Rightmove plc Half-yearly Report

Embargoed until 07.00, Wednesday 1 August 2012 2012 HALF YEAR RESULTS Rightmove plc, the UK's no. 1 property website, announces half year results for the six months ended 30 June 2012. Financial and Operational Highlights for the six months ended 30 June 2012 * Revenue up 23% to £57.9m (2011: £47.0m) * Underlying operating profit(1) up 28% to £42.6m (2011: £33.4m) * Underlying operating margin(1) increased to 73.5% (2011: 71.1%) * Underlying earnings per share(1) up 30% to 32.2p (2011: 24.8p) * Diluted earnings per share(2) up 40% to 27.6p (2011:19.7p) * Cash of £14.6m (2011: £17.9m) * Interim dividend increased by 2.0p to 9.0p (2011: 7.0p) per ordinary share * £30.0m spent to buy back 2.1m shares (2011: £23.4m), bringing the return of cash to shareholders including the dividend to £41.2m during the period (2011: £32.9m) * Page impressions on Rightmove up 23% to 5.9bn (2011: 4.8bn) * Number of advertisers virtually unchanged (+0.1%) this year at 18,299 (31 December 2011: 18,276) * Average revenue per advertiser(3) up 20% at £518 per month (2011: £430) (1) From continuing operations before share-based payments, NI on share-based incentives and no related adjustment for tax (2) From continuing operations (3) For agency and new homes Ed Williams, Managing Director, said: "Britain continues to move at Rightmove. Not only is Rightmove where home movers look for their next home, but we are the definitive source of information on what is happening in the UK property market. Our reputation with agents and other property professionals, whether through our data services business or as the source of the best view of the market for landlords and vendors, goes from strength to strength." 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 on their presence on Rightmove, and to return the cash we generate to shareholders. We have made further progress 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 an increasing number of mobile devices. Advertisers can reach a growing audience of home movers and can benefit from a range of advertising products and tools that help them run their businesses more effectively. We have returned to shareholders all the cash generated from operations during the period via increased dividends and continued share buybacks. Financial performance Organic revenue growth drove overall revenue to £57.9m (2011: £47.0m) which was up 23% on the prior year and, with our underlying cost base rising by only £1.8m, the Rightmove business model continues to demonstrate considerable operational leverage. Trading was strong in the period with the results also benefitting from customers increasing their spend more sharply than usual at the start of the year and the strength of our data services business which included some one-offs. Profit after tax(2) increased 36% to £29.3m (2011: £21.5m). Underlying operating profit(1) increased by 28% to £42.6m. Cash generated from operations was £41.1m, up £8.8m on the same period last year, with cash conversion remaining in excess of 100 percent. Underlying earnings per share(1) rose 30% to 32.2p compared to 24.8p a year ago reflecting the strong growth in profits and a reduced capital base as a result of share buy backs. On a diluted basis earnings per share was up 40% year on year. Highlights of operating performance Aspects of the operating performance for the first six months of 2012 which stand out are: * Rightmove traffic is up over 20% on the same period a year ago. Mobile access to Rightmove through our Apps (iPhone, iPad and Android) and our optimised mobile website has been of particular note in terms of rate of growth, with the number of searches up 100% year on year. * The 20% increase in the average revenue per advertiser (ARPA)(3). The increased spend came from price rises and sales of additional advertising products. 80% of agents and new homes developers are now taking at least one additional advertising product compared to 70% at this time last year. Most key metrics strengthened in the first six months of 2012 compared to the first half of 2011: * ARPA (3) up 20% at £518 per month (2011: £430) * Revenue from additional advertising products(3) up 53% at £17.0m (2011: £11.1m) * Overall membership virtually unchanged (+0.1)% since the start of the year at 18,299 offices and developments, although this is down 1% on the first half of 2011 * Retention rates among agents in line with high historical averages, with lower than historical churn rates among new homes advertisers * Page impressions on Rightmove up 23% to 5.9bn (2011: 4.8bn) and Rightmove continues to be ranked the 7th most popular UK website, and * Market share of all page impressions on the top four UK property websites unchanged at 83%. Agency Agency ARPA year on year was up 20% at £498 per office per month as a result of further adoption of additional advertising products and price increases. Our number of estate agent and lettings only agent offices is up since the start of the year at 15,150 (31 December 2011: 15,078). The significant increase in spend on additional advertising products is particularly encouraging with 44% of independent agents subscribing to our Flexible Membership offer where for a minimum monthly spend they benefit from discounts across our range of products. Spending was up across our entire range of additional advertising products with the introduction of our Local Valuation Alert product in January making a notable contribution. New Homes New homes ARPA is up by 23% compared to a year ago at £630 per month. This has continued to grow as a result of price rises and sales of both email campaigns and additional products. Sales of additional products benefitted from the introduction of packages that offer various product combinations and a preferential rate card for any other product purchases. New homes development numbers are 3% lower since the start of the year at 2,585 (31 December 2011: 2,668). Other Businesses Our Automated Valuation and Data Services business has performed very strongly with revenues up more than 200% on the first half of 2011, albeit from a low base. Contracted revenue from subscriptions or subscription-like contracts has increased substantially, although a significant part of the increase over last year came from one-off work unlikely to be repeated in the second half of the year. Having historically served an almost entirely discrete customer base of mortgage lenders, the business is increasingly working together with major customers of our advertising business. Uncertainties, threats and risks We continue to believe that 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. However, we have some confidence that the strong actions taken by our customers, particularly with regard to cost reduction, have left them more able to withstand further challenges. Conditions this year remain little changed from 2009, 2010 and 2011. Despite these conditions our customers have, in the considerable majority of cases, been able to trade profitably. With regard to competition, the Office of Fair Trading approved the merger of DMGT's FindAProperty and Prime Location websites with Zoopla and the deal was completed at the end of May. There has been no obvious change in the competitive environment. 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 give comfort regarding the opportunity to capture a high proportion of any increase in spend in a recovery. Dividend, share buy backs and balance sheet The Board intends to pay an interim dividend of 9.0p (2011: 7.0p), an increase of 29%, as part of its commitment to a progressive dividend policy. The interim dividend will be paid on 9 November 2012 to members on the register on 12 October 2012. Cash at the end of the period was £14.6m (2011: £17.9m). 2.1m shares were bought back during the period for £30.0m at an average price of £14.10 (2011: 2.3m at average price of £10.23). In total this period we have returned £41.2m to shareholders through dividends and share buy backs, putting the business in a strong position to be able to return all the cash that will be generated in 2012 during the year. Current trading and outlook Rightmove's trading in July has continued to be strong and coupled with our subscription model gives us grounds for confidence in achieving our expected out-turn for the year. Scott Forbes Ed Williams Chairman Managing Director 1 August 2012 RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF YEAR REPORT 2012 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 Ed Williams Chairman Managing Director 1 August 2012 CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME for the six months ended 30 June 2012 6 months Note 6 months ended ended Year ended 30 June 2012 30 June 2011 31 December 2011 £000 £000 £000 Continuing operations Revenue 3 57,881 46,957 97,017 Administrative expenses (19,043) (18,219) (34,350) Operating profit before share-based payments and NI on share-based 42,560 33,408 69,362 incentives Share-based payments 4 (1,256) (1,171) (2,269) NI on share-based 4 (2,466) (3,499) (4,426) incentives Operating profit 38,838 28,738 62,667 Financial income 5 134 96 182 Financial expenses 6 (88) (85) (121) Net financial income 46 11 61 Profit before tax 38,884 28,749 62,728 Income tax expense 10 (9,574) (7,210) (16,674) Profit from continuing 29,310 21,539 46,054 operations Discontinued operation Profit from discontinued operation 7 - 234 451 (net of income tax) Profit for the period being total comprehensive 29,310 21,773 46,505 income Attributable to: Equity holders of the 29,310 21,773 46,505 Parent Earnings per share (pence) Basic 8 28.57 20.61 44.37 Diluted 8 27.58 19.91 42.71 Earnings per share - continuing operations (pence) Basic 8 28.57 20.39 43.94 Diluted 8 27.58 19.70 42.29 Dividends per share 9 11.00 9.00 16.00 (pence) Total dividends 9 11,273 9,499 16,777 . CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION as at 30 June 2012 Note 30 June 2012 30 June 2011 31 December 2011 £000 £000 £000 Non-current assets Property, plant and 1,580 1,212 1,120 equipment Intangible assets 1,488 1,331 1,320 Trade and other receivables 7,11 1,667 1,000 1,667 Contingent consideration 7 - 667 - Deferred tax assets 10 12,143 9,524 10,684 Total non-current assets 16,878 13,734 14,791 Current assets Trade and other receivables 11 17,723 13,787 14,990 Contingent consideration 7 - 4,671 - Cash and cash equivalents 12 14,637 17,902 21,768 Total current assets 32,360 36,360 36,758 Total assets 49,238 50,094 51,549 Current liabilities Trade and other payables 13 (24,064) (19,847) (20,874) Income tax payable (9,647) (7,407) (6,021) Total current liabilities (33,711) (27,254) (26,895) Net assets 15,527 22,840 24,654 Equity Share capital 1,083 1,124 1,104 Other reserves 349 308 328 Retained earnings 14,095 21,408 23,222 Total equity attributable to the equity holders of 14 15,527 22,840 24,654 the Parent CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS for the six months ended 30 June 2012 6 months Note ended 6 months ended Year ended 30 June 2012 30 June 2011 31 December 2011 £000 £000 £000 Cash flows from operating activities Profit for the period 29,310 21,773 46,505 Adjustments for: Depreciation charges 391 309 661 Amortisation charges 153 145 279 Loss on disposal of property, plant and 45 - 68 equipment Loss on disposal of 1 - 26 intangible assets Financial income (134) (96) (182) Financial expenses 88 85 121 Share-based payments charge 4 1,256 1,171 2,269 Gain on sale of discontinued operation 7 - (234) (451) (net of income tax) Income tax expense 9,574 7,210 16,674 Operating cash flow before changes in working capital 40,684 30,363 65,970 Increase in trade and other (2,773) (1,968) (3,129) receivables Increase in trade and other 3,190 3,858 4,870 payables Cash generated from operating 41,101 32,253 67,711 activities Interest paid (88) (85) (121) Income taxes paid (6,008) (6,903) (14,281) Net cash from operating 35,005 25,265 53,309 activities Cash flows from investing activities Interest received 174 142 186 Acquisition of property, (896) (33) (361) plant and equipment Acquisition of intangible (322) (13) (162) assets Disposal of discontinued operation 7 - - 4,888 (net of cash disposed of) Net cash (used in)/generated from investing activities (1,044) 96 4,551 Cash flows from financing activities Dividends paid 9 (11,273) (9,499) (16,777) Purchase of shares for 14 (29,961) (23,359) (48,288) cancellation Share related expenses (226) (163) (323) Proceeds on exercise of 368 2,414 6,148 share options Net cash used in financing (41,092) (30,607) (59,240) activities Net decrease in cash and (7,131) (5,246) (1,380) cash equivalents Cash and cash equivalents at 21,768 23,148 23,148 1 January Cash and cash equivalents at 12 14,637 17,902 21,768 period end CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY for the six months ended 30 June 2012 EBT Reverse Share shares Treasury Other acquisition Retained Total capital reserve shares reserves reserve earnings equity £000 £000 £000 £000 £000 £000 £000 At 1 January 2011 1,147 (13,937) (11,917) 147 138 52,286 27,864 Total comprehensive - - - - - 21,773 21,773 income Profit for the period Transactions with owners recorded directly in equity Share-based - - - - - 1,171 1,171 payments Tax credit in respect of share-based - - - - - 2,639 2,639 incentives recognised directly in equity Dividends to - - - - - (9,499) (9,499) shareholders Exercise of share-based - 1,472 - - - 942 2,414 incentives Cancellation of (23) - - 23 - (23,359) (23,359) own shares Share related - - - - - (163) (163) expenses At 30 June 2011 1,124 (12,465) (11,917) 170 138 45,790 22,840 At 1 January 2011 1,147 (13,937) (11,917) 147 138 52,286 27,864 Total comprehensive income Profit for the - - - - - 46,505 46,505 year Transactions with owners recorded directly in equity Share-based - - - - - 2,269 2,269 payments Tax credit in respect of share-based - - - - - 7,271 7,271 incentives recognised directly in equity Dividends to - - - - - (16,777) (16,777) shareholders Exercise of share-based - 3,679 - - - 2,469 6,148 incentives Cancellation of (43) - - 43 - (48,288) (48,288) own shares Share related - - - - - (338) (338) expenses At 31 December 2011 1,104 (10,258) (11,917) 190 138 45,397 24,654 At 1 January 2012 1,104 (10,258) (11,917) 190 138 45,397 24,654 Total comprehensive - - - - - 29,310 29,310 income Profit for the period Transactions with owners recorded directly in equity Share-based - - - - - 1,256 1,256 payments Tax credit in respect of share-based - - - - - 1,400 1,400 incentives recognised directly in equity Dividends to - - - - - (11,273) (11,273) shareholders Exercise of share-based - 556 - - - (205) 351 incentives Cancellation of (21) - - 21 - (29,961) (29,961) own shares Share related - - - - - (210) (210) expenses At 30 June 2012 1,083 (9,702) (11,917) 211 138 35,714 15,527 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 consolidatedinterim financial statements of the Company as at and for the six months ended 30 June 2012 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 2011 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.rightmove.co.uk/investors. 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 2011. The condensed consolidated interim financial statements were approved by the Board of directors on 1 August 2012. 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 2011 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 2011. Going concern Throughout the period, the Group has been debt free, has continued to generate significant cash and has cash balances of £14,637,000 at 30 June 2012 (2011: £17,902,000). The Group entered into an agreement with Barclays Bank Plc for a £10,000,000 uncommitted money market loan on 15 February 2010. The loan was extended on 11 February 2011 for a further 12 month period and again on 8 February 2012 for a further 12 month period. To date no amount has been drawn under this facility in any period. After making enquiries, the Board of directors have a reasonable expectation that the Group and the Company have adequate resources and banking facilities to continue in operational existence for the foreseeable future. Accordingly the Board of directors continue to adopt the going concern basis in preparing these 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 2011. There are no new standards or amendments to standards that are mandatory for the first time for the financial year beginning 1 January 2012 that have an impact on the Group financial statements. The same accounting policies are anticipated to be applied for the year ending 31 December 2012. Judgments and estimates The preparation of the condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in future periods if applicable. In particular information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes: Note 4 Measurement of share-based payments relating to the inputs to the fair value models and the estimate of the number of shares that will eventually be issued Note 10 Deferred tax assets relating to the rate at which the asset will reverse and the recoverability of the asset 3 Operating segments The Group determines and presents operating segments based on the information that is provided to the Managing Director, who is the Group's Chief Operating Decision Maker. The Group's reportable segments are as follows: * The Agency segment which provides resale and lettings property advertising services on www.rightmove.co.uk; and * The New Homes segment which provides property advertising services to new 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 for assessing performance. All revenues in all periods are derived from third parties and there are no inter-segment revenues. Operating costs, financial income, financial expenses and income taxes in relation to the Agency, New Homes and the Other segment are managed on a centralised basis at a Rightmove Group Limited level and as there are no internal measures of individual segment profitability, relevant disclosures have been shown under the heading of Central in the table overleaf. Profit or loss segmental disclosures have been made on a continuing operations basis. Disclosures in respect of the discontinued Holiday Lettings segment are shown in Note 7. New Sub Agency Homes total Other Central Adjustments Total Operating £000 £000 £000 £000 £000 £000 £000 segments Six months ended 30 June 2012 Revenue 45,075 9,830 54,905 2,976 - - 57,881 Operating profit(1) - - - - 42,560 (3,722)(2) 38,838 Depreciation and - - - - (544) - (544) amortisation Financial income - - - - 134 - 134 Financial - - - - (88) - (88) expenses Trade receivables(3)10,398 3,618 14,016 968 - 56(4) 15,040 Other segment - - - - 34,198 - (5) 34,198 assets Segment - - - - (33,655) (56)(4) (33,711) liabilities Capital - - - - 1,218 - 1,218 expenditure(6) Six months ended 30 June 2011 Revenue 37,367 8,258 45,625 1,332 - - 46,957 Operating profit(1) - - - - 33,408 (4,670)(7) 28,738 Depreciation and - - - - (454) - (454) amortisation Financial income - - - - 96 - 96 Financial - - - - (85) - (85) expenses Trade receivables(3) 8,996 2,956 11,952 244 - 44(4) 12,240 Other segment - - - - 37,837 17(5) 37,854 assets Segment - - - - (27,193) (61)(4)(5) (27,254) liabilities (5) Capital - - - - 46 - 46 expenditure(6) Year ended 31 December 2011 Revenue 77,388 16,869 94,257 2,760 - - 97,017 Operating profit(1) - - - - 69,362 (6,695)(8) 62,667 Depreciation and - - - - (940) - (940) amortisation Financial income - - - - 182 - 182 Financial - - - - (121) - (121) expenses Trade receivables(3)9,907 2,677 12,584 498 - 50(4) 13,132 Other segment - - - - 38,405 12(5) 38,417 assets Segment liabilities - - - - (26,833) (62)(4)(5) (26,895) Capital - - - - 523 - 523 expenditure(6) (1) Operating profit is stated after the charge for depreciation and amortisation. (2) Operating profit for the six months ended 30 June 2012 does not include share-based payments charge (£1,256,000) and National Insurance (NI) on share-based incentives (£2,466,000). (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 2011 does not include share-based payments charge (£1,171,000) and Employer's NI on share-based incentives (£3,499,000). (8) Operating profit for the year ended 31 December 2011 does not include share-based payments charge (£2,269,000) and NI on share-based incentives (£4,426,000). 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 award 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. The total share-based payments charge for the six months ended 30 June 2012 relating to all share-based incentive plans was £1,256,000 (2011: £1,171,000). 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 2012 relating to all awards was £2,466,000 (2011: £3,499,000). Approved and Unapproved Plans There was no award of share options in the six months ended 30 June 2012 (2011:nil). Unapproved executive share option awards granted on 5 March 2010 at an exercise price of £6.66 are subject to an equal measure of Total Shareholder Return (TSR) and growth in EPS. The vesting of 50% of the 2010 award will be dependent on a relative total shareholder return (TSR) performance condition measured over a three-year performance period and the vesting of the other 50% of the 2010 award will be dependent on the satisfaction of an earnings per share (EPS) growth target measured over a three-year performance period. Unapproved executive share option awards made on 5 March 2009, which vested on 5 March 2012 were subject to a relative TSR performance over a three-year performance period, relative to the constituents of the FTSE 250. 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. 156,685 PSP awards were made on 2 March 2012 (the Grant date) subject to EPS and TSR performance. Performance will be measured over three financial years (1 January 2012 - 31 December 2014). The vesting in March 2015 (Vesting date) of 25% of the 2012 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 2012 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. Following the achievement of the 2011 internal performance targets, 76,048 nil cost deferred shares were awarded to executives and senior management on 2 March 2012 with the right to the release of the shares deferred until March 2014. 5 Financial income 6 months ended 6 months ended Year ended 30 June 2012 30 June 2011 31 December 2011 £000 £000 £000 Interest income on cash 134 96 182 balances 6 Financial expenses 6 months ended 6 months ended Year ended 30 June 2012 30 June 2011 31 December 2011 £000 £000 £000 Other financial expenses 88 85 121 7 Discontinued operation On 21 June 2010 the Group sold its 66.7% shareholding in Holiday Lettings Holdings Limited (HLHL), which owned 100% of the shares in the trading entity Holiday Lettings Limited (HLL) (Together the discontinued Holiday Lettings segment), to TripAdvisor Limited. Contingent consideration was dependent on the performance of the discontinued Holiday Lettings segment for the 12 month period from 1 April 2010 to 31 March 2011. The £5,104,000 estimate of the value of the contingent consideration at 31 December 2010 was revised upwards by £234,000 in the six months to 30 June 2011 and by a total of £451,000 in the year ended 31 December 2011. Of the final agreed amount of £5,555,000, £4,888,000 was received in October 2011 with £667,000 being transferred into an Escrow account in addition to the £1,000,000 of completion proceeds already held in Escrow and classified as non-current. Under the term of the sale agreement the amounts held in Escrow earn interest at Barclays Bank Plc's current interest rate and become available on the fourth anniversary of the completion date of the transaction. No discount has been applied as the account is interest bearing. 8 Earnings per share (EPS) Weighted average number of Continuing Discontinued Total ordinary operations operations earnings Pence shares £000 £000 £000 per share Six months ended 30 June 2012 Basic EPS 102,602,673 29,310 - 29,310 28.57 Diluted EPS 106,265,825 29,310 - 29,310 27.58 Underlying basic EPS 102,602,673 33,032 - 33,032 32.19 Underlying diluted EPS 106,265,825 33,032 - 33,032 31.08 Six months ended 30 June 2011 Basic EPS 105,628,029 21,539 234 21,773 20.61 Diluted EPS 109,334,879 21,539 234 21,773 19.91 Underlying basic EPS 105,628,029 26,209 234 26,443 25.03 Underlying diluted EPS 109,334,879 26,209 234 26,443 24.19 Year ended 31 December 2011 Basic EPS 104,809,475 46,054 451 46,505 44.37 Diluted EPS 108,891,146 46,054 451 46,505 42.71 Underlying basic EPS 104,809,475 52,749 451 53,200 50.76 Underlying diluted EPS 108,891,146 52,749 451 53,200 48.86 Weighted average number of ordinary shares (basic) 6 months ended 6 months ended Year ended 30 June 2012 30 June 2011 31 December 2011 Number of shares Number of shares Number of shares Issued ordinary shares at 1 January less ordinary 105,882,853 108,439,105 108,439,105 shares held by the EBT Effect of own shares held (2,505,430) (2,505,430) (2,505,430) in treasury Effect of own shares purchased for cancellation (893,639) (677,861) (1,904,709) Effect of share options 118,889 372,215 780,509 exercised 102,602,673 105,628,029 104,809,475 Weighted average number of ordinary shares (diluted) For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially dilutive shares. The Group's potential dilutive instruments are in respect of share-based incentives granted to employees, which will be settled by ordinary shares held by the EBT and shares held in treasury. 6 months ended 6 months ended Year ended 30 June 2012 30 June 2011 31 December 2011 Number of shares Number of shares Number of shares Weighted average number of ordinary shares (basic) 102,602,673 105,628,029 104,809,475 Dilutive impact of own shares held by the EBT and 3,663,152 3,706,850 4,081,671 shares held in treasury 106,265,825 109,334,879 108,891,146 Underlying EPS is calculated before the charge for share-based payments and NI on share-based incentives without any related tax adjustment. A reconciliation of the basic earnings for the period to the underlying earnings is presented below: 6 months ended 6 months ended Year ended 30 June 2012 30 June 2011 31 December 2011 £000 £000 £000 Basic earnings for the 29,310 21,773 46,505 period Share-based payments 1,256 1,171 2,269 NI on share-based 2,466 3,499 4,426 incentives Underlying earnings for the 33,032 26,443 53,200 period 9 Dividends Company dividends Dividends declared and paid by the Company were as follows: 6 months ended 6 months ended Year ended 30 June 2012 30 June 2011 31 December 2011 Pence per Pence per Pence per share £000 share £000 share £000 2010 final - - 9.0 9,499 9.0 9,499 dividend paid 2011 interim - - - - 7.0 7,278 dividend paid 2011 final 11.0 11,273 - - - - dividend paid 11.0 11,273 9.0 9,499 16.0 16,777 After the period end an interim dividend of 9.0p (2011: 7.0p) per qualifying ordinary share being £9,136,000 (2011: £7,306,000) was proposed by the Board of directors. The 2011 final dividend paid on 8 June 2012 was £11,273,000 (31 December 2011:£9,499,000) being a difference of £55,000 compared to that reported in the 2011 Annual Report which was due to a reduction in the ordinary shares entitled to a dividend between 31 December 2011 and the final dividend record date of 11 May 2012. 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. 10 Taxation The income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year applied to the profit before tax for the interim period. The Group's consolidated effective tax rate in respect of continuing operations for the six months ended 30 June 2012 was 24.6% (2011: 25.0%). The difference between the standard rate and the effective rate at 30 June 2012 is attributable to disallowable expenditure. The net deferred tax asset of £12,143,000 at 30 June 2012 (2011: £9,524,000) 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 the income statement to the extent that the related equity settled share-based payments charge was recognised in the statement of comprehensive income. 11 Trade and other receivables 30 June 2012 30 June 2011 31 December 2011 £000 £000 £000 Trade receivables 15,435 12,590 13,561 Less provision for impairment of (395) (350) (429) trade receivables Net trade receivables 15,040 12,240 13,132 Amounts held in Escrow (refer 1,667 1,000 1,667 Note 7) Prepayments and accrued income 2,619 1,496 1,683 Interest receivable 18 16 58 Other debtors 46 35 117 19,390 14,787 16,657 Non-current 1,667 1,000 1,667 Current 17,723 13,787 14,990 19,390 14,787 16,657 12 Cash and cash equivalents 30 June 2012 30 June 2011 31 December 2011 £000 £000 £000 Bank accounts 14,637 17,902 21,768 Cash balances were placed on deposit for varying lengths between one and ninety days during the period and attracted interest at a weighted average rate of 0.7% (2011: 0.6%). 13 Trade and other payables 30 June 2012 30 June 2011 31 December 2011 £000 £000 £000 Trade payables 671 505 370 Trade accruals 9,476 7,620 7,357 Other creditors 162 49 34 Other taxation and social 4,417 3,901 4,033 security Deferred revenue 9,338 7,772 9,080 24,064 19,847 20,874 14 Reconciliation of movement in capital and reserves EBT Reverse Share shares Treasury Other acquisition Retained Total capital reserve shares reserves reserve earnings equity £000 £000 £000 £000 £000 £000 £000 At 1 January 2011 1,147 (13,937) (11,917) 147 138 52,286 27,864 Total comprehensive - - - - - 21,773 21,773 income Profit for the period Share-based - - - - - 1,171 1,171 payments Tax credit in respect of share-based - - - - - 2,639 2,639 incentives recognised directly in equity Dividends to - - - - - (9,499) (9,499) shareholders Exercise of share-based - 1,472 - - - 942 2,414 incentives Cancellation of (23) - - 23 - (23,359) (23,359) own shares Share related - - - - - (163) (163) expenses At 30 June 2011 1,124 (12,465) (11,917) 170 138 45,790 22,840 At 1 January 2011 1,147 (13,937) (11,917) 147 138 52,286 27,864 Total comprehensive income Profit for the - - - - - 46,505 46,505 year Share-based - - - - - 2,269 2,269 payments Tax credit in respect of share-based - - - - - 7,271 7,271 incentives recognised directly in equity Dividends to - - - - - (16,777) (16,777) shareholders Exercise of share-based - 3,679 - - - 2,469 6,148 incentives Cancellation of (43) - - 43 - (48,288) (48,288) own shares Share related - - - - - (338) (338) expenses At 31 December 2011 1,104 (10,258) (11,917) 190 138 45,397 24,654 At 1 January 2012 1,104 (10,258) (11,917) 190 138 45,397 24,654 Total comprehensive - - - - - 29,310 29,310 income Profit for the period Share-based - - - - - 1,256 1,256 payments Tax credit in respect of share-based - - - - - 1,400 1,400 incentives recognised directly in equity Dividends to - - - - - (11,273) (11,273) shareholders Exercise of share-based - 556 - - - (205) 351 incentives Cancellation of (21) - - 21 - (29,961) (29,961) own shares Share related - - - - - (210) (210) expenses At 30 June 2012 1,083 (9,702) (11,917) 211 138 35,714 15,527 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 2012 was 2,124,948 (2011: 2,283,615 shares) representing 2.0% (2011: 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 £29,961,000 (2011: £23,359,000). The maximum and minimum prices paid were £14.99 (2011: £10.99) and £12.65 (2011: £9.04) 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. 259,351 share-based incentives were exercised in the period (2011: 718,178) at an average price of £1.35 (2011: £3.36) per ordinary share, which were satisfied by shares held in the EBT. At 30 June 2012 the EBT held 4,268,432 (2011: 5,604,151) ordinary shares of £0.01 each in the Company representing 4.0% (2011: 5.1%) 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 £67,953,000 (2011: £66,801,000). Other reserves The movement on other reserves of £21,000 (2011: £23,000) comprises the nominal value of ordinary shares cancelled during the period. Retained earnings The 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. 15 Related parties Inter-group transactions with subsidiaries During the period Rightmove plc was charged interest of £284,000 (2011: £152,000) by Rightmove Group Limited in respect of balances owing under the inter-group loan agreement dated 30 January 2008. As at 30 June 2012 the balance owing under this agreement was £50,587,000 (2011: £57,236,000) including capitalised interest of £284,000 (2011: £152,000). 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 financial statements in the half year report for the six months ended 30 June 2012 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 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 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 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 financial statements in the half year report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA. S J Wardell for and on behalf of KPMG Audit Plc Chartered Accountants Milton Keynes 1 August 2012 ADVISERS AND SHAREHOLDER INFORMATION Contacts Registered Corporate office advisers Managing Director: Ed Williams Rightmove plc Financial adviser Chief Operating Turnberry House UBS Investment Officer and Nick McKittrick 30 Caldecotte Bank Finance Director: Lake Drive Company Secretary: Robyn Perriss Caldecotte Joint brokers Website www.rightmove.co.uk Milton Keynes UBS Limited MK7 8LE Numis Securities Limited Registered in England no. 6426485 Financial calendar Auditor 2012 Half year results 1 August 2012 KPMG Audit Plc Interim dividend 12 October 2012 Bankers record date Interim Management 8 November 2012 Barclays Bank Plc Statement Interim dividend 9 November 2012 HSBC Bank Plc payment Full year results 1 March 2013 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: Capita Registrars The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Capita Registrars is a trading name of Capita Registrars Limited. Capita shareholder helpline: 0871 664 0300 (calls cost 10p per minute plus network extras) (Overseas: +44 20 8639 3399) Email: ssd@capitaregistrars.com Share portal: www.capitashareportal.com Through the website of our registrar, Capita Registrars, shareholders are able to manage their shareholding online and facilities include electronic communications, account enquiries, amendment of address and dividend mandate instructions.

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