Earnings Transcript for RMV.L - Q4 Fiscal Year 2020

Peter Brooks-Johnson: Good morning, everyone. And welcome to the presentation of Rightmove's 2020 Full Year results. My name is Peter Brooks-Johnson, and I'm joined for the first time by Alison Dolan, our CFO, who joined Rightmove in September. And she'll introduce herself in a moment. This is today's agenda. I'm going to talk through the highlights of the year, Alison is going to go through some of the more detailed financials, and then I'm going to spend some time giving you a little more color on the housing market and our strategic developments. One can't talk about 2020 without talking about how Rightmove has responded to the threats and risks from COVID-19. As the pandemic struck, we acted swiftly to look after our people, support our customers and protect our liquidity. I'll talk about the first two and Alison will cover the last in her section. All our employees moved seamlessly to working from home on the 17th of March and remain so today. I'd like to say a special thank you to all the Rightmovers who have not only looked out for each other, but our customers as well. Well as you will be aware of the significant financial support, we've offered our customers, I think the practical assistance we offered has also been important. This slide gives you a flavor of the practical assistance the team have delivered over the last year, so I won't repeat it. Moving on to the highlights of 2020. In 2020, COVID-19 upended the lives of everyone across the UK. The Rightmove network in fact has emerged stronger than ever as home hunters continue to turn to Rightmove first, and customers begin to invest more in our digital solutions to aid their recovery. 2020 was a record year for traffic, with total time spent on the platform of 15.9 billion minutes, 31% higher than 2019 and our enviable competitive position has strengthened. The first half of 2020 wasn't easy for our customers. With the temporary suspension of the housing market from the 23rd of March to the 13th of May in England, and later in Scotland and Wales. Advertisers on the 31st of December stood at, just shy of 19,200, a fall of 3%. Our Agency customers have been resilient with numbers rising in the second half of 2020. Testament to their flexibility, our branch-based agents have only reduced by just over 200 branches over the course of the year, despite everything thrown at them. The remainder of the dropping customers being the hybrid stock-based agents and New Homes developments, where all the units were sold. As previously announced, we offered a 75% discount for all of our estate agent and New Homes customers from April to July and continue to support the industry with a 60% discount in August and a 40% discount in September. The impact of that can be seen in the 29% fall in revenue and corresponding fall in profit and EPS. Given the uncertainty which unfolded in the first half of last year, we chose to preserve liquidity and cancel the 2019 final dividend and not declare an interim dividend for 2020. I would like to thank shareholders for their support in this. We remain committed to our capital allocation policy. And given the strong trading in the second half of the year, we're resuming our share buyback program and announcing a final dividend of 4.5p. Beyond our KPIs we have made much strategic progress so far this year. Rightmove's purpose is to make home moving easier in the UK. We will satisfy our purpose and drive growth through innovation. We continue to innovate in our heartland of property advertising, with the development of the home hunter part of the website, products and packages. And we continue to innovate to help agents be more efficient. Helping agents become more efficient has always been part of our strategy, as we see as a way of helping them reduce their costs, spending a larger proportion of their revenue on property marketing, and still being more profitable. And we innovate with data to support our customers too. In 2020, we rolled out new tools to help our estate agent and New Homes customers gain vital local insights to make their marketing more efficient. As property advertising will be the core of our growth, we are also innovating to generate future growth. We believe that there is much opportunity in helping home hunters to be transaction ready and have completed phase one of our digital rental journey. And we're looking to the future in the property sales market as well. We're integrating online property auctions on the site. More on all of that later. 2020 has reminded us we're part of a much bigger community and we've redoubled our efforts to ensure Rightmove is playing its part. We continue to actively reduce our carbon emissions, and offset those we cannot avoid while we're also intending to use our platform for good. Alison will talk a little more about our climate goals later. We deeply believe in opportunity for all. I'm pleased that some of our longer-term actions to reduce our gender pay gap are paying off. But we have much more to do and will not rest until we reach parity. Again, we aim to do more beyond our immediate surroundings. And I'm very excited about our new partnership with a charity Generating Genius, who focus on raising the next generation of STEM Leaders from black and ethnic minorities, and those from disadvantaged backgrounds. There's so much excitement for the future. But this is all built on our strong position today. Before I give a little more color to what we've seen more recently, and our strategic position, I'll hand over to Alison to talk about the numbers in more detail.

Alison Dolan: Thanks, Peter. Good morning, everybody. I'm Alison. I'm disappointed not to be able to meet you all in person today, and I look forward to doing that as soon as possible. I joined Rightmove in September, having spent close to four years at News UK as Chief Strategy Officer, where I was primarily focused on subscription growth for the times, the integration of the newly purchased Wireless Group and the growth of News UK's audio products, particularly its podcast output and plans for the launch of Times Radio. Prior to that, I spent 15 years at Sky, where for 12 of those, I was Group Treasurer. I did a number of Divisional Finance Director roles including the technology business and the B2B business, which I then ran for four years before I left in 2016. There are real similarities between Sky business and Rightmove. The subscribing customers are using our product to market their own business to end consumers and to differentiate themselves from their competitors. And our focus is to maximize the value of our proposition to our customers. And this was one of the reasons that I was excited to join Rightmove. It has been a hugely enjoyable six months. I've been struck by Rightmove's clarity of strategy and ambitions for growth, as well as the deep understanding of its market and the businesses of our customers. One of the things that I'm really going to value about being out of lockdown is being better able to absorb some of this understanding. Because not being able to be part of office conversations is one of the things that I found most frustrating about joining a new business during lockdown. So I'm looking forward to a more normal second six months. Now on to the results. As Peter outlined revenue for the year very clearly tells the story of the discounts we provided to our customers, in the light of which, our performance for the year has been very satisfactory. Revenue fell by £83.6 million pounds, 29% to £205.7 million. The revenue bridge on the right separates out the various elements involved. The customer discounts we provided following the market closure on the 23rd of March totaled £89 million. And Agency revenues were the biggest component of that drop, close to £70 million. Stripping out the discount, however, underlying ARPA grew increasing revenues by £13.6 million from a combination of earlier price rises, package upgrades, and increased product take up as customers took advantage of the buoyant market in the second half of the year. New Homes developers also spend more on products during the year. The financial impact of a drop in customer numbers was just over £12 million pounds. And Other revenues, which include our breadth businesses and the Van Mildert revenue is not included in ARPA, grew by about £4 million pounds. The largest of these gains was in Third-Party advertising, which grew by £2.6 million. Other gains included Commercial and Data Services. But the Overseas business fell by just over £1 million pounds due to virus related travel restrictions. Now there are a lot of moving parts making up the discount in ARPA numbers, the discount in particular, which includes non-ARPA revenues. So if we look at ARPA itself, the underlying trend is a little easier to see. Year-on-year including the discount ARPA fell by 28% to £778. However, because 2020 ARPA is so distorted by the effect of the discount, and the fact that 2019's 12-month ARPA only included three months of Van Mildert revenues, three-month trailing ARPA works better as a year-on-year comparison. By October 2020, the discount had been fully unwound, making the final quarter of 2020 a truer picture for ARPA. And also the final quarter of 2019, included Van Mildert in all three months. So on that basis, three-month trailing ARPA for 2020 grew 2% on 2019. We expect a growth profile for 2021 to look more like 2019's growth, possibly a little softer than the 8% we saw in that year, but not too far off. And December 2020's monthly ARPA of £1,103, is we think a pretty good starting base. ARPA growth for 2021 will also be driven more by product growth and package upgrades than it will by price. The cost slide is designed to illustrate the makeup of our cost base and to give you a sense of fixed costs relative to discretionary and variable costs. Just over 50% of our cost base is headcount, and 80% of that relates to our sales, customer service, and product and platform teams. Marketing is our next most significant cost at approximately 18% of total costs. It's almost all discretionary. And we did reduce our marketing spend in 2020 to preserve liquidity. Technology costs represent about 11% of the total. These are all of the costs associated with running the platform and the business, so hosting, licenses, traffic costs, etc. They are broadly fixed, although there are elements that grow as traffic to our sites grows, and that will continue. G&A is also about 11% of the total, rent, staff, travel, costs associated with referencing and rentals, etc. Depreciation and amortization are low for us as we capitalize so little but represented further 5% to 6%. The growth in costs over the last three years reflects investment in our sales and product teams. And 2020 also includes a full year of Van Mildert costs for the first time. Costs have been relatively steady at about 24% of revenues until 2020, when the increase to 33% is purely a function of reduced revenues in 2020. We did make a number of one-off cost savings during 2020 in the face of significant market volatility and to preserve liquidity. Headcount savings were the most significant and were a mixture of furthering some staff members, voluntary salary cuts on behalf of senior management and the Board and a pause in recruitment during the early months of the pandemic. In total, headcount savings amounted to £1.9 million. And these savings will not be repeated during 2020. Other staff related expenses such as travel, training and recruitment fees fell by £2 million as people worked from home and we're not paying recruiters. We also paused a number of outdoor marketing campaigns while people were at home, generating a saving of £0.7 million. Again, neither of these savings will repeat this year. So gross savings of £4.6 million. All but £1.4 million of which was offset by an increase in technology spend of £0.7 million, the majority of which was traffic related, and a full year of Van Mildert costs, the increase for which was £2.5 million. Unlike the savings, both elements of the cost increase are likely to be with us for 2021. 2021 costs therefore will revert to a more normal profile and there will be an element of catch-up costs in relation to recruitment, in particular, as we look to fill roles which have been vacant and to do that as quickly as we can. Filling the vacant product development roles is a key focus and will be particularly important in the year in which we will focus on product led growth. Over the past four years or so, our annual increase in operating costs has been in the order of £5 million to £6 million per year. You should expect that the two-year profile of increases from 2019 to 2021 would be broadly consistent with this. So ignoring the dip in 2020, a roughly £10 million to £12 million increase between 2019 and 2021. The fall in operating profit of 37% reflects the year's lower revenues and the natural gearing of the business. And this has meant operating profit of £135.1 million and an operating margin of 66%. Again for 2021, you should expect to see operating profits returning closer to that of 2019 and the corresponding recovery of margin to 70% or slightly above. From profits to cash. There are a number of new elements to our cash flow this year. We started the year with £36 million on the balance sheet. And although operational cash generation was similar to last year's at 105%, the increase in balance sheet cash at the year-end reflects the absence of a dividend and a much-reduced share buyback program for 2020. We ended the year with £97 million of surplus cash, and therefore have a couple of announcements for today. Firstly, we intend to continue to maintain higher levels of balance sheet cash than in previous years, approximately £50 million, which was the level at the half year. But we also feel that this is now an appropriate time to resume our share buyback program, which we will restart in March. And to announce a final dividend for 2020 of 4.5p, which will be paid in May. We will aim to end the year with £50 million pounds on the balance sheet once again. We believe that this is an appropriate balance of ensuring additional liquidity to help to withstand any further volatility, and our stated policy of returning surplus funds to shareholders, which remains unchanged. On the P&L, there is really only one element I would draw your attention to, which is the share-based incentives charge which is less than 50% of what it was in 2019. This is a function of a downward revision in relation to the assumptions on the extent to which performance conditions will be met for the earnings per share element of the 2018 and 2019 PSP awards, and of the 2019 DSP award. Most of you will probably remember that in 2020, we decided to move away from our previously used underlying operating profit which excludes this IFRS 2 charge and use operating profit instead in our reporting. But we've had more than one conversation on the impact that this has had on consensus as it's really a charge, which is difficult to predict, and over which we have little control. So for 2021, we will go back to reporting underlying profit, operating profit and to using it as the performance metric for bonus and share awards for exact directors. On the balance sheet, the only note where we changed really is the level of cash and money market deposits, which I've explained. Working capital metrics remained remarkably consistent during the pandemic. We saw little to no increase in the level of bad debt. So although we increased our bad debt provision in anticipation of some increase, we've since unwound it again, as we didn't need it. Debtor days did slightly increase reflecting support given to some customers to extend payment terms. We continue to pay our suppliers on the same prompt terms as pre-pandemic, with average days payable for trade creditors remaining at around 19 days. Working capital has also benefited by £18 million pounds from the payment of the corporation tax liability in line with HMRC's changes, which require larger businesses to pay tax in the year in which the profit is generated. Now on ESG, we have increased our focus on all aspects of ESG during the last year, and I will aim to update you at each reporting period on one element of our ESG agenda. I start today with the environmental element where there are both some new achievements and new commitments to talk about and where we have set ourselves some ambitious goals for the coming years. I'll talk firstly about these and then tell you some more about the frameworks under which we will report going forward. Rightmove achieved carbon neutrality in 2019. And we have retained that status since then, and will do so, going forward. That has meant identifying and measuring our emissions, and then offsetting them with two specific tree planting schemes, one in the UK and the other in the Amazon. We're obviously happy to have achieved that but our ambition is to reduce our emissions, not just to offset them. So we have made a renewed push on emissions reduction outlined in the table on this slide. The Sustainability Accounting Standards Board categorizes Rightmove as an internet media and services business with an already light carbon footprint, but challenges to limit the footprint of our data centers and the resource consumption of our mobile staff. Our targets therefore focus on limiting power and water consumption for both our offices and our data centers, increasing the proportion of office waste that is recycled and increasing the targets for ultra low emissions vehicles between now and 2028 by which time we aim to ensure that our entire fleet is low emission. We have also signed up to the 1.5 degrees Science Based Targets initiative and have committed to work with the SBTi scientists to ensure that the targets we have set ourselves are in line with the science behind keeping the planet at no more than 1.5 degrees above pre-industrial levels. We look forward to making really meaningful progress as we work towards net zero emissions. One of the features that these racers of businesses like about Rightmove is our ability to use our platform and our large audience in a system positive manner, aiming to lift all boats, if you like. For us, this could be about helping to create helpful content for consumers on how to increase the energy efficiency for their homes. And we have offered our help to government on this. We are also working with a number of mortgage lenders on the concept of green mortgages, and what improved terms might be possible for borrowers with more energy efficient homes. It's very early days, but we are excited about our ability to be a system positive business in this way, and want to play our part in making meaningful change. Lastly, on reporting going forward. Like others, we are preparing for the reporting requirements on the task force of climate related financial disclosures, the disclosures and impact assessment modeling required and we'll aim to use 2021 to get ready for the formal requirements in 2022. Our Board is also keen that we use this year to prepare for the TCFD. They are keenly interested to ensure that our environmental agenda is ambitious. And they are being both supportive of our plans and challenging of us to ensure that we are adequately set up to make progress. That's all from me. I'll now hand you back to Peter for a strategy and business update.

Peter Brooks-Johnson: Thank you, Alison. I'll start off by briefly covering what happened in the housing market in 2020. The resilience of the housing market will surprise many. Despite being closed for nearly three months, total transactions according to HMRC, was still over £1 million, just over 11%, down on 2019. The chart on the bottom of this page shows the shape of the transactions post the reopening of the market, the market was strong in the second half of the year. Typically transactions take around three months to complete. But COVID related processing delays extended this to over four months, which can be seen in the slow ramp up of transactions, which continues to build in the fourth quarter. That's a backwards looking view. We're extremely fortunate that by being in the middle of the UK property market, we also have a unique forward-looking view. I'll talk through the top chart first. This shows our proprietary view on demand and sales agreed in the market, as well as the HMRC transaction data versus 2019. Starting with the most leading indicator, demand, this is the light teal line. This is our measure of the number of unique buyers in the market inquiring about properties. You can see that this has been exceptionally strong since the relaxing of the first lockdown. You may be surprised to see that in reality, the announcement of the stamp duty holidays on the 8th of July didn't materially increase demand. It was already running that 60% over 2019. Quite incredibly, despite the current lockdown demand is rising and is again at around 30% higher than February, last year. Moving on to the next step in the process, shown by the orange line, you can see that the demand translates into sales being agreed around a month to six weeks later. Sales agreed up to the 14th of February this year were 20% ahead of the same period in 2019. It's very unlikely that sales being agreed in February will complete in time for the end of the stamp duty holiday, well if that happens at the end of March. I'm sure most agents are telling buyers and sellers this. So I think just as the announcement of the holiday didn't significantly change demand, it looks as if buyers are being motivated by more than potential tax saving, and continue to want to move house for lifestyle reasons. Our data suggests that there were around 630,000 transactions in the pipeline at the end of January 2021, with one in five of those transactions agreed in July last year, still waiting to complete. That's around twice as many as a normal year. So putting the leading indicators alongside those 630,000 transactions, we expect to see strong transaction numbers for at least the first quarter of this year. There will inevitably be some transactions which fall through post the stamp duty holiday, whenever that is, and we expect a quieter quarter after any announcements. Of course as a platform, Rightmove is only loosely correlated with the housing market, and then only its extremes. But from a customer's point of view, we've seen signs of a marginal increased commission rate and prices achieved for properties have also risen. So we believe that the agent commission pool have grown slightly over the last few months. But before you get too carried away with the market, I'd like to sound a note of caution. If you look at the bottom chart, you can see that the available stock has fallen since the start of the year, as a result of significantly less stock coming to market. It appears that lockdown is playing a role, with COVID making potential sellers nervous about inviting people into their homes. And also the impact of homeschooling, meaning percent potential sellers are preoccupied. There's been a noticeable dip in the listing of family homes. And of course, the lack of choice reinforces this dynamic. A further listing impetus from an extension to the stamp duty holiday may be helpful. Whilst this stock reduction isn't impacting demand at the moment, lack of choice may well slow the market in Q3. If it doesn't start reversing in Q2 as we exit lockdown, was uncautiously optimistic regardless of stamp duty deadlines, one must be mindful of a wider economic uncertainty in the rest of 2021. I'm sure you're all familiar with our strategy, but I think it's always an important place to start. In simple terms, we will have the largest audience of home hunters if we continue to deliver a great user experience leveraging both our 20 years of knowledge, but also keeping pace with modern technology. By combining virtually every home hunter in the UK, with our deep relationships with agents, we can deliver products which perform and help our customers to be successful. And by innovating to create a better marketplace, we can create more opportunity for our customers and new opportunities for Rightmove and we will make home moving in the UK easier for everyone. I'll look at each of the following in turn. I'll lead with home hunters, our package and product sales and ARPA and I've cut a number of customers. I'll then wrap up by looking at some of those new opportunities. So starting with our lead with home hunters. Alongside the record time spent on our platforms, for the first time ever, we recorded over 2 billion visits in a year, which is 31% up on last year. And we've just recorded another record with Wednesday the 17th of February being our busiest day ever, with over 8.5 million visits in the day. Clearly, much of that is attributable to the rapid pickup of the market in the second half of the year. As you can see from the comScore chart, our market share has increased as consumers has turned to the site, they trusted to deliver an impartial view on the marketplace. Rightmove is more than just search. We continue to extend our lead as the place consumers come to research the property market. The traffic to our research tools such as sold prices, up over 20% on the year. And Rightmove remains the only place to see more or less the whole of the UK property market in one place. Taken together, I don't think there can be any doubt that Rightmove is the place consumers turn to first and engage with most. All of this adds up to just one way we deliver value to our customers. Quality leads, which were up 27% year-on-year. We delivered a record 51 million leads in the year and continue to be much higher quality than any other lead source. It's also pleasing that development work to simplify the process of registering with Rightmove and setting up an instant alert also bore fruit, with a record number of home hunters registering with us in 2020. The combination of this record and the rapidly changing marketplace in the second half of the year, led to us delivering 24% more alerts than 2019. So not only did home hunters turn to us first, they heard about new properties on the market from us first too. I thought it might be useful to spend a moment talking about how that exposure helps agents win the right to sale a home. Those of you who know Rightmove well will be familiar that an agent's main priority is winning the right to sell a home as that is the route to their future income. Firstly, the leads we deliver are not only a source of tenants and buyers, we also ask buyers if they have a property to sell. On top of that, our products work to help agents from attracting potential sellers to securing that right to sell. Premium Listing was one of our first products launched in February 2007 and we've refined the design over the last 13 years. Premium Listing makes a property stand out by giving it a bigger listing with more photos in the results list. Agents often use this right at the end of the process to secure the right to sell a property. And as you can see, agents know it works. Sold By Me is our most recent product, which was launched at the end of 2019 as part of the Optimiser 2020 package. Sold By Me operates right at the start of the sales funnel, in the consideration phase. It highlights the properties which an agent has sold to help them demonstrate their success to potential sellers. Over half of sellers are looking to move out of an area. So where we know a potential seller's home address, Sold By Me uses dynamic targeting to show them preparatory properties from an agent who operates in their home area, rather than the area in which they're looking. Of course, the majority of the lifting for an agent's brand is done within the Rightmove site. But as you can see from the chart at the bottom, we're also driving traffic to agent's websites to let potential sellers get to know the Agency better. And finally, we also have products which streamline lead generation. For example, Local Valuation Alert, this is designed to put potential sellers directly in touch with a local agent. It effectively allows agents to skip the consideration phase entirely and get straight to trying to win the instruction in the seller's home. Because we have a whole of market view, we can track whether those sellers who are requesting valuations are putting their homes on the market. Last year, just looking at properties which actually came to market, Local Valuation Alert introduced sellers who are worth nearly £70 million in commission to agents. By utilizing our consistent investment and extensive data, these and all our other products add up to unrivaled exposure for our customers, which in turn underpins our long term ARPA growth. As Alison mentioned, we expect 2021 ARPA growth to be marginally softer than 2019. And we expect it mainly to be driven by product spend. In order to win sellers, agents aiming are to differentiate themselves from their competition. And as you can see, that's what our products do. With nearly 40% of our Agency customers taking one of our packages, it's important that we maintain the differentiation for those customers. So our strategy is not to significantly grow the proportion of agents who are on a package, but to increase the proportion of customers on our premium package. Starting with the lower Enhanced package, you can see the numbers have softened a little. Around 60% of that delta, our customer are upgrading to Optimiser and the remainder fell prey to the difficult trading conditions in 2020 and shut their doors. As I mentioned earlier, particularly pleasing has been the continued sales of our super premium package, Optimiser 2020, with the majority of upgrades coming from customers on the cheaper Optimiser 2015 package. As you can see from the chart in the bottom right, we've seen consistent growth in the second half of last year and that's continued into January, with 60 upgrades in the month. So moving on to customer numbers. As I mentioned earlier, customer numbers fell in the year by 3%. Within that fall, there are only just over 200 fewer branch-based agents. The majority of these were small one-branch agents with very low stock levels, and therefore cash reserves. Given their size and the interruption to their cash flow, I think it shows just how resilient estate agents are. The graph at the bottom of the page gives you a sense of the dynamics in the Agency market. They show joiners and leavers indexed to 2020. You can see from the graph on the left, that in the second half of 2020, we have more joiners than any six-month period since the first half of 2015. This was a combination of some of the branches which were mothballed in the first half of the year being unfrozen and also a pickup in new business attracted by the vibrant market. And those of course are shown on those new businesses though we're continuing to see a trend which I suspect is common to most small business categories. The failure rate is around 50% in the first six months, so we shouldn't expect a rapid expansion in branch numbers just yet. Turning to leavers, the second half of 2020 again shows the resilience of agents. Across the last five years, we've only seen fewer agencies leaving the business in the second half in 2015, and 2017. Looking forward, we've had modest agent growth in January. But as earlier, I would counsel caution, the more established customers who tend to have a higher success rate are opening new branches are rebuilding their balance sheet after 2020 and therefore hanging back a little. In addition, the looming stock challenge makes it more difficult to successfully open a branch. Adding to that, the success rate of those new businesses I think suggests that we're likely to be around flat on new branch numbers for the year. Of course, if the stock challenge disappears, it may be different in the second half. As ever, the story with New Homes membership is a little simpler. To remind you, we count each development site as a member in our membership numbers. This graph shows you the number of developments we've counted in our membership numbers as the black line. And the number of developers, in other words, the company's as the teal line. Social distancing restrictions, means it's been taking longer to build new properties. Developers have worked hard to speed up their development rate, whilst keeping their team safe, and are just now getting back to a supply rate, which is similar to pre-pandemic levels. The buoyant market in the second half of the year saw the sales rate outstrip the bill rate. Hence, we saw a reduction in developments listed. Given the current pace of the market, I'd expect the number of developments on the site to continue to fall in the first half of this year, as again, construction may struggle to keep up with demand. Indeed, many developers have already sold most of their planned property completions up to the middle of this year. We've refined our propositions for developments in the pre-marketing phase. And I think in the second half of this year, we should see development numbers grow a little as the impact of the increased build rate starts to balance, supply and demand. The audience on Rightmove is a vital part of the value we deliver to our customers. And we're always looking for ways to improve our home hunter experience. The new sold price section and the ground up rebuild of the property details page has been fully rolled out. And they're both delivering benefits to all customers and home hunters. The page has also been designed to allow us flexibility to tailor the experience for different property types, and to create more bespoke advertising products for our diverse advertisers. I thought I'd give you an insight into three new products we're on track to launch this year, which build on the property details page. The first is a new listing specifically aimed at new homes developers. The new product is designed to enable cross-sell and upsell between properties on a development once a home hunter is found somewhere of interest. It's also to make design to make it easier for a home hunter to visualize the whole development, not just the property they're looking at. This product is currently in beta test and we're seeing encouraging results and customer feedback. We'll be launching it in April. The second is and is aimed at enabling more home movers to consider auction as a mechanism for either buying or selling their home. In a traditional auction, the buyer is usually committed to the purchase on the fall of the hammer. In reality this means that most people who require a mortgage are excluded from considering auction properties because of the potential abortive costs. We won't be able to track an auction home without the pressure of the auction room. Conditional online auctions open the auction up to those who need a mortgage to finance the purchase. The provision of an upfront sales pack and reservation fee also creates advantages for buyers and sellers. With a typical time to complete around half the usual time taken for a private treaty sale, and reduced fall-throughs. We will integrate the auction and current bid information on properties which are being sold in this way. Critically, we're also integrating buyer and seller help information on the listing to ensure both understand the auction process and can determine if it's right for them. This is currently in development and we're going to be testing in Q2. And finally we're going to leverage a new page to help Build To Rent operators. Build To Rent is a rapidly growing segment with strong growth projections. Typically a built to rent property offers more amenities such as common areas and bills included, than you would see in a private rental property. It's therefore more expensive. Our research shows that these properties are attractive to many prospective tenants, but the operators find it difficult to differentiate their proposition to those tenants. Given the market reach of the Rightmove platform, we believe we can help operators communicate more successfully to potential tenants and also help those tenants who might prefer a more complete offer, find the perfect match. We expect our Build To Rent listing to enter beta test in Q3. I don't expect a noticeable revenue impact in 2021 from these products, but taken together, they will impact 2022. Rightmove is still only between 6% and 7% for typical agent's revenue. As I said earlier, a key part of our strategy is helping our customers become more efficient, so that they can afford to spend more on marketing products and still be more profitable. One way we do this is by utilizing our whole of market view to provide tools which give unique insights to help drive their businesses forward. Here are a couple of the tools that we released this year. The first is the Coming Soon tool for New Homes developers. It focuses on helping a developer refine the pricing and marketing for development shortly before launch. It brings together important up-to-date information on the housing market. Of course, there are other proxies for this information in the marketplace. But critically, the information we provide is near real-time in whole of market. The lower tool is the lead location tool for agents. Again, this uses our proprietary data about home movers, gleaned from the 1.3 billion minutes per month they spend on Rightmove. This maps, where people who are looking to move, move to. This is important, as it is these people who are thinking of moving, who will form potential sellers for their area. As you can see from this real example, it's not unusual for the majority of sellers to be moving just outside an agent's area. Traditional marketing struggles to reach the sellers. One of the things which frustrates many proactive agents is that all of their competition will get to know about these potential sellers who are moving out of area at the same time when the seller chooses to contact an agent. Of course, Sold By Me and Local Valuation Alert can help the agent find out before their competition. All of these innovations will help us grow in the near term. But we're also innovating for future growth. Rightmove is about making home moving easier for both property professionals and home movers. Helping home hunters be transaction-ready, is not only part of our purpose, it will help professionals be more efficient and creates future revenue opportunities for Rightmove. The video viewing tool, which we launched as part of our COVID response is part of the first phase of work to build a better digital tenant flow. I shared the flow at the top of this slide back in February. It shows the broad phases of the rental flow from search to living in the rental property. As you can see, phase one is now complete, which covers the majority of the journey bringing together the Rightmove Tenant Passport, Rightmove's Viewings Manager, and Van Mildert. Phase two is in development this year, which will bring enhancements to each step and also add in the contracting process. And this flow is already creating value for our customers and revenue opportunities for Rightmove. The whole flow makes the path to rental easier for agents and tenants. The first half of the flow has significant efficiency savings for agents. Online viewing videos bring greater benefits in lettings. Given the lower financial commitment, we're beginning to see some tenants willing to commit to a tenancy without a physical viewing. Of course this is a minority, a greater proportion of tenants are willing to use videos to narrow their search. Typically half the home hunters who request a video, watch it and go on to request a physical viewing. It's a significant opportunity for saving agents and tenants wasted journeys, as we typically generate around 250 tenant inquiries a month for each branch. Following a successful beta, we launched our next version of the Tenant Passport and Viewings Manager in November. Since then, over 400 branches have signed up to these free tools. The Passport allows agents to simply and easily assess a property's affordability and suitability for a tenant, potentially allowing them to suggest something more suitable. Again, this saves agent time and tenant disappointment. Between November and January, tenants created and shared 40,000 Passports. Viewings Manager allows the tenant to request appointment times directly from Rightmove but it's more than just appointment booking. Once an appointment is confirmed, Viewings Manager coordinates the process, reminding the tenant pre-appointment and gathering feedback and interest after the appointment. Tenants requested 18,000 appointments in January alone. An early data suggests that the appointment reminders and ease of canceling appointment reduces no shows by up to 50%, a further significant saving for agents. When these three steps are taken together, they have enabled some customers to reduce the number of viewings per lead by up to 70%. We see revenue opportunity in the second half of the flow. Referencing is a profitable business. And we see much opportunity in bringing more of our data experience to bear in this arena as part of phase two of the digital tenancy journey. Van Mildert reference ordering is now fully integrated in Viewings Manager, reducing rekeying and promoting speed. We've begun offering tenant contents insurance directly to tenants after their risk reference is successful. Its early days but the initial results are positive. Having a good product offered in the right context at the right time leads to a positive conversion rate. And successful reference indicates imminent move. Contents insurance isn't the only product we could offer in this way as we increase our experience in this area. Of course, the more references we deliver the larger number of opportunities we have to offer products to tenants. We've got exciting plans this year. But it's still early days. The only efficiency benefits we bring to agents and tenants, I think this will become an interesting revenue stream in around three to five years. We've much to do, and much ambition. But bringing it back to 2020, let's wrap up with the outlook. The network effects at the heart of our business are stronger than ever, with record traffic and leads. At the moment, the property market is busier than it's been for at least three years. Agents continue to recognize the value in our unrivaled audience and our products. With upgrades continuing to perform well, we are mindful of the uncertain economic backdrop, and we are planning modest price rises this year. With the strong market and the strong product sales I expect most of our growth in 2021 to be product lead. However, we are cautious for the rest of the year, particularly with the lack of stock, which may impact branch numbers and the likely fall in development numbers in the first half of the year. I'm delighted that today we are announcing the resumption of our capital return policy with a dividend and such share buybacks. We have the intention of reducing our cash position to £50 million by the end of 2021. I'd like to thank our shareholders for their support and understanding in 2020. As you can see, there's no slowdown in our ambition or in our long-term outlook. Thank you.

A - Peter Brooks-Johnson: Thank you, [Roberto]. Good morning, everyone. I'm joined this morning by Alison Dolan, our CFO and Miles Shipside, our Housing Market Expert. Hopefully you've had a chance to see the presentation. But I thought I'd take a couple of minutes to start off with and give you a quick summary of all the words that you may have heard. 2020 was Rightmove's 20th birthday. And of course, there's not been a year like it in our history. COVID has upended the lives of everyone in the UK, and it's had a tragic impact on many people. But for a roadmap perspective, we've emerged stronger. The network effects of the housing business are stronger than ever with record traffic and leads. Traffic in 2020 was over 30% higher than 2019. And the trend continues into this year, with a new record number of visits on the 17th of February, we at 8.5 million visits in the day. And that's all led to a market share and time according to comScore nudging slightly higher. That traffic is turning into leads and sales for our customers. Leads last year were up over 27%. And quite remarkably, transactions according to HMRC were only down 11% on 2019. Despite the uncertainty around the end of stamp duty holiday, home hunters continue to want to move, and our leading indicator of sales group for February 2021 is 20% higher than the 2019 number. Undoubtedly, 2020 was tough for our customers. And we offered both financial and practical support, as you know, both to help them in the short-term, but also to show empathy at a moment when our customers were hurting, which we know from past experience, builds long term goodwill. Despite the challenges, our branch-based agents were resilient, with only around 200 leaving the industry in the year, and branch numbers in total being positive in the second half, partly as multiple branches were unfrozen and new businesses started up encouraged by the vibrant market. The number of new joiners in the second half of the year was the highest in any six-month period since the first half of 2015. But looking forward, I wouldn't want to get too carried away. The lack of available stock and there is, of course, continuing macro worries. And for clarity, I don't think the timing of stamp duty holiday will have much impact on the number of transactions in 2021. I think we'll see a broadly similar branch numbers in 2021 in total. And from a New Homes perspective, I think the combination of the strong demand and relatively slow build rate due to COVID safe protocols, we'll see the numbers of new homes development listed fall a little from here. We're planning product led ARPA growth in 2021 and expected the growth rate to be close to that of 2019. Over a 1000 agents have upgraded to Optimiser 2020 in the last year and consistent sales. We've seen consistent sales in the second half of 2021. In second half on the 2021, we've got off to a good start with around 60 upgrades in January. We also made good progress with our strategic product projects in 2020. Amongst other things, the ground up rebuild of the property details page which will enable more exciting products in 2021 and we've delivered the first phase of a digital tenant journey. And finally, I'm delighted to say that after the pause in 2020, we've restarted our capital return program with a 4.5p dividend today and share buybacks in March. So that's it for me. Over to questions.

Operator: Ladies and gentlemen, we now begin the question-and-answer session. [Operator Instructions] We have the first question from the line of William Packer from Exane. Please go ahead, your line is open.

William Packer: Hi, there. It's Will Packer from Exane BNP Paribas. Thanks for taking my question. Three from me, please. Firstly, it's encouraging to see a rebound in agent numbers in the second half of the year. And your guidance of flat agent numbers for 2021 suggests the stabilization after weaker years. Could you talk about how you see the structural agency outlook? I suppose, some would argue that consolidation is likely, others would argue digital actually reduces barriers to entry and so you could see an acceleration in state agency formation as the market recovers. So just first question to comment on that dynamic? And then secondly, more specifically, does your guidance include any negative impact from consolidation with Countrywide? And final question for me is Boomin published a pretty aggressive e-mail this morning calling you overpriced and not innovative? Could you update us where we are on their launch process and what they're doing differently? How many agents have they signed up? Is there any product differentiation? Thanks very much.

Peter Brooks-Johnson: Thanks a lot. So starting off with sort of my view on structural outlook for Agency, I think and I would hope I'm being pretty consistent when I say, what we're going to see and I totally accept that from the outside the industry it's a little harder to see, what we're going to say is a continued process where at the very large end, I think we'll see a little bit more consolidation. I'm interested, as I'm sure you are, that we've seen rumors of a few deals in the last few weeks. But what's fascinating is, it seems to be on the whole, it seems to be people looking to buy in to the industry, which I think suggests that there's some real positivity about Agency for the future. And then at the bottom end, what we're seeing. so I shouldn't really say bottom end, at smaller end, what we see is continued fragmentation, somewhat specializing in those numbers of branches that joins us in the second half, was around that 50% of them were entirely new businesses. And they're small, these new businesses are small, two-three person businesses. At the moment, what we're seeing, as I noted in the presentation is, sadly around about 50% of them don't survive their first six months, which I think is probably pretty usual for SMEs. Obviously, as the market gets better that ratio will improve. So I think we're set for digitalization to continue to allow you to operate at a smaller level. Interestingly, one of the guys who used to work for Rightmove, left a couple of years ago to set up his own agency and I think in the last six months, so he's a great test case for us, his argument was I've been telling agents all these years what to do, I'm going to go and prove that I can do it myself. And so what he's done, actually, he sets up on his own using entirely digital methods and opened a small branch. But he said it was it was a projection of confidence and in the last half, he's actually recruited two more people, because he couldn't keep up with the work himself. Now, I would want to say that John is every agent. And obviously I've got a soft spot for him because he was a good employee. But I think that sort of shows the direction of travel, I think we'll see more of these very small because they can be nimble. So yeah, hopefully, my - I'm being consistent. I think in the medium term, we'll still see branch numbers rising in total. To talk about Boomin. So Boomin, latest information we have is that Boomin is possibly going to launch second half of March, would be my best guess. In terms of agent branch sign ups, not so - don't have a number to hand. I think I would probably conservatively suggest they should do quite well sign-up agents because at the moment, it's zero cost, zero commitment. So as an agent, why wouldn't you? So I would expect, I think we should expect that number to be reasonable. I think that they're not thinking about competition. The real challenge for a portal of any sort is actually getting consumers to come to your website. That, and for instance, our traffic actually is brand led. So 80% of our traffic comes to Rightmove because people have either tied to Rightmove directly into their browser or tied Rightmove into Google. So they - you have to offer something different to attract that traffic to your portal. I think moving and taking quite a different approach. At the outset, it appears again, I'm only going on what I've read, which will be the same as that that you've read. It appears that what they're trying to do is talk about sort of everything to do with the home, whether that be, whether this sofa will fit in my living room or whether my energy bill can be can be reduced. So if you like it's sort of a bit of Rightmove, a bit of Pinterest and a bit of Moneysupermarket usually, sort of blended together. So it's a really interesting approach. And I can't believe the internet prefer specialists and consumers will come for a really clean experience around a repurposed topic. But I've never - yeah, we will watch carefully and we'll see what they launch.

William Packer: Thanks, Peter, very useful color. Can I just follow up and use this as a segue just to hear your latest thoughts on the wider competitive backdrop? Zoopla obviously launched a pretty aggressive price point or went free for a while. Have they reverted to normal pricing now? Where OnTheMarket is in their pricing and are you seeing any big shifts in agents among your peers? Thanks.

Peter Brooks-Johnson: Yeah, so and well, as far as I know, Zoopla have now returned to normal pricing. No particular big shifts. You're right, well, for those of you who don't remember, Zoopla offered two deals, six months free for an agent if they signed up for, I think it was 24-month contract; and nine months free if they left - or an agent left Rightmove and signed and you signed up for a 32-month contract, from memory. Well, you can see the effects of that in our numbers. In terms of, OnTheMarket, I think what we've seen there is, OnTheMarket have become rational, and have really started cutting back on the free deals they were offering people. So you can see that their branch numbers have fallen recently, as they've asked people to pay, which I think makes lots of sense. Broadly speaking, seeing through the noise, actually competitive dynamics doesn't feel terribly different to this time last year.

William Packer: Thanks Peter, useful color.

Peter Brooks-Johnson: You're welcome.

Operator: Thank you for your question. We have the next question for the line of Adam Berlin from UBS. Please go ahead. Your line is open.

Adam Berlin: Hi, good morning, Peter and welcome, Alison. Three questions from me. The first question I want to ask is all the demand indicators talks about in terms of housing transactions, house prices, agent's commissions were going in the right direction. So why have you been a bit cautious on pricing this year, and guiding full credit of growth below 2019 levels in such a strong market? So just explain, if you could expand your thinking around that, that'd be really helpful. Second thing is I wanted to ask you about what Scout24 is doing in terms of the consumer subscription model focused on tenancy initially. You're obviously not going down that path, and you're giving away that tenancy if possible free and hoping to generate efficiencies. Why did you not think you could charge consumers in the same way that Scout24 is doing, because that product seems to be getting quite a lot of traction in Germany? And then the third question I wanted to ask you was about something you didn't talk so much about in your presentation, which is about kind of other lead gen, you might be able to do in terms of mortgages and broadband and other things that was talked about more in the note this morning? How are you thinking about those issues? What progress have you made? And will we see any revenue impact in 2021/2022 from those initiatives?

Peter Brooks-Johnson: Thanks, Adam. I'll first talk about ARPA, first. I think it'd be easy to walk past the fact there's still a lot of uncertainty in the macro-economy. I think we were all on a sort of vaccine high but there is still uncertainty. And when we're thinking about pricing for 2021, uncertainty was certainly forefront of mind. And we could have led with price this year but we chose to lead with products, for a few reasons. Firstly, product upsell tends to pick up sooner. And it picks up as soon as agents feel confident about their marketplace. And you can see from our numbers in the second half of 2020, we think that focusing on product will see confident agents increase spend more quickly than we would do with a sort of normal pricing route. Secondly, we built a lot of goodwill in the second half of last year, and certainly our sentiment indicators would show that and we want to be empathetic to our customers. Not all of them are feeling confident just yet. Whilst as you know, the demand indicators nationally are really strong, there are areas and submarkets, which are not looking too great, Central London is particularly notable. And actually, from a practical point of view, a product led strategy really, it's great because it adjusts really quickly and really effectively to an uncertain market whereas as you'll remember, a pricing strategy is - takes around four to six months to fully roll out. And what would we do if the national housing market shut as it did following catastrophe in March last year. In the middle of that, what do you do, or if a local area has its housing markets shut, there are practical considerations for us. And it's not to say we're not doing some price rise too. It's just less of the mix this year. I suspect that by the end of the year, when we look back, we'll be close to the sort of 70/30 product price growth spectrum, end of the spectrum rather than perhaps where we've been in previous years, which is 50/50. So that was really the logic with going after that. The other thing that's worth noting, when you look at the offer in total is - when we talk about offer in total, there is the blended offers between Agency and New Homes. And I think what we'll see in 2021, as I noted in the presentation, new home developers are sold out pretty much, the large ones. So we'll see a double impact, we'll see a reduction in volume of development listed onsite because they're all sold, but also fairly rationally, and the new homes developers are terribly rational. You don't mark it so hard, if you're forward sold and you've sold everything you've built and you're heard from them, from the notes that the Plc put out and a lot of them are forward sold until the middle of the year. So inevitably, you don't market quite so hard. So that also feeds into the blended offer. And secondly, you asked about Scout24. Yeah, I think it's a really interesting, it's really interesting product. We talk to them, I sort of I like the idea. I think we have to remember, every market is different. So P2P sales, and the sort of mindset around transactions and rentals would were P2P rentals as well-being generally much stronger market. So it's, I'd never say never, it's certainly not on our roadmap right now, it's one to keep a watch. I have a gut feel and we haven't researched it, I have a gut feel that UK tenants would behave quite differently. We also of course, have to be mindful that the legislation in the UK around upfront rental fee is different. And so that would add complexity, if we chose to go into that market. What we've chosen to do to sort of go up with similar theme is all around our digital tenant journey. So by giving the Passport upfront, which is free to tenant and agent and Viewings Manager which, I'm sure you've seen in my slides. I won't talk about it too much, but Viewings Manager, which really helps efficiency. It also helps, we've had feedback from agents that it's reduced no shows by 50%. And part of that is because the Viewings Manager reminds tenants to turn up but partly that's a feedback from tenants saying they much prefer it because they can if they found somewhere else, they can cancel automatically without having to bring up. And obviously being British, we don't like having difficult conversations, so it's easy to do that on the link. But the monetization for that comes and it's sort of just playing for your last question. The monetization comes from first referencing. Referencing is a profitable business. And obviously that will be through, but also what we call internal services. So the idea when you move into a rental, you really need sort out insurance. Many tenants don't realize that they are responsible for insurance, and they think that's done by the landlord. So that's an interesting conversation. We've helped 7000 tenants with that. And we are also now starting talking about broadband. So in that, one of the fascinating things we've learned is that broadband is more important to tenants than water, which probably at the moment makes a lot of sense, isn't it? Because all are kind of having trouble with broadband. So they actually thought about broadband much earlier in the process. So again, we're exploring that, it's early days for us. It's really promising because if you offer a good product at the right moment in the conversation, and of course with referencing, we know you're going to be moving in as a tenant because the reference has passed and we had a moving that. Well, what we can now experiment with and it showed some really, really promising chance is, when do we start talking to you about broadband? And that's how we know that you have to start talking about broadband before you start talking about insurance, because it's much more important and you want to sort it early. In terms of mortgages, we continue to work with Nationwide, we have learned so much in the last year, you'll remember us describing it as an experimental partnership. We've learned so much in the last 13, 14 months. And actually this year, we're really planning to push on. The thing for me right now, I want to accelerate our learning, so not particularly focused on generating revenue from that. I don't want to just splash the site with banner ads and things, which would be the way we can generate revenue or probably a pretty simple calculator or comparison tool, that definitely don't feel like us. We want to really learn and again, we're focused on making the journey more efficient because I think that's how we'll maximize the revenue in the long term. I think I'd hoped that we feel a little bit more revenue in '22 from those activities, but probably its '23, '24 before they really start to be noticeable in the P&L. Was that your three Adam?

Adam Berlin: That was it. Thank you very much.

Peter Brooks-Johnson: You're welcome.

Operator: Thank you for your question. We have another question from the line of Natasha Brilliant from Citi. Please go ahead.

Natasha Brilliant: Good morning, and thank you for taking my questions. And I just wanted to come back to offer and pricing. I know you said the majority will be product. Can you just confirm what's the underlying price increases for this year? And then beyond this year, with the 70/30 split that you talked about, do expect that to be the new norm? And if so, will you need to put more investment into people, technology to constantly deliver these products if pricing power starts to fade? And second question is on the development numbers. I know previously when we've talked the cyclicality of this business, there was a thought that maybe even in a more buoyant market, actually the developers would continue to advertise. Clearly, they're sort of out of stock at the moment. But is there a better way you could perhaps charge them to avoid these lumps and bumps rather than charging on a per development basis, some sort of retainer just to try and smooth that revenue stream? And then my final question is just on cash and you talked about maintaining a cash balance of about £50 million. And why do you feel that that's necessary? And would you go below that for any reason, temporarily? Thank you,

Peter Brooks-Johnson: You know, you're welcome Natasha. So your first question, pricing. So what we're doing with our pricing is we're doing, we're expanding our geographical and stock-based splits. So you might remember, I think I talked about this last year. If you roll back a few years in Rightmove, we used to charge the same amount regardless of stock level and regardless of location, which wasn't the most efficient way of doing pricing. So what we've been doing over the last few years is, I think last year, it was sort of plus or minus £60, £70, depending on the area in the country, dividing the country up into five zones. This year, we're expanding that a little bit more, so more like plus or minus a £100. And also, we're just looking at those agency who have got higher stock. So can't give you fair amount of increase, because it doesn't really work like that. It's very different depending on customer type and package. But that's the sort of sense. If you are a customer in those groups, you're probably looking at 10%, something like that. In terms of 70/30, so interestingly, I think our growth in 2015 was 70/30. And we then probably in 2019, we would have been 50/50. So it does move around, I wouldn't want you to think that 70/30 is now a new normal. We plan it and it changes depending on the market. So depending on the market structure, and it could be anywhere between those two. They'd probably be end stops of the range. I'd say, this year it's probably more likely 70/30 but I wouldn't want you to think that it might not be 50/50 next year. That doesn't really indicate anything. Because after all, for us, it's all looks pretty similar when it when it hits the P&L. So we don't mind, we think either model works, and it has to. What's more important is, does it work for our customers? So certainly wouldn't want to guess we've given up on 50/50. I'm sure you'll see it again. In terms of developers. Yeah, it's an interesting question. We have looked at different models in the past, I actually think this model, the model we have is a pretty reasonable model for us and our customers. I suppose I consult and winch about things, and many people will tell you I'm good at winching. But actually, it is a hedge, it is a semi-hedge because the markets are counter cyclical. Obviously, where agents are having a really good time because the market is great, we do well with agents but you know and sort of also they work for selling locks and vice versa. So I'm probably not terribly minded to change the model because I think that natural hedge, you also have to accept that it has a down moment. It also, if you look at numbers in say, '19, it helped us. So actually, I think it's a reasonable balance. And what the developers are doing, if they're still listing all their stock with us that they have, they still spend on marketing, they just take as little discretionary marketing at the top, which I think is entirely rational for them. So yeah, we continue to look at it. I don't think we'll change it. For your last question, so perhaps Alison will talk about £50 million.

Alison Dolan: Sure. Hi, Natasha. And you should think of it really as a liquidity protection measure and probably a bit of caution in calling an end to the volatility of the last year. Certainly our underlying policy in terms of returning surplus cash to shareholders have not changed. And neither has our policy in terms of long-term holding in of cash on the balance sheet. I think we are just being mindful of the way that the past year has played out and particularly the third lockdown where there were moments at which it seemed at least likely that the housing market would be closed again. So it's really just a reflection of caution in calling an early end to volatility. We're making a start to returning to a more normal balance sheet with the dividend and the resumption of the share buyback. And you shouldn't really read anything into the higher levels of cash, other than other than a bit of caution in preserving some extra liquidity.

Natasha Brilliant: Okay, that was really helpful. Thank you, to you both.

Peter Brooks-Johnson: Thank you.

Operator: Thank you for your question. We have the next question from the line of Robert Berg from Berenberg. Please go ahead, sir, your line is open.

Robert Berg: Hi. Yeah, thanks. Just one follow up from me actually. It's maybe a question for Alison. If I was to look at the top line growth, 2021 versus 2019, the growth is coming at zero or next to zero profitability. And obviously, you've been through a very strange time, so I'm asking a question on, is this kind of a trend where we should expect growth? Because, as you mentioned, coming more from product, more investment? Should we expect growth now to come at lower profitability levels? I think Alison alluded to a margin more towards the 70% level. Or is this kind of an abnormal trend, and we should expect margins to progress back up to the mid-70s that you've seen in the past? Thanks.

Alison Dolan: Thanks, Robert. So I think, I mean, in terms of the drivers of growth, we are seeing growth in ARPA, particularly at the agency level of sort of 7%. And we've talked this morning about a return to the sort of margins that you saw in 2019. There is definitely an element of cost catch up this year. If you look at the profile of costs during 2020, gross savings of £4.6 million, will not repeat this year, the majority of them won't repeat this year. And there is an element of catch-up, particularly with respect to recruitments, which will accelerate some of the costs into 2021. I wouldn't necessarily read that, as a structural change in the margin of the business. If you think about the margin at the agency level, which is the primary driver of our margin, and how strong that is, it takes a large movement in margin elsewhere to really make a dent in that. So what you're seeing in '21 is an element of cost increases on 2019, which is a combination of lack of savings, the lack of the savings that we saw in 2020, the return of a more normal level of annual increases of £35 million to £6 million, which is the levels that we've seen in the past, and then an element of catch-up. And don't forget that 2020 was the first year in which we saw a full year of Van Mildert cost, which will also be included going forward. So those are the underlying dynamics of the margin for '21.

Robert Berg: All right. Perfect, thank you.

Operator: Thank you for your question. We have the next question from the line on Cynthia Cuomo from Deutsche Bank. Please go ahead, your line is open.

Cynthia Cuomo: Good morning. Thank you for taking my question. I have just one follow up for Alison actually on the tax return policy. Considering where the cash balance ended in 2020, and considering what your previous policy was to return all excess cash to shareholders and should we think that if you want to get to around the £50 million balance, you mentioned, the buyback program in 2021, could be substantially higher than it used to be? Thank you.

Alison Dolan: Sorry, she's just making a funny face at me. Hi, good morning, I mean, clearly the in-year level of cash generation for '21 will be similar to previous years, yes. And we ended the year with just under just under £97 million of cash in the balance sheet. So if you take this final dividend, which is about £40 million, plus the in-year cash generation, we will, potentially need to accelerate some of the buyback levels that we've seen in the past in order to end the year with £50 million, but that is what we will do. Does that answer the question?

Cynthia Cuomo: Yes. Thank you.

Alison Dolan: Thank you.

Operator: Thank you for your question. We have another question for the line of Lisa Yang for Goldman Sachs. Please go ahead.

Lisa Yang: Good morning. I just had to follow up on the ARPA growth guidance. You said it'd be mainly led by product this year, could you maybe give us a bit more color in terms of the main contributors and your assumptions around the package upgrade beneath that? And the second question is, similarly on the ARPA, would it be possible to get your thoughts around evolution of ARPA for agents as opposed to New Homes. I understand the New Homes might be under a bit more pressure. So if you were to compare versus the 2019 level, would you say ARPA growth for agents can be a bit higher and New Homes a bit below where we were in 2019? And the third one would be on your comments around revenue particularly from referencing contract tenant services, could you maybe talk about the sort of roadmap to sort of tap into that revenue opportunity? How big could that could that be? Is that going to be a contributor for 2021? Or should we think about maybe more the older years? And the very last one, if I can. Is it just possible to get your sense of how you think commission polls for agents have changed in 2020, just to get a bit of a sense of the underlying health of your customers and how you think that's critical for 2021? Thank you.

Peter Brooks-Johnson: Thanks, Lisa. So ARPA growth, what's going to drive that growth in '21? I think that's the first question. Mainly I should see a sort of continuing Optimiser upgrades. It's not the only thing, we will - we get, you might remember, you can either buy our products, so you could either buy them in a package, or you can actually buy them through that account. But I think the main driver would be those Optimiser upgrades, so people upgrading, potentially from Optimiser 2015, which was the old package up to our new super premium package of 2020. And you'll see we're seeing upgrades at about the 350-360 level. So that makes quite a big difference to ARPA quite quickly if we continue on that path, so that the majority of the growth in Agency. And yes, in terms of the growth in segmental offers and you have the - that you have as an Agency, sorry. Yeah, I think I think your assumption is broadly correct. That we'll see, compared to 2019, at segmental level will see more coming out of Agency than we will out of New Homes. So, yes, it's probably truth. So that's possible. And then sort of roadmap from here on that digital kind of journey and the journey from revenue, I think the contribution in '21 will be small, probably similarly, I don't - I wouldn't want you guys to be writing any big numbers into your notes for '22, probably even '23. I think it's a sort of three-to-five-year horizon that we're looking at in terms of that journey. Obviously, we're sort of laying down the structure of the journey. I don't think while tenants are moving towards it. And I'm actually delighted that we're seeing, revenue perspective, we're seeing up to 70% fewer viewings per let, which, of course is efficient for agents. But the other thing that's not often talked about is it's much better for tenants, because that means tenants aren't wasting a lot of time and potentially facing a disappointment. So, but I don't think you should expect a particularly notable revenue contribution through until probably three or five years from now. I think that was it, does that answer your question or is there also something else I've missed?

Lisa Yang: Yeah. Just wondering, your thoughts about the evolution of the commissions - agents commission last year and into 2021?

Peter Brooks-Johnson: Yeah, a good question for that. So measuring commission is definitely more of an art than a science because unsurprisingly, agents don't publish their commission rates [indiscernible]. So what and you have to rely on a few relatively small scale surveys, and you have to be a bit careful because extrapolating too hard becomes a fool's errand. So what I think we've seen is that commission has bumped up a little bit, maybe 5 basis points, 10 basis points, that sort of level. So then don't just get carried away. The other thing, of course has happened is that achieved prices has gone up, and we continue to see pretty good achieved price growth. So all-in-all, I think the net agent commission pool has gone up on a unit basis. And then of course, this year, I would like to think we'll get back to a more normal transaction run rate. So on a volume basis compared to last year, and maybe they'll see a bit more as well. So I think that things are in an okay place, actually, when you take all of that together. And I think it's interesting that we've seen good agents, actually some good agents are noticeably pushing their commission up a bit more than five basis points, but probably a reasonable average guess. Miles, anything to add on, the line is miserable?

Miles Shipside: Well, that's obviously the large positive is, so it's a bit contract pipelines is obviously the stamp duty that could affect some of that. But overall agents reporting to me that their cash flow is very positive.

Peter Brooks-Johnson: Thanks Miles. Sorry, is that, I mean that cover the last. Now, is there anything else I missed?

Lisa Yang: Yeah, no, that's perfect. Thank you very much.

Peter Brooks-Johnson: Thank you.

Operator: Thank you for your question. We have another question from the line of Gareth Davies from Numis. Please go ahead. Your line is open.

Gareth Davies: Yeah. Hi, morning, guys. Just one last for me as well, in the context of the presentation you did earlier online. You mentioned a number of sort of innovations, looking forward. I think the one that stood out and was quite interested in is the move into auctions. Certainly felt slightly left field to where we've seen you go in the past. I just wondered if you can expand on the scale of the opportunity, kind of how your payment model would work in that environment and kind of what's particularly interesting about it?

Peter Brooks-Johnson: Okay, let's start with what's interesting. And it well [indiscernible]. So what's interesting about auctions is, I think I sort of rambled on a bit in the presentation. What - I suppose to the UK public probably has a vision of auctions and auction room and a person with a gavel standing in front. And the problem for most homebuyers is, at the moment the gavel falls, you're committed, which means if you need a mortgage, you probably don't get involved because the difficulty is you then have, I think, it can be up to 10% deposit and your aborting fee is quite high. And of course, you can't apply for mortgage. Also then in auctions, you don't have the right, so I think it puts people off. And what we've seen emerge in the last, probably five years, is the online conditional auction. And the features in online conditional auction, and there'll be suppliers that offer it. But there's more, there's typically more information up front. So as a buyer, you can be a bit more confident. There's a course the fact that these auctions typically take place over a number of days or a week, and you're not under the pressure of an auction room because it's all online. So you bid online, means that you don't have that what might be just made of, to be worried about the twitch thing and you ended up with a two-bed house in Bolton, but so that gives consumers more confidence. And probably the big thing is its conditional. So those are the benefits to the buyer. So if you need a mortgage, you're more likely to be able to participate. As a seller and actually for the agent, what typically happens, and certainly with our initial partner, what we're seeing out of their data is, completion is a lot quicker because a lot of the legal work has been prepared upfront. Because as a local property, you're a lot more confident that it's going to sell. So whereas, yeah, we're seeing completion at about 56 days from an online conditional auction, which is about half the time of a normal sale. So from a seller, it's really important, because you - it's not going to work for everybody, because you may well achieve a slightly lower price, of course. But what you start to do is you start to get certainty of sale, which for a number of people, not just people in financial distress, is really important. So that's what we're seeing happen. And this is really, I've said, emerging in the last five years. That's why it's interesting. It's not a big portion of the marketplace, maybe a couple of percent of transactions. And what we've chosen to do, we think, because it has advanced use for the buyers and sellers, because we believe that it's an area that requires clear explanation, say, even for everybody, we've decided to sort of offer this service to carefully vetted online auction providers. So we're not running the auction. That's not our experience. And we will also give a lot of consumer information on the page. So not only can they see how to bid and they can see the current bidding and time left and that sort of information. There's actually a help panel, which means they can understand exactly what is an auction. So in terms of opportunities, I think the last part of your question and it's difficult to see at the moment. So the current structure is its pretty much it's an advertising deal. But I think it's difficult to say because we don't know whether our participation and sort of sharing information will change the percentage of the market. I wouldn't want anyone, again, I wouldn't want anyone to get sort of massively carried away that suddenly we're going to turn ourselves into an auction provider. I don't see it, I think it might be a portion of the market and who knows, it could grow from a couple of percent of it. And that will be good news for us. It's really about trying to service this part of the market and actually utilize our trusted status, because consumers trust us. And actually, we therefore can supply that sort of important information. That's all the answers, does that answer your question?

Gareth Davies: Yes, very good, thank you.

Operator: Thank you for your question. We have another question for the line Miriam Adisa from Morgan Stanley. Please go ahead, your line is open.

Miriam Adisa: Hi, good morning, everyone. Thanks for taking my question, two left from me. And just on Van Mildert. Just wondering, how should we think about the cost base for that developing over time, particularly as we move towards the next stage of development? Are there any particular sort of step changes or things that we should be aware of there? And how you're sort of thinking about the margin profile of that compared to the core business? And then just on the agents or hybrid agents, just wondering what you've seen by far in the market, and sort of what your expectations are for the New Year? Thanks.

Alison Dolan: Thanks, Miriam. In terms of Van Mildred cost, the [indiscernible] cost base is certainly immaterial in the context of our total cost base is about £3 million of operating costs, and then we amortize about £0.5 million, you shouldn't expect to see any increases in that really going forward, it may come down a little. The majority of it is headcount. They've added about 80 heads in total to the overall headcount base of the business. So know that that may change at the margin, but it will not be anything significant.

Peter Brooks-Johnson: Yeah, just one word, Miriam. I think, the journey we're on. I mean, we're on this digitizing journey in rentals. And I think what that means for Van Mildred is, over time, we make - we're using our data to make that process more efficient and more digital, so we can increase volumes without increasing headcount. So our aim would be the volume profile will get incrementally better, as we start to run those changes through. In terms of hybrid agents, I think what we see is, again that they are, I mean the good businesses, they are very front in new listing numbers because that's when most of them charge. So that's when their income appears, is directly linked to the number of new listings. So what we see with those businesses is that they probably had not a bad second half because new listing numbers were going up. I would imagine that the first half of this year, they'll have to pay a little bit more attention because new listing numbers are going down. So I think that's - it's just a slightly different dynamic. I don't think we should get carried away that either it's about to be a total new dawn or the death knell. They just got a little bit more than a traditional agent, because they charge more. Does that answer you?

Miriam Adisa: Yeah, yeah. Answered it, thank you.

Alison Dolan: Thanks Miriam.

Peter Brooks-Johnson: Thanks Miriam.

Operator: Thank you for your question. We have another question from the line of Andrew Ross from Barclays. Please go ahead. Your line is open.

Andrew Ross: Great, thanks. And morning all, thanks for squeezing me in. And I've got two. And first one is a follow up on Natasha's question where I think you said for those agents who are seeing a price increase in 2021, that increases about 10%. Can you tell us what percentage of agents are not getting a price increase for this year? I know there's quite a bit of mix going on there. And on top of that, what percentage of agents did not get a price increase for 2020 because COVID happened at a time where you might have had that conversation? So are there a big chunk of agents who are now not been an increase for two years? My first question. And then the second one is your visibility over kind of up to 8% ARPA the growth for this year. At this point, how many of your agents have you had the offer conversation with? I know that always used to be kind of at the start of the year, but I think it's a bit more spread out now. And should we assume because most of the product growth is Optimiser 2020. For those agents who you've had the conversation with, it's pretty much locked-in at this point and there's not really room so to do better, or is it possible that there might be more upsell from those agents as you go through the year? Thanks.

Peter Brooks-Johnson: Right, I'll do the second one first. And so what we'd say we've done - we had about 20 odd percent of conversations now for the 2021 price increases. Yes 20 and odd percent extension from 2021 conversations. I think that's one of your questions. And then the question about so if someone's had a had a price rise, does always get locked-in on the upgrade? No, actually not. We will continue to see upgrade, sort of pre- and post-price rise conversations. So it doesn't necessarily lock us in to that. I mean, obviously sort of guarantee the floor, I suppose but it doesn't lock us in. So that was that one. In terms of 2021 price rise, I currently can't remember. But it's the majority - the majority won't be seeing a price rise. So that's one of the reasons it'll be product led. And then in 2020, I don't have the number in front of me, Andrew. To get to your question, I think your sort of end point was, does that mean there's lots of customers who won't - whose prices once, it's gone up into subsequent years, was that what you? There won't be many in that category, I think is the answer. I don't have the number in front of me, I'm afraid.

Andrew Ross: And this is your plan but when you get to, I don't know, August this year and you start to think about the price increase for '22. But we're now going to go back to an across-the-board price increase for everybody? Or maybe it's just too early to know?

Peter Brooks-Johnson: I think it's a good question. It's a little early, I think as Alison notes, a bit earlier on. Still, there's still a reasonable amount of uncertainty floating around in our world. For all of us, isn't there? I think, after all those are not dates, so I have to repeat myself. I think we won't see, I don't see a reason that we wouldn't return to a more usual pattern. But I think we have to wait and see and see what the environment looks like later in this work.

Andrew Ross: What are you looking for there? Is it the health of agents or is it kind of competitive dynamics for the question about because I would have thought that, given the state of the end market, which looked pretty solid and given what we're hearing about kind of commission rates and the health of agent's P&L. I don't see at this point, why there would be much of an uncertainty about your ability to do price for '22? So yeah, are you just been cautious or it's for something specific you're looking at?

Peter Brooks-Johnson: So yeah, health of agent. Yeah, I mean, I'm always a bit cautious. I would agree with everything you say in terms of what I would guess right now, but I think we don't just make a decision now. So we're waiting to see a little bit. We've obviously got to work out what's going to happen with stamp duty or this is going to work out normally. And there are the sort of general macro worries, let's see how that pans out. But actually I agree with everything you said. I don't see a reason today that we wouldn't be doing it.

Andrew Ross: Very helpful. Thank you.

Peter Brooks-Johnson: You're welcome.

Operator: Thank you for your question. There are no further question at the moment.

Peter Brooks-Johnson: Lovely. Well, should we call that day then everybody? There are no more questions?

Operator: No, sir, there are no more question.

Peter Brooks-Johnson: Thank you, Roberto. Right, well thank you, everybody. Thanks for coming along and spending 50 Minutes with us. And as ever, if you got any more questions, then get in touch with either Alison or I, directly. Other than that, I can only wish you a lovely, sunny Friday and a lovely weekend.