TIDMRMV
RNS Number : 4289V
Rightmove Plc
07 August 2020
Embargoed until 07.00 on 7 August 2020
Half year results for the six months ended 30 June 2020
Rightmove plc, the UK's largest property portal, today announces
its unaudited results for the 6 months ended
30 June 2020.
Financial Highlights
H1 2020 H1 2019 Change
------------------------------------------- --------------- ---------- -------
Revenue GBP94.8m GBP143.9m -34%
Operating profit GBP61.7m GBP108.2m -43%
Interim dividend - 2.8p -100%
Basic earnings per share 5.7p 9.9p -42%
Average revenue per advertiser (ARPA) (1) GBP712 GBP1,077 -34%
-- Revenue down 34% year on year reflecting the impact of the
75% discount support offered to our customers for the period April
to June 2020
-- Cash at the end of the period of GBP50.3m (31 December 2019: cash and deposits GBP36.3m)
-- Average revenue per advertiser (ARPA) down by 34% on the same
period a year ago to GBP712 (1) per month (2019: GBP1,077)
Operational highlights
-- Membership numbers down 3.3% since the start of the year to
19,158 (31 December 2019: 19,809) reflecting a 3.5% decline in
Agency branches, together with a 2.1% fall in New Homes
developments. Branch based agents resilient with a decline of 300
(2%) since the start of the year. Q2 saw a decelerating trend in
branch closures with Agency branches and New Homes developments
being net positive in June
-- Rightmove's position as the place home hunters turn to first
remains strong with market share of time on site at 88% (3)
-- Rightmove is the only place to find virtually the whole of
the property market in one place with over 940,000 UK residential
properties advertised on Rightmove. The listings lead over any
other UK website has widened to over 50%
-- Continued traffic growth with visits up 5% year on year
helped by a stronger than expected increase since the reopening of
the property market in England in May with time on site and visits
in June up over 50% year on year. Time on site averaging 1.1
billion (2) minutes per month over the period (2019: 1.1
billion)
-- Reaffirmation of the value of premium packages. Despite
market uncertainty the proportion of customers taking either the
Enhanced or Optimiser packages grew to 39% (December 2019: 38%),
with 400 premium Optimiser 2020 packages sold in 2020, including
nearly 100 during lockdown
-- Pace of product development accelerated despite lockdown with
300 software releases, 10% more than a year ago
Current trading and O utlook
Home hunter demand has been strong since our customers started
re-opening their businesses from 13 May, supported by changes in
consumer needs and the recent announcement of temporary stamp duty
holidays across the UK. Since 13 May we have recorded 65 days
beating Rightmove's previous traffic record set on 19 February
2020. Between 1 June and 31 July demand for sales properties has
been 50% higher than the same period in 2019 with rental demand
being over 20% higher.
The positive metrics in June and July allied to the stamp duty
holidays give grounds for cautious optimism that housing
transaction levels will increase from the low point in Q2.
Rightmove data suggests that the significant increase in activity
is being driven not only from the pent up demand from the period of
lock down, but an increased number of home hunters who have decided
to move following the experience of lock down. However, it is too
early to assess whether the strength of this positive momentum in
the housing market will be maintained against the threat of further
lock downs and wider economic slowdown.
The strong demand has led to positive trading momentum since the
beginning of June. The number of branch based Estate Agency
branches increased in both June and July and the number of products
sold to Estate Agents were 7% higher in July 2020 than July
2019.
Rightmove is uniquely placed to benefit from the return to a
more normal property market. The strong traffic post the easing of
the lockdown and the resilience in product and package adoption
through the pandemic illustrate the strength of our network and the
value our customers see in our products.
Rightmove's subscription advertising model, together with the
strength of our proposition for both customers and consumers now
and in the future, supports the Board's continued confidence in the
long term prospects for the business.
Given these prospects we confirm our commitment to our long
established policy of returning all free cash flow to shareholders
through a mix of dividends and share buy backs as soon as
prudent.
Peter Brooks-Johnson, Chief Executive Officer , said:
"In recent months Covid-19 has disrupted the lives of everyone
across the UK. Our customers have shown incredible resilience and
ingenuity to continue to trade through this exceptional period. I
am grateful for both their continued support and also their
proactive engagement to ensure that home hunters have been well
informed and protected. I'm also immensely proud of the Rightmove
team for the unerring dedication which has seen Rightmove operate
seamlessly throughout this challenging period and offer
unprecedented support to the industry through discounts and
accelerated innovation.
Following the reopening of the housing market on 13 May housing
market activity is at record levels, with evidence of new home
hunters coming into the market with changing needs as they reassess
their priorities and further incentivised by the temporary stamp
duty holiday. Rightmove has extended its lead as the place home
hunters turn to first for their move. It's quite incredible that 65
of our record days have been since 13 May. I'm pleased that our
customers are choosing to invest in our digital solutions to take
advantage of this record demand.
Despite the current strong market we're mindful that potential
economic challenges and further Covid restrictions in the second
half of the year make it hard to predict how sustained the increase
in activity will be.
Rightmove's purpose is to make home moving easier in the UK and
the restrictions placed on our daily lives because of Covid have
shown the value of the innovations we are delivering to better
enable this."
Half Year Statement
Our response to Covid-19
During the pandemic our priorities have been to: protect our
people; support our customers; protect our liquidity and continue
to make progress against our long-term strategic goals of making
home moving easier in the UK by helping consumers to be transaction
ready. Much to the credit of our people, we have continued to
operate all aspects of our business without interruption and
believe we are well placed for the future.
Looking after our people
On 17 March 2020 our employees seamlessly transitioned to
working remotely which is a testament to the flexibility and
professionalism of the Rightmove team.
Full time working from home brings with it new health and
well-being challenges, augmented for many with the additional
pressure of home schooling children or caring for relatives. We
have supported our people, including those on furlough, through a
series of Covid-19 tailored webinars on topics such as home
schooling and mental well-being and additional practical support
for those working such as an extra ten days' paid leave for those
with caring responsibilities. We have also focussed on keeping the
connections between teams that are such a key part of the Rightmove
culture through regular business updates, including Company-wide
'Town Hall' webinars on a weekly basis.
Whilst our customers closed their offices many continued to work
remotely through the lockdown period. Our customer facing teams
were on hand to support them wherever possible, and during the
period that the housing market was effectively closed (23 March to
13 May), the team made over 50,000 customer contacts to both answer
questions and proactively offer support. The Rightmove product and
technology team continued to deliver innovation, focused on both
the short term needs of our customers, but also pursuing our longer
term strategic development goals. In addition, during the lockdown
period the team delivered nearly 300 software releases, 10% more
than a year ago.
The Board would like to express its thanks for the unerring
dedication of our employees and the support they have shown to each
other and to our customers during this challenging time.
Supporting our customers
The Government measures taken to contain the spread of Covid-19
have had an unprecedented impact on the UK property market, which
was effectively closed from 23 March until 13 May in England, 22
June in Wales and 29 June in Scotland. In the face of this closure,
we took action to assist our customers, with a 75% discount for
Agency and New Homes customers for April to July, as well as
selective support across our other business units. Given that it
takes an average of three months for housing transactions to
complete, which impacts the cash flows of our agent customers and
that it will also take time for agents to build a pipeline of
vendors and new sales instructions, we are continuing to support
agents in England with a 60% discount in August and a 40% discount
in September. Agents in Scotland and Wales will receive a 75%
discount in August and a 60% discount in September.
Beyond financial support, we have continued to provide advice
and deliver innovative new tools to help the property market
function whilst adhering to the social distancing guidelines and
minimising unnecessary travel. Practical support includes a new
tool which enables customers to securely deliver online viewing
videos to home hunters in line with government advice. The
integrated tool also offers usage reporting and functionality to
make the process of responding to home hunter enquiries quicker and
more efficient for agents; bespoke local market data to help agents
target resources most efficiently and also to use with home buyers
and sellers; consumer webinars and an accompanying consumer advice
hub. Our weekly consumer email update is read by an average of
800,000 home hunters every week; and a series of 54 Covid-19
related webinars for agents have been attended by over 34,000
property professionals from over 5,200 branches.
Our customers have shown incredible resilience and ingenuity. We
are grateful for both their continued support and also their
proactive engagement to ensure that home hunters have been well
informed over this period.
Protecting our liquidity
We took action to protect our liquidity through the decision to
cancel the previously announced 2019 final dividend, and the
suspension of our share buyback programme from 14 March. We also
confirmed our eligibility to access the Government's Covid
Corporate Financing Facility (CCFF), and extended the Group's
committed revolving loan facility with Barclays Bank plc for 12
months, although no CCFF has been issued and no amounts drawn under
the loan facility.
To conserve cash and reduce operating costs during the period,
from 6 April around one third of the organisation was placed on
furlough, predominantly those in customer facing roles, reflecting
the reduced activity in the housing market. In recognition of the
impact of Covid-19 on our stakeholders, the entire Board and the
Group's Senior Leadership Team took a voluntary 20% reduction in
salary with effect from 1 April to 31 July. We have also deferred
GBP12m of VAT payments, which must be made before 31 March
2021.
With the reopening of the property market, we had returned all
employees from furlough by the end of 31 July 2020. 'Doing the
right thing' is central to the Rightmove culture and as the
immediate uncertainty of the crisis passes and given our resilience
in the year to date we intend to repay the grant from the
Coronavirus Job Retention Scheme (CJRS) and we will not be taking
the furlough bonus in January next year. We believe that repaying
the CJRS grant of GBP0.7m supports both our brand and our
responsibilities to the wider community.
Strategic highlights
Continued strategic innovation
In addition to the rapid response to the pandemic our focus on
strategic innovation has continued through the period, with the
importance of making the property marketplace more efficient for
home hunters and agents throughout the home moving journey
highlighted by the Covid-19 restrictions.
In the first half of 2020 we delivered functionality which
further increases the appeal of Rightmove to home hunters and will
also support future revenue growth as we help consumers become more
transaction ready, including mortgage tools and insight and an
enhanced version of the property details page
To enhance our reputation as the UK's favourite property
research resource a new version of the sold price search launched
in April. The new design responds more quickly, delivers a more
flexible experience and contributed to an increase in traffic of
over 20% to these pages together with an increase in valuation
leads sent to our customers via the Local Valuation Alert
product.
A new version of the property details page was rolled out to
Overseas properties and entered beta testing for rental properties
at the end of July. The new design provides a rich, highly visual
experience for home hunters increasing image size by 50% and fully
integrates video content on the page. The new page increased home
hunter engagement by 40%.
The alpha testing of integrated appointment booking
functionality for tenants completed in March. Building on the
knowledge gained as part of the Van Mildert acquisition the next
version of the appointment booking functionality will begin beta
testing in August and will include the next iteration of the
Rightmove Tenant Passport. The appointment booking functionality
will allow home hunters to request an appointment electronically
whilst enhancing the lead information with the passport details to
allow agents to prioritise tenants most likely to pass a reference.
Once a viewing is confirmed, tenants will receive automated
reminders to help avoid missed appointments and unnecessary
journeys for agents. Following the viewing, feedback is
automatically gathered from the tenant saving the agent time and
offering the home hunter the chance to express their interest in
progressing towards tenancy. From the autumn, Agents will be able
to seamlessly order a reference from Van Mildert without the need
to re-enter applicant details.
Continuing our exploratory partnership with the Nationwide
Building Society a number of enhancements have been made to the
design and location of Rightmove mortgage calculator tools which
has more than doubled home hunter engagement and provided valuable
insight that will underpin our future plans.
The place home hunters turn to first
Rightmove brings together the UK's largest and most engaged
property audience and the largest inventory of properties in one
place.
Rightmove is the place that home hunters turn to first and
engage with most when searching, researching and moving home with
the market share of time spent in June at 88%. Our lead in
available properties for sale has widened with over 50% more
properties than any other website in the UK.
During lockdown, home hunters reduced their activity. Visits in
April 2020 were around 60% of those recorded in April 2019, however
the recovery in traffic has been particularly strong since 13 May.
June 2020 saw a record 230m visits, over 60% higher than June 2019,
helping visits for the last six months reach a new record level, 5%
higher than a year ago. The amount of time spent by home hunters
has also been encouraging with over 1.5 billion minutes in June, up
over 50% year on year. Time on site for the period averaged 1.1
billion minutes per month, unchanged from the prior period.
Being synonymous with home hunting in the UK allows us to
provide the most significant and effective exposure for our
customers' brands and properties. Telephone and email leads in June
were 5.7 million, up 57% year on year, and despite the hiatus
during April and May leads for the period were up 3% year on
year.
The increased home hunter engagement and our continuous product
development increases the value of both our advertising and lead
generation products. Leads from our Local Valuation Alert product
which introduces agents to potential sellers were up over 20% in
the second quarter compared with 2019.
Financial performance
Revenue
Revenue was impacted by the support we provided to our customers
in the face of the significantly reduced property market activity
as a result of Covid-19. We provided a 75% discount to our Agency
and New Homes customers and selected discounts across our other
business units between April and June, with a revenue impact in the
period of GBP50.5m. As a result, revenue declined by 34% year on
year to GBP94.8m (2019: GBP143.9m). We expect that the further
discounts we have provided to our customers in the second half will
have a revenue impact of GBP35m-GBP37m.
H1 2020 H1 2019 Change
GBPm GBPm
--------------- ----------------- -------- -------
Agency 66.6 104.8 -36%
New Homes 17.3 27.8 -38%
Other 10.9 11.3 -4%
--------------- ----------------- -------- -------
Total revenue 94.8 143.9 -34%
--------------- ----------------- -------- -------
30 June 2020 31 December 2019 Change
------------------------ ---------------------- ----------------- -------
Agency branches 15,767 16,347 -3.5%
New Homes developments 3,391 3,462 -2.1%
Total membership 19,158 19,809 -3.3%
------------------------ ---------------------- ----------------- -------
Agency revenue decreased by GBP38.2m year on year to GBP66.6m,
with the financial impact of the 75% discount offsetting the
revenue growth in the first quarter. Encouragingly, the majority of
Agency customers maintained their product and package adoption
throughout the period, and product spend increased in June
following the reopening of the property market. Agency ARPA fell by
GBP338 to GBP685(4) (2019: GBP1,023) per branch per month as a
result of the discount provided. Agency customer numbers declined
by 580 branches, of which 280 related to a reduction in branch
equivalents, being virtual branches based on average property stock
levels, and typically applying to hybrid agencies. Over 90% of our
agents are branch based agents who have been resilient over the
period. The number of branch based agency members fell by 300
branches, 2% of the total, due primarily to the loss of lower stock
and less established agents, who were particularly sensitive to the
cash flow impacts of Covid-19.
New Homes revenue declined by GBP10.5m year on year to GBP17.3m,
also largely driven by the impact of the 75% discount throughout
the second quarter. Whilst some developers reduced discretionary
spend on our suite of digital advertising products in order to
conserve cash flow as property market activity reduced, we have
seen a strong return of product spend in May and June as developers
resumed site construction and sales and marketing activities. New
Homes ARPA fell by GBP510 to GBP836 (5) (2019:GBP1,346) per
development per month. The majority of our New Homes customers
maintained their presence on Rightmove throughout lockdown, with
robust development numbers in the first half of 2020, down only
2.1% since December 2019.
Other revenue, which includes Overseas, Data Services,
Commercial and Third Party advertising services, declined by 4% in
the first half of 2020 to GBP10.9m. We supported our Commercial and
Overseas customers with discounts of 75% and 50% respectively
throughout Q2, and this was partially offset by growth in our Third
Party advertising revenues of GBP1.6m year on year, principally due
to our mortgage sponsorship agreement with Nationwide, which
commenced in September 2019.
Operating profit
H1 2020 H1 2019 Change
GBPm GBPm
------------------ ----------------- -------- -------
Revenue 94.8 143.9 -34%
Operating costs (33.1) (35.7) -7%
------------------ ----------------- -------- -------
Operating profit 61.7 108.2 -43%
------------------ ----------------- -------- -------
Operating profit declined by 43% to GBP61.7m (2019: GBP108.2m)
and operating margin was 65.1% (2019: 75.2%). Operating costs
decreased by GBP2.6m to GBP33.1m (2019: GBP35.7m) reflecting the
following mitigating measures to reduce operating costs and to
preserve cash from April 2020:
-- Board and Senior Leadership Team remuneration : In
recognition of the impact of Covid-19 on our stakeholders, the
entire Board and the Group's Senior Leadership Team took a
voluntary 20% reduction in salary with effect from 1 April 2020 to
31 July 2020.
-- Furlough : From 6 April 2020 the Group furloughed around a
third of its employees, predominantly in customer facing roles,
under the Coronavirus Job Retention Scheme. All employees were
brought back from furlough by the end of July 2020. Given the
resumption of housing market activity and our performance in the
year to date, we have decided to repay the cash received under the
furlough scheme of GBP0.7m by December 2020.
-- Marketing spend : Marketing spend reduced in the period as we
deferred planned spend in line with the significant reduction in UK
housing market activity experienced in Q2. However, we plan to
continue marketing activity over the second half of 2020 as we
invest in our biggest ever national television marketing campaign
to use the strength of our brand and consumer reach to support
property market activity for the benefit of our customers.
-- Discretionary costs : With all employees working remotely at
home since late March 2020, travel, accommodation and staff
subsistence costs have reduced, resulting in a year on year saving
of GBP0.3m in the period.
Costs were also impacted by a reduction in salary costs due to a
fall in average headcount (excluding Van Mildert) to 490 (2019:
517) and reduction in other employee costs, offset by increased
investment in technology and the inclusion of Van Mildert operating
costs.
Full year costs are likely to be slightly more weighted to the
second half principally due to the timing of recruitment of
additional headcount which had been paused earlier in the year
following the reduction in property market activity, and the
phasing of marketing campaigns.
From 2020, operating profit is reported on a GAAP basis,
including the charge or credit relating to share-based payments and
National Insurance on share-based incentives. In accordance with
IFRS 2, a non-cash credit of GBP0.2m (2019: GBP2.2m charge) was
credited to income representing the amortisation of the fair value
of share-based incentives granted. The reduction in the charge
reflects both a reduction in the quantum of new share-based
incentives granted in the period, together with the impact of
performance conditions for historical awards for the executive
directors which are now unlikely to be met. The full year IFRS 2
charge is estimated to be in the range of GBP1.0m to GBP1.3m.
NI is being accrued, where applicable at a rate of 13.8%, on the
potential employee gain on share-based incentives. Based on a
decline in the closing share price from GBP6.34 at 31 December 2019
to GBP5.46 at 30 June 2020 in respect of the outstanding
share-based incentives granted, together with the realised NI cost
on share-based incentives exercised in the period, there was a
credit of GBP0.1m (2019: GBP0.6m charge) in the period.
Earnings per share (EPS)
Basic EPS declined by 42% to 5.7p (2019: 9.9p) reflecting the
reduction in year on year profit, offset by the benefit of the
share buyback programme in place during 2019 and at the start of
the year which reduced the weighted average number of ordinary
shares in issue to 871.7m (2019: 888.2m).
Cash position and balance sheet liquidity
Throughout the period, the Group was debt free and has continued
to see strong cash generation with cash conversion in excess of
100%(6) . Cash generated in the period benefitted from a working
capital reduction of GBP13.7m, primarily due to the reduction in
debtors as a result of the discount provided to customers. This
benefit is expected to reverse in the second half of the year. The
Group's closing cash balance was GBP50.3m (31 December 2019: cash
and money market deposits balance of GBP36.3m).
The Group has the benefit of a GBP10.0m committed revolving loan
facility with Barclays Bank plc which was agreed on 7 February 2020
and replaced the previous GBP10.0m committed loan facility with
Barclays Bank plc which was terminated on that date. In April 2020
a variation was agreed to the facility to extend the term beyond
the original year to 7 February 2022 and introduce a covenant in
relation to the ratio of net debt to EBITDA. No amount has been
drawn under the facility.
On 27 April 2020 Rightmove received confirmation that it is
eligible to access the UK Government's CCFF. Rightmove has not
issued any commercial paper under the scheme.
Deferral of indirect taxation (VAT) payments: The UK government
announced in March that all UK VAT-registered businesses had the
option to defer any VAT payments due between 20 March 2020 and 30
June 2020. Payments must be made on or before 31 March 2021. During
the period the Group deferred VAT payments of GBP12.1m. Given the
positive start to the re-opening of the housing market, the Group
intends to bring forward the settlement of the VAT deferrals to the
end of 2020.
Returns to shareholders
Given the uncertainties caused by the impact of Covid-19, the
Board considered it prudent to cancel the proposed final dividend
payment of 4.4p per share (GBP38.5m in total) for the year ended 31
December 2019 in order to preserve cash and strengthen the Group's
financial liquidity.
The Board would like to thank our shareholders for their support
regarding the dividend cancellation which provided the cash flow
headroom and flexibility for the Group to extend financial support
to our customers.
The Board recognises the importance of the dividend to our
shareholders; however, given that we believe it is in the best
long-term interests of the Group and its shareholders that the
Agency discount is extended for a further period until the end of
September 2020, we have not declared an interim dividend. The Board
will consider the appropriateness, quantum and timing of future
dividend payments when it has a clearer view of the scale and
duration of the impact of Covid-19 on the business.
The Group bought back and cancelled 5.0m ordinary shares (2019:
3.6m shares) in the period at a cost of GBP30.1m (2019: GBP18.5m)
as part of its ongoing share buyback programme. On 14 March we
announced our intention to pause our share buyback programme in
order to conserve cash and strengthen our balance sheet.
Our long-term capital allocation policy is unchanged and the
Board remains committed to returning substantially all free cash
flows to shareholders through a combination of a progressive
dividend policy and a share buyback programme.
Principal risks and uncertainties
The Group's principal risks and uncertainties and a summary of
the mitigations for each are set out below.
Covid-19
The Covid-19 pandemic and measures taken to contain it have had
an unprecedented impact on the UK economy and the property market.
The business took immediate action to mitigate the impact of the
pandemic on the Group, its employees, customers and other
stakeholders. Key measures included:
-- Invoking business continuity procedures which have enabled
the entire organisation to work remotely, for the safety of our
employees and in accordance with Government guidelines. The
transition to remote working has had no significant impact on
business performance and can continue for as long as is required.
We have been trialling a return to the London, Milton Keynes and
Newcastle offices for a small number of employees since July,
following a full risk assessment.
-- Providing financial support to our customers in response to
the significant reduction in activity in the property market.
Property transactions (7) which drive our customers' revenue, were
down 57% year on year in April and 52% down year on year in May. We
provided a discount of 75% of the invoice value for 4 months from
April to July for our Agency and New Homes customers and selected
support across other business units. The support has been extended
with a 60% discount in August and 40% in September for Agency
customers, and different arrangements in Wales and Scotland where
the property market opened later than in England.
-- Continuing to innovate to ensure that we maximise our value
to agents whilst activity in the property market was severely
restricted, and to help agents work as effectively as possible
during this period. This included new features on the Rightmove
platforms such as highlighting properties where online viewing is
available and giving agents the ability to deliver video content
automatically in response to a Rightmove lead. The frequency of
agent webinars has increased, together with advice on the website,
to help agents navigate the new restrictions within the property
market e.g. for viewings. Rightmove is also providing local market
data to agents to provide insight in their area.
-- Preserving cash flow through the cancellation of the
previously proposed 2019 final dividend (GBP38.5m), suspension of
the share buyback programme from 14 March, and deferral of indirect
taxation (VAT) payments of GBP12.1m.
-- Furloughing around one third of employees, predominantly in
customer facing roles, from 6 April under the Coronavirus Job
Retention Scheme. The Group intends to repay the furlough grant
following the increase in activity since the property market
reopened. The Board and Group's Senior Leadership team took a
voluntary 20% reduction in salary with effect from 1 April to 31
July.
-- Ensuring liquidity through confirmation of eligibility to
access the Government's CCFF, and extension of the Group's GBP10.0m
committed revolving loan facility for 12 months to 7 February
2022.
The measures that the Government has taken and continues to take
in order to contain the pandemic are expected to increase the
macroeconomic risk on the business as detailed in the table below
in risk 1, and the continued incidence of Covid-19 increases the
risk of ensuring the right talent in the business as detailed below
in risk 5 due to the increased risk of employee absence due to
illness.
Withdrawal from the EU
Following the UK's departure from the European Union on 31
January 2020, the UK is now in a transition period which is due to
end on 31(st) December 2020. The UK and the EU are currently in
discussions regarding the parameters of future trading
arrangements. If the UK and the EU are unable to reach an agreement
on these arrangements the macroeconomic risk to the business
increases as detailed in risk 1.
The Principal Risks and uncertainties remain as set out in
detail in the Strategic Report of the 2019 Annual Report.
Risk Description Mitigation
1 Macroeconomic environment
The Group derives almost * Continuing to provide the most significant and
all its revenue from the effective exposure for customers' brands and
UK and is therefore dependent properties, be the largest source of high quality
on the macroeconomic conditions leads, offer value-adding products and packages,
surrounding the UK housing provide market insight and help drive operational
market and consumer confidence efficiencies for our customers, thereby embedding the
which impacts on property value of our membership.
transaction levels.
* Maintaining a flexible cost base that can respond to
changing conditions.
-------------------------------------- -------------------------------------------------------------
2 Competitive environment
The Group operates in a * Communication of the value of Rightmove membership to
competitive marketplace advertisers
with attractive margins
and low barriers to entry.
This may result in increased * Continued investment in our account management teams
competition from existing to ensure we stay close to our customers and local
competitors or new entrants markets and help our customers run their businesses
targeting the Group's primary more efficiently.
revenue markets.
* Sustained marketing investment in the Rightmove
brand.
* Sustained investment and innovation in serving both
home hunters and our customers.
-------------------------------------- -------------------------------------------------------------
3 New or disruptive technologies
and changing consumer behaviours * Continual improvements to our platforms including
Rightmove operates in a ongoing investment in mobile and tablet platforms.
fast-moving online marketplace.
Failure to innovate or
adopt new technologies * Developing our product proposition to meet our
or failure to adapt to customers' needs and evolving business models.
changing customer business
models and evolving consumer
behaviour may impact the * Ongoing monitoring of consumer behaviour.
Group's ability to offer
the best products and services
to its advertisers and * Large in-house technology team with culture of
the best consumer experience. innovation.
* Regular contact with the start-up and prop-tech
communities to stay abreast of innovations in the
marketplace.
-------------------------------------- -------------------------------------------------------------
4 Cyber security and IT systems
The Group has a high dependency * Disaster Recovery and Business Continuity Plans in
on technology and internal place, subject to regular review and testing.
IT systems. In today's
digital world there are
increased risks associated * Use of three data centres to load balance and ensure
with external cyber-attacks optimal performance and business continuity
which could result in unavailability capability.
of our platforms. A security
breach such as corruption
or loss of key data may * Regular backups of key data
disrupt the efficiency
and functioning of the
Group's day to day operations. * Regular testing of the security of the IT systems and
platforms including penetration testing and
distributed denial of service attack procedures.
* Ongoing investment in security systems
* Ongoing monitoring of our corporate and web hosting
systems by external specialists
* Regular internal security training and 'spear
phishing' tests of minimise risk of social
engineering attacks.
* Enhance the security of the corporate network to
minimise risk relating to remote working.
-------------------------------------- -------------------------------------------------------------
5 Securing and retaining
the right talent * Ongoing succession planning and development of future
Our continued success is leaders.
dependent on our ability
to attract, recruit, retain
and motivate our highly * Payment of competitive reward, including a blend of
skilled workforce. short and long-term incentives for senior management.
* The ability for employees to participate in the
success of the Group through the SIP and SAYE
schemes.
* Regular staff communication and engagement.
* Maintaining the culture of the Group, which generates
significant staff loyalty.
* Enabling remote working as required by the business
or in line with Government guidance to ensure the
safety of employees.
-------------------------------------- -------------------------------------------------------------
Next trading update
Our next scheduled reporting date is 26 February 2021 when we
will announce our results for the year ending
31 December 2020.
Andrew Fisher Peter Brooks-Johnson
Chairman Chief Executive Officer
7 August 2020
Notes to the half year results for the six months ended 30 June
2020
(1) Average Revenue per Advertiser (ARPA) is calculated as
revenue from Agency and New Homes advertisers in a given month
divided by the total number of advertisers during the month,
measured as a monthly average over the six month period.
(2) Source: Google analytics.
(3) Source: Comscore, June 2020
(4) Agency ARPA is calculated as revenue from Agency advertisers
in a given month divided by the total number of advertisers during
the month, measured as a monthly average over the six month
period.
(5) New Homes ARPA is calculated as revenue from New Homes
advertisers in a given month divided by the total number of
advertisers during the month, measured as a monthly average over
the six month period.
(6) Cash generated from operating activities of GBP77.3m
compared to operating profit as reported in the income statement of
GBP61.7m.
(7) Source: HMRC transactions for England, Scotland and Wales
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF
YEAR REPORT 2020
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
Andrew Fisher Peter Brooks-Johnson
Chairman Chief Executive Officer
07 August 2020
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE
INCOME
for the six months ended 30 June 2020
Note 6 months ended 6 months ended Year ended
30 June 2020 30 June 2019 31 December 2019
GBP000 GBP000 GBP000
------------------------------------------------------ ------ ---------------- ---------------- ------------------
Revenue 4,5 94,815 143,914 289,320
------------------------------------------------------ ------ ---------------- ---------------- ------------------
Administrative expenses (33,116) (35,723) (75,590)
Operating profit 61,699 108,191 213,730
------------------------------------------------------ ------ ---------------- ---------------- ------------------
Financial income 131 141 318
Financial expenses (259) (250) (486)
------------------------------------------------------ ------ ---------------- ---------------- ------------------
Net financial expenses (128) (109) (168)
------------------------------------------------------ ------ ---------------- ---------------- ------------------
Profit before tax 61,571 108,082 213,562
Income tax expense 9 (11,615) (20,632) (40,473)
------------------------------------------------------ ------ ---------------- ---------------- ------------------
Profit for the period being total comprehensive
income 49,956 87,450 173,089
------------------------------------------------------ ------ ---------------- ---------------- ------------------
Attributable to:
Equity holders of the Parent 49,956 87,450 173,089
------------------------------------------------------ ------ ---------------- ---------------- ------------------
Earnings per share (pence)
Basic 7 5.73 9.85 19.57
Diluted 7 5.72 9.81 19.49
Dividends per share (pence) 8 - 4.00 6.80
Total dividends 8 - 35,510 60,173
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL
POSITION
as at 30 June 2020
Note 30 June 2020 30 June 2019 31 December 2019
GBP000 GBP000 GBP000
-------------------------------------------------------------- ----- ------------- ------------- -----------------
Non-current assets
Property, plant and equipment 12,654 14,125 12,802
Intangible assets 22,324 2,861 21,954
Deferred tax assets 9 2,654 3,109 2,718
-------------------------------------------------------------- ----- ------------- ------------- -----------------
Total non-current assets 37,632 20,095 37,474
-------------------------------------------------------------- ----- ------------- ------------- -----------------
Current assets
Trade and other receivables 10 12,751 25,594 23,985
Contract assets 5 428 364 429
Money market deposits - 4,116 4,141
Cash and cash equivalents 50,306 50,020 32,117
-------------------------------------------------------------- ----- ------------- ------------- -----------------
Total current assets 63,485 80,094 60,672
-------------------------------------------------------------- ----- ------------- ------------- -----------------
Total assets 101,117 100,189 98,146
-------------------------------------------------------------- ----- ------------- ------------- -----------------
Current liabilities
Trade and other payables 11 (22,517) (17,134) (19,516)
Lease liabilities (1,706) (1,397) (1,709)
Contract liabilities 5 (1,263) (1,982) (2,111)
Income tax payable (927) (20,523) (18,930)
Provisions (558) (255) (256)
-------------------------------------------------------------- ----- ------------- ------------- -----------------
Total current liabilities (26,971) (41,291) (42,522)
Non-current liabilities
Lease liabilities (9,768) (11,170) (10,499)
Provisions (2,941) (445) (2,914)
Deferred tax liability (916) - (871)
-------------------------------------------------------------- ----- ------------- ------------- -----------------
Total non-current liabilities (13,625) (11,615) (14,284)
-------------------------------------------------------------- ----- ------------- ------------- -----------------
Total liabilities (40,596) (52,906) (56,806)
-------------------------------------------------------------- ----- ------------- ------------- -----------------
Net assets 60,521 47,283 41,340
-------------------------------------------------------------- ----- ------------- ------------- -----------------
Equity
Share capital 887 904 892
Other reserves 545 528 540
Retained earnings (net of own shares held) 59,089 45,851 39,908
-------------------------------------------------------------- ----- ------------- ------------- -----------------
Total equity attributable to the equity holders of the Parent 60,521 47,283 41,340
-------------------------------------------------------------- ----- ------------- ------------- -----------------
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
for the six months ended 30 June 2020
Note 6 months ended 6 months ended Year ended
30 June 2020 30 June 2019 31 December 2019
GBP000 GBP000 GBP000
------------------------------------------------------ ----- --------------- --------------- -----------------
Cash flows from operating activities
Profit for the period 49,956 87,450 173,089
Adjustments for:
Depreciation charges 1,564 1,653 3,114
Amortisation charges 501 171 480
Financial income (131) (141) (318)
Financial expenses 259 250 486
Re-measurement of leased assets - - 283
Share-based payments 6 (182) 2,198 4,911
Income tax expense 9 11,615 20,632 40,473
------------------------------------------------------ ----- --------------- --------------- -----------------
Operating cash flow before changes in working capital 63,582 112,213 222,518
Decrease/(increase) in trade and other receivables 11,209 (3,101) (481)
Increase/(decrease) in trade and other payables 3,021 (929) 35
Increase/(decrease) in provisions 329 (395) (371)
Decrease in contract assets 5 1 63 28
Decrease in contract liabilities 5 (848) (164) (44)
Cash generated from operating activities 77,294 107,687 221,685
Financial expenses paid (118) (101) (198)
Income taxes paid (29,845) (16,859) (37,263)
------------------------------------------------------ ----- --------------- --------------- -----------------
Net cash from operating activities 47,331 90,727 184,224
------------------------------------------------------ ----- --------------- --------------- -----------------
Cash flows used in investing activities
Interest received on cash and cash equivalents 156 101 259
Reduction in money market deposits 4,141 - -
Acquisition of property, plant and equipment (1,249) (391) (543)
Acquisition of intangible assets (871) (159) (236)
Acquisition of subsidiary, net of cash acquired - - (15,627)
Net cash from investing activities 2,177 (449) (16,147)
------------------------------------------------------ ----- --------------- --------------- -----------------
Cash flows from financing activities
Unclaimed dividends/(net dividends paid) 8 2 (35,510) (59,856)
Purchase of own shares for cancellation 12 (30,125) (18,499) (88,583)
Purchase of own shares for share incentive plans 12 - (1,285) (2,112)
Share-related expenses (232) (148) (619)
Payment of lease liabilities (1,043) (823) (1,535)
Proceeds on exercise of share-based incentives 79 160 898
Net cash used in financing activities (31,319) (56,105) (151,807)
------------------------------------------------------ ----- --------------- --------------- -----------------
Net increase in cash and cash equivalents 18,189 34,173 16,270
Cash and cash equivalents at 1 January 32,117 15,847 15,847
------------------------------------------------------ ----- --------------- --------------- -----------------
Cash and cash equivalents at period end 50,306 50,020 32,117
------------------------------------------------------ ----- --------------- --------------- -----------------
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN
SHAREHOLDERS' EQUITY
for the six months ended 30 June 2020
Own shares held Reverse acquisition
Share GBP000 Other reserve Retained Total
capital reserves GBP000 earnings equity
GBP000 GBP000 GBP000 GBP000
---------------------- --------- ---------------- ---------- -------------------- ---------- ---------
At 1 January 2019 908 (11,138) 386 138 22,290 12,584
Total comprehensive
income
Profit for the
period - - - - 87,450 87,450
Transactions with
owners recorded
directly in equity
Share-based payments - - - - 2,198 2,198
Tax credit in respect
of share-based
incentives
recognised directly
in equity - - - - 314 314
Dividends to
shareholders - - - - (35,510) (35,510)
Exercise of
share-based
incentives - 752 - - (592) 160
Purchase of shares
for restricted share
plan - (1,285) - - - (1,285)
Cancellation of own
shares (4) - 4 - (18,499) (18,499)
Share-related
expenses - - - - (129) (129)
---------------------- --------- ---------------- ---------- -------------------- ---------- ---------
At 30 June 2019 904 (11,671) 390 138 57,522 47,283
---------------------- --------- ---------------- ---------- -------------------- ---------- ---------
At 1 January 2019 908 (11,138) 386 138 22,290 12,584
Total comprehensive
income
Profit for the year - - - - 173,089 173,089
Transactions with
owners recorded
directly in equity
Share-based payments - - - - 4,911 4,911
Tax credit in respect
of share-based
incentives
recognised directly
in equity - - - - 1,028 1,028
Net dividends - - - - (59,856) (59,856)
Exercise of
share-based
incentives - 1,506 - - (608) 898
Purchase of shares
for share incentive
plan - (2,112) - - - (2,112)
Cancellation of own
shares (16) - 16 - (88,583) (88,583)
Share-related
expenses - - - - (619) (619)
----------------------
At 31 December 2019 892 (11,744) 402 138 51,652 41,340
---------------------- --------- ---------------- ---------- -------------------- ---------- ---------
At 1 January 2020 892 (11,744) 402 138 51,652 41,340
Total comprehensive
income
Profit for the
period - - - - 49,956 49,956
Transactions with
owners recorded
directly in equity
Share-based payments - - - - (182) (182)
Tax debit in respect
of share-based
incentives
recognised directly
in equity - - - - (336) (336)
Exercise of
share-based
incentives - 466 - - (387) 79
Cancellation of own
shares (5) - 5 - (30,125) (30,125)
Share-related
expenses - - - - (211) (211)
---------------------- --------- ---------------- ---------- -------------------- ---------- ---------
At 30 June 2020 887 (11,278) 407 138 70,367 60,521
---------------------- --------- ---------------- ---------- -------------------- ---------- ---------
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 2020 comprise the
Company and its interest in its subsidiaries (together referred to
as the Group). Its principal business is the operation of the
Rightmove platforms, which have the largest audience of any UK
property portal (as measured by time on site).
The consolidated financial statements of the Group as at and for
the year ended 31 December 2019 are available upon request to the
Company Secretary from the Company's registered office at 2
Caldecotte Lake Business Park, Caldecotte Lake Drive, Caldecotte,
Milton Keynes, MK7 8LE or are available on the corporate website at
plc.rightmove.co.uk.
Basis of preparation
These interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting, and should be
read in conjunction with the Group's last annual consolidated
financial statements, prepared in accordance with IFRS as adopted
by the EU, as at and for the year ended 31 December 2019 ('last
annual financial statements'). They do not include all of the
information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last annual financial statements.
The condensed consolidated interim financial statements were
approved by the Board of directors on 7 August 2020. The half year
results for the current and comparative period are unaudited. The
auditor, KPMG LLP, has carried out a review of the condensed
consolidated interim financial statements and its report is set out
at the end of this document.
The comparative figures as at and for the year ended 31 December
2019 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 2019.
Going concern
Due to the significant uncertainty arising from the Covid-19
pandemic, management has performed a detailed going concern review,
testing the Group's liquidity in a range of scenarios as set out
below.
Throughout the period, the Group was debt free, has continued to
be cash generative and had cash balances of GBP50,306,000 at 30
June 2020 (31 December 2019: cash and money market deposits balance
of GBP36,258,000).
The Group has the benefit of a GBP10.0m committed revolving loan
facility with Barclays Bank plc which was agreed on 7 February 2020
and replaced the previous GBP10.0m committed loan facility with
Barclays Bank plc which was terminated on that date. In April 2020
a variation was agreed to the facility to extend the term beyond
the original year to 7 February 2022 and introduced a covenant in
relation to the ratio of net debt to EBITDA. No amount has been
drawn under the facility.
On 27 April 2020 Rightmove received confirmation that it is
eligible to access the UK Government's Covid Corporate Financing
Facility (CCFF) which will close to new issuers on 31 December 2020
under the terms of the CCFF Operating Procedures dated 19 June
2020, and which can be varied at the Bank of England's discretion.
Rightmove has not issued any commercial paper under the scheme and
did not require access to the CCFF for its Going Concern
assessment.
Following the lockdown measures introduced in response to
Covid-19, in particular the inability to physically view
properties, activity in the housing market was significantly
reduced in the UK from late March. In order to support our
customers during this unprecedented shut down of the UK property
market, we offered our Agency and New Homes customers a 75%
discount on their invoice value for 4 months between April and
July, with selected discount support across other business
units.
1 General information (continued)
These discounts had a revenue impact of GBP50.5m in the period.
The Group took immediate steps to preserve liquidity over the
period, including the decision to suspend the share buyback
programme from 14 March, and the cancellation of the previously
announced 2019 dividend.
Activity in the housing market was restarted in England on 13
May and was followed in late June in Scotland and Wales. It takes
time, however, for activity to convert into cash for our agents,
with housing transactions taking on average three months to
complete. We have therefore extended the support to our Agency
customers for a further two months, and communicated a discount of
60% in August and 40% in September. Due to the delay in the restart
of activity in Scotland and Wales, the discount in these areas has
been extended to 75% in August and 60% in September.
In stress testing the cash flows of the Group, management
modelled a range of scenarios, including severe, but plausible
downside scenarios which considered the impact of a reduction in
housing transaction numbers of varying severity during 2020,
followed by improved transaction activity in 2021.
Under the various transaction scenarios, we have modelled likely
timing of cash flows for our customers for the next 12 months and
considered the impact on our key drivers of revenue being customer
numbers and average revenue per advertiser (ARPA). We have also
considered cost mitigation measures, where appropriate, including
reducing headcount and lower marketing spend. In all of the
scenarios tested the Group remained debt-free, did not require
utilisation of the loan facility or the CCFF, and the loan facility
covenant was not breached.
The Board of directors consider that the Group and the Company
have adequate resources to continue in operation for at least 12
months from the date of these results and have therefore continued
to adopt the going concern basis in preparing these condensed
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 2019.
The same accounting policies are anticipated to be applied for
the year ending 31 December 2020.
3 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 judgements 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.
Management has determined that there are no significant areas of
estimation uncertainty or critical judgements in applying
accounting policies that have a significant effect on the amounts
recognised in the condensed consolidated interim financial
statements of the Group.
4 Operating segments
The Group determines and presents operating segments based on
internal 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 Rightmove's platforms; and
-- The New Homes segment which provides property advertising
services to new home developers and housing associations on
Rightmove's platforms.
The Other segment which represents activities under the
reportable segments threshold, comprises Overseas and Commercial
property advertising services and non-property advertising services
which include our Third Party advertising and Data 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
revenue in all periods are derived from third parties and there is
no inter-segment revenue.
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 below.
New Homes
Agency GBP000 Sub total GBP000 Other Central Adjustments Total GBP000
GBP000 GBP000 GBP000 GBP000
Six months ended
30 June 2020
Revenue 66,573 17,277 83,850 10,965 - - 94,815
Operating profit(1) - - - - 61,699 - 61,699
Depreciation and
amortisation - - - - (2,065) (-) (2,065)
Financial income - - - - 131 - 131
Financial expenses - - - - (259) - (259)
Trade receivables(2) 1,536 3,718 5,254 2,776 - 253(3) 8,283
Other segment assets - - - - 92,684 150(3) 92,834
Segment liabilities - - - - (40,193) (403)(3) (40,596)
Capital expenditure(4) - - - - 2,120 - 2,120
----------------------- -------- ----------- ------------------ -------- --------- ------------- --------------
Six months ended
30 June 2019
Revenue 104,782 27,809 132,591 11,323 - - 143,914
Operating profit(1) - - - - 108,191 - 108,191
Depreciation and amortisation - - - - (1,824) - (1,824)
Financial income - - - - 141 - 141
Financial expenses - - - - (250) - (250)
Trade receivables(2) 6,527 11,462 17,989 1,821 - 194(3) 20,004
Other segment assets - - - - 80,114 71(3) 80,185
Segment liabilities - - - - (52,641) (265)(3) (52,906)
Capital expenditure(4) - - - - 550 - 550
------------------------------- -------- ------- -------- ------- --------- --------- ---------
Year ended
31 December 2019
Revenue 209,268 55,482 264,750 24,570 - - 289,320
Operating profit(1) - - - - 213,730 - 213,730
Depreciation and amortisation - - - - (3,594) - (3,594)
Financial income - - - - 318 - 318
Financial expenses - - - - (486) - (486)
Trade receivables(2) 5,324 11,086 16,410 2,944 - 198 (3) 19,552
Other segment assets - - - - 77,668 55 (3) 77,723
Segment liabilities - - - - (55,682) (253) (3) (55,935)
Capital expenditure(4) - - - - (779) - (779)
------------------------------- -------- ------- -------- ------- --------- ---------- ---------
(1) Operating profit is stated after the charge for
depreciation, amortisation, share-based payments and NI on
share-based incentives
(2) 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.
(3) The adjustments column reflects the reclassification of
credit balances in trade receivables and debit balances in accounts
payable made on consolidation for statutory accounts purposes.
(4) Capital expenditure consists of purchases of property, plant
and equipment and intangible assets.
5 Revenue
The Group's operations and main revenue streams are those
described in the last annual financial statements. The Group's
revenue is derived from contracts with customers.
Disaggregation of revenue
In the following table, revenue is disaggregated by property and
non-property advertising revenue. The table also includes a
reconciliation of the disaggregated revenue with the Group's
reportable segments (see Note 4).
Six months ended Estate Agency New Homes Other Total
30 June 2020
GBP000 GBP000 GBP000 GBP000
Revenue stream
Property products 66,573 17,277 4,828 88,678
Non-property products - - 6,137 6,137
----------------------- -------------- ---------- -------- --------
66,573 17,277 10,965 94,815
----------------------- -------------- ---------- -------- --------
Six months ended Estate Agency New Homes Other Total
30 June 2019 GBP000 GBP000 GBP000 GBP000
Revenue stream
Property products 104,782 27,809 6,798 139,389
Non-property products - - 4,525 4,525
----------------------- -------------- ---------- -------- --------
104,782 27,809 11,323 143,914
----------------------- -------------- ---------- -------- --------
Year ended Estate Agency New Homes Other Total
31 December 2019 GBP000 GBP000 GBP000 GBP000
Revenue stream
Property products 209,268 55,482 13,961 278,711
Non-property products - - 10,609 10,609
----------------------- -------------- ---------- -------- --------
209,268 55,482 24,570 289,320
----------------------- -------------- ---------- -------- --------
Contract balances
The following table provides information about receivables,
contract assets and contract liabilities from contracts with
customers.
30 June 30 June 31 December
Note 2020 2019 2019
GBP000 GBP000 GBP000
---------------------------- ------- -------- --------- ------------
Trade receivables, which
are included in trade and
other receivables 10 9,166 20,777 20,285
Contract assets 428 364 429
Contract liabilities (1,263) (1,982) (2,111)
---------------------------- ------- -------- --------- ------------
The contract assets primarily relate to the Group's rights to
consideration for services provided but not invoiced at the
reporting date. The contract assets are transferred to trade
receivables when invoiced and the rights have become
unconditional.
The contract liabilities primarily relate to the advance
consideration received from Estate Agency, Overseas and Commercial
customers, for which revenue is recognised as or when the services
are provided.
6 Share-based payments
The Group operates share-based incentive schemes for executive
directors and 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), a Deferred Share
Bonus Plan (DSP), Performance Share Plan (PSP) and the Rightmove
Share Incentive Plan (SIP). In March 2019 a Restricted Share Plan
(RSP) was established that awards shares to selected senior
management.
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 is measured using either the Monte
Carlo or Black Scholes pricing model as is most appropriate for
each scheme.
The total share-based payments credit for the six months ended
30 June 2020 relating to all share-based incentive plans was
GBP182,000 (2019: GBP2,198,000 charge).
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 credit for the six months ended 30 June 2020 relating to
all awards was GBP144,000 (2019: GBP573,000 charge). The share
price at 30 June 2020 was GBP5.46
(30 June 2019: GBP5.35).
Approved and Unapproved Plans
There has been no award of share options under these plans since
5 March 2010.
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.
PSP awards are dependent on a relative Total Shareholders Return
performance condition (25% of the award) and an EPS growth target
measured over a three-year performance period (75% of the award).
PSP awards are valued using the Monte Carlo model for the TSR
element and the Black Scholes model for the EPS element and the
resulting charge is spread over the period between Grant Date and
Vesting Date, typically three years. No PSP awards were made in the
six month period to 30 June 2020.
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
nil cost 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 65% of the 2019 internal
performance targets, 357,152 nil cost deferred shares were awarded
to executives and senior management on 4 March 2020 with the right
to the release of the shares deferred until March 2022.
Share Incentive Plan (SIP)
In 2014, the Group established the Rightmove SIP. Employees were
offered 450 free shares on 20 December 2019 as a gift, subject to a
three-year service period from 21 December 2019 to 20 December 2022
(the Vesting Period). The SIP awards have been valued using the
Black Scholes model and the resulting share-based payments charge
spread evenly over the Vesting Period of three years. The SIP
shareholders are entitled to a dividend paid in cash over the
Vesting Period. No performance criteria are applied to the vesting
of SIP free shares.
Restricted share plan (RSP)
In March 2019 an RSP was established that awards shares to
selected senior management, subject only to service conditions.
Participants are not entitled to receive dividends on these awards.
RSP awards are valued using the Black Scholes model and the
resulting share-based payments charge is being spread evenly over
the Vesting Period of the shares, being three years. No RSP awards
were made in the six month period to 30 June 2020.
7 Earnings per share (EPS)
Pence per share
GBP000 Basic Diluted
Six months ended 30 June 2020
Earnings 49,956 5.73 5.72
Six months ended 30 June 2019
Earnings 87,450 9.85 9.81
Year ended 31 December 2019
Earnings 173,089 19.57 19.49
Weighted average number of ordinary shares (basic)
6 months ended 6 months ended Year ended
30 June 2020 30 June 2019 31 December 2019
Number of shares Number of shares Number of shares
---------------------------------------------------------- ------------------ ------------------ ------------------
Issued ordinary shares at 1 January less ordinary shares
held by the EBT and SIP Trust 888,422,516 904,626,215 904,626,215
Less own shares held in treasury at the beginning of the
year (13,360,310) (14,813,304) (14,813,304)
Effect of own shares purchased for cancellation (3,525,393) (1,867,483) (6,097,026)
Effect of share-based incentives exercised 166,506 399,973 863,996
Effect of shares purchased by the EBT - (161,700) (216,744)
871,703,319 888,183,701 884,363,137
---------------------------------------------------------- ------------------ ------------------ ------------------
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 Employees' Share Trust
(EBT), SIP Trust and shares held in treasury.
6 months ended 6 months ended Year ended
30 June 2020 30 June 2019 31 December 2019
Number of shares Number of shares Number of shares
------------------------------------------------------- ------------------ ------------------ ------------------
Weighted average number of ordinary shares (basic) 871,703,319 888,183,701 884,363,137
Dilutive impact of share-based incentives outstanding 2,237,305 3,592,806 3,670,032
873,940,624 891,776,507 888,033,169
------------------------------------------------------- ------------------ ------------------ ------------------
8 Dividends
Company dividends
Dividends declared and paid by the Company were as follows:
6 months ended 30 June 2020 6 months ended Year ended 31 December 2019
30 June 2019
Pence per share Pence per share Pence per share
GBP000 GBP000 GBP000
---------------------- --------------------- -------- ---------------- --------- ------------------ ----------
2018 final dividend
paid - - 4.00 35,510 4.00 35,510
2019 interim dividend
paid - - - - 2.80 24,663
- - 4.00 35,510 6.80 60,173
-------------------------------------------- -------- ---------------- --------- ------------------ ----------
Unclaimed dividends returned (2) (317)
--------------------------------------------- -------- ---------------- --------- ------------------ ----------
Net dividends included in the statement of
cash flows (2) 35,510 59,856
--------------------------------------------- -------- ---------------- --------- ------------------ ----------
No interim dividend has been proposed by the Board of
directors.
(2019: 2.8p per qualifying ordinary 1p share GBP24,845,000).
The 2019 final dividend proposed in the Annual Report of 4.4p
per ordinary share being GBP38,483,000 was withdrawn from the AGM
resolutions in May 2020 and cancelled in order to provide
additional short-term balance sheet liquidity to Rightmove, given
the uncertainties caused by the impact of Covid-19.
The terms of the EBT provide that dividends payable on the
ordinary shares held by the EBT are waived.
9 Taxation
The income tax expense of GBP11,615,000 (2019: GBP20,632,000) is
recognised based on management's best estimate of the consolidated
effective tax rate expected for the full financial year applied to
the profit before tax for the six month period. The Group's
consolidated effective tax rate for the six months ended 30 June
2020 was 18.9%% (2019: 19.1%). The difference between the standard
rate of 19.0% and the effective rate of 18.9% at 30 June 2020 is
attributable to a rate change in respect of opening deferred tax
assets.
The deferred tax asset of GBP2,654,000 at 30 June 2020 (2019:
GBP3,109,000) 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. The deferred tax liability of
GBP916,000 at 30 June 2020 (2019: nil) is in respect of the
intangible asset recognised on acquisition of Van Mildert Landlord
and Tenant Protection Limited.
The deferred tax asset at 30 June 2030 has been calculated at
the rate of 19.0% which represents the expected rate at which the
net deferred tax asset will reverse in the future.
10 Trade and other receivables
30 June 2020 30 June 2019 31 December 2019
GBP000 GBP000 GBP000
--------------------------------------------------- ------------- ------------- -----------------
Trade receivables 9,166 20,777 20,285
Less provision for impairment of trade receivables (883) (773) (733)
--------------------------------------------------- ------------- ------------- -----------------
Net trade receivables 8,283 20,004 19,552
Prepayments 4,155 5,423 3,922
Interest receivable 7 38 32
Other debtors 306 129 479
--------------------------------------------------- ------------- -------------
12,751 25,594 23,985
--------------------------------------------------- ------------- ------------- -----------------
11 Trade and other payables
30 June 2020 30 June 2019 31 December 2019
GBP000 GBP000 GBP000
----------------------------------- -------------- -------------- ------------------
Trade payables 2,222 1,614 1,384
Trade accruals 7,393 5,050 6,705
Other creditors 515 117 481
Other taxation and social security 12,387 10,353 10,946
22,517 17,134 19,516
----------------------------------- -------------- -------------- ------------------
12 Reconciliation of movement in capital and reserves
Share buyback
In June 2007, the Company commenced a share buyback programme to
purchase its own ordinary shares. The total number of shares bought
back in the six months to 30 June 2020 was 5,028,392 (2019:
3,630,257) representing 0.6% (2019: 0.4%) of the ordinary shares in
issue (excluding shares held in treasury). All the shares bought
back in the period were cancelled. The shares were acquired on the
open market at a total consideration (excluding costs) of
GBP30,125,000 (2019: GBP18,499,000). The maximum and minimum prices
paid were GBP6.50 (2019: GBP5.60) and GBP5.05 (2019: GBP4.28) per
share respectively.
Own shares held - GBP000 Total
EBT shares reserve SIP shares reserve Treasury shares own shares held
GBP000 GBP000 GBP000 GBP000
--------------------------------- --------------------- --------------------- ------------------ -----------------
Own shares held as at 1 January
2019 (1,113) (2,985) (7,040) (11,138)
Shares transferred to SIP - - - -
Shares purchased for RSP (1,285) - - (1,285)
Share-based incentives exercised
in the period 26 475 251 752
Own shares held as at 30 June
2019 (2,372) (2,510) (6,789) (11,671)
--------------------------------- --------------------- --------------------- ------------------ -----------------
Own shares held as at 1 January
2019 (1,113) (2,985) (7,040) (11,138)
Shares purchased for SIP (2,112) - - (2,112)
Shares transferred to SIP 826 (826) - -
Share-based incentives exercised
in the year 208 424 723 1,355
Reduction in shares released due
to net settlement - - (31) (31)
SIP releases in the year - 182 - 182
--------------------------------- --------------------- --------------------- ------------------ -----------------
Own shares held as at 31
December 2019 (2,191) (3,205) (6,348) (11,744)
--------------------------------- --------------------- --------------------- ------------------ -----------------
Own shares held as at 1 January
2020 (2,191) (3,205) (6,348) (11,744)
Share-based incentives exercised
in the period 42 329 35 406
SIP releases in the period - 60 - 60
Own shares held as at 30 June
2020 (2,149) (2,816) (6,313) (11,278)
--------------------------------- --------------------- --------------------- ------------------ -----------------
Own shares held - number of shares
Total
EBT shares reserve SIP shares reserve Treasury shares own shares held
--------------------------------- --------------------- --------------------- ------------------ -----------------
Own shares held as at 1 January
2019 2,248,020 810,095 14,813,304 17,871,419
Shares purchased for RSP 254,502 - - 254,502
Share-based incentives exercised
in the period (54,100) (121,450) (526,483) (702,033)
Own shares held as at 30 June
2019 2,448,422 688,645 14,286,821 17,423,888
--------------------------------- --------------------- --------------------- ------------------ -----------------
Own shares held as at 1 January
2019 2,248,020 810,095 14,813,304 17,871,419
Shares purchased for SIP 385,612 - - 385,612
Shares transferred to SIP (131,110) 131,110 - -
Share-based incentives exercised
in the year (294,160) (111,800) (1,518,184) (1,924,144)
Reduction in shares released due
to net settlement - - 65,190 65,190
SIP releases in the year - (44,275) - (44,275)
--------------------------------- --------------------- --------------------- ------------------ -----------------
Shares held as at 31 December
2019 2,208,362 785,130 13,360,310 16,353,802
--------------------------------- --------------------- --------------------- ------------------ -----------------
Own shares held as at 1 January
2020 2,208,362 785,130 13,360,310 16,353,802
Share-based incentives exercised
in the period (86,128) (97,870) (74,820) (258,818)
SIP releases in the year - (12,400) - (12,400)
Shares held as at 30 June 2020 2,122,234 674,860 13,285,490 16,082,584
--------------------------------- --------------------- --------------------- ------------------ -----------------
(a) EBT shares reserve
This reserve represents the cost of own shares acquired by the
EBT less any exercises of share-based incentives.
At 30 June 2020, the EBT held 2,122,234 (2019: 2,448,422)
ordinary shares in the Company, representing 0.2%
(2019: 0.3%) of the ordinary shares in issue (excluding shares
held in treasury). The market value of the shares held by the EBT
at 30 June 2020 was GBP11,587,000 (2019: GBP13,099,000).
(b) SIP shares reserve
In November 2014, the Group established the Rightmove Share
Incentive Plan Trust (SIP). This reserve represents the cost of
acquiring shares less any exercises or releases of SIP awards.
Employees of the Group were offered 450 0.1 pence free shares in
December 2019, subject to a three-year service period from January
2020 to December 2022.
At 30 June 2020 the SIP Trust held 674,860 (2019: 688,645)
ordinary shares in the Company of 0.1 pence each, representing
0.08% (2019: 0.08%) of the ordinary shares in issue (excluding
shares held in treasury). The market value of the shares held in
the SIP Trust at the period end was GBP3,685,000 (30 June 2019:
GBP3,684,000).
(c) Treasury Shares
This represents the cost of acquiring shares held in treasury
less any exercises of share-based incentives. These shares were
bought back in 2008 at an average price of 47.60 pence and may be
used to satisfy certain share-based incentive awards.
Other reserves
This represents the Capital Redemption Reserve in respect of own
shares bought back and cancelled. The movement in other reserves of
GBP5,000 (2019: GBP4,000) comprises the nominal value of ordinary
shares cancelled during the period.
Retained earnings
The loss on exercise of share-based incentives is the difference
between the value that the shares held by the EBT, SIP and treasury
shares were originally acquired at and the exercise price at which
share-based incentives were exercised during the period.
13 Related parties
Inter-group transactions with subsidiaries
During the period Rightmove plc was charged interest of
GBP113,000 (2019: GBP308,000) by Rightmove Group Limited in respect
of balances owing under the inter-group loan agreement dated 30
January 2008. As at 30 June 2020 the balance owing under this
agreement was GBP45,651,000 (2019: GBP1,805,000) including
capitalised interest.
The Company grants share options to employees of Rightmove Group
Limited. This transaction is recognised as a recharge arrangement
with an increase in the carrying value of the investment of
Rightmove Group Limited.
Inter-group transactions between subsidiaries
In 2018, Rightmove Rent Services Limited became a related party
to the Company following its incorporation on
19 February 2018. During the period, Rightmove Group Limited has
settled liabilities on behalf of Rightmove Rent Services Limited
and the balance owing under the inter-group loan agreement dated 28
March 2018 was GBP1,515,000 as at 30 June 2020 (2019:
GBP1,090,000). Under IFRS 9 this loan has been fully impaired
within Rightmove Group Limited as it is not expected to be
recovered. The interest charged under this agreement was GBP6,000
(2019: GBP5,000).
Following its acquisition on 30 September 2019 Van Mildert
became a related party to the Company. Rightmove Group Limited has
settled liabilities on behalf of Van Mildert and the balance owing
under the inter-group loan agreement dated 30 September 2019 was
GBP199,000 as at 30 June 2020 (2019: GBPnil). The interest charged
under this agreement was nil (2019: nil). Rightmove Group Limited
issued a subordinated loan agreement to Van Mildert for GBP400,000
on 7 February 2020 and a further GBP500,000 on 29 April 2020. These
loans are not repayable within two years and provide liquidity for
the business. The interest charged under this agreement was
GBP2,000.
ADVISERS AND SHAREHOLDER INFORMATION
Contacts Registered office Corporate advisers
Chief Executive Peter Brooks-Johnson Rightmove plc Financial adviser
Officer:
Interim Group Finance Georgina Hudson 2 Caldecotte Lake UBS Investment
Director: Sandra Odell Business Park Bank
Company Secretary: www.rightmove.co.uk Caldecotte Lake
Website: Drive Joint brokers
Caldecotte UBS AG London Branch
Milton Keynes Numis Securities
Limited
MK7 8LE
Auditor
KPMG LLP
Registered in
England no. 6426485 Bankers
Financial calendar Barclays Bank Plc
2020
Full year results 26 February 2021 Santander UK plc
HSBC UK Bank plc
Lloyds Banking
Group plc
Solicitors
EMW LLP
Slaughter and May
Herbert Smith Freehills
LLP
Registrar
Link Asset Services*
*Shareholder enquiries
The Company's registrar is Link Asset Services (formerly Capita
Asset Services). 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:
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Link Asset Services is a trading name of Link Market Services
Limited.
Shareholder helpline: 0371 664 0391 (calls cost 10p per minute
plus network extras) (Overseas: +44 20 8639 3399)
Email: enquiries@linkgroup.co.uk
Share portal: www.signalshares.com
Through the website of our registrar, Link Asset Services,
shareholders are able to manage their shareholding online and
facilities include electronic communications, account enquiries,
amendment of address and dividend mandate instructions.
INDEPENT REVIEW REPORT TO RIGHTMOVE PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2020 which comprises the condensed
consolidated interim statement of comprehensive income, condensed
consolidated interim statement of financial position, condensed
consolidated interim statement of cash flows, condensed
consolidated interim statement of changes in shareholders' equity
and the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2020 is not prepared, in all material respects, in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU and
the Disclosure Guidance and Transparency Rules ("the DTR") of the
UK's Financial Conduct Authority ("the UK FCA").
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. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) 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.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
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 DTR of the UK FCA. 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.
Anna Jones
for and on behalf of KPMG LLP
Chartered Accountants
The Pinnacle
170 Midsummer Boulevard
Milton Keynes
MK9 1BP
7 August 2020
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR EAXPKELFEEFA
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