2009 Half year results
Embargoed until 07.00, Friday 21 August 2009
RIGHTMOVE PLC
2009 HALF YEAR RESULTS
Rightmove plc, the UK's no. 1 property search website, announces half year
results for the six months ended
30 June 2009.
Financial and operational highlights for the six months ended 30 June 2009
* Revenue down 11% to £33.6m (2008: £37.8m)
* Operating costs reduced by 19% to £13.7m (2008: £17.0m)
* Underlying operating profit* down 4% to £19.9m (2008: £20.8m)
* Underlying earnings per share* up 13% to 12.8p (2008: 11.3p)
* Interim dividend maintained at 3.0p per ordinary share (2008: 3.0p)
* Net cash from operating activities increased by 9% to £16.2m (2008: £14.9m)
* Net debt reduced by 58% to £9.9m (2008: £23.3m)
* Page impressions on Rightmove websites up 3% to 3.2bn (2008: 3.1bn)
* Number of advertisers down 13% to 16,874 (2008: 19,301), but up 1% in the
six month period since 31 December 2008, and average spend per advertiser
up 1% at £305 per month (2008: £301^)
Ed Williams, Group Managing Director, said:
"Rightmove has proven its worth in tough times. Customer loyalty, coupled with
cost management, mean we have been able to weather these housing market
conditions with minimal impact on profitability. Our business is already
growing again on all major measures whether that is in terms of usage of our
website by home hunters, in terms of number of advertisers or in terms of their
individual spend with us."
* Before share-based payments and NI on share-based incentives
^ H1 2008 ARPA has been restated using the new method adopted at the end of
2008 based on taking the ARPA for the six month period rather than the ARPA for
the last month of the period
Half year statement
Strategic position
Our strategic objectives as we started 2009 were to maintain our market
position as the UK's leading property website, to maintain our advertising
customer base (in so far as those advertisers themselves remained in the
industry), and to defend the value we deliver as compared to alternative forms
of property advertising. These objectives appeared to us as key to the future
success of the business in the face of the toughest property market conditions
in a generation.
At the mid-year our market position is stronger than ever, helped by our "See
More" TV campaign and online optimisation of our website which, together with
continued investment in leading functionality, have contributed to record
levels of site traffic. The advertising customer base has been immensely loyal.
We have grown the number of customers since the start of 2009 among estate
agents, lettings agents and holiday homes owners. The number of new homes
developer customers is unchanged, though individual companies typically have
fewer developments to market than six months ago. The value we deliver has
enabled us to maintain prices, grow discretionary spend and continue to invest
in the business.
Rightmove's share of property advertising spend has grown substantially as
advertisers cut back on traditional media.
Financial performance
Revenue decreased by 11% to £33.6m compared to the same period last year, with
declines in the number of estate agents in the industry and in the number of
developments being marketed accounting for the decline.
However underlying operating profit* decreased by only 4% to £19.9m. The
resilience of operating profits reflects the success in reducing costs during
the second half of 2008 and the continued focus on costs during this most
recent period. Operating costs were down by 19% at £13.7m even though we
maintained marketing spend to reinforce our leadership position. As a result,
the underlying operating margin for the first half of 2009 was 59.2% compared
to 55.1% for the first half of 2008.
Underlying earnings per share* (UEPS) rose 13% to 12.8p compared to 11.3p a
year ago. The rise in UEPS was principally due to the increase in the deferred
tax asset arising on share-based incentives and the substantial share buy back
programme in 2008. The effective tax rate was 28%.
Operating performance
The first six months of 2009 have seen growth in most key metrics compared to
the position at the end of 2008. In several of the cases where there has been
growth this year (e.g. membership), the figures are down on a year ago as a
result of the tough trading conditions in the second half of last year.
Therefore we have compared all our key operating metrics with the same period
in 2008, except for membership and retention numbers which are a comparison of
December 2008 with mid 2009:
* Page impressions on Rightmove websites at 3.2bn for the first half of 2009,
up 3% on the same period a year ago
* Market share of page impressions compared to our three largest competitors
at 80% (up from 78% a year ago)
* Overall membership since the start of the year up 1% to 16,874:
+ Estate agents up 2% to 9,960
+ Lettings agents up 15% to 3,632
+ New homes developer customers unchanged but the number of developments
advertised down 14% to 2,898
+ Overseas homes advertisers down 11% to 384
+ Holiday Lettings adverts up 18% to 33,521
* Higher retention rates among agents at 94% for the first six months
(compared to 74% for the whole of 2008), but increased churn rate among new
homes developments and overseas homes averaging 9% (2008: 8%) and 13%
(2008: 8%) per month respectively
* Revenue from discretionary products of £4.1m compared with £3.7m for the
same period a year ago, despite the reduction in advertiser numbers
* Average revenue per advertiser (ARPA) up 1% at £305 per month (2008:£301 ^).
However, the significant reduction in the number of new homes
developments at the same time as an increase in lettings only agents has
depressed the increase. If there had been a constant mix of customer types,
ARPA would have been up 5% driven particularly by new homes developers.
Website traffic is up by 3% compared to the first half of 2008 at 3.2bn page
impressions. This is an especially strong performance given that the first
three months of 2008 saw relatively high levels of activity before a sharp
downturn in the market in April 2008. Traffic in 2009 has remained strong in
May, June and July at a time when in most previous years we have seen declines
compared to the January to March peaks. Monday 10 August 2009 was the busiest
day in the nine year history of Rightmove websites with page impressions of
22.6m.
The number of estate agents in the market appears to have stabilised and, as a
result of gaining market share, Rightmove has more estate agent members than at
the start of the year. There has been strong growth in the number of lettings
agents and in the number of estate agents also offering a lettings service
helping Rightmove's rapid growth in this area. The threat to the future of
house builders appears much reduced as they have managed to generate
significant cash inflows from selling properties albeit at lower prices and
renegotiating their debt arrangements. However, the low levels of new
developments coming to market and a switch among Housing Associations to social
rent have resulted in a significant reduction in the number of developments
being marketed. Conditions for our overseas homes business have been
challenging with the UK seen as a poor potential source of buyers for overseas
sellers as a result of the general economic conditions in the UK and the
weakness of Sterling. In contrast conditions have been ideal for the growth of
our Holiday Lettings business, which has grown revenues by 52% year on year, as
holiday-makers trade down to self-catering short-haul holidays and home owners
seek higher occupancy rates.
Rightmove Choice products (our upgraded advertising services above and beyond
standard property listings) are now used by 39% of our advertisers, with those
that take Choice products buying more than two each. Despite a marked decline
in the total number of advertisers as compared to a year ago, revenue from
Choice products and email campaigns increased by 11% to £4.1m (2008: £3.7m).
Uncertainties, threats and risks
We indicated three main areas of uncertainty or risk to our business in the
2008 annual report, identifying that the business was inevitably exposed to the
general uncertainty of the housing market particularly transaction volumes; the
threat of new property websites; and Rightmove's ability to capture marketing
spend from local newspapers when the property advertising sector recovers.
The gradual but sustained increase in housing transactions, coupled with
significant cost reductions within our customers' businesses, probably account
for the stability we have seen in agent numbers. There is increasing evidence
that the number of new homes developments being marketed has reached the
bottom, reflected in our own most recent numbers.
In respect of the competitive landscape, the first half of 2009 saw the exit
from the UK market of Real Estate Australia (the Australian market leader owned
by News Corporation) as it wound down Property Finder. The supposed threat of
new entrants has not materialised. Rightmove's market share of the top four UK
property websites by pages viewed increased in the period to 80% (2008: 78%), a
historically very high level.
Local newspaper groups' own reported results for property advertising bring
home the scale to which advertisers have cut spend in tough market conditions.
Increased sales of Choice products at a time when newspapers are still
experiencing declines in property advertising is an encouraging early sign.
Rightmove's biggest challenge and opportunity is now to increase our customers'
spend with us whether on our existing product set or new products we will be
introducing as the housing market recovers.
Cash flow and net debt
In April 2009, we termed out £25m of a £40m revolving loan facility with the
Bank of Scotland which had been used for the specific purpose of facilitating
share buy backs. The term of the loan facility is five years with £5m repayable
within one year. At the half year, following payment of our full year dividend
of 7.0p per ordinary share, net debt stood at £9.9m (2008: £23.3m).
Cash generated from operations was £22.4m (2008: £19.2m) with cash flow
conversion in excess of 100% for the six month period. With continued strong
operating cash flows we will be in a position to either repay the outstanding
debt early or increase the rate at which we return capital to shareholders.
Dividends
The Board intends to pay an interim dividend of 3.0p (2008: 3.0p) in line with
our policy of maintaining dividends until such time as profits are growing
again. The interim dividend will be paid on 13 November 2009 to members on the
register on 16 October 2009.
Current trading and outlook
The last 18 months have borne out that the Rightmove business is only strongly
exposed to the property market to the extent that it affects the number of
potential advertisers in business. We appear now to be in a period where the
number of offices and developments being marketed is sustainable, with the
prospect of growth in our advertiser numbers over the coming year.
Building on the revenue growth achieved since the low point in April, July has
seen the highest monthly revenue for the year-to-date. With continued low
costs, July generated our second highest monthly operating profit ever. July
was also the best month ever in terms of usage by home hunters (measured by
page impressions on the site) and saw a further strengthening of market share
of page impressions of the top four property websites. A £1m TV advertising
campaign has been booked for September.
We are confident of increased average spend on Rightmove by our customers over
the next 12 months. A number of factors which have had a dampening impact on
the average spend, such as the change in mix of our customers, are unlikely to
continue and may well start to reverse. The resilience of spend on our Choice
products at the worst point in the cycle and the recent increases in adoption
are encouraging. The return on investment of Rightmove as compared to local
newspapers (which continue to account for the lion's share of advertising
spend) remains, in our opinion, compelling. Similar to newspaper advertising,
our next product set will allow our customers to promote their services and
brands not just the properties that they advertise.
The Board is confident of exceeding market expectations for 2009, while not quite
matching 2008 operating profit*, and achieving further growth in 2010.
Scott Forbes, Chairman
Ed Williams, Managing Director
21 August 2009
For further information please contact:-
Rightmove
Ed Williams, Managing Director
Nick McKittrick, Finance Director and Chief Operating Officer
Telephone: 0207 087 0605/0207 087 0664
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF
THE HALF YEAR REPORT 2009
We confirm that to the best of our knowledge:
The condensed set of financial statements has been prepared in accordance with
IAS 34 Interim Financial Reporting as adopted by the EU;
The interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed consolidated interim financial
statements; and description of the principal risks and uncertainties for the
remaining six months of the financial year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the Group during that period; and any changes in the related
party transactions described in the last annual report that could do so.
By order of the Board
Scott Forbes, Chairman
Ed Williams, Managing Director
21 August 2009
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2009
Note 6 months ended 6 months ended Year ended
30 June 30 June 31 December
2009 2008 2008
£000 £000 £000
Revenue 3 33,557 37,817 74,046
Administrative expenses (14,652) (17,702) (34,555)
Operating profit before
share-based payments, NI
on share-based incentives
and capital reconstruction 19,856 20,833 41,004
credit
Share-based payments 4 (841) (958) (1,998)
NI on share-based 4 (110) 240 240
incentives
Capital reconstruction - - 245
credit
Operating profit 18,905 20,115 39,491
Financial income 5 109 203 630
Financial expenses 6 (823) (524) (1,955)
Net financial expenses (714) (321) (1,325)
Profit before tax 18,191 19,794 38,166
Income tax expense 9 (5,182) (7,203) (12,663)
Profit for the period
being total comprehensive 13,009 12,591 25,503
income
Attributable to:
Equity holders of the 13,009 12,591 25,503
Parent
Earnings per share (pence)
Basic 7 11.94 10.71 22.49
Diluted 7 11.90 10.57 22.48
Dividends per share 8 7.00 6.00 9.00
(pence)
Total dividends 8 7,615 7,082 10,358
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
as at 30 June 2009
Note 30 June 2009 30 June 2008 31 December 2008
£000 £000 £000
Non-current assets
Property, plant and 10 1,610 2,142 1,883
equipment
Intangible assets 10,948 7,839 11,123
Deferred tax assets 328 192 164
Total non-current assets 12,886 10,173 13,170
Current assets
Trade and other receivables 11 9,387 12,485 12,627
Cash and cash equivalents 12 15,118 3,162 23,059
Total current assets 24,505 15,647 35,686
Total assets 37,391 25,820 48,856
Current liabilities
Loans and borrowings 14 (5,000) (26,500) (39,750)
Bank overdraft 12 - - (172)
Trade and other payables 13 (11,523) (13,400) (12,418)
Income tax payable (5,361) (6,224) (5,787)
Deferred consideration 16 (6,133) (2,461) (6,133)
Provisions (2) (160) (13)
Total current liabilities (28,019) (48,745) (64,273)
Non-current liabilities
Loans and borrowings 14 (20,000) - -
Deferred tax liabilities (86) (99) (92)
Provisions - (167) -
Total non-current (20,086) (266) (92)
liabilities
Net liabilities (10,714) (23,191) (15,509)
Equity
Share capital 1,201 1,212 1,201
Other reserves 231 220 231
Deficit on retained (12,146) (24,623) (16,941)
earnings
Total equity attributable
to equity 15 (10,714) (23,191) (15,509)
holders of the Parent
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
for the six months ended 30 June 2009
Note 6 months 6 months Year ended
ended ended 31 December
30 June 2009 30 June 2008 2008
£000 £000 £000
Cash flows from operating
activities
Profit for the period 13,009 12,591 25,503
Adjustments for:
Depreciation charges 328 314 648
Amortisation charges 243 207 452
Financial income 5 (109) (203) (630)
Financial expenses 6 823 524 1,955
Share-based payments charge 4 841 958 1,998
Income tax expense 5,182 7,203 12,663
Operating cash flow before
changes in working capital 20,317 21,594 42,589
Decrease/(increase) in trade
and other receivables 3,241 (1,283) (1,462)
Decrease in trade and other (1,117) (1,310) (2,296)
payables
(Decrease)/increase in (11) 154 (160)
provisions
Cash generated from 22,430 19,155 38,671
operations
Interest paid (476) (191) (1,480)
Income taxes paid (5,778) (4,100) (9,972)
Net cash from operating
activities 16,176 14,864 27,219
Cash flows from investing
activities
Interest received 108 203 667
Acquisition of property, (57) (414) (491)
plant and equipment
Acquisition of intangible (66) (466) (464)
assets
Proceeds from disposal of
property, plant and - - 1
equipment
Net cash used in investing (15) (677) (287)
activities
Cash flows from financing
activities
Dividends paid 8 (7,615) (7,082) (10,358)
Subsidiary dividends paid to 8
minority shareholders (534) - 0
Purchase of shares for 15 - (11,917) (11,917)
treasury
Purchase of shares for 15 - (29,861) (32,840)
cancellation
Purchase of shares by The
Rightmove Employees' Share 15 (918) - -
Trust (EBT)
Share buy back expenses - (272) (287)
Proceeds on exercise of 12 - -
share options
Proceeds from borrowings - 26,500 39,750
Repayment of borrowings 14 (14,750) - -
Debt issue costs (125) (200) (200)
Net cash used in financing (23,930) (22,832) (15,852)
activities
Net (decrease)/increase in
cash and (7,769) (8,645) 11,080
cash equivalents
Cash and cash equivalents at 22,887 11,807 11,807
1 January
Cash and cash equivalents at 12 15,118 3,162 22,887
period end
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the six months ended 30 June 2009
EBT own Reverse
Share Share shares Treasury Other acquisition Retained Total
capital premium reserve shares reserves reserve earnings equity
£000 £000 £000 £000 £000 £000 £000 £000
At 1 January 2008 1,327 105 (17,149) (19,362) - - 47,471 12,392
Capital (33) (105) - 19,362 - 138 (19,362) -
reconstruction
Profit for the - - - - - - 12,591 12,591
period
Dividends to
shareholders - - - - - - (7,082) (7,082)
Equity settled
share-based - - - - - - 958 958
incentives charge
Purchase of shares
for treasury - - - (11,917) - - - (11,917)
Purchase of own - - - (29,861) - - - (29,861)
shares
Cancellation of own
shares (82) - - 29,861 82 - (29,861) -
Share buy back
expenses - - - - - - (272) (272)
At 30 June 2008 1,212 - (17,149) (11,917) 82 138 4,443 (23,191)
At 1 January 2008 1,327 105 (17,149) (19,362) - - 47,471 12,392
Capital (33) (105) - 19,362 - 138 (19,362) -
reconstruction
Profit for the - - - - - - 25,503 25,503
period
Dividends to
shareholders - - - - - - (10,358) (10,358)
Equity settled
share- based - - - - - - 1,998 1,998
incentives charge
Purchase of shares
for treasury - - - (11,917) - - - (11,917)
Purchase of own - - - (32,840) - - - (32,840)
shares
Cancellation of own
shares (93) - - 32,840 93 - (32,840) -
Share buy back
expenses - - - - - - (287) (287)
At 31 December 2008 1,201 - (17,149) (11,917) 93 138 12,125 (15,509)
At 1 January 2009 1,201 - (17,149) (11,917) 93 138 12,125 (15,509)
Profit for the - - - - - - 13,009 13,009
period
Dividends to
shareholders - - - - - - (7,615) (7,615)
Subsidiary
dividends to - - - - - - (534) (534)
minority
shareholders
Equity settled
share- based - - - - - - 841 841
incentives charge
Gain on exercise of
share options - - 10 - - - 2 12
Purchase of own
shares by the EBT - - (918) - - - - (918)
At 30 June 2009 1,201 - (18,057) (11,917) 93 138 17,828 (10,714)
NOTES
1 General information
Rightmove plc (the Company) is a Company registered in England
(Company no. 6426485) domiciled in the United Kingdom (UK). The condensed
consolidated interim financial statements of the Company as at and for the six
months ended 30 June 2009 comprise the Company and its interest in its
subsidiaries (together referred to as the Group). Its principal business is the
operation of the Rightmove.co.uk website which is the UK's largest property
website.
The consolidated financial statements of the Group as at and for the year ended
31 December 2008 are available upon request to the Company Secretary from the
Company's registered office at 4th Floor, 33 Soho Square, London, W1D 3QU
or from the investor relations website at www.rightmove.co.uk/investors.rsp.
Basis of preparation
The condensed consolidated interim financial statements have been prepared in
accordance with International Financial Reporting Standard IAS 34 Interim
Financial Reporting and the Disclosure and Transparency Rules of the UK's
Financial Services Authority. They do not include all of the information
required for full annual financial statements and should be read in conjunction
with the consolidated financial statements of the Group as at and for the year
ended 31 December 2008.
The condensed consolidated interim financial statements were approved by the
Board of directors on 21 August 2009. The half year results for the current and
comparative period are unaudited. The auditor, KPMG Audit Plc, has carried out
a review of the interim financial statements and their report is set out at the
end of this document.
The comparative figures as at and for the year ended 31 December 2008 are
extracted from the Group's statutory accounts for that financial year. Those
accounts have been reported on by the auditor and delivered to the registrar of
companies. The report of the auditor was:
(i) unqualified;
(ii) did not include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report; and
(iii) did not contain a statement under Section 237 (2) or (3) of the Companies
Act 1985.
The Group's financial risk management objectives and policies are consistent
with that disclosed in the consolidated financial statements as at and for the
year ended 31 December 2008.
Going concern
The Group has significant cash balances of £15,118,000 (30 June 2008:£3,162,000).
As described in Note 14 the Group has £25,000,000 of term debt as at 30 June 2009
of which £5,000,000 is repayable within one year.
The Group's forecasts and projections, taking account of reasonably possible
changes in performance show that the Group will be able to operate within the
current level of its facility and meet scheduled loan payments and related bank
covenant requirements.
After making enquiries, the directors have a reasonable expectation that the
Group and the Company have adequate resources to continue in operational
existence for the foreseeable future. Accordingly they continue to adopt the
going concern basis in preparing these accounts.
2 Significant accounting policies
The accounting policies applied by the Group in these condensed consolidated
interim financial statements are in accordance with International Financial
Reporting Standards as adopted by the European Union (Adopted IFRSs) and except
as described below are the same as those applied by the Group in its
consolidated financial statements as at and for the year ended 31 December 2008.
The following new standards and amendments to standards are mandatory for the
first time for the financial year beginning 1 January 2009.
Revised IAS 1 Presentation of Financial Statements (2007) introduces the term
`total comprehensive income' which represents changes in equity during the
period other than those changes from transactions with owners in their capacity
as owners. The Group has elected to present one performance statement being the
statement of comprehensive income which replaces the income statement.
IFRS 8 Operating Segments introduces the `management approach' to segment
reporting under which segment information is presented on the same basis as
that used for internal reporting purposes. This has resulted in an increase in
the number of reportable segments presented, as the previously reported
property advertising segment has been split into Agency, New Homes, Holiday
Lettings and Other segments.
The same accounting policies are anticipated to be applied for the year ending
31 December 2009.
Judgments and estimates
The preparation of financial statements in conformity with Adopted IFRSs
requires management to make judgments, estimates and assumptions that affect
the application of policies and reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of
making judgments about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in future periods if applicable.
In particular information about significant areas of estimation uncertainty and
critical judgments in applying accounting policies that have the most
significant effect on the amounts recognised in the financial statements is
included in the following notes:
Note 4 Measurement of share-based payments
Note 11 Impairment of trade receivables
Note 16 Deferred consideration carrying value
3 Segment information
The Group's reportable segments are as follows:
* The Agency segment which provides resale and lettings property advertising
services on www.rightmove.co.uk;
* The New Homes segment which provides property advertising services to new
homes developers and Housing Associations on www.rightmove.co.uk;
* The Holiday Lettings segment which provides advertising services in
connection with holiday rental properties on www.holidaylettings.co.uk; and
* The Other segment comprises overseas property advertising services on
www.rightmove.co.uk and non-property advertising services which include
business and information services, banner advertising on
www.aboutmyplace.co.uk, Automated Valuation Model services and Local
Editions.
Management monitors the operating results of business segments separately for
the purpose of making decisions about resources to be allocated and of
assessing performance. Segment performance is evaluated based on revenue which
in certain respects, as explained in the table below, is measured differently
from revenue as reported in the consolidated financial statements. All revenues
in all periods are derived from third parties and there are no inter-segment
revenues.
Operating costs, finance income, financial expenses and income taxes in
relation to the Agency, New Homes and the Other segment are managed on a
centralised basis at a Rightmove Group Limited level and as there are no
internal measures of individual segment profitability relevant disclosures have
been shown under the heading of Central in the table below.
Operating New Holiday Sub
segments Agency Homes Lettings total Other Central Adjustments Total
£000 £000 £000 £000 £000 £000 £000 £000
Six months
ended 30 June
2009
Revenue 22,479 7,463 2,866 32,808 1,303 - (554)(1) 33,557
Operating - - 1,158 1,158 - 19,294 (1,547)(3) 18,905
profit(2)
Depreciation
and - - (15) (15) - (514) (42)(4) (571)
amortisation
Financial - - 8 8 - 101 - 109
income
Financial - - - - - (823) - (823)
expenses
Trade 5,138 2,579 80 7,797 213 - 147(6) 8,157
receivables(5)
Other segment - - 934 934 - 19,102 9,198(7) 29,234
assets
Segment - - (480) (480) - (45,449) (2,176)(8) (48,105)
liabilities
Capital - - 10 10 - 113 - 123
expenditure(9)
Six months
ended
30 June 2008
Revenue 25,454 9,449 1,886 36,789 1,918 - (890) (1) 37,817
Operating - - 572 572 - 21,193 (1,650) 20,115
profit(2) (10)
Depreciation
and - - (7) (7) - (472) (42) (4) (521)
amortisation
Financial - - 8 8 - 195 - 203
income
Financial - - - - - (391) (133)(12) (524)
expenses
Trade 5,523 4,210 68 9,801 458 - 187(6) 10,446
receivables
(5)
Other - - 1,101 1,101 - 8,522 5,751(7) 15,374
segment
assets
Segment - - (184) (184) - (47,328) (1,499) (49,011)
liabilities (8)
Capital - - 56 56 - 824 - 880
expenditure
(9)
Year ended
31 December
2008
Revenue 49,428 18,676 3,791 71,895 3,209 - (1,058) 74,046
(1)
Operating - - 907 907 - 41,239 (2,655) 39,491
profit(2) (11)
Depreciation
and - - (19) (19) - (997) (84) (4) (1,100)
amortisation
Financial - - 30 30 - 600 - 630
income
Financial - - (2) (2) - (1,679) (274) (1,955)
expenses (12)
Trade 5,209 3,704 50 8,963 852 - 150(6) 9,965
receivables
(5)
Other - - 1,538 1,538 - 28,113 9,240(7) 38,891
segment
assets
Segment - - (322) (322) - (62,413) (1,630) (64,365)
liabilities (8)
Capital - - 102 102 - 853 - 955
expenditure
(9)
(1) Segment revenue in respect of Holiday Lettings is recognised for management
purposes when the invoice is raised. In the consolidated financial statements
the revenue is spread evenly over the period of the contracted service with any
deferred revenue held on the balance sheet and accordingly an adjustment has
been made to reconcile to consolidated Group revenue.
(2) Operating profit is stated after the charge for depreciation and
amortisation.
(3) Operating profit for the six months ended 30 June 2009 does not include
share-based payments charge (£841,000), NI on share-based incentives (£
110,000), the amortisation of customer relationships (£42,000) and the
additional segment revenue recognised by Holiday Lettings (£554,000).
(4) Depreciation and amortisation excludes the consolidation adjustment in
respect of the amortisation of customer relationships.
(5) The only segment assets that are separately monitored by the Chief
Operating Decision Maker relate to trade receivables net of any associated
provision for impairment. All other segment assets are reported on a
centralised basis.
(6) The adjustments column reflects the reclassification of credit balances in
accounts receivable made on consolidation for statutory accounts purposes.
(7) Other segment assets exclude goodwill arising on consolidation in
connection with the accounting entries for the acquisition of Holiday Lettings
Limited (HLL) as well as the net book value of customer relationships.
(8) The adjustment column reflects the reclassification of credit balances in
accounts receivable as well as an adjustment to reflect the deferred revenue
balance in respect of the Holiday Lettings segment.
(9) Capital expenditure consists of additions of property, plant and equipment
and intangible assets (excluding goodwill).
(10) Operating profit for the six months ended 30 June 2008 does not include
share-based payments charge (£958,000), NI on share-based incentives
(£240,000 credit), the amortisation of customer relationships (£42,000) and the
additional segment revenue recognised by Holiday Lettings (£890,000).
(11) Operating profit for the year ended 31 December 2008 does not include
share-based payments charge (£1,998,000), NI on share-based incentives
(£ 240,000 credit), capital reconstruction credit (£245,000), the amortisation of
customer relationships (£84,000) and the additional segment revenue recognised
by Holiday Lettings (£1,058,000).
(12) Financial expenses exclude the consolidation adjustment relating to the
unwinding of the effective interest rate on the HLL deferred purchase
consideration.
4 Share-based payments
Share options
In accordance with IFRS 2 a charge of £747,000 (30 June 2008: £958,000) is
included in the statement of comprehensive income, being the amortisation of
the value of all share options granted since 2006. Included in the charge for
the six months ended 30 June 2009 is £74,000 representing the IFRS 2 charge on
1,103,948 executive unapproved share options which were granted on 5 March 2009
at an exercise price of £2.24, subject to a relative TSR performance condition.
Employer's National Insurance (NI) is being accrued, where applicable, at a
rate of 12.8% on the difference between the share price at the balance sheet
date and the average exercise price of the share options. The charge for the
six month period ended 30 June 2009 is £93,000. Based on the share price at 30
June 2008 the accrual built up in prior periods was reversed resulting in a
credit to the statement of comprehensive income of £240,000.
Deferred share plan
In March 2009 a deferred share plan was established which will allow certain
senior management employees the opportunity to earn a bonus linked as a
percentage of base salary settled in deferred shares. The award of shares in
March 2010 is contingent on the satisfaction of pre-set internal targets
including profit before tax relative to the business plan and key performance
indicators such as website traffic share and customer retention. The right to
the shares will be deferred for two years from March 2010 until March 2012 and
potentially forfeitable during that period should the employee leave
employment. The deferred share awards have been valued using the Black Scholes
model and the resulting IFRS 2 charge has been spread evenly over the combined
performance period and the vesting period of the shares, being three years. The
charge for the six months ended 30 June 2009 is £94,000.
NI is being accrued, where applicable, at a rate of 12.8% based on the share
price at the period end date. The charge for the six month period ended
30 June 2009 is £17,000.
5 Financial income
6 months ended 6 months ended Year ended
30 June 2009 30 June 2008 31 December 2008
£000 £000 £000
Interest income on cash 109 203 551
balances
Interest income on over - - 79
payment of taxes
109 203 630
6 Financial expenses
6 months ended 6 months ended Year ended
30 June 2009 30 June 2008 31 December 2008
£000 £000 £000
Debt issue costs 125 200 200
Interest expense 429 138 1,367
Unwinding of effective
interest rate on deferred - 133 274
purchase consideration
Other financial expenses 269 52 113
Preference dividend interest - 1 1
823 524 1,955
7 Earnings per share (EPS)
Weighted average
number of Earnings Pence
ordinary shares £000 per share
Six months ended 30 June 2009
Basic EPS 108,954,232 13,009 11.94
Diluted EPS 109,319,317 13,009 11.90
Underlying basic EPS 108,954,232 13,960 12.81
Underlying diluted EPS 109,319,317 13,960 12.77
Six months ended 30 June 2008
Basic EPS 117,518,535 12,591 10.71
Diluted EPS 119,123,970 12,591 10.57
Underlying basic EPS 117,518,535 13,309 11.32
Underlying diluted EPS 119,123,970 13,309 11.17
Year ended 31 December 2008
Basic EPS 113,405,224 25,503 22.49
Diluted EPS 113,449,416 25,503 22.48
Underlying basic EPS 113,405,224 27,016 23.82
Underlying diluted EPS 113,449,416 27,016 23.81
Weighted average number of ordinary shares (basic)
6 months ended 6 months ended Year ended
30 June 2009 30 June 2008 31 December 2008
Number of shares Number of shares Number of shares
Issued ordinary shares at 1
January less ordinary 111,697,173 121,046,278 121,046,278
shares held by the EBT
Effect of own shares held (2,505,430) (1,783,400) (2,146,388)
in treasury
Effect of own shares
purchased for cancellation - (1,744,343) (5,494,666)
Effect of own shares
purchased by the EBT (238,576) - -
Effect of share options 1,065 - -
exercised
108,954,232 117,518,535 113,405,224
Weighted average number of ordinary shares (diluted)
For diluted EPS, the weighted average number of ordinary shares in issue is
adjusted to assume conversion of all dilutive potential shares. The Group has
one potential dilutive instrument being those ordinary shares held by the EBT
to satisfy share-based incentives granted to employees.
6 months ended 6 months ended Year ended
30 June 2009 30 June 2008 31 December 2008
Number of shares Number of shares Number of shares
Weighted average number of
ordinary shares (basic) 108,954,232 117,518,535 113,405,224
Dilutive impact of own
shares held by the EBT 365,085 1,605,435 44,192
109,319,317 119,123,970 113,449,416
Underlying EPS is calculated before the charge for share-based payments,
capital reconstruction credit and NI on share-based incentives. A
reconciliation of the basic earnings for the period to the underlying earnings
is presented below:
6 months ended 6 months ended Year ended
30 June 2009 30 June 2008 31 December 2008
£000 £000 £000
Basic earnings for the 13,009 12,591 25,503
period
Share-based payments 841 958 1,998
NI on share-based 110 (240) (240)
incentives
Capital reconstruction - - (245)
credit
Underlying earnings for the 13,960 13,309 27,016
period
8 Dividends
Company dividends
Dividends declared and paid by the Company were as follows:
6 months ended 6 months ended Year ended
30 June 2009 30 June 2008 31 December 2008
Pence per Pence per Pence per
share £000 share £000 share £000
2007 final dividend - - 6.0 7,082 6.0 7,082
paid
2008 interim dividend - - - - 3.0 3,276
paid
2008 final dividend 7.0 7,615 - - - -
paid
7.0 7,615 6.0 7,082 9.0 10,358
After the period end an interim dividend of 3.0p (30 June 2008: 3.0p) per
qualifying ordinary share being £3,264,000 (30 June 2008: £3,279,000) was
proposed by the directors. No provision was made for the interim dividend in
either period and there are no income tax consequences.
The 2008 final dividend paid on 12 June 2009 was £7,615,000
(31 December 2008:£7,643,000). The difference of £28,000 was due to a
reduction in the ordinary shares entitled to a dividend between 31 December 2008
and the final dividend record date of 15 May 2009.
Subsidiary dividends
Dividends of £534,000 were paid in the period by Holiday Lettings Holdings
Limited to minority shareholders.
9 Taxation
The Group's consolidated effective tax rate for the six months ended
30 June 2009 is 28% (30 June 2008: 36%). The difference between the standard
rate and the effective rate at 30 June 2008 was mainly attributable to the
reversal of the deferred tax asset on share options (6%) and disallowable
expenditure (2%).
The net deferred tax asset of £242,000 at 30 June 2009 (30 June 2008: £192,000)
is in respect of tax losses brought forward, equity settled share-based
incentives and accelerated capital allowances.
The deferred tax asset relating to equity settled share-based incentives at 30
June 2009 is £176,000 (30 June 2008: £4,000).
10 Property, plant and equipment
During the six months ended 30 June 2009 the Group acquired assets with a cost
of £57,000 (30 June 2008: £414,000).
Assets with a carrying value of £nil were disposed of during the six months
ended 30 June 2009 (30 June 2008: £nil).
As at 30 June 2009 the Group had committed to incur capital expenditure of £nil
(30 June 2008: £nil).
11 Trade and other receivables
30 June 2009 30 June 2008 31 December
2008
£000 £000 £000
Trade receivables 8,398 11,082 10,266
Less provision for impairment of
trade receivables (241) (726) (383)
Net trade receivables 8,157 10,356 9,883
Amounts owed by related parties - 90 82
(see Note 17)
Other debtors 182 763 260
Prepayments and accrued income 1,040 1,276 2,395
Accrued interest receivable 8 - 7
9,387 12,485 12,627
12 Cash and cash equivalents
30 June 2009 30 June 2008 31 December
2008
£000 £000 £000
Bank accounts 5,118 2,439 5,091
Deposit accounts 10,000 723 17,968
Cash and cash equivalents 15,118 3,162 23,059
Bank overdraft used for cash
management purposes - - (172)
Cash and cash equivalents in the
statement 15,118 3,162 22,887
of cash flows
Cash balances were placed on deposit for varying lengths between one and three
months during the period and attracted interest at a weighted average rate of
1.1% (30 June 2008: 5.0%).
13 Trade and other payables
30 June 2009 30 June 2008 31 December
2008
£000 £000 £000
Trade payables 624 1,080 1,225
Trade accruals 1,949 2,535 2,112
Other creditors 265 137 67
Other taxation and social security 1,854 3,262 2,601
Deferred revenue 6,809 6,386 6,413
Interest payable 22 - -
11,523 13,400 12,418
14 Loans and borrowings
During the period £14,750,000 of the revolving loan facility with the Bank of
Scotland was repaid out of surplus cash. On 16 April 2009 the Company converted
£25,000,000, being the balance of its Sterling-denominated revolving loan
facility, into a five year term loan. The loan bears interest at LIBOR plus
1.5% together with a mandatory cost applied by the lender and is repayable over
five years in 20 equal instalments.
30 June 2009 30 June 2008 31 December 2008
Carrying Carrying Carrying
Fair value Fair value Fair value
value £000 value £000 value £000
£000 £000 £000
Non-current
liabilities
Unsecured bank 20,000 20,000 - - - -
borrowings
Current liabilities
Bank overdraft - - - - 172 172
Current portion of
unsecured bank 5,000 5,000 26,500 26,500 39,750 39,750
borrowings
Cash and cash (15,118) (15,118) (3,162) (3,162) (23,059) (23,059)
equivalents
Total net debt 9,882 9,882 23,338 23,338 16,863 16,863
15 Reconciliation of movement in capital and reserves
EBT own Reverse
Share Share shares Treasury Other acquisition Retained Total
capital premium reserve shares reserves reserve earnings equity
£000 £000 £000 £000 £000 £000 £000 £000
At 1 January 2008 1,327 105 (17,149) (19,362) - - 47,471 12,392
Capital (33) (105) - 19,362 - 138 (19,362) -
reconstruction
Profit for the - - - - - - 12,591 12,591
period
Dividends to
shareholders - - - - - - (7,082) (7,082)
Equity settled
share-based - - - - - - 958 958
incentives charge
Purchase of shares
for treasury - - - (11,917) - - - (11,917)
Purchase of own - - - (29,861) - - - (29,861)
shares
Cancellation of own
shares (82) - - 29,861 82 - (29,861) -
Share buy back
expenses - - - - - - (272) (272)
At 30 June 2008 1,212 - (17,149) (11,917) 82 138 4,443 (23,191)
At 1 January 2008 1,327 105 (17,149) (19,362) - - 47,471 12,392
Capital (33) (105) - 19,362 - 138 (19,362) -
reconstruction
Profit for the - - - - - - 25,503 25,503
period
Dividends to
shareholders - - - - - - (10,358) (10,358)
Equity settled
share-based - - - - - - 1,998 1,998
incentives charge
Purchase of shares
for treasury - - - (11,917) - - - (11,917)
Purchase of own - - - (32,840) - - - (32,840)
shares
Cancellation of own
shares (93) - - 32,840 93 - (32,840) -
Share buy back
expenses - - - - - - (287) (287)
At 31 December 2008 1,201 - (17,149) (11,917) 93 138 12,125 (15,509)
At 1 January 2009 1,201 - (17,149) (11,917) 93 138 12,125 (15,509)
Profit for the - - - - - - 13,009 13,009
period
Dividends to
shareholders - - - - - - (7,615) (7,615)
Subsidiary
dividends to - - - - - - (534) (534)
minority
shareholders
Equity settled
share-based - - - - - - 841 841
incentives charge
Gain on exercise of
share options - - 10 - - - 2 12
Purchase of own
shares by the EBT - - (918) - - - - (918)
At 30 June 2009 1,201 - (18,057) (11,917) 93 138 17,828 (10,714)
Share buy back
In June 2007, the Company commenced a share buy back programme to purchase its
own ordinary shares. The total number of shares bought back in the six months
to 30 June 2009 was nil.
The total number of shares bought back in the six months to 30 June 2008 was
10,712,806 representing 9% of the issued share capital (excluding shares held
in treasury). Of the 10,712,806 shares bought back, 8,207,376 shares were
cancelled and 2,505,430 shares were transferred to treasury. The shares were
acquired on the open market at a total consideration (excluding costs) of
£41,778,000. The maximum and minimum prices paid were 501p and 319p per share
respectively.
EBT own shares reserve
This reserve represents the carrying value of own shares held by the EBT.
During the period the EBT purchased 399,836 shares on the open market at a cost
of £918,000 to satisfy share incentive awards. 5,210 Sharesave options were
exercised in the period at a price of £2.59 per ordinary share, which were
satisfied by shares held in the EBT. At 30 June 2009 the EBT held 8,748,326
(30 June 2008: 8,353,700) ordinary shares in the Company of £0.01 each
representing 7.4% (30 June 2008: 7.0%) of the issued share capital (excluding
shares held in treasury). The market value of the shares held in the EBT at the
end of the period was £30,750,000 (30 June 2008: £22,387,916).
16 Deferred consideration
In terms of the HLL shareholders' agreement a put and call option exists to
acquire the remaining 33.3% interest owned by management. The put option can be
exercised any time from 1 July 2009 based either on a multiple of EBIT per the
latest audited accounts or HLL's market value if higher. At 31 December 2008
the deferred consideration was increased to £6,133,000 based on the directors'
best estimate of likely market value for the business. The directors consider
that this valuation continues to be appropriate as at 30 June 2009.
17 Related parties
Transactions with principal shareholders
As at 30 June 2009 the Company has no principal shareholders.
As at 30 June 2008 the Company had one principal shareholder, Connells Limited,
who held 17.9% of the then issued share capital (excluding shares held in
treasury). The Group's transactions and balances with this former shareholder
for the comparative periods were as follows:
6 months ended Year ended
30 June 2008 31 December 2008
£000 £000
Amounts owed byformershareholder:
Sequence (UK) Limited (Connells) 58 55
Connells Residential 32 27
90 82
Amounts invoiced to former
shareholder:
Sequence (UK) Limited (Connells) 337 581
Connells Overseas Property 2 2
Department
Connells Residential 186 333
525 916
Dividends paid:
Connells Limited 1,275 1,912
Inter-group interest
During the period Rightmove plc was charged interest of £347,000
(30 June 2008: £nil) by Rightmove Group Limited in respect of balances
owing on the inter-group loan in accordance with a loan agr eement dated
30 January 2008.
Transactions with directors and key management
There were no material transactions with directors or key management in any
period.
Independent review report to Rightmove plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half year financial report for the six months ended
30 June 2009 which comprises the condensed consolidated interim statement of
comprehensive income, the condensed consolidated interim statement of financial
position, the condensed consolidated interim statement of cash flows, the
condensed consolidated interim statement of changes in shareholders' equity and
the related explanatory notes. We have read the other information contained in
the half year financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed
set of financial statements.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Disclosure
and Transparency Rules ("the DTR") of the UK's Financial Services Authority
("the UK FSA"). Our review has been undertaken so that we might state to the
Company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company for our review work, for
this report, or for the conclusions we have reached.
Directors' responsibilities
The half-year financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-year
financial report in accordance with the DTR of the UK FSA.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the EU. The condensed
consolidated set of financial statements included in this half year financial
report has been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
consolidated set of financial statements in the half year financial report
based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit performed in accordance
with International Standards on Auditing (UK and Ireland) and consequently does
not enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed consolidated set of financial statements in the half
year financial report for the six months ended 30 June 2009 is not prepared, in
all material respects, in accordance with IAS 34 as adopted by the EU and the
DTR of the UK FSA.
S J Wardell
for and on behalf of KPMG Audit Plc
Chartered Accountants
Milton Keynes
21 August 2009
ADVISERS AND SHAREHOLDER INFORMATION
Contacts
Managing Director: Ed Williams
Chief Operating Officer Nick McKittrick
and Finance Director:
Company Secretary: Liz Taylor
Website www.rightmove.co.uk
Email investor.relations@rightmove.co.uk
Financial calendar 2009
Half year results 21 August 2009
Interim dividend record 16 October 2009
date
Interim dividend 13 November 2009
payment
IMS November 2009
Full year results 26 February 2010
Annual General Meeting May 2010
Registered office
Rightmove plc
4th Floor
33 Soho Square
London W1D 3QU
Registered in England
no.6426485
Corporate advisers
Financial adviser
UBS Investment Bank
Joint broker
UBS Limited
Numis Securities Limited
Auditor
KPMG Audit Plc
Bankers
Barclays Bank plc
Bank of Scotland plc
Solicitors
Slaughter and May
Pinsent Masons
Registrar
Capita Registrars*
*Shareholder enquiries
The Company's registrar is Capita Registrars. They will be pleased to deal with
any questions regarding your shareholding or dividends. Please notify them of
your change of address or other personal information. Their address details
are:
Capita Registrars
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
HD8 OGA
Capita Registrars is a trading name of Capita Registrars Limited
Capita shareholder helpline: 0871 664 0300 (calls cost 10p per minute plus
network extras) (overseas: +44 20 8639 3399)
Email: ssd@capitaregistrars.com
Share portal (www.capitashareportal.com)
Through the website of our registrar, Capita Registrars, shareholders are able
to manage their shareholding online and facilities include electronic
communications, account enquires, amendment of address and dividends mandate
instructions.
RIGHTMOVE PLC HALF YEAR REPORT 2009
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