Half-yearly Report
Embargoed until 07.00, Wednesday 3 August 2011
2011 HALF YEAR RESULTS
Rightmove plc, the UK's no. 1 property website, announces half year results for
the six months ended 30 June 2011.
Financial and Operational Highlights
for the six months ended 30 June 2011
* Revenue up 20% to £47.0m (2010: £39.2m)
* Underlying operating profit* up 25% to £33.4m (2010: £26.8m)
* Underlying operating margin* increased to 71% (2010: 68%)
* Underlying earnings per share* up 35% to 24.8p (2010: 18.4p)
* Cash generated from operations of £32.3m (2010: £27.5m), with cash
conversion in excess of 100%
* Interim dividend increased by 40% to 7.0p per ordinary share (2010: 5.0p)
reflecting our intention to continue to return post-tax operating profits
to shareholders promptly
* £23.4m spent to buy back 2.3m shares (2010: 1.6m), bringing the return of
cash including the dividend to £32.9m during the period (2010: £18.1m)
* Period end cash balance of £17.9m (2010: £22.9m)
* Page impressions on Rightmove websites up 23% to 4.8bn (2010: 3.9bn)
* Number of advertisers up 2% so far this year at 18,480 (31 December 2010:
18,042) up 3% on a year ago (30 June 2010: 17,993)
* Average revenue per advertiser up 18% at £430 per month (2010: £365)
Ed Williams, Managing Director, said:
"Rightmove is where UK home hunters find their next home. The success of our
iPhone, iPad and mobile applications mean that people are now home hunting
wherever they are, not just at home or work. People thinking of selling their
home know it remains a challenging housing market, so they increasingly expect
their estate agent to make sure that their property is advertised as
prominently on Rightmove as possible. Continuing to grow revenue and profits in
the current housing market is the result of the importance of Rightmove to home
hunters and property advertisers alike and a tribute to all the efforts of our
people."
For more information please contact:
Rightmove
Ed Williams or Nick McKittrick
Rightmove plc Press Office 0207 087 0605/ 07894 255295
* From continuing operations before share-based payments and National Insurance
(NI) on share-based incentives.
________________________________________________________________________________
Half Year Statement
Strategic position
Our strategy remains to build on our market position as the UK's leading
property website, to grow organically through our customers investing more in
their presence on Rightmove, and to return the cash we generate to shareholders
promptly.
We have made further substantial progress against all three elements of our
strategy. We have improved the home hunting experience, we have improved the
effectiveness of Rightmove for our advertisers and we have increased the total
cash returned to shareholders.
Financial performance
Revenue increased by 20% to £47.0m compared to the same period last year.
Underlying operating profit* increased by 25% to £33.4m. The strong growth in
operating profits reflects the operational leverage in the Rightmove business
model as well as continued cost consciousness.
Cash generated from operations was £32.3m, up £4.8m on the same period last
year, with cash conversion in excess of 100%.
Underlying earnings per share* rose 35% to 24.8p compared to 18.4p a year ago
driven in the most part by the growth in profits. Diluted earnings per share on
continuing operations rose 24% to 19.7p (2010: 15.9p).
Highlights of operating performance
Aspects of the operating performance for the first six months of 2011 which
stand out are:
* The general increase in home hunter activity and specifically the very
rapid increase in the use of mobile devices. Internet site traffic rose,
with May 2011 being our busiest month ever, and the gap from competitors
continuing to widen. Mobile usage by June 2011 was accounting for 14% of
all property searches on Rightmove and peaked at 20% on a single day for
the first time.
* The substantial increase in spending by our customers on Rightmove, up by
18%. The increase in spend came from a range of sources including price
rises. A notable feature was the further growth in spend on additional
advertising products which are used by our advertisers to promote their
brand and wider proposition.
Most key metrics strengthened in the first six months of 2011 compared to the
first half of 2010:
* Overall membership up 3% on June 2010 and up 2% since the start of the
current year to 18,480 offices and developments
* Retention rate among agents in line with the historical average and the
churn rate among new home advertisers lower than the historical average
* Average revenue per advertiser up 18% at £430 per month (2010: £365)
* Revenue from additional advertising products up 45% at £11.3m (2010: £7.8m)
* Page impressions on Rightmove websites up 23% to 4.8bn (2010: 3.9bn),
keeping Rightmove firmly in the top 10 UK websites
* Market share up 1% to 83% of all page impressions on the top four UK
property websites and up from 55% to 59% of all property website page
impressions in June 2011 as compared to June 2010.
Agency
Our number of estate agency and lettings only offices is up by 427 (+3%) since
the start of the year to 15,242.
This has been achieved against a backdrop of limited growth in the total number
of agents following something of a rebound in late 2009 and early 2010.
Retention rates are in line with historical levels (apart from 2008/9) with no
material loss of agents from the most recent review of membership prices.
Almost three quarters of all agents are taking additional products and
spending more than £130 per month on those products. Further progress has been
made with adoption of our "bundled" offering now running to a third of our
smaller independent estate agent and lettings agent customers. All of our
additional advertising products have sold well during the period and have
increased penetration rates, with our display advertising products
demonstrating the fastest rate of growth. Recently signed long-term agreements
with our largest agency advertisers demonstrate a clear long-term intent to
increase their usage of additional advertising products.
New Homes
New homes developers and development numbers are broadly unchanged since the
start of the year (+10) at 2,691, reflecting the understandable caution in the
house building industry. However, with average spend per development up by 13%
to £513 per month compared to a year ago, overall revenue is higher than for
the same period last year.
The increased average spend reflects continued strong demand among developers
for both our established additional advertising products and email campaigns.
We have also made a promising start with our Development Microsite product for
new home developers with initial signs indicating house builders are willing to
spend more on Rightmove display products to attract home hunters to their
dedicated particular area within Rightmove.
Other Businesses
The overseas property market continues to be challenging as a result of
tightening consumer spend and lack of debt financing. Advertiser numbers are
essentially unchanged since the start of the year at 547 (+1). Average spend
per advertiser has fallen from £241 per month a year ago to £207 per month,
reflecting the change in mix from the continued growth in private advertisers
advertising a single property. Overall revenue is up 4% on a year ago,
reflecting some additional revenue from business partnerships and advertising
of non-property services relevant to overseas homes buyers and sellers.
Revenue from our Data Services business is down £0.1m from a year ago at £0.6m,
reflecting the continued challenging mortgage market.
Uncertainties, threats and risks
At a high level the Rightmove business could be vulnerable to three main areas
of uncertainty or risk: the state of the housing market if it leads to a
reduction in the number of potential advertisers, competition, and Rightmove's
ability to capture a high proportion of any increase in property advertising
revenue as the sector recovers.
Uncertainties surrounding the housing market clearly exist and are likely to be
tightly linked to the wider economic environment in the UK. However, we have
some confidence that the strong actions taken by our customers, particularly
with regard to cost reduction, have left them more able to withstand further
challenges.
The competitive environment hasn't changed significantly from six months ago.
Google withdrew from the property advertising market at the start of the year.
Established competitors have increased their level of marketing activity over
the last six months, but the gap between Rightmove and the nearest competitor
has widened, providing further evidence that home hunter habits are
increasingly deeply engrained in Rightmove.
Since April 2009 Rightmove has been growing its property advertising revenue
during a period in which spend in newspapers appears to have continued to fall
after the large declines of 2008. Based on our own reported numbers we believe
that Rightmove is growing much faster than any other form of property
advertising media with meaningful revenues.
Dividend, share buy backs and balance sheet
The Board intends to pay an interim dividend of 7.0p (2010: 5.0p). As part of
the Board's commitment to return cash promptly to shareholders, we have decided
to increase the interim dividend at a faster rate than the increase in the
underlying operating profit* in the half year. The interim dividend will be
paid on 11 November 2011 to members on the register on 14 October 2011.
Cash at the end of the period was £17.9m (2010: £22.9m). The final dividend
paid in June together with £23.4m of share buy backs means that we have
returned the cash generated by the business during the period. 2.3m shares were
bought back during the period at an average price of £10.23 (2010: £6.68).
Current trading and outlook
Rightmove's trading in July has been in line with that during the first half of
the year and our subscription revenue model gives us confidence in achieving
our expected out-turn for the year. We do not believe that flat or modest falls
in house prices would materially affect the outlook, provided that transaction
volumes do not take a sharp downward turn, and expect to make further progress
in 2012.
Scott Forbes, Chairman
Ed Williams, Managing Director
3 August 2011
* From continuing operations before share-based payments and National Insurance
(NI) on share-based incentives.
_______________________________________________________________________________
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF YEAR REPORT
2011
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 a 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 of directors
Scott Forbes, Chairman
Ed Williams, Managing Director
3 August 2011
____________________________________________________________________________________
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2011
6 months
6 months ended ended Year ended
Note 30 June 2011 30 June 2010 31 December 2010
£000 £000 £000
Continuing operations
Revenue 3 46,957 39,222 81,556
Administrative expenses (18,219) (14,593) (29,490)
Operating profit before
share-based payments and
NI on share-based 33,408 26,833 56,563
incentives
Share-based payments 4 (1,171) (989) (1,846)
NI on share-based 4 (3,499) (1,215) (2,651)
incentives
Operating profit 28,738 24,629 52,066
Financial income 5 96 62 171
Financial (expenses)/ 6 (85) (159) 8
credit
Net financial income/ 11 (97) 179
(expenses)
Profit before tax 28,749 24,532 52,245
Income tax expense 10 (7,210) (6,736) (13,710)
Profit from continuing 21,539 17,796 38,535
operations
Discontinued operation
Profit from discontinued
operation 7 234 17,278 19,467
(net of income tax)
Profit for the period
being total comprehensive 21,773 35,074 58,002
income
Attributable to:
Equity holders of the 21,773 35,074 58,002
Parent
Earnings per share (pence)
Basic 8 20.61 32.22 53.69
Diluted 8 19.91 31.25 52.08
Continuing operations
Basic 8 20.39 16.35 35.67
Diluted 8 19.70 15.85 34.60
Dividends per share 9 9.00 7.00 12.00
(pence)
Total dividends 9 9,499 7,586 12,957
.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
as at 30 June 2011
Note 30 June 2011 30 June 2010 31 December 2010
£000 £000 £000
Non-current assets
Property, plant and 1,212 1,256 1,488
equipment
Intangible assets 1,331 1,376 1,463
Trade and other receivables 7,11 1,000 1,000 1,000
Contingent consideration 7 667 2,917 667
Deferred tax assets 10 9,524 3,771 6,675
Total non-current assets 13,734 10,320 11,293
Current assets
Trade and other receivables 11 13,787 11,594 11,865
Contingent consideration 7 4,671 - 4,437
Cash and cash equivalents 12 17,902 22,866 23,148
Total current assets 36,360 34,460 39,450
Total assets 50,094 44,780 50,743
Current liabilities
Trade and other payables 13 (19,847) (13,785) (15,989)
Income tax payable (7,407) (6,911) (6,890)
Total current liabilities (27,254) (20,696) (22,879)
Net assets 22,840 24,084 27,864
Equity
Share capital 1,124 1,173 1,147
Other reserves 308 259 285
Retained earnings 21,408 22,652 26,432
Total equity attributable
to equity holders of the 14 22,840 24,084 27,864
Parent
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
for the six months ended 30 June 2011
Note 6 months
ended 6 months ended Year ended
30 June 2011 30 June 2010 31 December 2010
£000 £000 £000
Cash flows from operating
activities
Profit for the period 21,773 35,074 58,002
Adjustments for:
Depreciation charges 309 281 575
Amortisation charges 145 187 336
Loss on disposal of
property, plant and - 33 76
equipment
Loss on disposal of - - 1
intangible assets
Financial income (96) (62) (171)
Financial expenses/(credit) 85 159 (8)
Share-based payments charge 4 1,171 989 1,846
Gain on sale of discontinued
operation 7 (234) (16,502) (18,691)
(net of income tax)
Income tax expense 7,210 7,040 14,014
Operating cash flow before
changes in working capital 30,363 27,199 55,980
Increase in trade and other (1,968) (2,516) (2,734)
receivables
Increase in trade and other 3,858 2,769 5,585
payables
Increase in provisions - 4 4
Cash generated from 32,253 27,456 58,835
operations
Interest paid (35) (103) (136)
Income taxes paid (6,903) (4,878) (12,198)
Net cash from operating 25,315 22,475 46,501
activities
Cash flows from investing
activities
Interest received 142 53 109
Acquisition of property, (33) (322) (906)
plant and equipment
Acquisition of intangible (13) (7) (245)
assets
Proceeds on disposal of
property, plant and - - 15
equipment
Disposal of discontinued
operation 7 - 13,693 13,284
(net of cash disposed of)
Net cash from investing 96 13,417 12,257
activities
Cash flows from financing
activities
Dividends paid 9 (9,499) (7,586) (12,957)
Subsidiary dividends paid to
minority shareholders 9 - (300) (300)
Purchase of shares for 14 (23,359) (10,548) (29,358)
cancellation
Share related expenses 14 (163) (73) (206)
Proceeds on exercise of 14 2,414 2,163 3,893
share options
Repayment of borrowings - (22,500) (22,500)
Debt issue costs (50) (75) (75)
Net cash used in financing (30,657) (38,919) (61,503)
activities
Net decrease in cash and (5,246) (3,027) (2,745)
cash equivalents
Cash and cash equivalents at 23,148 25,893 25,893
1 January
Cash and cash equivalents at 12 17,902 22,866 23,148
period end
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
for the six months ended 30 June 2011
EBT Reverse
Share shares Treasury Other acquisition Retained Total
capital reserve shares reserves reserve earnings equity
£000 £000 £000 £000 £000 £000 £000
At 1 January 2010 1,189 (16,185) (11,917) 105 138 29,863 3,193
Total
comprehensive - - - - - 35,074 35,074
income
Profit for the
period
Transactions with
owners recorded
directly in
equity
Equity settled
share-based - - - - - 989 989
incentives charge
Tax in respect of
share-based
incentives - - - - - 873 873
recognised
directly in
equity
Dividends to - - - - - (7,586) (7,586)
shareholders
Exercise of share - 1,317 - - - 846 2,163
options
Cancellation of (16) - - 16 - (10,548) (10,548)
own shares
Share related - - - - - (74) (74)
expenses
At 30 June 2010 1,173 (14,868) (11,917) 121 138 49,437 24,084
At 1 January 2010 1,189 (16,185) (11,917) 105 138 29,863 3,193
Total
comprehensive
income
Profit for the - - - - - 58,002 58,002
year
Transactions with
owners recorded
directly in
equity
Equity settled
share-based - - - - - 1,846 1,846
incentives charge
Tax in respect of
share-based
incentives - - - - - 3,451 3,451
recognised
directly in
equity
Dividends to - - - - - (12,957) (12,957)
shareholders
Exercise of share - 2,248 - - - 1,645 3,893
options
Cancellation of (42) - - 42 - (29,358) (29,358)
own shares
Share related - - - - - (206) (206)
expenses
At 31 December 1,147 (13,937) (11,917) 147 138 52,286 27,864
2010
At 1 January 2011 1,147 (13,937) (11,917) 147 138 52,286 27,864
Total
comprehensive - - - - - 21,773 21,773
income
Profit for the
period
Transactions with
owners recorded
directly in equity
Equity settled
share-based - - - - - 1,171 1,171
incentives charge
Tax in respect of
share-based
incentives - - - - - 2,639 2,639
recognised
directly in equity
Dividends to - - - - - (9,499) (9,499)
shareholders
Exercise of share - 1,472 - - - 942 2,414
options
Cancellation of (23) - - 23 - (23,359) (23,359)
own shares
Share related - - - - - (163) (163)
expenses
At 30 June 2011 1,124 (12,465) (11,917) 170 138 45,790 22,840
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 2011 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 2010 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 2010.
The condensed consolidated interim financial statements were approved by the
Board of directors on 3 August 2011. 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 2010 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 498 (2) or (3) of the Companies
Act 2006.
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 2010.
Going concern
Since the repayment of the £25,000,000 term loan in February 2010, the Group
has been debt free and has continued to generate significant cash with cash
balances of £17,902,000 (2010: £22,866,000).
The Group entered into an agreement with Barclays Bank Plc for a £10,000,000
uncommitted money market loan on 15 February 2010. The loan was extended on
11 February 2011 for a further 12 month period. No amount was drawn down under
this facility in either period.
After making enquiries, the Board of directors have a reasonable expectation
that the Group and the Company have adequate resources and banking facilities
to continue in operational existence for the foreseeable future. Accordingly
the Board of directors continue to adopt the going concern basis in preparing
these interim financial statements.
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 2010.
The following new standards and amendments to standards are mandatory for the
first time for the financial year beginning 1 January 2011:
(i) Amendment to IFRS 1 `First time adoption' - financial instrument
disclosures provides first-time adopters with the same transition provisions as
included in the amendments to IFRS 7, `Financial instruments: Disclosures',
regarding comparative information for the new three-level classification
disclosures. As the Group is not a first time adopter this amendment has had no
impact on the Group's consolidated financial statements.
(ii) Amendment to IAS 24 Related Party Disclosures removes the requirement for
government-related entities to disclose details of all transactions with the
government and other government-related entities. This has had no impact on the
Group's consolidated financial statements.
The same accounting policies are anticipated to be applied for the year ending
31 December 2011.
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 relating to the inputs to the fair
value models and the estimate of the number of shares that will eventually be
issued
Note 7 Measurement of the contingent consideration receivable in relation to
the disposal of the Holiday Lettings segment regarding the estimate of future
profitability
Note 10 Deferred tax assets relating to the rate at which the asset will
reverse and the recoverability of the asset
3 Operating segments
The Group determines and presents operating segments based on the information
that internally is provided to the Managing Director, who is the Group's Chief
Operating Decision Maker.
The Group's reportable segments are as follows:
* The Agency segment which provides resale and lettings property advertising
services on www.rightmove.co.uk; and
* The New Homes segment which provides property advertising services to new
homes developers and Housing Associations on www.rightmove.co.uk.
The Other segment which represents activities under the reportable segments
threshold comprises overseas property advertising services on
www.rightmove.co.uk and non-property advertising services which include
business and information services and Automated Valuation Model services.
Management monitors the business segments at a revenue and trade receivables
level separately for the purpose of making decisions about resources to be
allocated and of assessing performance. All revenues in all periods are derived
from third parties and there are no inter-segment revenues.
Operating costs, financial 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 overleaf.
Profit or loss segmental disclosures have been made on a continuing operations
basis. Disclosures in respect of the discontinued Holiday Lettings segment are
shown in Note 7.
New Sub
Agency Homes total Other Central Adjustments Total
Operating £000 £000 £000 £000 £000 £000 £000
segments
Six months ended
30 June 2011
Revenue 37,367 8,258 45,625 1,332 - - 46,957
Operating profit - - - - 33,408 (4,670) (2) 28,738
(1)
Depreciation and - - - - (454) - (454)
amortisation
Financial income - - - - 96 - 96
Financial - - - - (85) - (85)
expenses
Trade receivables 8,996 2,956 11,952 244 - 44(4) 12,240
(3)
Other segment - - - - 37,837 17 (5) 37,854
assets
Segment - - - - (27,193) (61)(4)(5) (27,254)
liabilities
Capital - - - - 46 - 46
expenditure(6)
Six months ended
30 June 2010
Revenue 30,166 7,652 37,818 1,404 - - 39,222
Operating profit - - - - 26,833 (2,204) 24,629
(1) (7)
Depreciation and - - - - (401) - (401)
amortisation
Financial income - - - - 62 - 62
Financial credit - - - - (159) - (159)
Trade receivables 7,498 2,407 9,905 411 - 48 (4) 10,364
(3)
Other segment - - - - 34,416 - 34,416
assets
Segment - - - - (20,629) (67) (4) (20,696)
liabilities (5)
Capital - - - - 290 32 (8) 322
expenditure(6)
Year ended
31 December 2010
Revenue 63,795 15,078 78,873 2,683 - - 81,556
Operating profit - - - - 56,563 (4,497) 52,066
(1) (9)
Depreciation and - - - - (845) - (845)
amortisation
Financial income - - - - 171 - 171
Financial - - - - 8 - 8
expenses
Trade receivables 7,878 2,156 10,034 115 - 40 (4) 10,189
(3)
Other segment - - - - 40,539 15 (5) 40,554
assets
Segment - - - - (22,824) (55)(4)(5) (22,879)
liabilities
Capital - - - - 1,119 32 (8) 1,151
expenditure(6)
(1) Operating profit is stated after the charge for depreciation and
amortisation.
(2) Operating profit for the six months ended 30 June 2011 does not include
share-based payments charge (£1,171,000) and National Insurance (NI) on
share-based incentives (£3,499,000).
(3) 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.
(4) The adjustments column reflects the reclassification of credit balances in
accounts receivable made on consolidation for statutory accounts purposes.
(5) The adjustment column reflects the reclassification of debit balances in
accounts payable made on consolidation for statutory accounts purposes.
(6) Capital expenditure consists of additions of property, plant and equipment
and intangible assets (excluding goodwill).
(7) Operating profit for the six months ended 30 June 2010 does not include
share-based payments charge (£989,000) and Employer's NI on share-based
incentives (£1,215,000).
(8) The adjustments column reflects capital expenditure of £32,000 in respect
of the discontinued Holiday Lettings segment.
(9) Operating profit for the year ended 31 December 2010 does not include
share-based payments charge (£1,846,000) and NI on share-based incentives
(£2,651,000).
4 Share-based payments
Share awards
Since flotation, the Company has awarded share options to executive directors
and other selected employees designed to align the interests of employees with
the long-term success of the business. Following approval by shareholders at
the Annual General Meeting in May 2011, the executive unapproved and approved
share option plans have been replaced by The Rightmove Performance Share Plan
(PSP). The PSP permits awards of nil cost options or contingent shares which
will only vest in the event of prior satisfaction of a performance condition.
All share-based incentives are subject to a service condition.
The IFRS 2 charge for the six months ended 30 June 2011 relating to share-based
incentive plans was £1,171,000 (2010: £989,000).
Share options
An IFRS 2 charge of £778,000 (2010: £785,000) is included in the statement of
comprehensive income, being the amortisation of the value of all share options
granted since 2006. There was no award of executive unapproved share options in
the six months ended 30 June 2011 (2010: 440,919). The executive unapproved
share options on 5 March 2010 were granted at an exercise price of £6.66. The
vesting of 50% of the 2010 award will be dependent on a relative total
shareholder return (TSR) performance condition measured over a three-year
performance period and the vesting of the other 50% of the 2010 award will be
dependent on the satisfaction of an earnings per share (EPS) growth target
measured over a three-year performance period.
NI is being accrued, where applicable, at a rate of 13.8%, which management
expect to be the prevailing rate when the existing share options are exercised,
on the difference between the share price at the period end date and the
average exercise price of the share options. The charge for the six month
period ended 30 June 2011 is £3,290,000 (2010: £1,172,000).
Performance Share Plan
In May 2011 following shareholder approval, a PSP was established. 164,258 PSP
awards were made to executive directors and senior managers on 4 May 2011 (the
Grant date) subject to EPS and TSR performance. Performance will be measured
over three financial years (1 January 2011 - 31 December 2013). The vesting in
March 2014 (Vesting date) of 25% of the 2011 PSP award will be dependent on a
relative TSR performance condition measured over a three-year performance
period and the vesting of the 75% of the 2011 PSP award will be dependent on
the satisfaction of an EPS growth target measured over a three-year performance
period.
The PSP awards have been valued using the Monte Carlo model and the resulting
IFRS 2 charge is being spread evenly over the period between the Grant date and
the Vesting date, being 34 months. The charge for the six months ended
30 June 2011 is £90,000 (2010: £nil).
NI is being accrued, where applicable, at a rate of 13.8%, which management
expects to be the prevailing rate when the PSP shares are released to the
employees, based on the share price at the reporting date. The charge for the
six month period ended 30 June 2011 is £15,000 (2010: £nil).
Deferred share bonus plan (DSB)
In March 2009 a DSB Plan was established which allows certain executive
directors and senior managers the opportunity to earn a bonus determined as a
percentage of base salary settled in deferred shares. The award of shares under
the plan is contingent on the satisfaction of pre-set internal targets relating
to underlying drivers of long-term revenue growth (the Performance period). The
right to the shares is deferred for two years from the date of the award (the
Vesting period) and potentially forfeitable during that period should the
employee leave employment. The IFRS 2 charge is being spread evenly over the
combined Performance period and Vesting period of the shares, being three
years.
Following the achievement of the 2010 internal performance targets, 118,467 nil
cost option deferred shares were awarded to executive directors and senior
management on 4 March 2011 (the Award date) with the right to the release of
the shares deferred until March 2013.
The IFRS 2 charge for the six months ended 30 June 2011 is £303,000
(2010: £204,000).
NI is being accrued, where applicable, at a rate of 13.8%, which management
expects to be the prevailing rate when the deferred shares are released to the
employees, based on the share price at the reporting date. The charge for the
six month period ended 30 June 2011 is £194,000 (2010: £43,000).
All existing share-based incentives can be satisfied from shares held in The
Rightmove Employees' Share Trust (EBT) or from shares held in treasury, without
any requirement to issue further shares.
5 Financial income
6 months ended 6 months ended Year ended
30 June 2011 30 June 2010 31 December 2010
£000 £000 £000
Interest income on cash 96 62 171
balances
6 Financial expenses/(credit)
6 months ended 6 months ended Year ended
30 June 2011 30 June 2010 31 December 2010
£000 £000 £000
Debt issue costs 50 75 (125)
Interest expense - 52 52
Other financial expenses 35 32 65
85 159 (8)
7 Discontinued operation
On 21 June 2010 the Group sold its 66.7% shareholding in Holiday Lettings
Holdings Limited (HLHL), which owned 100% of the shares in the trading entity
Holiday Lettings Limited (HLL), to TripAdvisor Limited.
6 months ended 6 months ended Year ended
30 June 2011 30 June 2010 31 December 2010
£000 £000 £000
Results of discontinued
operation
Revenue - 3,059 3,059
Administrative expenses - (1,979) (1,979)
Results from operating - 1,080 1,080
activities
Income tax - (304) (304)
Results from operating
activities - 776 776
(net of income tax)
Gain on sale of discontinued 234 16,502 18,691
operation
Income tax on gain on sale of
discontinued operation - - -
Effect on profit for the period 234 17,278 19,467
Earnings per share (pence)
Basic 0.22 15.87 18.02
Diluted 0.21 15.40 17.48
6 months ended 6 months ended Year ended
30 June 2011 30 June 2010 31 December 2010
£000 £000 £000
Cash flows from discontinued
operations
Net cash from operating - 1,856 1,856
activities
Net cash from investing - 13,661 13,661
activities
Net cash used in financing - (300) (300)
activities
Net cash from discontinued - 15,217 15,217
operation
6 months ended Year ended
30 June 2010 31 December 2010
£000 £000
Effect of the disposal on the financial
position of the Group
Property, plant and equipment (145) (145)
Intangible assets (13,059) (13,059)
Trade and other receivables (352) (352)
Cash and cash equivalents (1,484) (1,484)
Trade and other payables 3,238 3,238
Income tax payable 638 638
Deferred consideration 8,909 8,909
Provisions 10 10
Deferred tax liabilities 64 64
Net assets disposed of (2,181) (2,181)
Consideration received, satisfied in cash 15,177 15,185
Contingent consideration 2,917 5,104
Amounts held in Escrow 1,000 1,000
Less costs to sell (411) (417)
Net consideration 18,683 20,872
Consideration received, satisfied in cash 15,177 15,185
Cash and cash equivalents disposed of (1,484) (1,484)
Less costs to sell - (417)
Net cash inflow 13,693 13,284
The value of the contingent consideration is dependent on the performance of
the Holiday Lettings segment for the 12 month period from 1 April 2010 to
31 March 2011. The value of the contingent consideration was revised upwards
from £2,917,000 reported as at 30 June 2010 to £5,104,000 as at
31 December 2010 and has been further revised upwards to £5,338,000 as at
30 June 2011 based on unaudited results of the Holiday Lettings segment for the
three months to 31 March 2011. The first £667,000 of contingent consideration will
be transferred into an Escrow account, in addition to the £1,000,000 of completion
proceeds already held in Escrow. The total estimated future cash consideration
is £6,338,000 of which £1,667,000 has been classified as non-current.
Under the term of the sale agreement the amounts held in Escrow earn interest
at Barclays Bank Plc's current interest rate and become available on the fourth
anniversary of the completion date of the transaction. No discount has been
applied as the account is interest bearing.
8 Earnings per share (EPS)
Weighted
average
number of Continuing Discontinued Total
ordinary operations operations earnings Pence
shares £000 £000 £000 per share
Six months ended
30 June 2011
Basic EPS 105,628,029 21,539 234 21,773 20.61
Diluted EPS 109,334,879 21,539 234 21,773 19.91
Underlying basic EPS 105,628,029 26,209 234 26,443 25.03
Underlying diluted EPS 109,334,879 26,209 234 26,443 24.19
Six months ended
30 June 2010
Basic EPS 108,872,581 17,796 17,278 35,074 32.22
Diluted EPS 112,226,520 17,796 17,278 35,074 31.25
Underlying basic EPS 108,872,581 20,000 17,278 37,278 34.24
Underlying diluted EPS 112,226,520 20,000 17,278 37,278 33.22
Year ended
31 December 2010
Basic EPS 108,021,339 38,535 19,467 58,002 53.69
Diluted EPS 111,361,386 38,535 19,467 58,002 52.08
Underlying basic EPS 108,021,339 43,032 19,467 62,499 57.86
Underlying diluted EPS 111,361,386 43,032 19,467 62,499 56.12
Weighted average number of ordinary shares (basic)
6 months ended 6 months ended Year ended
30 June 2011 30 June 2010 31 December 2010
Number of shares Number of shares Number of shares
Issued ordinary shares at
1 January less ordinary 108,439,105 111,504,537 111,504,537
shares held by the EBT
Effect of own shares held (2,505,430) (2,505,430) (2,505,430)
in treasury
Effect of own shares
purchased for cancellation (677,861) (492,599) (1,560,101)
Effect of share options 372,215 366,073 582,333
exercised
105,628,029 108,872,581 108,021,339
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 potentially dilutive shares. The Group's
potential dilutive instruments are in respect of share-based incentives granted
to employees, which will be settled by ordinary shares held by the EBT and
shares held in treasury.
6 months ended 6 months ended Year ended
30 June 2011 30 June 2010 31 December 2010
Number of shares Number of shares Number of shares
Weighted average number of
ordinary shares (basic) 105,628,029 108,872,581 108,021,339
Dilutive impact of own
shares held by the EBT and 3,706,850 3,353,939 3,340,047
shares held in treasury
109,334,879 112,226,520 111,361,386
Underlying EPS is calculated before the charge for share-based payments 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 2011 30 June 2010 31 December 2010
£000 £000 £000
Basic earnings for the 21,539 17,796 38,535
period
Share-based payments 1,171 989 1,846
NI on share-based 3,499 1,215 2,651
incentives
Earnings from continuing 26,209 20,000 43,032
operations
Earnings from discontinued 234 17,278 19,467
operation
Underlying earnings for the 26,443 37,278 62,499
period
9 Dividends
Company dividends
Dividends declared and paid by the Company were as follows:
6 months ended 6 months ended Year ended
30 June 2011 30 June 2010 31 December 2010
Pence per Pence per Pence per
share £000 share £000 share £000
2009 final - - 7.0 7,586 7.0 7,586
dividend paid
2010 interim - - - - 5.0 5,371
dividend paid
2010 final 9.0 9,499 - - - -
dividend paid
9.0 9,499 7.0 7,586 12.0 12,957
After the period end an interim dividend of 7.0p (2010: 5.0p) per qualifying
ordinary share being £7,306,000 (2010: £5,403,000) was proposed by the Board of
directors.
The 2010 final dividend paid on 10 June 2011 was £9,499,000
(31 December 2010: £7,586,000) being a difference of £35,000 compared to that
reported in the 2010 Annual Report which was due to a reduction in the ordinary
shares entitled to a dividend between 31 December 2010 and the final dividend
record date of 13 May 2011.
The terms of the EBT provide that dividends payable on the ordinary shares held
by the EBT are waived.
No provision was made for the interim dividend in either period and there are
no income tax consequences.
Subsidiary dividends
Dividends of £300,000 were paid in 2010 by HLHL to minority shareholders. As no
minority interest was recognised in the consolidated statement of financial
position and the Group consolidated 100% of HLHL's results prior to its
disposal, the dividends paid in 2010 were treated as an addition to goodwill.
10 Taxation
The income tax expense is recognised based on management's best estimate of the
weighted average annual income tax rate expected for the full financial year
applied to the profit before tax for the interim period. The Group's
consolidated effective tax rate in respect of continuing operations for the six
months ended 30 June 2011 was 25% (2010: 27%). The difference between the
standard rate and the effective rate at 30 June 2011 is attributable to credits
as a result of the increase in the deferred tax asset arising on share-based
incentives and corporation tax deductions arising on exercise of share options.
The net deferred tax asset of £9,524,000 at 30 June 2011 (2010: £3,771,000) is
in respect of equity settled share-based incentives and depreciation in excess
of capital allowances.
11 Trade and other receivables
30 June 2011 30 June 2010 31 December 2010
£000 £000 £000
Trade receivables 12,590 10,580 10,560
Less provision for impairment of (350) (216) (371)
trade receivables
Net trade receivables 12,240 10,364 10,189
Amounts held in Escrow (refer 1,000 1,000 1,000
Note 7)
Prepayments and accrued income 1,496 1,186 1,577
Interest receivable 16 9 62
Other debtors 35 35 37
14,787 12,594 12,865
Non-current 1,000 1,000 1,000
Current 13,787 11,594 11,865
14,787 12,594 12,865
12 Cash and cash equivalents
30 June 2011 30 June 2010 31 December 2010
£000 £000 £000
Bank accounts 17,902 22,866 23,148
Cash balances were placed on deposit for varying lengths between one day and
two weeks during the period and attracted interest at a weighted average rate
of 0.6% (2010: 0.7%).
13 Trade and other payables
30 June 2011 30 June 2010 31 December 2010
£000 £000 £000
Trade payables 505 409 1,033
Trade accruals 7,620 3,809 4,734
Other creditors 49 237 240
Other taxation and social 3,901 3,006 3,223
security
Deferred revenue 7,772 6,324 6,759
19,847 13,785 15,989
14 Reconciliation of movement in capital and reserves
EBT Reverse
Share shares Treasury Other acquisition Retained Total
capital reserve shares reserves reserve earnings equity
£000 £000 £000 £000 £000 £000 £000
At 1 January 2010 1,189 (16,185) (11,917) 105 138 29,863 3,193
Total
comprehensive - - - - - 35,074 35,074
income
Profit for the
period
Equity settled
share-based - - - - - 989 989
incentives charge
Tax in respect of
share-based
incentives - - - - - 873 873
recognised
directly in
equity
Dividends to - - - - - (7,586) (7,586)
shareholders
Exercise of share - 1,317 - - - 846 2,163
options
Cancellation of (16) - - 16 - (10,548) (10,548)
own shares
Share related - - - - - (74) (74)
expenses
At 30 June 2010 1,173 (14,868) (11,917) 121 138 49,437 24,084
At 1 January 2010 1,189 (16,185) (11,917) 105 138 29,863 3,193
Total
comprehensive
income
Profit for the - - - - - 58,002 58,002
year
Equity settled
share-based - - - - - 1,846 1,846
incentives charge
Tax in respect of
share-based
incentives - - - - - 3,451 3,451
recognised
directly in
equity
Dividends to - - - - - (12,957) (12,957)
shareholders
Exercise of share - 2,248 - - - 1,645 3,893
options
Cancellation of (42) - - 42 - (29,358) (29,358)
own shares
Share related - - - - - (206) (206)
expenses
At 31 December 2010 1,147 (13,937) (11,917) 147 138 52,286 27,864
2010
At 1 January 2011 1,147 (13,937) (11,917) 147 138 52,286 27,864
Total
comprehensive - - - - - 21,773 21,773
income
Profit for the
period
Equity settled
share-based - - - - - 1,171 1,171
incentives charge
Tax in respect of
share-based
incentives - - - - - 2,639 2,639
recognised
directly in equity
Dividends to - - - - - (9,499) (9,499)
shareholders
Exercise of share - 1,472 - - - 942 2,414
options
Cancellation of (23) - - 23 - (23,359) (23,359)
own shares
Share related - - - - - (163) (163)
expenses
At 30 June 2011 1,124 (12,465) (11,917) 170 138 45,790 22,840
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 2011 was 2,283,615 (2010: 1,578,775 shares) representing 2.0%
(2010: 1.3%) of the ordinary shares in issue (excluding shares held in treasury).
All the shares bought back in the period were cancelled and no shares were
transferred to treasury. The shares were acquired on the open market at a total
consideration (excluding costs) of £23,359,000 (2010: £10,548,000). The maximum
and minimum prices paid were £10.99 (2010: £6.90) and £9.04 (2010: £6.09) per
share respectively.
EBT shares reserve
This reserve represents the carrying value of own shares held by the EBT.
During the period the EBT purchased no shares. 718,178 options were exercised
in the period (2010: 642,613) at an average price of £3.36 (2010: £3.38) per
ordinary share, which were satisfied by shares held in the EBT. At 30 June 2011
the EBT held 5,604,151 (2010: 6,776,261) ordinary shares of £0.01 each in the
Company representing 5.1% (2010: 5.9%) of the shares in issue (excluding shares
held in treasury). The market value of the shares held in the EBT at the period
end was £66,801,000 (2010: £42,690,000).
Other reserves
The movement on other reserves of £23,000 (2010: £16,000) comprises the nominal
value of ordinary shares cancelled during the period.
Retained earnings
The gain on exercise of share options is the difference between the value that
the shares held by the EBT were originally acquired at and the price at which
share options were exercised during the year.
15 Related parties
Inter-group transactions with subsidiaries
During the period Rightmove plc was charged interest of £152,000
(2010: £392,000) by Rightmove Group Limited in respect of balances owing under
the inter-group loan agreement dated 30 January 2008. As at 30 June 2011 the
balance owing under this agreement was £57,236,000 (2010: £90,723,000)
including capitalised interest of £152,000 (2010: £2,229,000).
Transactions with key management staff
There were no transactions with key management staff 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 report for the six months ended 30 June 2011 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 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 report is the responsibility of, and has been approved by, the
Board of directors. The Board of directors are responsible for preparing the
half year 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 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 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 conducted 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 report for the six months ended 30 June 2011 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
3 August 2011
_________________________________________________________________________________
ADVISERS AND SHAREHOLDER INFORMATION
Contacts Managing Director Ed Williams
Chief Operating Officer
and Finance Director Nick McKittrick
Company Secretary Liz Taylor
Website www.rightmove.co.uk
Financial Calendar 2011
Half year results 3 August 2011
Interim dividend record date 14 October 2011
Interim Management Statement 10 November 2011
Interim dividend payment 11 November 2011
Full year results 24 February 2012
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 brokers
UBS Limited
Numis Securities Limited
Auditor
KPMG Audit Plc
Bankers
Barclays Bank Plc
HSBC Bank Plc
Solicitors
Slaughter and May
Pinsent Masons
Registrar
Capita Registrars
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
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
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 enquiries, amendment of address and dividend mandate
instructions.
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