21st Aug 2009 07:00
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 withcost management, mean we have been able to weather these housing marketconditions with minimal impact on profitability. Our business is alreadygrowing again on all major measures whether that is in terms of usage of ourwebsite by home hunters, in terms of number of advertisers or in terms of theirindividual 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 statementStrategic positionOur strategic objectives as we started 2009 were to maintain our marketposition as the UK's leading property website, to maintain our advertisingcustomer base (in so far as those advertisers themselves remained in theindustry), and to defend the value we deliver as compared to alternative formsof property advertising. These objectives appeared to us as key to the futuresuccess of the business in the face of the toughest property market conditionsin a generation.At the mid-year our market position is stronger than ever, helped by our "SeeMore" TV campaign and online optimisation of our website which, together withcontinued investment in leading functionality, have contributed to recordlevels of site traffic. The advertising customer base has been immensely loyal.We have grown the number of customers since the start of 2009 among estateagents, lettings agents and holiday homes owners. The number of new homesdeveloper customers is unchanged, though individual companies typically havefewer developments to market than six months ago. The value we deliver hasenabled us to maintain prices, grow discretionary spend and continue to investin 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, withdeclines in the number of estate agents in the industry and in the number ofdevelopments being marketed accounting for the decline.However underlying operating profit* decreased by only 4% to 19.9m. Theresilience of operating profits reflects the success in reducing costs duringthe second half of 2008 and the continued focus on costs during this mostrecent period. Operating costs were down by 19% at 13.7m even though wemaintained marketing spend to reinforce our leadership position. As a result,the underlying operating margin for the first half of 2009 was 59.2% comparedto 55.1% for the first half of 2008.Underlying earnings per share* (UEPS) rose 13% to 12.8p compared to 11.3p ayear ago. The rise in UEPS was principally due to the increase in the deferredtax asset arising on share-based incentives and the substantial share buy backprogramme in 2008. The effective tax rate was 28%.
Operating performance
The first six months of 2009 have seen growth in most key metrics compared tothe position at the end of 2008. In several of the cases where there has beengrowth this year (e.g. membership), the figures are down on a year ago as aresult of the tough trading conditions in the second half of last year.Therefore we have compared all our key operating metrics with the same periodin 2008, except for membership and retention numbers which are a comparison ofDecember 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 pageimpressions. This is an especially strong performance given that the firstthree months of 2008 saw relatively high levels of activity before a sharpdownturn in the market in April 2008. Traffic in 2009 has remained strong inMay, June and July at a time when in most previous years we have seen declinescompared to the January to March peaks. Monday 10 August 2009 was the busiestday in the nine year history of Rightmove websites with page impressions of22.6m.The number of estate agents in the market appears to have stabilised and, as aresult of gaining market share, Rightmove has more estate agent members than atthe start of the year. There has been strong growth in the number of lettingsagents and in the number of estate agents also offering a lettings servicehelping Rightmove's rapid growth in this area. The threat to the future ofhouse builders appears much reduced as they have managed to generatesignificant cash inflows from selling properties albeit at lower prices andrenegotiating their debt arrangements. However, the low levels of newdevelopments coming to market and a switch among Housing Associations to socialrent have resulted in a significant reduction in the number of developmentsbeing marketed. Conditions for our overseas homes business have beenchallenging with the UK seen as a poor potential source of buyers for overseassellers as a result of the general economic conditions in the UK and theweakness of Sterling. In contrast conditions have been ideal for the growth ofour Holiday Lettings business, which has grown revenues by 52% year on year, asholiday-makers trade down to self-catering short-haul holidays and home ownersseek higher occupancy rates.Rightmove Choice products (our upgraded advertising services above and beyondstandard property listings) are now used by 39% of our advertisers, with thosethat take Choice products buying more than two each. Despite a marked declinein the total number of advertisers as compared to a year ago, revenue fromChoice 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 the2008 annual report, identifying that the business was inevitably exposed to thegeneral uncertainty of the housing market particularly transaction volumes; thethreat of new property websites; and Rightmove's ability to capture marketingspend from local newspapers when the property advertising sector recovers.The gradual but sustained increase in housing transactions, coupled withsignificant cost reductions within our customers' businesses, probably accountfor the stability we have seen in agent numbers. There is increasing evidencethat the number of new homes developments being marketed has reached thebottom, reflected in our own most recent numbers.In respect of the competitive landscape, the first half of 2009 saw the exitfrom the UK market of Real Estate Australia (the Australian market leader ownedby News Corporation) as it wound down Property Finder. The supposed threat ofnew entrants has not materialised. Rightmove's market share of the top four UKproperty websites by pages viewed increased in the period to 80% (2008: 78%), ahistorically very high level.Local newspaper groups' own reported results for property advertising bringhome the scale to which advertisers have cut spend in tough market conditions.Increased sales of Choice products at a time when newspapers are stillexperiencing 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 beintroducing as the housing market recovers.
Cash flow and net debt
In April 2009, we termed out 25m of a 40m revolving loan facility with theBank of Scotland which had been used for the specific purpose of facilitatingshare buy backs. The term of the loan facility is five years with 5m repayablewithin one year. At the half year, following payment of our full year dividendof 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 flowconversion in excess of 100% for the six month period. With continued strongoperating cash flows we will be in a position to either repay the outstandingdebt 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 withour policy of maintaining dividends until such time as profits are growingagain. The interim dividend will be paid on 13 November 2009 to members on theregister on 16 October 2009.
Current trading and outlook
The last 18 months have borne out that the Rightmove business is only stronglyexposed to the property market to the extent that it affects the number ofpotential advertisers in business. We appear now to be in a period where thenumber of offices and developments being marketed is sustainable, with theprospect of growth in our advertiser numbers over the coming year.Building on the revenue growth achieved since the low point in April, July hasseen the highest monthly revenue for the year-to-date. With continued lowcosts, July generated our second highest monthly operating profit ever. Julywas also the best month ever in terms of usage by home hunters (measured bypage impressions on the site) and saw a further strengthening of market shareof page impressions of the top four property websites. A 1m TV advertisingcampaign has been booked for September.We are confident of increased average spend on Rightmove by our customers overthe next 12 months. A number of factors which have had a dampening impact onthe average spend, such as the change in mix of our customers, are unlikely tocontinue and may well start to reverse. The resilience of spend on our Choiceproducts at the worst point in the cycle and the recent increases in adoptionare encouraging. The return on investment of Rightmove as compared to localnewspapers (which continue to account for the lion's share of advertisingspend) remains, in our opinion, compelling. Similar to newspaper advertising,our next product set will allow our customers to promote their services andbrands 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, ChairmanEd Williams, Managing Director21 August 2009For further information please contact:-RightmoveEd Williams, Managing Director Nick McKittrick, Finance Director and Chief Operating OfficerTelephone: 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 withIAS 34 Interim Financial Reporting as adopted by the EU;The interim management report includes a fair review of the informationrequired by:(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication ofimportant events that have occurred during the first six months of thefinancial year and their impact on the condensed consolidated interim financialstatements; and description of the principal risks and uncertainties for theremaining six months of the financial year; and(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related partytransactions that have taken place in the first six months of the currentfinancial year and that have materially affected the financial position orperformance of the Group during that period; and any changes in the relatedparty transactions described in the last annual report that could do so.By order of the BoardScott Forbes, ChairmanEd Williams, Managing Director21 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 GBP000 GBP000 GBP000 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 41,004credit Share-based payments 4 (841) (958) (1,998) NI on share-based 4 (110) 240 240incentives Capital reconstruction - - 245credit 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 25,503income Attributable to: Equity holders of the 13,009 12,591 25,503Parent 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 GBP000 GBP000 GBP000 Non-current assets Property, plant and 10 1,610 2,142 1,883equipment 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 GBP000 GBP000 GBP000 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 38,671operations 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 - - 1equipment 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) 11,080cash equivalents Cash and cash equivalents at 22,887 11,807 11,8071 January Cash and cash equivalents at 12 15,118 3,162 22,887period 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
GBP000 GBP000 GBP000 GBP000 GBP000
000 GBP000 GBP000
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 12,591period Dividends to shareholders - - - - - - (7,082) (7,082) Equity settled share-based - - - - - - 958 958incentives 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 25,503period Dividends to shareholders - - - - - - (10,358) (10,358) Equity settled share- based - - - - - - 1,998 1,998incentives 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 13,009period Dividends to shareholders - - - - - - (7,615) (7,615) Subsidiary dividends to - - - - - - (534) (534)minority shareholders Equity settled share- based - - - - - - 841 841incentives 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)NOTES1 General informationRightmove plc (the Company) is a Company registered in England(Company no. 6426485) domiciled in the United Kingdom (UK). The condensedconsolidated interim financial statements of the Company as at and for the sixmonths ended 30 June 2009 comprise the Company and its interest in itssubsidiaries (together referred to as the Group). Its principal business is theoperation of the Rightmove.co.uk website which is the UK's largest propertywebsite.The consolidated financial statements of the Group as at and for the year ended31 December 2008 are available upon request to the Company Secretary from theCompany'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 inaccordance with International Financial Reporting Standard IAS 34 InterimFinancial Reporting and the Disclosure and Transparency Rules of the UK'sFinancial Services Authority. They do not include all of the informationrequired for full annual financial statements and should be read in conjunctionwith the consolidated financial statements of the Group as at and for the yearended 31 December 2008.The condensed consolidated interim financial statements were approved by theBoard of directors on 21 August 2009. The half year results for the current andcomparative period are unaudited. The auditor, KPMG Audit Plc, has carried outa review of the interim financial statements and their report is set out at theend of this document.The comparative figures as at and for the year ended 31 December 2008 areextracted from the Group's statutory accounts for that financial year. Thoseaccounts have been reported on by the auditor and delivered to the registrar ofcompanies. The report of the auditor was:(i) unqualified;(ii) did not include a reference to any matters to which the auditor drewattention by way of emphasis without qualifying their report; and(iii) did not contain a statement under Section 237 (2) or (3) of the CompaniesAct 1985.The Group's financial risk management objectives and policies are consistentwith that disclosed in the consolidated financial statements as at and for
theyear ended 31 December 2008.Going concernThe 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 possiblechanges in performance show that the Group will be able to operate within thecurrent level of its facility and meet scheduled loan payments and related bankcovenant requirements.After making enquiries, the directors have a reasonable expectation that theGroup and the Company have adequate resources to continue in operationalexistence for the foreseeable future. Accordingly they continue to adopt thegoing concern basis in preparing these accounts.
2 Significant accounting policies
The accounting policies applied by the Group in these condensed consolidatedinterim financial statements are in accordance with International FinancialReporting Standards as adopted by the European Union (Adopted IFRSs) and exceptas described below are the same as those applied by the Group in itsconsolidated 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 theperiod other than those changes from transactions with owners in their capacityas owners. The Group has elected to present one performance statement being thestatement 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 estimatesThe preparation of financial statements in conformity with Adopted IFRSsrequires management to make judgments, estimates and assumptions that affectthe application of policies and reported amounts of assets and liabilities,income and expenses. The estimates and associated assumptions are based onhistorical experience and various other factors that are believed to bereasonable under the circumstances, the results of which form the basis ofmaking judgments about carrying values of assets and liabilities that are notreadily apparent from other sources. Actual results may differ from theseestimates.
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 paymentsNote 11 Impairment of trade receivablesNote 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 forthe purpose of making decisions about resources to be allocated and ofassessing performance. Segment performance is evaluated based on revenue whichin certain respects, as explained in the table below, is measured differentlyfrom revenue as reported in the consolidated financial statements. All revenuesin all periods are derived from third parties and there are no inter-segmentrevenues.
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 GBP000GBP000 GBP000 GBP000GBP000 GBP000 GBP000 GBP000 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) 18,905profit(2) Depreciation and - - (15) (15) - (514) (42)(4) (571)amortisation Financial - - 8 8 - 101 - 109income Financial - - - - - (823) - (823)expenses Trade 5,138 2,579 80 7,797 213 - 147(6) 8,157receivables(5) Other segment - - 934 934 - 19,102 9,198(7) 29,234assets Segment - - (480) (480) - (45,449) (2,176)(8) (48,105)liabilities Capital - - 10 10 - 113 - 123expenditure(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) 20,115profit(2) (10) Depreciation and - - (7) (7) - (472) (42) (4) (521)amortisation Financial - - 8 8 - 195 - 203income Financial - - - - - (391) (133)(12) (524)expenses Trade 5,523 4,210 68 9,801 458 - 187(6) 10,446receivables (5) Other - - 1,101 1,101 - 8,522 5,751(7) 15,374segment assets Segment - - (184) (184) - (47,328) (1,499) (49,011)liabilities (8) Capital - - 56 56 - 824 - 880expenditure (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) 39,491profit(2) (11) Depreciation and - - (19) (19) - (997) (84) (4) (1,100)amortisation Financial - - 30 30 - 600 - 630income Financial - - (2) (2) - (1,679) (274) (1,955)expenses (12) Trade 5,209 3,704 50 8,963 852 - 150(6) 9,965receivables (5) Other - - 1,538 1,538 - 28,113 9,240(7) 38,891segment assets Segment - - (322) (322) - (62,413) (1,630) (64,365)liabilities (8) Capital - - 102 102 - 853 - 955expenditure (9) (1) Segment revenue in respect of Holiday Lettings is recognised for managementpurposes when the invoice is raised. In the consolidated financial statementsthe revenue is spread evenly over the period of the contracted service with anydeferred revenue held on the balance sheet and accordingly an adjustment hasbeen made to reconcile to consolidated Group revenue.(2) Operating profit is stated after the charge for depreciation andamortisation.(3) Operating profit for the six months ended 30 June 2009 does not includeshare-based payments charge ( 841,000), NI on share-based incentives ( 110,000), the amortisation of customer relationships ( 42,000) and theadditional segment revenue recognised by Holiday Lettings ( 554,000).(4) Depreciation and amortisation excludes the consolidation adjustment inrespect of the amortisation of customer relationships.(5) The only segment assets that are separately monitored by the ChiefOperating Decision Maker relate to trade receivables net of any associatedprovision for impairment. All other segment assets are reported on acentralised basis.(6) The adjustments column reflects the reclassification of credit balances inaccounts receivable made on consolidation for statutory accounts purposes.(7) Other segment assets exclude goodwill arising on consolidation inconnection with the accounting entries for the acquisition of Holiday LettingsLimited (HLL) as well as the net book value of customer relationships.(8) The adjustment column reflects the reclassification of credit balances inaccounts receivable as well as an adjustment to reflect the deferred revenuebalance in respect of the Holiday Lettings segment.(9) Capital expenditure consists of additions of property, plant and equipmentand intangible assets (excluding goodwill).(10) Operating profit for the six months ended 30 June 2008 does not includeshare-based payments charge ( 958,000), NI on share-based incentives ( 240,000 credit), the amortisation of customer relationships ( 42,000) and theadditional segment revenue recognised by Holiday Lettings ( 890,000).(11) Operating profit for the year ended 31 December 2008 does not includeshare-based payments charge ( 1,998,000), NI on share-based incentives ( 240,000 credit), capital reconstruction credit ( 245,000), the amortisation ofcustomer relationships ( 84,000) and the additional segment revenue recognisedby Holiday Lettings ( 1,058,000).(12) Financial expenses exclude the consolidation adjustment relating to theunwinding of the effective interest rate on the HLL deferred purchaseconsideration.4 Share-based paymentsShare optionsIn accordance with IFRS 2 a charge of 747,000 (30 June 2008: 958,000) isincluded in the statement of comprehensive income, being the amortisation ofthe value of all share options granted since 2006. Included in the charge forthe six months ended 30 June 2009 is 74,000 representing the IFRS 2 charge on1,103,948 executive unapproved share options which were granted on 5 March 2009at an exercise price of 2.24, subject to a relative TSR performance condition.Employer's National Insurance (NI) is being accrued, where applicable, at arate of 12.8% on the difference between the share price at the balance sheetdate and the average exercise price of the share options. The charge for thesix month period ended 30 June 2009 is 93,000. Based on the share price at 30June 2008 the accrual built up in prior periods was reversed resulting in acredit to the statement of comprehensive income of 240,000.
Deferred share plan
In March 2009 a deferred share plan was established which will allow certainsenior management employees the opportunity to earn a bonus linked as apercentage of base salary settled in deferred shares. The award of shares inMarch 2010 is contingent on the satisfaction of pre-set internal targetsincluding profit before tax relative to the business plan and key performanceindicators such as website traffic share and customer retention. The right tothe shares will be deferred for two years from March 2010 until March 2012 andpotentially forfeitable during that period should the employee leaveemployment. The deferred share awards have been valued using the Black Scholesmodel and the resulting IFRS 2 charge has been spread evenly over the combinedperformance period and the vesting period of the shares, being three years. Thecharge 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 shareprice 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 GBP000 GBP000 GBP000 Interest income on cash 109 203 551balances Interest income on over - - 79payment of taxes 109 203 6306 Financial expenses 6 months ended 6 months ended Year ended 30 June 2009 30 June 2008 31 December 2008 GBP000 GBP000 GBP000 Debt issue costs 125 200 200 Interest expense 429 138 1,367 Unwinding of effective interest rate on deferred - 133 274purchase consideration Other financial expenses 269 52 113
Preference dividend interest - 1
1 823 524 1,9557 Earnings per share (EPS) Weighted average number of Earnings Pence ordinary shares GBP000 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 111,697,173 121,046,278 121,046,278shares 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 isadjusted to assume conversion of all dilutive potential shares. The Group hasone potential dilutive instrument being those ordinary shares held by the EBTto 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 44,192 109,319,317 119,123,970 113,449,416Underlying EPS is calculated before the charge for share-based payments,capital reconstruction credit and NI on share-based incentives. Areconciliation of the basic earnings for the period to the underlying earningsis presented below: 6 months ended 6 months ended Year ended 30 June 2009 30 June 2008 31 December 2008 GBP000 GBP000 GBP000 Basic earnings for the 13,009 12,591 25,503period 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 27,016period 8 DividendsCompany 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 GBP000 share GBP000 share GBP000 2007 final dividend - - 6.0 7,082 6.0 7,082paid 2008 interim dividend - - - - 3.0 3,276paid 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 GBP000 GBP000 GBP000 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 GBP000 GBP000 GBP000 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 22,887of cash flows Cash balances were placed on deposit for varying lengths between one and threemonths during the period and attracted interest at a weighted average rate
of1.1% (30 June 2008: 5.0%).13 Trade and other payables 30 June 2009 30 June 2008 31 December 2008 GBP000 GBP000 GBP000 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 12,41814 Loans and borrowings
During the period 14,750,000 of the revolving loan facility with the Bank ofScotland was repaid out of surplus cash. On 16 April 2009 the Company converted 25,000,000, being the balance of its Sterling-denominated revolving loanfacility, into a five year term loan. The loan bears interest at LIBOR plus1.5% together with a mandatory cost applied by the lender and is repayable overfive years in 20 equal instalments. 30 June 2009 30 June 2008 31 December 2008 Carrying Carrying Carrying Fair value Fair value Fair value value GBP000 value GBP000 value GBP000 GBP000 GBP000 GBP000 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 39,750borrowings 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 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 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 12,591period Dividends to shareholders - - - - - - (7,082) (7,082) Equity settled share-based - - - - - - 958 958incentives 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 25,503period Dividends to shareholders - - - - - - (10,358) (10,358) Equity settled share-based - - - - - - 1,998 1,998incentives 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 13,009period Dividends to shareholders - - - - - - (7,615) (7,615) Subsidiary dividends to - - - - - - (534) (534)minority shareholders Equity settled share-based - - - - - - 841 841incentives 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 itsown ordinary shares. The total number of shares bought back in the six monthsto 30 June 2009 was nil.The total number of shares bought back in the six months to 30 June 2008 was10,712,806 representing 9% of the issued share capital (excluding shares heldin treasury). Of the 10,712,806 shares bought back, 8,207,376 shares werecancelled and 2,505,430 shares were transferred to treasury. The shares wereacquired 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 sharerespectively.EBT own shares reserveThis 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 costof 918,000 to satisfy share incentive awards. 5,210 Sharesave options wereexercised in the period at a price of 2.59 per ordinary share, which weresatisfied 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 eachrepresenting 7.4% (30 June 2008: 7.0%) of the issued share capital (excludingshares held in treasury). The market value of the shares held in the EBT at theend 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 toacquire the remaining 33.3% interest owned by management. The put option can beexercised any time from 1 July 2009 based either on a multiple of EBIT per thelatest audited accounts or HLL's market value if higher. At 31 December 2008the deferred consideration was increased to 6,133,000 based on the directors'best estimate of likely market value for the business. The directors considerthat this valuation continues to be appropriate as at 30 June 2009.
17 Related parties
Transactions with principal shareholdersAs 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 intreasury). The Group's transactions and balances with this former shareholderfor the comparative periods were as follows: 6 months ended Year ended 30 June 2008 31 December 2008 GBP000 GBP000
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 2Department Connells Residential 186 333 525 916Dividends 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 financialstatements in the half year financial report for the six months ended30 June 2009 which comprises the condensed consolidated interim statement ofcomprehensive income, the condensed consolidated interim statement of financialposition, the condensed consolidated interim statement of cash flows, thecondensed consolidated interim statement of changes in shareholders' equity andthe related explanatory notes. We have read the other information contained inthe half year financial report and considered whether it contains any apparentmisstatements or material inconsistencies with the information in the condensedset of financial statements.This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the Disclosureand 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 theCompany those matters we are required to state to it in this report and for noother purpose. To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the Company for our review work, forthis report, or for the conclusions we have reached.
Directors' responsibilities
The half-year financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearfinancial report in accordance with the DTR of the UK FSA.As disclosed in note 2, the annual financial statements of the Group areprepared in accordance with IFRSs as adopted by the EU. The condensedconsolidated set of financial statements included in this half year financialreport has been prepared in accordance with IAS 34 Interim Financial Reportingas 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 ReviewEngagements (UK and Ireland) 2410 Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity issued by the AuditingPractices Board for use in the UK. A review of interim financial informationconsists of making enquiries, primarily of persons responsible for financialand accounting matters, and applying analytical and other review procedures. Areview is substantially less in scope than an audit performed in accordancewith International Standards on Auditing (UK and Ireland) and consequently doesnot enable us to obtain assurance that we would become aware of all significantmatters that might be identified in an audit. Accordingly, we do not express anaudit opinion.ConclusionBased on our review, nothing has come to our attention that causes us tobelieve that the condensed consolidated set of financial statements in the halfyear financial report for the six months ended 30 June 2009 is not prepared, inall material respects, in accordance with IAS 34 as adopted by the EU and theDTR of the UK FSA.S J Wardellfor and on behalf of KPMG Audit PlcChartered AccountantsMilton Keynes21 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 [email protected] 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 withany questions regarding your shareholding or dividends. Please notify them ofyour change of address or other personal information. Their address details
are:Capita RegistrarsNorthern HouseWoodsome ParkFenay BridgeHuddersfieldHD8 OGA
Capita Registrars is a trading name of Capita Registrars Limited
Capita shareholder helpline: 0871 664 0300 (calls cost 10p per minute plusnetwork extras) (overseas: +44 20 8639 3399)Email: [email protected] portal (www.capitashareportal.com)Through the website of our registrar, Capita Registrars, shareholders are ableto manage their shareholding online and facilities include electroniccommunications, account enquires, amendment of address and dividends mandateinstructions. RIGHTMOVE PLC HALF YEAR REPORT 2009
vendorRelated Shares:
Rightmove