3rd Aug 2011 07:00
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 Highlightsfor 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 ouriPhone, iPad and mobile applications mean that people are now home huntingwherever they are, not just at home or work. People thinking of selling theirhome know it remains a challenging housing market, so they increasingly expecttheir estate agent to make sure that their property is advertised asprominently on Rightmove as possible. Continuing to grow revenue and profits inthe current housing market is the result of the importance of Rightmove to homehunters and property advertisers alike and a tribute to all the efforts of ourpeople."For more information please contact:RightmoveEd Williams or Nick McKittrickRightmove 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 StatementStrategic positionOur strategy remains to build on our market position as the UK's leadingproperty website, to grow organically through our customers investing more intheir presence on Rightmove, and to return the cash we generate to shareholderspromptly.We have made further substantial progress against all three elements of ourstrategy. We have improved the home hunting experience, we have improved theeffectiveness of Rightmove for our advertisers and we have increased the totalcash 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 inoperating profits reflects the operational leverage in the Rightmove businessmodel 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 agodriven in the most part by the growth in profits. Diluted earnings per share oncontinuing 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 numberof 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 nomaterial loss of agents from the most recent review of membership prices.Almost three quarters of all agents are taking additional products andspending more than £130 per month on those products. Further progress has beenmade with adoption of our "bundled" offering now running to a third of oursmaller independent estate agent and lettings agent customers. All of ouradditional advertising products have sold well during the period and haveincreased penetration rates, with our display advertising productsdemonstrating the fastest rate of growth. Recently signed long-term agreementswith our largest agency advertisers demonstrate a clear long-term intent toincrease their usage of additional advertising products.
New Homes
New homes developers and development numbers are broadly unchanged since thestart of the year (+10) at 2,691, reflecting the understandable caution in thehouse 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 forthe same period last year.The increased average spend reflects continued strong demand among developersfor both our established additional advertising products and email campaigns.We have also made a promising start with our Development Microsite product fornew home developers with initial signs indicating house builders are willing tospend more on Rightmove display products to attract home hunters to theirdedicated particular area within Rightmove.
Other Businesses
The overseas property market continues to be challenging as a result oftightening consumer spend and lack of debt financing. Advertiser numbers areessentially unchanged since the start of the year at 547 (+1). Average spendper 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 advertisersadvertising a single property. Overall revenue is up 4% on a year ago,reflecting some additional revenue from business partnerships and advertisingof 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 areasof uncertainty or risk: the state of the housing market if it leads to areduction in the number of potential advertisers, competition, and Rightmove'sability to capture a high proportion of any increase in property advertisingrevenue as the sector recovers.Uncertainties surrounding the housing market clearly exist and are likely to betightly linked to the wider economic environment in the UK. However, we havesome confidence that the strong actions taken by our customers, particularlywith regard to cost reduction, have left them more able to withstand furtherchallenges.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 overthe last six months, but the gap between Rightmove and the nearest competitorhas widened, providing further evidence that home hunter habits areincreasingly deeply engrained in Rightmove.Since April 2009 Rightmove has been growing its property advertising revenueduring a period in which spend in newspapers appears to have continued to fallafter the large declines of 2008. Based on our own reported numbers we believethat Rightmove is growing much faster than any other form of propertyadvertising 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 ofthe Board's commitment to return cash promptly to shareholders, we have decidedto increase the interim dividend at a faster rate than the increase in theunderlying operating profit* in the half year. The interim dividend will bepaid 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 dividendpaid in June together with £23.4m of share buy backs means that we havereturned the cash generated by the business during the period. 2.3m shares werebought 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 ofthe year and our subscription revenue model gives us confidence in achievingour expected out-turn for the year. We do not believe that flat or modest fallsin house prices would materially affect the outlook, provided that transactionvolumes do not take a sharp downward turn, and expect to make further progressin 2012. Scott Forbes, ChairmanEd Williams, Managing Director3 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, ChairmanEd Williams, Managing Director3 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 56,563incentives 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) 8credit 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 38,535operations 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 58,002income Attributable to: Equity holders of the 21,773 35,074 58,002Parent 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 1,488equipment 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 27,864Parent 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 76equipment Loss on disposal of - - 1intangible 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 5,585payables Increase in provisions - 4 4 Cash generated from 32,253 27,456 58,835operations Interest paid (35) (103) (136) Income taxes paid (6,903) (4,878) (12,198) Net cash from operating 25,315 22,475 46,501activities 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 - - 15equipment Disposal of discontinued operation 7 - 13,693
13,284
(net of cash disposed of) Net cash from investing 96 13,417 12,257activities 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 3,893share 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 25,8931 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 35,074income Profit for the period Transactions with owners recorded directly in equity Equity settled share-based - - - - - 989 989incentives charge Tax in respect of share-based incentives - - - - - 873 873recognised directly in equity Dividends to - - - - - (7,586) (7,586)shareholders Exercise of share - 1,317 - - - 846 2,163options 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 58,002year Transactions with owners recorded directly in equity Equity settled share-based - - - - - 1,846 1,846incentives charge Tax in respect of share-based incentives - - - - - 3,451 3,451recognised directly in equity Dividends to - - - - - (12,957) (12,957)shareholders Exercise of share - 2,248 - - - 1,645 3,893options 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 27,8642010 At 1 January 2011 1,147 (13,937) (11,917) 147 138 52,286 27,864 Total comprehensive - - - - - 21,773 21,773income Profit for the period Transactions with owners recorded directly in equity Equity settled share-based - - - - - 1,171 1,171incentives charge Tax in respect of share-based incentives - - - - - 2,639 2,639recognised directly in equity Dividends to - - - - - (9,499) (9,499)shareholders Exercise of share - 1,472 - - - 942 2,414options 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 22,840NOTES1 General informationRightmove 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 ofthe 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 ended31 December 2010 are available upon request to the Company Secretary from theCompany's registered office at 4th Floor, 33 Soho Square, London, W1D 3QU orfrom the investor relations website at www.rightmove.co.uk/investors.rsp.Basis of preparationThe 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 2010.The condensed consolidated interim financial statements were approved by theBoard of directors on 3 August 2011. 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 2010 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 498 (2) or (3) of the CompaniesAct 2006.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 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 expectationthat the Group and the Company have adequate resources and banking facilitiesto continue in operational existence for the foreseeable future. Accordinglythe Board of directors continue to adopt the going concern basis in preparingthese interim financial statements.
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,except as described below, are the same as those applied by the Group in itsconsolidated financial statements as at and for the year ended31 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 instrumentdisclosures provides first-time adopters with the same transition provisions asincluded in the amendments to IFRS 7, `Financial instruments: Disclosures',regarding comparative information for the new three-level classificationdisclosures. As the Group is not a first time adopter this amendment has had noimpact on the Group's consolidated financial statements.(ii) Amendment to IAS 24 Related Party Disclosures removes the requirement forgovernment-related entities to disclose details of all transactions with thegovernment and other government-related entities. This has had no impact on theGroup's consolidated financial statements.
The same accounting policies are anticipated to be applied for the year ending 31 December 2011.
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 payments relating to the inputs to the fairvalue models and the estimate of the number of shares that will eventually beissuedNote 7 Measurement of the contingent consideration receivable in relation tothe disposal of the Holiday Lettings segment regarding the estimate of futureprofitability
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 informationthat internally is provided to the Managing Director, who is the Group's ChiefOperating 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 receivableslevel separately for the purpose of making decisions about resources to beallocated and of assessing performance. All revenues in all periods are derivedfrom 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 operationsbasis. Disclosures in respect of the discontinued Holiday Lettings segment areshown in Note 7. New Sub Agency Homes total Other Central Adjustments Total Operating £000 £000 £000 £000 £000 £000 £000segments 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) 37,854assets Segment - - - - (27,193) (61)(4)(5) (27,254)liabilities Capital - - - - 46 - 46expenditure(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 - 34,416assets Segment - - - - (20,629) (67) (4) (20,696)liabilities (5) Capital - - - - 290 32 (8) 322expenditure(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 - 8expenses Trade receivables 7,878 2,156 10,034 115 - 40 (4) 10,189(3) Other segment - - - - 40,539 15 (5) 40,554assets Segment - - - - (22,824) (55)(4)(5) (22,879)liabilities Capital - - - - 1,119 32 (8) 1,151expenditure(6) (1) Operating profit is stated after the charge for depreciation andamortisation.(2) Operating profit for the six months ended 30 June 2011 does not includeshare-based payments charge (£1,171,000) and National Insurance (NI) onshare-based incentives (£3,499,000).(3) 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.(4) The adjustments column reflects the reclassification of credit balances inaccounts receivable made on consolidation for statutory accounts purposes.(5) The adjustment column reflects the reclassification of debit balances inaccounts payable made on consolidation for statutory accounts purposes.(6) Capital expenditure consists of additions of property, plant and equipmentand intangible assets (excluding goodwill).(7) Operating profit for the six months ended 30 June 2010 does not includeshare-based payments charge (£989,000) and Employer's NI on share-basedincentives (£1,215,000).(8) The adjustments column reflects capital expenditure of £32,000 in respectof 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 paymentsShare awardsSince flotation, the Company has awarded share options to executive directorsand other selected employees designed to align the interests of employees withthe long-term success of the business. Following approval by shareholders atthe Annual General Meeting in May 2011, the executive unapproved and approvedshare option plans have been replaced by The Rightmove Performance Share Plan(PSP). The PSP permits awards of nil cost options or contingent shares whichwill 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 ofcomprehensive income, being the amortisation of the value of all share optionsgranted since 2006. There was no award of executive unapproved share options inthe six months ended 30 June 2011 (2010: 440,919). The executive unapprovedshare options on 5 March 2010 were granted at an exercise price of £6.66. Thevesting of 50% of the 2010 award will be dependent on a relative totalshareholder return (TSR) performance condition measured over a three-yearperformance period and the vesting of the other 50% of the 2010 award will bedependent on the satisfaction of an earnings per share (EPS) growth targetmeasured 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 PSPawards were made to executive directors and senior managers on 4 May 2011 (theGrant date) subject to EPS and TSR performance. Performance will be measuredover three financial years (1 January 2011 - 31 December 2013). The vesting inMarch 2014 (Vesting date) of 25% of the 2011 PSP award will be dependent on arelative TSR performance condition measured over a three-year performanceperiod and the vesting of the 75% of the 2011 PSP award will be dependent onthe satisfaction of an EPS growth target measured over a three-year performanceperiod.The PSP awards have been valued using the Monte Carlo model and the resultingIFRS 2 charge is being spread evenly over the period between the Grant date andthe 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 executivedirectors and senior managers the opportunity to earn a bonus determined as apercentage of base salary settled in deferred shares. The award of shares underthe plan is contingent on the satisfaction of pre-set internal targets relatingto underlying drivers of long-term revenue growth (the Performance period). Theright to the shares is deferred for two years from the date of the award (theVesting period) and potentially forfeitable during that period should theemployee leave employment. The IFRS 2 charge is being spread evenly over thecombined Performance period and Vesting period of the shares, being threeyears.Following the achievement of the 2010 internal performance targets, 118,467 nilcost option deferred shares were awarded to executive directors and seniormanagement on 4 March 2011 (the Award date) with the right to the release ofthe 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 managementexpects to be the prevailing rate when the deferred shares are released to theemployees, based on the share price at the reporting date. The charge for thesix month period ended 30 June 2011 is £194,000 (2010: £43,000).All existing share-based incentives can be satisfied from shares held in TheRightmove Employees' Share Trust (EBT) or from shares held in treasury, withoutany 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 171balances
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 1,080activities Income tax - (304) (304) Results from operating activities - 776 776(net of income tax) Gain on sale of discontinued 234 16,502 18,691operation 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 1,856activities Net cash from investing - 13,661 13,661activities Net cash used in financing - (300) (300)activities Net cash from discontinued - 15,217 15,217operation 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 13,284The value of the contingent consideration is dependent on the performance ofthe Holiday Lettings segment for the 12 month period from 1 April 2010 to31 March 2011. The value of the contingent consideration was revised upwardsfrom £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 completionproceeds already held in Escrow. The total estimated future cash considerationis £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 interestat Barclays Bank Plc's current interest rate and become available on the fourthanniversary of the completion date of the transaction. No discount has beenapplied 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 108,439,105 111,504,537 111,504,537shares 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 372,215 366,073 582,333exercised 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 isadjusted to assume conversion of all potentially dilutive shares. The Group'spotential dilutive instruments are in respect of share-based incentives grantedto employees, which will be settled by ordinary shares held by the EBT andshares 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 3,340,047shares 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 38,535period Share-based payments 1,171 989 1,846 NI on share-based 3,499 1,215 2,651incentives Earnings from continuing 26,209 20,000 43,032operations Earnings from discontinued 234 17,278 19,467operation Underlying earnings for the 26,443 37,278 62,499period 9 DividendsCompany dividendsDividends 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 7,586dividend paid 2010 interim - - - - 5.0 5,371dividend paid 2010 final 9.0 9,499 - - - -dividend paid 9.0 9,499 7.0 7,586 12.0 12,957After the period end an interim dividend of 7.0p (2010: 5.0p) per qualifyingordinary share being £7,306,000 (2010: £5,403,000) was proposed by the Board ofdirectors.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 dividendsDividends of £300,000 were paid in 2010 by HLHL to minority shareholders. As nominority interest was recognised in the consolidated statement of financialposition and the Group consolidated 100% of HLHL's results prior to itsdisposal, 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 theweighted average annual income tax rate expected for the full financial yearapplied to the profit before tax for the interim period. The Group'sconsolidated effective tax rate in respect of continuing operations for the sixmonths ended 30 June 2011 was 25% (2010: 27%). The difference between thestandard rate and the effective rate at 30 June 2011 is attributable to creditsas a result of the increase in the deferred tax asset arising on share-basedincentives 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) isin respect of equity settled share-based incentives and depreciation in excessof 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 1,000Note 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 23,148Cash balances were placed on deposit for varying lengths between one day andtwo weeks during the period and attracted interest at a weighted average rateof 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 3,223security 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 35,074income Profit for the period Equity settled share-based - - - - - 989 989incentives charge Tax in respect of share-based incentives - - - - - 873 873recognised directly in equity Dividends to - - - - - (7,586) (7,586)shareholders Exercise of share - 1,317 - - - 846 2,163options 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 58,002year Equity settled share-based - - - - - 1,846 1,846incentives charge Tax in respect of share-based incentives - - - - - 3,451 3,451recognised directly in equity Dividends to - - - - - (12,957) (12,957)shareholders Exercise of share - 2,248 - - - 1,645 3,893options 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 21,773income Profit for the period Equity settled share-based - - - - - 1,171 1,171incentives charge Tax in respect of share-based incentives - - - - - 2,639 2,639recognised directly in equity Dividends to - - - - - (9,499) (9,499)shareholders Exercise of share - 1,472 - - - 942 2,414options 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 22,840Share buy backIn 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 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 weretransferred to treasury. The shares were acquired on the open market at a totalconsideration (excluding costs) of £23,359,000 (2010: £10,548,000). The maximumand minimum prices paid were £10.99 (2010: £6.90) and £9.04 (2010: £6.09) pershare respectively.EBT shares reserveThis reserve represents the carrying value of own shares held by the EBT.During the period the EBT purchased no shares. 718,178 options were exercisedin the period (2010: 642,613) at an average price of £3.36 (2010: £3.38) perordinary share, which were satisfied by shares held in the EBT. At 30 June 2011the EBT held 5,604,151 (2010: 6,776,261) ordinary shares of £0.01 each in theCompany representing 5.1% (2010: 5.9%) of the shares in issue (excluding sharesheld in treasury). The market value of the shares held in the EBT at the periodend was £66,801,000 (2010: £42,690,000).Other reservesThe movement on other reserves of £23,000 (2010: £16,000) comprises the nominalvalue of ordinary shares cancelled during the period.Retained earningsThe gain on exercise of share options is the difference between the value thatthe shares held by the EBT were originally acquired at and the price at whichshare options were exercised during the year.
15 Related parties
Inter-group transactions with subsidiariesDuring 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 thebalance 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 staffThere were no transactions with key management staff in any period.
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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 report for the six months ended 30 June 2011 whichcomprises the condensed consolidated interim statement of comprehensive income,the condensed consolidated interim statement of financial position, thecondensed consolidated interim statement of cash flows, the condensedconsolidated interim statement of changes in shareholders' equity and therelated explanatory notes. We have read the other information contained in thehalf year report and considered whether it contains any apparent misstatementsor material inconsistencies with the information in the condensed set offinancial 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 (theUK FSA). Our review has been undertaken so that we might state to the Companythose matters we are required to state to it in this report and for no otherpurpose. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the Company for our review work, for thisreport, or for the conclusions we have reached.Directors' responsibilitiesThe half year report is the responsibility of, and has been approved by, theBoard of directors. The Board of directors are responsible for preparing thehalf year 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 report hasbeen prepared in accordance with IAS 34 Interim Financial Reporting as adoptedby the EU.Our responsibilityOur responsibility is to express to the Company a conclusion on the condensedconsolidated set of financial statements in the half year report based on ourreview.Scope of reviewWe 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 conducted 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.
Conclusion
Based on our review, nothing has come to our attention that causes us tobelieve that the condensed consolidated set of financial statements in the halfyear report for the six months ended 30 June 2011 is not prepared, in allmaterial respects, in accordance with IAS 34 as adopted by the EU and the DTRof the UK FSA.S J Wardellfor and on behalf of KPMG Audit PlcChartered AccountantsMilton Keynes3 August 2011_________________________________________________________________________________
ADVISERS AND SHAREHOLDER INFORMATION
Contacts Managing Director Ed WilliamsChief Operating Officer and Finance Director Nick McKittrick Company Secretary Liz TaylorWebsite www.rightmove.co.ukFinancial Calendar 2011Half year results 3 August 2011Interim dividend record date 14 October 2011Interim Management Statement 10 November 2011Interim dividend payment 11 November 2011Full year results 24 February 2012 Registered officeRightmove plc4th Floor33 Soho SquareLondon W1D 3QURegistered in England no. 6426485Corporate advisersFinancial adviserUBS Investment BankJoint brokersUBS LimitedNumis Securities LimitedAuditorKPMG Audit PlcBankersBarclays Bank PlcHSBC Bank PlcSolicitorsSlaughter and MayPinsent MasonsRegistrarCapita RegistrarsThe 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 detailsare:Capita RegistrarsThe Registry34 Beckenham RoadBeckenhamKentBR3 4TU
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.comThrough the website of our registrar, Capita Registrars, shareholders are ableto manage their shareholding online and facilities include electroniccommunications, account enquiries, amendment of address and dividend mandateinstructions.
XLONRelated Shares:
Rightmove