes in benefits).

· Executive directors should be principally rewarded for the overall success of the business for which they have collective responsibility. The Group has key short-term and medium/long-term goals and executive directors should be incentivised against these goals.

· Executive directors should not be able to gain significantly from short-term successes which subsequently prove not to be consistent with growing the overall value of the business. Hence a majority of any bonus payable in relation to short-term strategic goals is required to be taken in the form of shares in the Company which are deferred for a further two years after the bonus target has been achieved.

The following table provides an overview of the Committee's remuneration policy, which has been designed to reflect the principles described above:

Remuneration policy

Discretions maintained by the Committee in operating its incentive plans

The Committee will operate the annual bonus plan, PSP and Sharesave Plan according to their respective rules and in accordance with the Listing Rules and HMRC rules where relevant.

The Committee retains discretion, consistent with market practice, in a number of regards to the operation and administration of these plans. These discretions include, but are not limited to, the following:

· The selection of participants in the respective plan;

· The timing of grant of an award (if any) and payments;

· The size of an award and/or a payment (with limits as described in the table above);

· The extent of vesting based on the achievement of performance targets and applicable exercise periods where relevant;

· How to deal with a change of control (e.g. the timing of testing performance targets) or restructuring of the Group;

· Determination of a good/bad leaver for incentive plan purposes based on the rules of each plan and the appropriate treatment chosen including the timing of the delivery of shares;

· Adjustments (if any) required in certain circumstances (e.g. rights issues, corporate restructuring events and special dividends); and

· The annual review of performance measures, targets and weightings for the annual bonus plan and PSP from year to year.

The Committee also retains the ability to adjust the targets and/or set different measures for the annual bonus plan and PSP if events occur (e.g. a material divestment or acquisition) which cause it to determine that the conditions are no longer appropriate and the amendment is required so that the conditions achieve their original purpose and are not materially less difficult to satisfy.

Any use of the above discretions would, where relevant, be detailed in the Annual Report on Remuneration and if appropriate, the subject of prior communication with the Company's major shareholders.

All previous share options, PSP, DSP and Sharesave awards that were granted but remain outstanding at 31 December 2015 (detailed on pages 72 to 73), remain eligible to vest based on their original award terms.

Selection of performance measures and how targets are setThe performance metrics that are used for annual bonus and long-term incentive plans are a subset of the Group's key performance indicators.

For the annual bonus, underlying operating profit before tax(1) is the primary performance metric used as it is aligned to the Group's strategy of delivering profitable growth and is a key financial performance indicator used within the business. Consistent with previous years, operating profit is measured on an underlying basis, to exclude any volatility in relation to the Company's share price in connection with the IFRS 2 valuation and National Insurance charge on share-based incentives granted. The underlying operating profit(1) before tax target is set on a sliding scale based around the business plan for the year, with 25% payable for threshold performance.

The annual bonus also considers performance against other operational metrics, including a traffic market share target, Other revenue and for 2016, an employee engagement target, for a minority of the bonus, with a sliding scale used to determine performance against each measure. Market share is a measure of the size and engagement of our audience and the value which Rightmove, as a media group, brings to our customers. Therefore a challenging target to increase this audience is considered appropriate by the Committee. The Other revenue target will measure growth in revenue from businesses other than Agency and New Homes. Since some of these will be at an early stage, we consider growth in revenue rather than in operating profit to be the appropriate measure and note that this element of the bonus is only a small proportion of the total bonus opportunity.

For the PSP, awards are subject to a combination of EPS and relative TSR performance conditions. EPS is considered the most appropriate financial metric for this particular business at this stage in its development (since it is the measure of profitability that is most closely aligned with shareholders' interests and monitored on an ongoing basis within the business). The policy also recognises that relative TSR should also be a performance measure in order for there to be a clear alignment of executive and shareholder interests. EPS targets are set based on sliding scales that take account of internal financial planning and external analyst forecasts. Only 25% of the EPS element will pay out for threshold performance levels, with the maximum award requiring substantial out-performance. For TSR, the range of targets measure how successful the Company is in out-performing the FTSE250 Index (the Index within which the Company currently resides) with 25% of this part of the award vesting at the threshold performance level, through to full vesting for 25% out-performance of the Index over the three year performance period.

Performance targets do not apply to Sharesave awards since these awards are structured to encourage employees to become share owners and to maintain tax-favoured status the awards must operate on a consistent basis for all employees.

How the views of employees are taken into account

The Company has not to date felt it necessary to consult directly with employees on executive remuneration matters. However, the Committee is kept aware of pay and employment conditions within the wider workforce when setting executive directors' remuneration policy.

[1] Before share-based payments and NI on share-based incentives.

Remuneration policy for executive directors compared to other employees

The Committee will consider the proposed salary increase budget for the whole Group when it is deciding on salary increases for executive directors specifically.

In line with the Company's strategy to keep remuneration simple and consistent, benefits and pension arrangements provided to executive directors are the same as those offered to all Group employees. 

The extent to which annual bonuses are offered varies by level of employee within the Group, with the quantum and performance metrics used determined by the nature of the role and responsibilities and market rates at that level. 

Long-term incentive awards, other than the all-employee Sharesave Plan, are only offered to senior management as those awards are more heavily weighted towards performance-related pay and have a stronger visibility on the value created for shareholders and the reward for participants.

Shareholders' views

The Committee considers it vitally important to maintain open and transparent communication with the Company's shareholders. The Committee will consult with major shareholders before any material change in remuneration policy is approved. The views of shareholders received at the AGM, during meetings with investors and through other contact during the year, are considered by the Committee and contribute to the development of the overall remuneration policy.

Recruitment and promotion policy

The Committee proposes an executive director's remuneration package for new appointments in line with the principles outlined in the table below: 

Directors' service contracts and non-executive directors' terms of appointment

The 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 by the Company of the service agreements of directors or senior executives are considered by the Committee.

The service agreements for the executive directors 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.

In addition, any statutory entitlements or sums to settle or compromise claims in connection with the termination would be paid as necessary.

For Nick McKittrick a payment in lieu of notice will be related to base salary, benefits and projected annual bonus pursuant to the Group's targets being achieved for the year (pro-rated for any unexpired period of notice where appropriate). The Committee is aware that the provision of annual bonus with a payment in lieu of notice is no longer considered in line with best practice. The provision within Nick McKittrick's contract is considered a legacy issue which would not be repeated in any future director's service contract.

For Peter Brooks-Johnson and Robyn Perriss a payment in lieu of notice will be restricted to base salary and benefits.

The treatment for share-based incentives previously granted to an executive director will be determined based on the relevant plan rules. The default treatment will be for outstanding awards to lapse on cessation of employment.

For awards granted under the PSP (approved by shareholders in 2011) 'good leaver' status may be determined, in certain prescribed circumstances, such as death, ill health, disability, redundancy, transfer or sale of the employing company, or other circumstances at the discretion of the Committee. If defined as a good leaver, awards will remain subject to performance conditions, which will be measured over the performance period from grant to the original vesting date, unless the Committee determine to assess performance from grant to the date of cessation, and which will be reduced pro-rata to reflect the proportion of the performance period actually served. The Committee retains the discretion to disapply time pro-rating in exceptional circumstances.

For awards granted under the DSP, 'good leaver' status may be determined for reasons of death, injury, disability, redundancy, transfer or sale of the employing company or other circumstances at the discretion of the Committee. If defined as a good leaver, awards will be retained and vest on the original vesting date.

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.

The Letters of Appointment for the non-executive directors provide for a term of up to two three year periods and a possible further three year term (subject to re-election by shareholders and subject to the director remaining independent). The appointments may be terminated with a notice period of three months on either side and the Letters of Appointment set out the time commitments required to meet the expectations of their roles.

Copies are available for inspection on request to the Company Secretary.

Further details of all directors' contracts and Letters of Appointment are summarised below:

(1) The service contracts and the Letters of Appointment for all directors appointed prior to 28 January 2008, were transferred from Rightmove Group Limited to Rightmove plc with effect from this date on completion of a Scheme of Arrangement under the Companies Act 1985.

(2) Nick McKittrick joined the Group in December 2000 and was appointed to the Board on 5 March 2004. His service with the Group at the date of this report is 15 years and 2 months.

(3) Peter Brooks-Johnson joined the Group on 9 January 2006 and was appointed to the Board on 10 January 2011. His service with the Group at the date of this report is 10 years and 1 month.

(4) Robyn Perriss joined the Group on 1 July 2007 and was appointed to the Board on 30 April 2013. Her service to the Group at the date of this report is 8 years and 8 months.

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 listed or similar company and retain any fees received.Annual Report on Remuneration

Role and membership

Terms of reference

The primary role of the Committee is to make recommendations to the Board as to the Company's broad policy and framework for the remuneration of the executive directors, the Chairman of the Board and the Company Secretary. The remuneration and terms of appointment of the non-executive directors are determined by the Board as a whole.

In accordance with the Code, the Committee also recommends the structure and monitors the level of remuneration for the first layer of management below Board level. The Committee is also aware of, and advises on, the employee benefit structures throughout the Group and ensures that it is kept aware of any potential business risks arising from those remuneration arrangements.

The Committee has formal terms of reference which are reviewed annually and updated as required. These are available on the Company's website at plc.rightmove.co.uk or on request from the Company Secretary.

Membership

The following independent non-executive directors were members of the Committee during 2015. During 2015 the Committee met five times and attendance at the meetings is shown below:

(1) Peter Williams replaced Jonathan Agnew as the Chairman of the Committee on the 7 May 2015.

(2) Jonathan Agnew and Judy Vezmar retired from the Committee and the Board at the 2015 AGM on the 7 May 2015.

(3) Ashley Martin stepped down from the Committee on the 7 May 2015.

(4) Rakhi Parekh was appointed to the Committee on the 7 May 2015. Prior to that she attended two Committee meetings by invitation.

The quorum for meetings of the Committee is two members. The Committee will meet at such times as may be necessary but will normally meet at least five times a year.

The Company Secretary acts as Secretary to the Committee.

Only members of the Committee have the right to attend Committee meetings. The Chairman of the Committee has requested that the Chairman of the Board attend the meetings except during discussions relating to his own remuneration. The Chief Executive Officer may also be invited to meetings and the Committee takes into consideration their recommendations regarding the remuneration of executive colleagues and the first layer of management below Board level. No executive director is involved in deciding their own remuneration. 

External advisorsNew Bridge Street (NBS), a trading name of Aon plc, which is a member of the Remuneration Consultants Group and has signed up to its Code of Conduct, has been retained as the Committee's remuneration advisor since 2011. The terms of engagement between the Company and NBS are available from the Company Secretary on request.

The total fees paid to NBS in respect of services to the Committee during the year were £27,233.

During 2015 NBS provided services to the Company in connection with the valuation of share-based incentives (as required by IFRS 2) and confirmed that, in its view, these services did not present a conflict of interest with the other services provided to the Committee.

The Committee reviews its relationship with external advisors on a regular basis and continues to believe that there are no conflicts of interest.

What has the Committee done during the year?

The Committee met five times during the year to consider and where appropriate, approve key remuneration items including the following:

Pay and incentive plan reviews

· Annual review and approval of executive directors' base salaries and benefits;

· Reviewed year end business performance against relevant performance targets to determine annual bonus payouts and vesting of long-term incentives;

· Reviewed and approved overall remuneration policy for executive directors for 2016, including appropriate benchmarks and performance measures for the annual performance related bonus and 2016 PSP awards to ensure measures are aligned with strategy and that targets are appropriately stretching;

· Ongoing monitoring of senior management remuneration structures;

· Approval of share awards granted under the Deferred Share Bonus Plan (DSP) and the Rightmove Performance Share Plan (PSP); and

· Reviewed and approved an increase in the Chairman's fee following an appropriate benchmarking exercise.

Governance

· Reviewed and approved the 2015 Directors' Remuneration Report;

· Reviewed the 2015 AGM voting and feedback from institutional investors;

· Evaluated the Committee's performance during the year; and

· Reviewed the Committee's terms of reference.

Application of policy for year ending 31 December 2016

Salaries

The executive directors' salaries for the 2016 financial year are set out in the table below: 

The 4% increase in executive directors' salaries is in line with the average workforce increase for 2016 across the Group.

Pension and other benefits

The Group operates a stakeholder pension plan for employees under which the employer contributes 6% of base salary, subject to the employee contributing a minimum of 3% of base salary. Nick McKittrick has chosen not to participate in this arrangement. The Company does not contribute to any personal pension arrangements.

The executive directors are enrolled in the Group's private medical insurance scheme and receive life assurance cover equal to four times base salary. Additionally, the executive directors are members of the Group's medical cash plan.

Annual bonus

The annual bonus for the 2016 financial year will be consistent with the policy detailed on page 52 of the remuneration policy section of this report in terms of maximum bonus opportunity, deferral and clawback provisions. The mechanism through which the clawback can be implemented (enabling both the recovery and withholding of incentive pay) enables the Committee to (i) reduce the cash bonus earned in a subsequent year and/or reduce outstanding DSP/PSP share awards (i.e. withholding provisions may be used to effect a recovery) or (ii) for the Committee to require that a net of tax balancing cash payment be made to the Company. The measures have been selected to reflect a range of financial and strategic targets that support the key objectives of the Group.

The performance measures and weightings will be as follows:

(1) Operating profit before share-based payments and NI on share-based incentives.

(2) Revenue excluding Agency and New Homes.

(3) Based on the results of the annual employee survey.

In relation to the financial target a challenging sliding scale will operate with 25% of the maximum bonus opportunity payable at the threshold underlying operating profit target relative to 2016 business plan through to 100% becoming payable for significant outperformance relative to the plan. A greater proportion of the award will be paid for exceeding on-target performance. The weighting of this performance measure has been reduced to 65% (2014: 70%) to allow for a new 5% employee engagement performance measure, introduced this year, which has been introduced as Rightmove recognises that the engagement and commitment of our employees is considered a key contributor to the Group's financial success. The other target weightings are unchanged from 2014 at 15% traffic market share and 15% other revenue.

The targets themselves, as they relate to the 2016 financial year, are deemed to be commercially sensitive. However, retrospective disclosure of the targets and performance against them will be provided in next year's Annual Report on Remuneration to the extent that they do not remain commercially sensitive at the time.

Long-term incentives

To ensure that the Company's total remuneration is competitive overall, following a wide reaching shareholder pre-consultation exercise, subject to achieving demanding performance targets, the award levels under the PSP were increased to 200% of base salary for all executive directors from 2014.

Consistent with current market practice and previous years, awards to the executive directors under the PSP in 2016 will be subject to a mixture of EPS (75% of awards) and relative TSR (25% of the awards) performance conditions. The 2016 targets are as follows:

EPS condition

The Group's EPS growth will be measured over the period of three financial years (2016 to 2018). The EPS figure used will be equivalent to the Group's basic underlying EPS (before share-based payments, National Insurance on share-based incentives and no related adjustment for tax). With a view to ensuring appropriately stretching but achievable targets are set in light of market expectations for the Group, the following range of targets will apply to the 2016 awards: 

(1) The benchmark underlying basic EPS for the financial year 2015 from which these targets will be measured is 121.4p

As in prior years, the targets that are intended to operate for the 2016 PSP awards were set to be appropriately demanding in light of the Group's internal planning, external market expectations for future growth and the record high base point from which growth would be measured. In the current trading environment, the targets are considered to provide a realistic incentive at the lower end of the performance range but require exceptional performance to achieve full vesting. On this basis, the Committee is satisfied that the range of targets are appropriately demanding, and no less challenging to the range of targets set for 2015 awards.

Relative TSR condition

The vesting schedule for the relative TSR element of executive directors' 2016 PSP awards is set out below. For previous awards, relative TSR has been assessed against the FTSE250 Index, reflecting that the Company was, and continues to be a constituent of this Index and towards the middle or top half of the Index in terms of market capitalisation when the awards were granted. The Company is now positioned well into the top quartile of the FTSE250 Index in terms of market capitalisation and therefore to ensure that the comparator group remains reflective of companies of a comparable size for the 2016 grant, it was felt that it was more appropriate to compare the Company's performance relative to the FTSE350 Index. Performance will continue to be measured over three financial years.

(1) If the FTSE350 Index's TSR was 50% over the three year performance period, then the Company's TSR would have to be at least 75% for all 25% of the PSP shares to vest.

Chairman and non-executive directors' fees

The Chairman and non-executive fees were last reviewed in a market context in 2009 with no increases beyond the default policy level of a cost of living increase in line with the basic level of pay rise received by employees within the business. Therefore it was considered appropriate to ask NBS to carry out a benchmarking exercise in 2015 to ensure that the Chairman and non-executive director remuneration at Rightmove took due account of the continued growth of the Group, current market rates and reflected the current time commitment of the Chairman and non-executives in light of increased responsibilities due to regulatory changes. It was also considered necessary to revise fees so that the Company would be able to recruit a Chairman or non-executive directors of the appropriate calibre in the future allowing for the current size of the Group. Having assessed these factors, revised fees were approved.

The basic non-executive fee has been set at £50,000 (2015: £46,817) with an additional £10,000(2015: £5,852) fee per annum paid for the chairing of the Audit and Remuneration Committees and a further £5,000 (2015: £5,852) fee paid to the Senior Independent Director as detailed in the table below. No further increases are anticipated for a minimum of three years.

(1) Peter Williams became the Chairman of the Remuneration Committee and the Senior Independent Director on 7 May 2015 as Jonathan Agnew stepped down. The fees for 2015 reflect the pro-rated increased fee from that date.

Statement of shareholder voting at AGM

At the AGM on 7 May 2015, 94.62% of shareholders voted in favour of the Directors' Remuneration Report. The Committee believes this illustrates the strong level of shareholder support for the remuneration framework. The table below shows full details of the voting outcomes for the Directors' Remuneration Report:

Directors'

Remuneration

(1) A vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast 'For' and 'Against' a resolution.

In line with the Company's commitment to ongoing dialogue with its shareholders, meetings are offered, where appropriate, to understand the reasons for any potential or actual opposition to the Company's remuneration policy. Changes are made to our policy where it is considered appropriate to do so.

Review of past performance

Share price performance

In 2015, the Company's share price ended the year at £41.25 up 83% year on year (the FTSE250 Index was up 8.36%). On a three year basis the share price has increased by 198% and has continued to outperform the FTSE250 Index over that period as shown in the graphs on page 66.

Total shareholder return (TSR)

The first graph on the next page compares the TSR of Rightmove's shares against the FTSE250 Index and the FTSE350 Index for the period from 1 January 2013 to 31 December 2015. TSR is the product of movements in the share price plus dividends reinvested on the ex-dividend date. TSR provides a useful, widely used benchmark to illustrate the Company's performance over the last three years. Specifically, it illustrates the value of £100 invested in Rightmove's shares and in the FTSE250 Index and the FTSE350 Index over that period.

As required by the Act, the Company's TSR performance is required to be shown against a recognised broad-based share index. The FTSE250 Index was previously chosen as the comparator because Rightmove was, and continues to be, a constituent of this Index and it was therefore also the Index used for the purposes of measuring relative performance for PSP awards. As Rightmove is currently ranked towards the top of that Index in terms of market capitalisation, it is now felt to be more appropriate to use the FTSE350 Index for the purpose of comparing TSR performance against the 2016 PSP awards and therefore this will be used as the criteria applied to 25% of the PSP awards to be granted in March 2016.

The graphs on the next page illustrate, for statutory purposes, the TSR of Rightmove's shares against the FTSE250 Index and the FTSE350 Index for the three and seven years to 31 December 2015.

TSR graph - three years

 Source: Thomson Reuters

This graph shows the value by 31 December 2015, of £100 invested in Rightmove on31 December 2012, compared to the value of £100 invested in the FTSE250 Index and FTSE350 Index, on a daily basis.

TSR graph - seven years

Source: Thomson Reuters

This graph shows the value by 31 December 2015, of £100 invested in Rightmove on31 December 2008, compared with the value of £100 invested in the FTSE250 Index and FTSE350 Index on a daily basis.

Total remuneration for the Chief Executive OfficerThe table below shows the total remuneration figure for the Chief Executive Officer over a seven year performance period. The total remuneration figure includes the annual bonus and long-term incentive awards which vested based on performance in those years:

(1) Ed Williams was Chief Executive Officer until his retirement on 30 April 2013. Nick McKittrick was appointed Chief Executive Officer at this time.

(2) The table above includes share-based incentive awards in the period that the associated performance conditions, excluding service conditions are satisfied. Certain pre-float share option awards prior to 2006, which had only service conditions and no performance conditions would have been included in the single figure remuneration table in the year of grant in accordance with Schedule 8 of the Act. The table above therefore excludes £2,026,674 and £4,151,532 of awards with no performance conditions, which vested in 2009 and 2010 respectively.

Directors' remuneration (audited)

The information included below up to and including page 74 is audited.

The remuneration of the directors of the Company during the year for time served as a director is as follows:

(1) Benefits in kind for the executive directors relate to private medical insurance and the medical cash plan.

(2) The annual bonus amount relates to the accrued payment in respect of the full year results for the year ended 31 December 2015 including the deferred element of 60%.

(3) The value of the nil cost PSPs vesting is calculated by taking the number of nil cost options expected to vest in March 2016 (including dividend roll up), which are dependent on the three year performance period ended 31 December 2015 and multiplying by the year end closing share price of £41.25.

(4) Fee for the year up to retirement from the Board and Committees at the AGM on 7 May 2015.

(5) Fee includes a pro-rated increase from 7 May 2015 for appointment to Remuneration Committee Chairman and Senior Independent Director.

(6) These relate to nil cost PSPs granted to Robyn Perriss prior to her appointment as director.

(1) Benefits in kind for the executive directors relate to private medical insurance and the medical cash plan.

(2) The annual bonus amounts relate to the cash amount paid in respect of the full year results for the year ended 31 December 2014 and the nil cost deferred shares granted in March 2015, which have been valued using the share price at grant date of £27.83.

(3) The value of the nil cost PSPs vesting is calculated by taking the number of nil cost options of which 92.35% vested in March 2015 (including dividend roll up), which were dependent on the three year performance period ended 31 December 2014 and multiplying by the December 2014 closing share price of £22.48.

(4) Fee pro-rated from appointment on 3 February 2014.

(5) Fee pro-rated from appointment on 28 July 2014.

(6) These relate to nil cost PSPs granted to Robyn Perriss prior to her appointment as director.

Defined contribution pension

The Group operates a stakeholder pension plan for employees under which the employer contributes 6% of base salary, subject to the employee contributing a minimum of 3% of base salary. Nick McKittrick chose not to participate in this arrangement. Peter Brooks-Johnson and Robyn Perriss are members of the stakeholder pension plan and during 2015 the Company contributed £22,860 and £21,816 per annum respectively. The Company does not contribute to any personal pension arrangements.

How was pay linked to performance in 2015?

Annual bonus planThe incentive for the financial year ended 31 December 2015 was in the form of a cash bonus of up to 50% of salary and a DSP bonus of up to 75% of salary (i.e. 125% in total). The bonus (both cash and DSP elements) was determined by a mixture of underlying operating profit performance (70%) and key performance indicators (30%) relating to underlying drivers of long-term revenue growth.

When comparing performance against the 2015 bonus targets set, the Committee determined that 100% of the maximum achievable cash and DSP bonus should be paid to the executive directors. Accordingly, a cash bonus of 50% of base salary will be paid to the executives and 75% of base salary will be granted to the executives under the DSP, which will be deferred until March 2018. More details are provided in the table below:

(1) Operating profit before share-based payments and NI on share-based incentives.

(2) The targets relate to all revenue streams except Agency and New Homes.

Long-term incentives

The PSP awards granted in March 2013 were subject to EPS (75% of the awards) and relative TSR (25% of the awards) performance conditions which related to the three year period ended31 December 2015.

The vesting schedule for the relative TSR element of executive directors' 2013 PSP awards is set out below:

At the end of the performance period, Rightmove's TSR was 187.4% compared to 51.6% for the FTSE250 Index. As this level of outperformance is more than 25%, these options will vest in full from 8 March 2016.

Rightmove's EPS growth is measured over a period of three financial years (2013 to 2015). The EPS figure used is equivalent to Rightmove's reported diluted underlying EPS but with a standard UK tax rate applied (Normalised EPS) and the vesting schedule is set out below:

At the end of the performance period, Normalised EPS was 112.9p which from a Normalised EPS base of 63.1p results in growth of 79%, exceeding the maximum 40% EPS growth target and will result in full vesting of this part of the award (maximum of 75%) from 8 March 2016.

In aggregate, the performance over the year was considered exceptional by the Committee who were satisfied that paying maximum bonuses was appropriate.

Share awards granted during the year

On 2 March 2015 Nick McKittrick, Peter Brooks-Johnson and Robyn Perriss were awarded shares under the PSP, which vest in March 2018, and are subject to a mixture of EPS (75% of the awards) and relative TSR (25% of the awards) performance with the greater weighting on EPS to reflect its particular relevance to the performance of the business.

(1) Based on the average mid market share price for the three consecutive days prior to grant, taken from the Daily Official List, of £27.83.

The vesting schedule for the relative TSR element of executive directors' 2015 PSP awards is set out below. It is consistent with the TSR condition used for previous grants under the share option scheme. Performance will be measured over three financial years.

Rightmove's EPS growth will be measured over a period of three financial years (2015-2017). The EPS figure used will be equivalent to the Group's underlying basic EPS (before share-based payments, NI on share-based incentives and no related adjustments for tax).

The following vesting schedule will apply for executive directors' awards granted in 2015:

The benchmark underlying basic EPS for the financial year 2014 from which these targets will be measured is 100.3p.

Share-based incentives held by the directors and not exercised as at 31 December 2015 

(1) On 4 May 2011, the executive directors were awarded nil cost options under the PSP, which vested in full in 2014 and were subject to a mixture of EPS and relative TSR performance which was met in full. Robyn Perriss exercised 6,201 performance shares (which included a dividend roll up of 229 shares) in April 2015, sold 4,558 shares immediately upon exercise at a market value of £32.00 per share and retained 1,643 shares. Nick McKittrick exercised 51,178 performance shares (which included a dividend rollup of 1,889 shares) in September 2015 and sold all the shares immediately upon exercise at a market value of £37.39 per share. Peter Brooks-Johnson exercised 24,605 performance shares (which included a dividend roll up of 908 shares) in September 2015, sold 11,588 shares upon exercise at a market value of £37.34 per share and retained 13,017 shares.

(2) On 2 March 2012, the executive directors were awarded nil cost options under the PSP, of which 92.35% vested in 2015 and were subject to a mixture of EPS performance which vested at 75% and relative TSR performance which vested at 17.35% out of a maximum possible 25%. Robyn Perriss exercised 4,879 performance shares (which consisted of 4,697 shares representing 389 lapsed shares from the original 5,086 shares awarded and a dividend roll up of 182 shares) in April 2015, sold 3,586 shares immediately upon exercise at a market value of £32.00 per share and retained 1,293 shares. Nick McKittrick exercised 37,702 performance shares (which consisted of 36,296 shares representing the original 39,303 shares awarded less 3007 lapsed shares and a dividend roll up of 1,406 shares) in September 2015 and sold all the shares immediately upon exercise at a market value of £37.39 per shares.

(3) The nil cost deferred shares granted under the DSP on 8 March 2013, were exercisable from 8 March 2015 subject to annual bonus targets which were met in full.

Robyn Perriss exercised 2,172 shares in April 2015, subsequently sold 1,596 shares at a market value of £32.00 per share and retained 576 shares.

Peter Brooks-Johnson exercised 11,689 shares in April 2015 and sold all the shares immediately upon exercise at a market value of £30.82 per share.

Nick McKittrick exercised 15,184 shares in September 2015 and sold all the shares immediately upon exercise at a market value of £37.34 per share.

(4) On 2 March 2015 Nick McKittrick, Peter Brooks-Johnson and Robyn Perriss were awarded 7,546, 6,320 and 4,999 nil cost deferred shares respectively under the DSP, which vest in 2017. The average mid market share price for the three consecutive preceding days taken from the Daily Official List and used to calculate the number of shares awarded was £27.83.

(5) On 2 March 2015 Nick McKittrick, Peter Brooks-Johnson and Robyn Perriss were awarded 29,321, 24,556 and 19,425 nil cost shares respectively under the PSP, which vest in 2018, further details are described on page 71.

(6) In October 2011 prior to her appointment as Finance Director, Robyn Perriss was granted 910 Sharesave options. The options vested in 2014 and have an exercise price of £9.88. In April 2015, Robyn Perriss exercised 910 Sharesave options and retained the shares.

Dilution

All existing executive share-based incentives can be satisfied from shares held in the Rightmove Employees' Share Trust (EBT) and shares held in treasury. It is intended that the 2016 share-based incentive awards will also be settled from shares currently held in the EBT or from shares held in treasury without any requirement to issue further shares.

Directors' interests in sharesThe interests (both beneficial and family interests) of the directors in office at the date of this report in the share capital of the Company were as follows: 

· The Company's shares in issue (including 2,322,314 shares held in treasury) as at 31 December 2015 comprised 97,741,977 (2014: 99,993,317) ordinary shares of £0.01 each.

· The closing share price of the Company was £41.25 as at 31 December 2015 (the last day of trading in 2015). The lowest and highest share prices during the year were £21.21 and £41.80 respectively.

· The executive directors are regarded as being interested, for the purposes of the Companies Act 2006, in 386,057(2014: 596,499) ordinary shares of £0.01 each in the Company currently held by the EBT as they are, together with other employees, potential beneficiaries of the EBT.

· The directors' beneficial holdings represent 0.5% of the Company's shares in issue as at 31 December 2015 (2014: 0.5%) (excluding shares held in treasury).

· There have been no changes to the above interests between the year end and the date of this report.

Executive director share ownership guidelines are set out in the Policy Report on page 53. The interests of the executive directors in office at 31 December 2015 in the share capital of the Company as a percentage of base salary were as follows:

Percentage increase in the remuneration of the Chief Executive Officer

The table below shows the movement in the salary, benefits and annual bonus for the Chief Executive Officer between the current and previous financial year compared to that of the total amounts for all employees of the Group for each of these elements of pay.

The CEO's salary increased by 2%, being the same inflationary increase as awarded to all eligible Rightmove employees. The annual bonus of the CEO increased as a result of the maximum bonus being achieved in relation to the 2015 bonus targets, compared with a payout of 70% in 2014.

The average salary and annual bonus for all employees shows a small year on year decline due to a mix effect with the investment in new heads in 2015 primarily being in customer facing roles at lower average salary levels than other Rightmove employees.

Benefit costs have fallen for the CEO and all employees following the renegotiation of our health insurance supply contract on improved terms.