Rightmove PLC — Interim / Quarterly Report 2013

Jul 31, 2013

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RNS Number : 5265K

Rightmove Plc

31 July 2013

Embargoed until 07.00, Wednesday 31 July 2013

2013 HALF YEAR RESULTS

Rightmove plc, the UK's no. 1 property website, announces half year results for the six months ended 30 June 2013.

Financial and Operational Highlights

for the six months ended 30 June 2013

·           Revenue up 16% to £67.2m (2012: £57.9m)

·           Underlying operating profit(1) up 15% to £49.0m (2012: £42.6m)

·           Underlying operating margin(1) of 73.0% (2012: 73.5%)

·           Underlying earnings per share(1) up 19% to 38.4p (2012: 32.2p)

·           Diluted earnings per share up 20% to 33.2p (2012: 27.6p)

·           Interim dividend increased by 2p to 11p (2012: 9p) per ordinary share, up 22%

·           £37.4m (2012: £41.2m) of cash returned to shareholders through dividends and share buybacks in the period

·           Page impressions on Rightmove up 22% to 7.2bn (2012: 5.9bn)

·           Number of advertisers up 646 (+3.5%) this year at 18,916 (31 December 2012: 18,270)

·           Average revenue per advertiser(2) up 14% at £593 per month (2012: £518)

(1) Before share-based payments, NI on share-based incentives and no related adjustment for tax

(2) For agency and new homes

Nick McKittrick, Chief Executive Officer, said:

"Rightmove's popularity continues to grow. Traffic to our website and mobile platforms is up over 20% on a year ago reflecting our ongoing investment in our brand and our technology coupled with an improving housing market.  This has generated a record number of enquiries for our customers.  We continue to develop our services to provide the most engaging experience for home movers and the best advertising platforms for our customers to reach the UK's largest home moving audience and to win more business." 

Half Year Statement

Strategic position

Our strategy remains to build on our market position as the UK's leading property website, to grow organically through our customers investing more in their presence on Rightmove, and to return the cash we generate to shareholders. 

We continue to deliver against all three elements of our strategy.  Home hunters can find the widest selection of properties on the market, presented with the best information quickly and easily through our website and mobile platforms.  Advertisers can reach the UK's largest audience of home movers and benefit from a range of great value advertising products and tools to win more business.  We have returned all excess cash generated from operations during the period to shareholders via increased dividends and continued share buybacks.

Financial performance

Revenue has grown to £67.2m (2012: £57.9m) up 16% on the previous year, with trading in the period benefiting from the further adoption of additional advertising products, price increases and growth in customer numbers.

Profit after tax increased 16% to £34.1m (2012: £29.3m) and underlying operating profit(1) increased by 15% to £49.0m.

Costs in the first half are £18.2m and are slightly weighted to H1 this year due to the timing of our marketing spend.  We finished producing our new TV campaign featuring Blondie's music 'Dreaming' in H1 and in addition to the TV advertising we ran in January and February we ran our new campaign in April, May and June.

Cash generated from operating activities was £42.7m (2012: £41.1m) representing 96% cash conversion ratio.  We returned all free cash flow in the period to shareholders through a combination of dividends and share buybacks.

Underlying earnings per share(1) rose 19% to 38.4p compared to 32.2p a year ago, reflecting the strong growth in profits and the benefit of shares bought back in the second half of 2012.  On a diluted basis, earnings per share were up 20% year on year.

Highlights of operating performance

Aspects of the operating performance for the first six months of 2013 of note are:

·           Traffic is up over 20% on the same period a year ago.  We've continued to see significant growth in mobile traffic across both our apps (iPhone, iPad and Android) and our mobile optimised website.  The latest version of our iPhone/iPad app, released at the start of the year, has been downloaded over three million times

·           Enquiries have increased each month and are up over 70% in June 2013 compared to June 2012, reflecting our investment in geographic telephone numbers and the increased traffic to our website and mobile platforms

·           Average revenue per advertiser (ARPA)(2) is up 14% on the same period a year ago.  The increased spend came from a combination of sales of additional advertising products and price rises.

Most key metrics strengthened in the first six months of 2013 compared to the first half of 2012:

·           ARPA(2) up 14% at £593 per month (2012: £518)

·           Revenue from additional advertising products(2) up 31% at £22.3m (2012: £17.0m)

·           Overall membership up 646 (+3.5%) since the start of the year at 18,916 offices and developments

·           Retention rates among advertisers in line with high historical averages

·           Page impressions on Rightmove up 22% to 7.2bn (2012: 5.9bn), keeping Rightmove firmly in the top 10 UK websites

·           Market share of page impressions, excluding apps, of the top three UK property portals at 81% (2012: 83%).

Agency

Agency ARPA was up 11% year on year at £553 per office per month as a result of further adoption of additional advertising products and price increases.  Spending by agents was up across our entire range of additional advertising products and 55% (June 2012: 44%) of independent agents are now subscribing to one of our packages, where for a minimum monthly spend they benefit from discounts across our range of products.

The number of agency offices is 4% higher since the start of the year at 15,811 (31 December 2012: 15,244).  Whilst there have been a number of new office openings, two-thirds of the growth can be attributed to a 'Join Now' offer targeted at low stock agencies which ran from April to the end of June.

New Homes

New homes ARPA is up by 37% compared to a year ago at £861 per month.  The substantial increase in ARPA is due to very strong demand for additional products and email campaigns, in part driven by the launch of the Government's 'Help to Buy' scheme, and price increases.  Development numbers are 188 lower since the start of the year at 2,248

(31 December 2012: 2,436).

Other businesses

Our data services and overseas homes advertising businesses, both modest contributors in terms of overall revenue, continue to trade healthily.  The number of overseas customers is 267 higher since the start of the year at 857 mainly due to the refining of our overseas product offering.

Uncertainties, threats and risks

Rightmove could be vulnerable to three main areas of uncertainty or risk: the state of the housing market, if it leads to a reduction in the number of potential advertisers; competition; and Rightmove's ability to capture a high proportion of any increase in property advertising revenue as the sector recovers.

Uncertainties surrounding the housing market clearly exist and are likely to be tightly linked to the wider economic environment in the UK.  We believe that the strong actions taken by our customers over the last five years, particularly with regard to cost reduction, have left them more able to withstand challenges in the housing market and that a decline in customer numbers is only likely in the event of a further material downturn in the market.  So far this year the housing market has been improving and is being helped by a number of Government schemes. 

The competitive environment is largely unchanged and our market share of traffic, as measured by page impressions, has remained at over 80%.

Rightmove has been growing its property advertising revenue in challenging housing market conditions.  The continued increase in adoption of additional advertising products combined with very high customer retention rates gives comfort regarding the opportunity to capture a high proportion of any increase in property advertising spend in a recovery.

Dividend, share buybacks and balance sheetThe Board intends to pay an interim dividend of 11p (2012: 9.0p), an increase of 22%, as part of its commitment to a progressive dividend policy.  The interim dividend will be paid on 8 November 2013 to members on the register on

11 October 2013. 

1.25m shares were bought back during the period for £23.3m at an average price of £18.61. In total this period we have returned £37.4m to shareholders, through dividends and share buybacks, putting the business in a strong position to be able to return all the cash that will be generated in 2013 during the year.

Current trading and outlook

Rightmove's trading in July has been in line with that during the first half of the year and, coupled with the visibility provided by our subscription model, gives us grounds for confidence in delivering full year expectations. 

Scott Forbes                                                                                         Nick McKittrick

Chairman                                                                                              Chief Executive Officer

31 July 2013

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF YEAR REPORT 2013

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                                                                                         Nick McKittrick

Chairman                                                                                               Chief Executive Officer

31 July 2013

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2013

	Note	6 months ended 30 June 2013	6 months ended 30 June 2012	Year ended 31 December 2012
		£000	£000	£000
Revenue	3	67,172	57,881	119,365
Administrative expenses		(22,522)	(19,043)	(36,283)
Operating profit before share-based payments and NI on share-based incentives		49,014	42,560	87,533
Share-based payments	4	(1,275)	(1,256)	(2,410)
NI on share-based incentives	4	(3,089)	(2,466)	(2,041)
Operating profit		44,650	38,838	83,082
Financial income	5	83	134	240
Financial expenses	6	(92)	(88)	(129)
Net financial (expenses)/income		(9)	46	111
Profit before tax		44,641	38,884	83,193
Income tax expense	9	(10,545)	(9,574)	(20,642)
Profit for the period being total comprehensive income		34,096	29,310	62,551
Attributable to:
Equity holders of the Parent		34,096	29,310	62,551
Earnings per share (pence)
Basic	7	34.04	28.57	61.30
Diluted	7	33.15	27.58	59.24
Dividends per share (pence)	8	14.00	11.00	20.00
Total dividends	8	14,114	11,273	20,439
.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

as at 30 June 2013

	Note	30 June 2013	30 June 2012	31 December 2012
		£000	£000	£000
Non-current assets
Property, plant and equipment		1,549	1,580	1,757
Intangible assets		1,638	1,488	1,616
Trade and other receivables	10	-	1,667	1,674
Deferred tax assets	9	7,824	12,143	9,667
Total non-current assets		11,011	16,878	14,714
Current assets
Trade and other receivables	10	23,537	17,723	18,476
Cash and cash equivalents	11	6,468	14,637	7,082
Total current assets		30,005	32,360	25,558
Total assets		41,016	49,238	40,272
Current liabilities
Trade and other payables	12	(23,276)	(24,064)	(23,738)
Income tax payable		(6,573)	(9,647)	(8,892)
Total current liabilities		(29,849)	(33,711)	(32,630)
Non-current liabilities
Provisions		(146)	-	(129)
Total non-current liabilities		(146)	-	(129)
Total liabilities		(29,995)	(33,711)	(32,759)
Net assets		11,021	15,527	7,513
Equity
Share capital		1,046	1,083	1,059
Other reserves		386	349	373
Retained earnings		9,589	14,095	6,081
Total equity attributable to the equity holders of the Parent	13	11,021	15,527	7,513

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

for the six months ended 30 June 2013

	Note	6 months ended 30 June 2013	6 months ended 30 June 2012	Year ended 31 December 2012
		£000	£000	£000
Cash flows from operating activities
Profit for the period		34,096	29,310	62,551
Adjustments for:
Depreciation charges		396	391	752
Amortisation charges		213	153	327
Loss on disposal of property, plant and equipment		-	45	42
Loss on disposal of intangible assets		-	1	1
Financial income		(83)	(134)	(240)
Financial expenses		92	88	129
Share-based payments	4	1,275	1,256	2,410
Income tax expense		10,545	9,574	20,642
Operating cash flow before changes in working capital		46,534	40,684	86,614
Increase in trade and other receivables		(3,410)	(2,773)	(3,501)
(Decrease)/increase in trade and other payables		(488)	3,190	2,879
Increase in provisions		17	-	129
Cash generated from operating activities		42,653	41,101	86,121
Financial expenses paid		(92)	(88)	(129)
Income taxes paid		(8,894)	(6,008)	(14,618)
Net cash from operating activities		33,667	35,005	71,374
Cash flows from investing activities
Interest received		106	174	248
Acquisition of property, plant and equipment		(188)	(896)	(1,431)
Acquisition of intangible assets		(235)	(322)	(624)
Net cash used in investing activities		(317)	(1,044)	(1,807)
Cash flows from financing activities
Dividends paid	8	(14,114)	(11,273)	(20,439)
Purchase of own shares for cancellation	13	(23,264)	(29,961)	(66,359)
Share related expenses		(137)	(226)	(482)
Proceeds on exercise of share-based incentives		3,551	368	3,027
Net cash used in financing activities		(33,964)	(41,092)	(84,253)
Net decrease in cash and cash equivalents		(614)	(7,131)	(14,686)
Cash and cash equivalents at 1 January		7,082	21,768	21,768
Cash and cash equivalents at period end	11	6,468	14,637	7,082

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

for the six months ended 30 June 2013

	Share capital £000	EBT shares reserve £000	Treasury shares £000	Other reserves £000	Reverse acquisition reserve £000		Retained earnings £000	Total equity £000
At 1 January 2012	1,104	(10,258)	(11,917)	190	138	45,397		24,654
Total comprehensive income Profit for the period	-	-	-	-	-	29,310		29,310
Transactions with owners recorded directly in equity
Share-based payments	-	-	-	-	-	1,256		1,256
Tax credit in respect of share-based incentives recognised directly in equity	-	-	-	-	-	1,400		1,400
Dividends to shareholders	-	-	-	-	-	(11,273)		(11,273)
Exercise of share-based incentives	-	556	-	-	-	(205)		351
Cancellation of own shares	(21)	-	-	21	-	(29,961)		(29,961)
Share related expenses	-	-	-	-	-	(210)		(210)
At 30 June 2012	1,083	(9,702)	(11,917)	211	138	35,714		15,527
At 1 January 2012	1,104	(10,258)	(11,917)	190	138	45,397		24,654
Total comprehensive income
Profit for the year	-	-	-	-	-	62,551		62,551
Transactions with owners recorded directly in equity
Share-based payments	-	-	-	-	-	2,410		2,410
Tax credit in respect of share-based incentives recognised directly in equity	-	-	-	-	-	2,136		2,136
Dividends to shareholders	-	-	-	-	-	(20,439)		(20,439)
Exercise of share-based incentives	-	2,347	-	-	-	680		3,027
Cancellation of own shares	(45)	-	-	45	-	(66,359)		(66,359)
Share related expenses	-	-	-	-	-	(467)		(467)
At 31 December 2012	1,059	(7,911)	(11,917)	235	138	25,909		7,513

At 1 January 2013	1,059	(7,911)	(11,917)	235	138	25,909	7,513
Total comprehensive income Profit for the period	-	-	-	-	-	34,096	34,096
Transactions with owners recorded directly in equity
Share-based payments	-	-	-	-	-	1,275	1,275
Tax credit in respect of share-based incentives recognised directly in equity	-	-	-	-	-	2,127	2,127
Dividends to shareholders	-	-	-	-	-	(14,114)	(14,114)
Exercise of share-based incentives	-	4,550	-	-	-	(999)	3,551
Cancellation of own shares	(13)	-	-	13	-	(23,264)	(23,264)
Share related expenses	-	-	-	-	-	(163)	(163)
At 30 June 2013	1,046	(3,361)	(11,917)	248	138	24,867	11,021

NOTES

1  General information

Rightmove plc (the Company) is a Company registered in England (Company no. 6426485) domiciled in the United Kingdom (UK). The condensed consolidated interim financial statements of the Company as at and for the six months ended 30 June 2013 comprise the Company and its interest in its subsidiaries (together referred to as the Group). Its principal business is the operation of the rightmove.co.uk website which is the UK's largest property website.

The consolidated financial statements of the Group as at and for the year ended 31 December 2012 are available upon request to the Company Secretary from the Company's registered office at Turnberry House, 30 Caldecotte Lake Drive, Caldecotte, Milton Keynes, MK7 8LE or from the investor relations website at www.plc.rightmove.co.uk.

Basis of preparation

The condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting and the Disclosure and Transparency Rules of the UK's Financial Services Authority. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2012.

The condensed consolidated interim financial statements were approved by the Board of directors on 31 July 2013. The half year results for the current and comparative period are unaudited. The auditor, KPMG Audit Plc, has carried out a review of the condensed consolidated interim financial statements and their report is set out at the end of this document.

The comparative figures as at and for the year ended 31 December 2012 are extracted from the Group's statutory accounts for that financial year. Those accounts have been reported on by the auditor and delivered to the Registrar of Companies. The report of the auditor was:

(i) unqualified;

(ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and

(iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

The Group's financial risk management objectives and policies are consistent with that disclosed in the consolidated financial statements as at and for the year ended 31 December 2012.

Going concern

Throughout the period, the Group was debt free, has continued to generate significant cash and has cash balances of £6,468,000 at 30 June 2013 (2012: £14,637,000).

The Group renewed an agreement with Barclays Bank Plc for a £10,000,000 uncommitted money market loan on 6 February 2013. To date no amount has been drawn under this facility.

After making enquiries, the Board of directors has a reasonable expectation that the Group and the Company have adequate resources and banking facilities to continue in operational existence for the foreseeable future. Accordingly the Board of directors continues to adopt the going concern basis in preparing these condensed consolidated interim financial statements.

2  Significant accounting policies

The accounting policies applied by the Group in these condensed consolidated interim financial statements are in accordance with International Financial Reporting Standards as adopted by the European Union (Adopted IFRSs) and are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2012.

There are no new standards or amendments to standards that are mandatory for the first time for the financial year beginning 1 January 2013 that have an impact on the Group financial statements.

The same accounting policies are anticipated to be applied for the year ending 31 December 2013.

Judgements and estimates

The preparation of the condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in future periods if applicable.

In particular information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:

Note 4                     Measurement of share-based payments relating to the inputs to the fair value models and the estimate of the number of shares that will eventually be issued

Note 9     Deferred tax assets relating to the rate at which the asset will reverse and the recoverability of the asset

3  Operating segments

The Group determines and presents operating segments based on the information that is provided to the Chief Executive Officer, who is the Group's Chief Operating Decision Maker.

The Group's reportable segments are as follows:

·      The Agency segment which provides resale and lettings property advertising services on www.rightmove.co.uk; and

·      The New Homes segment which provides property advertising services to new home developers and housing associations on www.rightmove.co.uk.

The Other segment which represents activities under the reportable segments threshold, comprises overseas and commercial property advertising services on www.rightmove.co.uk and non-property advertising services which include business and information services and Automated Valuation Model services.

Management monitors the business segments at a revenue and trade receivables level separately for the purpose of making decisions about resources to be allocated and of assessing performance. All revenues in all periods are derived from third parties and there are no inter-segment revenues.

Operating costs, financial income, financial expenses and income taxes in relation to the Agency, New Homes and the Other segment are managed on a centralised basis at a Rightmove Group Limited level and as there are no internal measures of individual segment profitability, relevant disclosures have been shown under the heading of Central in the table overleaf. 

Operating segments	Agency £000	New Homes £000	Sub total £000	Other £000	Central £000	Adjustments £000	Total £000
Six months ended 30 June 2013
Revenue	51,369	12,018	63,387	3,785	-	-	67,172
Operating profit(1)	-	-	-	-	49,014	(4,364) (2)	44,650
Depreciation and amortisation	-	-	-	-	(609)	-	(609)
Financial income	-	-	-	-	83	-	83
Financial expenses	-	-	-	-	(92)	-	(92)
Trade receivables(3)	13,071	5,244	18,315	1,151	-	46 (4)	19,512
Other segment assets	-	-	-	-	21,493	11 (5)	21,504
Segment liabilities	-	-	-	-	(29,938)	(57) (4)(5)	(29,995)
Capital expenditure(6)	-	-	-	-	423	-	423

Six months ended 30 June 2012
Revenue	45,075	9,830	54,905	2,976	-	-	57,881
Operating profit(1)	-	-	-	-	42,560	(3,722) (7)	38,838
Depreciation and amortisation	-	-	-	-	(544)	-	(544)
Financial income	-	-	-	-	134	-	134
Financial expenses	-	-	-	-	(88)	-	(88)
Trade receivables(3)	10,398	3,618	14,016	968	-	56 (4)	15,040
Other segment assets	-	-	-	-	34,198	- (5)	34,198
Segment liabilities	-	-	-	-	(33,655)	(56) (4)(5)	(33,711)
Capital expenditure(6)	-	-	-	-	1,218	-	1,218

Year ended 31 December 2012
Revenue	92,387	20,599	112,986	6,379	-	-	119,365
Operating profit(1)	-	-	-	-	87,533	(4,451)  (8)	83,082
Depreciation and amortisation	-	-	-	-	(1,079)	-	(1,079)
Financial income	-	-	-	-	240	-	240
Financial expenses	-	-	-	-	(129)	-	(129)
Trade receivables(3)	10,693	4,003	14,696	1,290	-	51 (4)	16,037
Other segment assets	-	-	-	-	24,219	16 (5)	24,235
Segment liabilities	-	-	-	-	(32,692)	(67) (4)(5)	(32,759)
Capital expenditure(6)	-	-	-	-	2,055	-	2,055

(1) Operating profit is stated after the charge for depreciation and amortisation.

(2) Operating profit for the six months ended 30 June 2013 does not include share-based payments charge (£1,275,000) and National Insurance (NI) on share-based incentives (£3,089,000).

(3) The only segment assets that are separately monitored by the Chief Operating Decision Maker relate to trade receivables net of any associated provision for impairment. All other segment assets are reported on a centralised basis.

(4) The adjustments column reflects the reclassification of credit balances in accounts receivable made on consolidation for statutory accounts purposes.

(5) The adjustments column reflects the reclassification of debit balances in accounts payable made on consolidation for statutory accounts purposes.

(6) Capital expenditure consists of additions of property, plant and equipment and intangible assets (excluding goodwill).

(7) Operating profit for the six months ended 30 June 2012 does not include share-based payments charge (£1,256,000) and Employer's NI on share-based incentives (£2,466,000).

(8) Operating profit for the year ended 31 December 2012 does not include share-based payments charge (£2,410,000) and NI on share-based incentives (£2,041,000).

4  Share-based payments

The Group operates share-based incentive schemes for executive directors and other selected senior management employees. Since flotation, the Company has awarded share options under the Rightmove Unapproved Executive Share Option Plan (Unapproved Plan) and the Rightmove Approved Executive Share Option Plan (Approved Plan). The Group also operates a Savings Related Share Option Scheme (Sharesave Plan) and in May 2011 the Rightmove Performance Share Plan (PSP) was introduced.

All share-based incentives are subject to a service condition. Such conditions are not taken into account in the fair value of the service received. The fair value of services received in return for share-based incentives is measured by reference to the fair value of share-based incentives granted. The estimate of the fair value of the share-based incentives granted is measured using either the Monte Carlo or Black Scholes pricing model as is most appropriate for each scheme.

During 2013 the Group amended the rules of the Unapproved Plan to enable such awards to be net settled whereby the number of shares released by the EBT and sold to satisfy the award is equivalent to the gain due to the option holder. Consequently no proceeds are received by the EBT on exercise of unapproved share options.

The total share-based payments charge for the six months ended 30 June 2013 relating to all share-based incentive plans was £1,275,000 (2012: £1,256,000).

NI is being accrued, where applicable, at a rate of 13.8%, which management expects to be the prevailing rate when the awards are exercised, based on the share price at the reporting date. The total NI charge for the six months ended 30 June 2013 relating to all awards was £3,089,000 (2012: £2,466,000).

Approved and Unapproved Plans

There has been no award of share options since 5 March 2010.

Unapproved executive share option awards granted on 5 March 2010, at an exercise price of £6.66, vested in full on 5 March 2013. They were subject to an equal measure of Total Shareholder Return (TSR) relevant to the constituents of the FTSE 250 and growth in earnings per share (EPS) over a three-year performance period.

Performance Share Plan (PSP)

The PSP permits awards of nil cost options or contingent shares which will only vest in the event of prior satisfaction of a performance condition.

119,065 PSP awards were made on 8 March 2013 (the Grant date) subject to EPS and TSR performance. Performance will be measured over three financial years (1 January 2013 - 31 December 2015). The vesting in March 2016 (Vesting date) of 25% of the 2013 PSP award will be dependent on a relative TSR performance condition measured over a three-year performance period and the vesting of the 75% of the 2013 PSP award will be dependent on the satisfaction of an EPS growth target measured over a three-year performance period. PSP award holders are entitled to receive dividends accruing between the Grant date and the Vesting date and this value will be delivered in shares.

Deferred share bonus plan (DSP)

In March 2009 a DSP was established which allows executive directors and other selected senior management the opportunity to earn a bonus determined as a percentage of base salary settled in deferred shares. The award of shares under the plan is contingent on the satisfaction of pre-set internal targets relating to underlying drivers of long-term revenue growth (the Performance period). The right to the shares is deferred for two years from the date of the award (the Vesting period) and potentially forfeitable during that period should the employee leave employment. The deferred share awards have been valued using the Black-Scholes model and the resulting share based payments charge is being spread evenly over the combined Performance period and Vesting period of the shares, being three years.

Following the achievement of the 2012 internal performance targets, 63,331 nil cost deferred shares were awarded to executives and senior management on 8 March 2013 with the right to the release of the shares deferred until March 2015.

5  Financial income

	6 months ended 30 June 2013 £000	6 months ended 30 June 2012 £000	Year ended 31 December 2012 £000
Interest income on cash balances	80	134	233
Interest income on amounts held in Escrow	3	-	7
	83	134	240

6  Financial expenses

	6 months ended 30 June 2013 £000	6 months ended 30 June 2012 £000	Year ended 31 December 2012 £000
Other financial expenses	92	88	129

7  Earnings per share (EPS)

	Weighted average number of ordinary shares	Total earnings £000	Pence per share
Six months ended 30 June 2013
Basic EPS	100,159,039	34,096	34.04
Diluted EPS	102,855,415	34,096	33.15
Underlying basic EPS	100,159,039	38,460	38.40
Underlying diluted EPS	102,855,415	38,460	37.39
Six months ended 30 June 2012
Basic EPS	102,602,673	29,310	28.57
Diluted EPS	106,265,825	29,310	27.58
Underlying basic EPS	102,602,673	33,032	32.19
Underlying diluted EPS	106,265,825	33,032	31.08
Year ended 31 December 2012
Basic EPS	102,036,054	62,551	61.30
Diluted EPS	105,587,648	62,551	59.24
Underlying basic EPS	102,036,054	67,002	65.67
Underlying diluted EPS	105,587,648	67,002	63.46

Weighted average number of ordinary shares (basic)

	6 months ended 30 June 2013 Number of shares	6 months ended 30 June 2012 Number of shares	Year ended 31 December 2012 Number of shares
Issued ordinary shares at 1 January less ordinary shares held by the EBT	102,492,086	105,882,853	105,882,853
Effect of own shares held in treasury	(2,505,430)	(2,505,430)	(2,505,430)
Effect of own shares purchased for cancellation	(525,846)	(893,639)	(1,846,076)
Effect of share-based incentives exercised	698,229	118,889	504,707
	100,159,039	102,602,673	102,036,054

Weighted average number of ordinary shares (diluted)

For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially dilutive shares. The Group's potential dilutive instruments are in respect of share-based incentives granted to employees, which will be settled by ordinary shares held by the EBT and shares held in treasury.

	6 months ended 30 June 2013 Number of shares	6 months ended 30 June 2012 Number of shares	Year ended 31 December 2012 Number of shares
Weighted average number of ordinary shares (basic)	100,159,039	102,602,673	102,036,054
Dilutive impact of share-based incentives outstanding	2,696,376	3,663,152	3,551,594
	102,855,415	106,265,825	105,587,648

Underlying EPS is calculated before the charge for share-based payments and NI on share-based incentives but without any adjustment to the tax charge in respect of these items. A reconciliation of the basic earnings for the period to the underlying earnings is presented below:

	6 months ended 30 June 2013 £000	6 months ended 30 June 2012 £000	Year ended 31 December 2012 £000
Basic earnings for the period	34,096	29,310	62,551
Share-based payments	1,275	1,256	2,410
NI on share-based incentives	3,089	2,466	2,041
Underlying earnings for the period	38,460	33,032	67,002

8  Dividends

Company dividends

Dividends declared and paid by the Company were as follows:

	6 months ended 30 June 2013		6 months ended 30 June 2012				Year ended 31 December 2012
	Pence per share	£000		Pence per share	£000	Pence per share		£000
2011 final dividend paid	-	-		11.0	11,273	11.0		11,273
2012 interim dividend paid	-	-		-	-	9.0		9,166
2012 final dividend paid	14.0	14,114		-	-	-		-
	14.0	14,114		11.0	11,273	20.0		20,439

After the period end an interim dividend of 11.0p (2012: 9.0p) per qualifying ordinary share being £11,103,000 (2012: £9,136,000) was proposed by the Board of directors.

The 2012 final dividend paid on 7 June 2013 was £14,114,000 (31 December 2012: £11,273,000) being a difference of £133,000 compared to that reported in the 2012 Annual Report which was due to an increase in the ordinary shares entitled to a dividend between 31 December 2012 and the final dividend record date of 10 May 2013.

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.

9  Taxation

The income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year applied to the profit before tax for the interim period. The Group's consolidated effective tax rate for the six months ended 30 June 2013 was 23.6% (2012: 24.6%). The difference between the standard rate and the effective rate at 30 June 2013 is attributable to the reduction in the rate at which deferred tax is recognised and disallowable expenditure.

The net deferred tax asset of £7,824,000 at 30 June 2013 (2012: £12,143,000) is in respect of equity settled share-based incentives and depreciation in excess of capital allowances. The deferred tax asset arising on equity settled share-based incentives was recognised in profit or loss to the extent that the related equity settled share-based payments charge was recognised in the statement of comprehensive income.

10  Trade and other receivables

	30 June 2013	30 June 2012	31 December 2012
	£000	£000	£000
Trade receivables	19,926	15,435	16,484
Less provision for impairment of trade receivables	(414)	(395)	(447)
Net trade receivables	19,512	15,040	16,037
Amounts held in Escrow	1,677	1,667	1,674
Prepayments and accrued income	2,290	2,619	2,325
Interest receivable	27	18	50
Other debtors	31	46	64
	23,537	19,390	20,150
Non-current	-	1,667	1,674
Current	23,537	17,723	18,476
	23,537	19,390	20,150

Amounts held in Escrow relate to the completion proceeds and contingent consideration on the sale on 21 June 2010 of the Group's 66.7% shareholding in Holiday Lettings Holdings Limited (HLHL), which owned 100% of the shares in the trading entity Holiday Lettings Limited (HLL).

Under the term of sale agreement the amounts held in Escrow earn interest at Barclays Bank Plc's current interest rate and become available on the fourth anniversary of the completion date of the transaction and have accordingly been reclassified from non-current to current in the period. No discount has been applied as the account is interest bearing.

11  Cash and cash equivalents

	30 June 2013	30 June 2012	31 December 2012
	£000	£000	£000
Bank accounts	6,468	14,637	7,082

Cash balances attracted interest at a weighted average rate of 0.7% (2012: 0.7%).

12  Trade and other payables

	30 June 2013	30 June 2012	31 December 2012
	£000	£000	£000
Trade payables	961	671	1,220
Trade accruals	5,644	9,476	7,694
Other creditors	207	162	146
Other taxation and social security	5,123	4,417	4,770
Deferred revenue	11,341	9,338	9,908
	23,276	24,064	23,738

13  Reconciliation of movement in capital and reserves

	Share capital £000	EBT shares reserve £000	Treasury shares £000	Other reserves £000	Reverse acquisition reserve £000	Retained earnings £000	Total equity £000
At 1 January 2012	1,104	(10,258)	(11,917)	190	138	45,397	24,654
Total comprehensive income Profit for the period	-	-	-	-	-	29,310	29,310
Share-based payments	-	-	-	-	-	1,256	1,256
Tax credit in respect of share-based incentives recognised directly in equity	-	-	-	-	-	1,400	1,400
Dividends to shareholders	-	-	-	-	-	(11,273)	(11,273)
Exercise of share-based incentives	-	556	-	-	-	(205)	351
Cancellation of own shares	(21)	-	-	21	-	(29,961)	(29,961)
Share related expenses	-	-	-	-	-	(210)	(210)
At 30 June 2012	1,083	(9,702)	(11,917)	211	138	35,714	15,527
At 1 January 2012	1,104	(10,258)	(11,917)	190	138	45,397	24,654
Total comprehensive income
Profit for the year	-	-	-	-	-	62,551	62,551
Share-based payments	-	-	-	-	-	2,410	2,410
Tax credit in respect of share-based incentives recognised directly in equity	-	-	-	-	-	2,136	2,136
Dividends to shareholders	-	-	-	-	-	(20,439)	(20,439)
Exercise of share-based incentives	-	2,347	-	-	-	680	3,027
Cancellation of own shares	(45)	-	-	45	-	(66,359)	(66,359)
Share related expenses	-	-	-	-	-	(467)	(467)
At 31 December 2012	1,059	(7,911)	(11,917)	235	138	25,909	7,513

At 1 January 2013	1,059	(7,911)	(11,917)	235	138	25,909	7,513
Total comprehensive income Profit for the period	-	-	-	-	-	34,096	34,096
Share-based payments	-	-	-	-	-	1,275	1,275
Tax credit in respect of share-based incentives recognised directly in equity	-	-	-	-	-	2,127	2,127
Dividends to shareholders	-	-	-	-	-	(14,114)	(14,114)
Exercise of share-based incentives	-	4,550	-	-	-	(999)	3,551
Cancellation of own shares	(13)	-	-	13	-	(23,264)	(23,264)
Share related expenses	-	-	-	-	-	(163)	(163)
At 30 June 2013	1,046	(3,361)	(11,917)	248	138	24,867	11,021

Share buy back

In June 2007, the Company commenced a share buy back programme to purchase its own ordinary shares. The total number of shares bought back in the six months to 30 June 2013 was 1,250,203 (2012: 2,124,948 shares) representing 1.2% (2012: 2.0%) of the ordinary shares in issue (excluding shares held in treasury). All the shares bought back in the period were cancelled and no shares were transferred to treasury. The shares were acquired on the open market at a total consideration (excluding costs) of £23,264,000 (2012: £29,961,000). The maximum and minimum prices paid were £21.00 (2012: £14.99) and £14.49 (2012: £12.65) per share respectively.

EBT shares reserve

This reserve represents the carrying value of own shares held by the EBT. During the period the EBT purchased no shares. 2,442,073 share-based incentives were exercised in the period (2012: 259,351) at an average price of £3.35 (2012: £1.35) per ordinary share, which were satisfied by shares held in the EBT. At 30 June 2013 the EBT held 1,200,450 (2012: 4,268,432) ordinary shares of £0.01 each in the Company representing 1.2% (2012: 4.0%) of the shares in issue (excluding shares held in treasury). The market value of the shares held in the EBT at the period end was £25,017,000 (2012: £67,953,000).

	6 months ended 30 June 2013 Number of shares	6 months ended 30 June 2012 Number of shares	Year ended 31 December 2012 Number of shares
Shares held in EBT at 1 January	3,404,029	4,527,783	4,527,783
Share-based incentives exercised in period	(2,442,073)	(259,351)	(1,123,754)
Reduction in shares released from EBT due to net settlement (refer Note 4)	238,494	-	-
Shares held in EBT at period end	1,200,450	4,268,432	3,404,029

Other reserves

The movement on other reserves of £13,000 (2012: £21,000) comprises the nominal value of ordinary shares cancelled during the period.

Retained earnings

The (loss)/gain on exercise of share-based incentives is the difference between the value that the shares held by the EBT were originally acquired at and the price at which share-based incentives were exercised during the year.

14  Related parties

Inter-group transactions with subsidiaries

During the period Rightmove plc was charged interest of £142,000 (2012: £284,000) by Rightmove Group Limited in respect of balances owing under the inter-group loan agreement dated 30 January 2008. As at 30 June 2013 the balance owing under this agreement was £54,576,000 (2012: £50,587,000) including capitalised interest of £142,000 (2012: £284,000).

No dividends have been declared by Rightmove Group Limited during 2013. On 21 March 2012 Rightmove Group Limited declared an interim dividend of 61.8p per ordinary share to the Company. The dividend of £79,969,000 was settled via a reduction in the inter-group loan balance.

Transactions with key management staff

There were no transactions with key management staff in any period.

Independent review report to Rightmove plc

Introduction

We have been engaged by the Company to review the condensed consolidated interim financial statements in the half year report for the six months ended 30 June 2013 which comprises the condensed consolidated interim statement of comprehensive income, the condensed consolidated interim statement of financial position, the condensed consolidated interim statement of cash flows, the condensed consolidated interim statement of changes in shareholders' equity and the related explanatory notes. We have read the other information contained in the half year report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial statements.

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules (the DTR) of the UK's Financial Services Authority (the UK FSA). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half year report is the responsibility of, and has been approved by, the Board of directors. The Board of directors are responsible for preparing the half year report in accordance with the DTR of the UK FSA. 

As disclosed in Note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed consolidated interim financial statements included in this half year report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. 

Our responsibility Our responsibility is to express to the Company a conclusion on the condensed consolidated interim financial statements in the half year report based on our review. 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements in the half year report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

Karen Wightman

for and on behalf of KPMG Audit Plc

Chartered Accountants

Milton Keynes

31 July 2013

ADVISERS AND SHAREHOLDER INFORMATION

Contacts		Registered office	Corporate advisers
Chief Executive Officer:	Nick McKittrick	Rightmove plc	Financial adviser
Chief Operating Officer: Finance Director and Company	Peter Brooks-Johnson	Turnberry House 30 Caldecotte Lake Drive	UBS Investment Bank
Secretary:	Robyn Perriss	Caldecotte	Joint brokers
		Milton Keynes	UBS Limited
		MK7 8LE	Numis Securities Limited
		Registered in England no. 6426485
Financial calendar 2013			Auditor
Half year results	31 July 2013		KPMG Audit Plc
Interim dividend record date	11 October 2013		Bankers
Interim Management Statement	7 November 2013		Barclays Bank Plc
Interim dividend payment	8 November 2013		HSBC Bank Plc
Full year results	28 February 2014		Santander UK plc
			Solicitors
			Slaughter and May
			Pinsent Masons
			Registrar
			Capita Registrars*

*Shareholder enquiries

The Company's registrar is Capita Registrars. They will be pleased to deal with any questions regarding your shareholding or dividends. Please notify them of your change of address or other personal information. Their address details are:

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The Registry

34 Beckenham Road

Beckenham

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BR3 4TU

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Capita shareholder helpline: 0871 664 0300 (calls cost 10p per minute plus network extras) (Overseas: +44 20 8639 3399)

Email: ssd@capitaregistrars.com

Share portal: www.capitashareportal.com

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