Half-yearly Report

Embargoed until 07.00, Wednesday 3 August 2011 2011 HALF YEAR RESULTS Rightmove plc, the UK's no. 1 property website, announces half year results for the six months ended 30 June 2011. Financial and Operational Highlights for the six months ended 30 June 2011 * Revenue up 20% to Â£47.0m (2010: Â£39.2m) * Underlying operating profit* up 25% to Â£33.4m (2010: Â£26.8m) * Underlying operating margin* increased to 71% (2010: 68%) * Underlying earnings per share* up 35% to 24.8p (2010: 18.4p) * Cash generated from operations of Â£32.3m (2010: Â£27.5m), with cash conversion in excess of 100% * Interim dividend increased by 40% to 7.0p per ordinary share (2010: 5.0p) reflecting our intention to continue to return post-tax operating profits to shareholders promptly * Â£23.4m spent to buy back 2.3m shares (2010: 1.6m), bringing the return of cash including the dividend to Â£32.9m during the period (2010: Â£18.1m) * Period end cash balance of Â£17.9m (2010: Â£22.9m) * Page impressions on Rightmove websites up 23% to 4.8bn (2010: 3.9bn) * Number of advertisers up 2% so far this year at 18,480 (31 December 2010: 18,042) up 3% on a year ago (30 June 2010: 17,993) * Average revenue per advertiser up 18% at Â£430 per month (2010: Â£365) Ed Williams, Managing Director, said: "Rightmove is where UK home hunters find their next home. The success of our iPhone, iPad and mobile applications mean that people are now home hunting wherever they are, not just at home or work. People thinking of selling their home know it remains a challenging housing market, so they increasingly expect their estate agent to make sure that their property is advertised as prominently on Rightmove as possible. Continuing to grow revenue and profits in the current housing market is the result of the importance of Rightmove to home hunters and property advertisers alike and a tribute to all the efforts of our people." For more information please contact: Rightmove Ed Williams or Nick McKittrick Rightmove plc Press Office 0207 087 0605/ 07894 255295 * From continuing operations before share-based payments and National Insurance (NI) on share-based incentives. ________________________________________________________________________________ Half Year Statement Strategic position Our strategy remains to build on our market position as the UK's leading property website, to grow organically through our customers investing more in their presence on Rightmove, and to return the cash we generate to shareholders promptly. We have made further substantial progress against all three elements of our strategy. We have improved the home hunting experience, we have improved the effectiveness of Rightmove for our advertisers and we have increased the total cash returned to shareholders. Financial performance Revenue increased by 20% to Â£47.0m compared to the same period last year. Underlying operating profit* increased by 25% to Â£33.4m. The strong growth in operating profits reflects the operational leverage in the Rightmove business model as well as continued cost consciousness. Cash generated from operations was Â£32.3m, up Â£4.8m on the same period last year, with cash conversion in excess of 100%. Underlying earnings per share* rose 35% to 24.8p compared to 18.4p a year ago driven in the most part by the growth in profits. Diluted earnings per share on continuing operations rose 24% to 19.7p (2010: 15.9p). Highlights of operating performance Aspects of the operating performance for the first six months of 2011 which stand out are: * The general increase in home hunter activity and specifically the very rapid increase in the use of mobile devices. Internet site traffic rose, with May 2011 being our busiest month ever, and the gap from competitors continuing to widen. Mobile usage by June 2011 was accounting for 14% of all property searches on Rightmove and peaked at 20% on a single day for the first time. * The substantial increase in spending by our customers on Rightmove, up by 18%. The increase in spend came from a range of sources including price rises. A notable feature was the further growth in spend on additional advertising products which are used by our advertisers to promote their brand and wider proposition. Most key metrics strengthened in the first six months of 2011 compared to the first half of 2010: * Overall membership up 3% on June 2010 and up 2% since the start of the current year to 18,480 offices and developments * Retention rate among agents in line with the historical average and the churn rate among new home advertisers lower than the historical average * Average revenue per advertiser up 18% at Â£430 per month (2010: Â£365) * Revenue from additional advertising products up 45% at Â£11.3m (2010: Â£7.8m) * Page impressions on Rightmove websites up 23% to 4.8bn (2010: 3.9bn), keeping Rightmove firmly in the top 10 UK websites * Market share up 1% to 83% of all page impressions on the top four UK property websites and up from 55% to 59% of all property website page impressions in June 2011 as compared to June 2010. Agency Our number of estate agency and lettings only offices is up by 427 (+3%) since the start of the year to 15,242. This has been achieved against a backdrop of limited growth in the total number of agents following something of a rebound in late 2009 and early 2010. Retention rates are in line with historical levels (apart from 2008/9) with no material loss of agents from the most recent review of membership prices. Almost three quarters of all agents are taking additional products and spending more than Â£130 per month on those products. Further progress has been made with adoption of our "bundled" offering now running to a third of our smaller independent estate agent and lettings agent customers. All of our additional advertising products have sold well during the period and have increased penetration rates, with our display advertising products demonstrating the fastest rate of growth. Recently signed long-term agreements with our largest agency advertisers demonstrate a clear long-term intent to increase their usage of additional advertising products. New Homes New homes developers and development numbers are broadly unchanged since the start of the year (+10) at 2,691, reflecting the understandable caution in the house building industry. However, with average spend per development up by 13% to Â£513 per month compared to a year ago, overall revenue is higher than for the same period last year. The increased average spend reflects continued strong demand among developers for both our established additional advertising products and email campaigns. We have also made a promising start with our Development Microsite product for new home developers with initial signs indicating house builders are willing to spend more on Rightmove display products to attract home hunters to their dedicated particular area within Rightmove. Other Businesses The overseas property market continues to be challenging as a result of tightening consumer spend and lack of debt financing. Advertiser numbers are essentially unchanged since the start of the year at 547 (+1). Average spend per advertiser has fallen from Â£241 per month a year ago to Â£207 per month, reflecting the change in mix from the continued growth in private advertisers advertising a single property. Overall revenue is up 4% on a year ago, reflecting some additional revenue from business partnerships and advertising of non-property services relevant to overseas homes buyers and sellers. Revenue from our Data Services business is down Â£0.1m from a year ago at Â£0.6m, reflecting the continued challenging mortgage market. Uncertainties, threats and risks At a high level the Rightmove business could be vulnerable to three main 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. The competitive environment hasn't changed significantly from six months ago. Google withdrew from the property advertising market at the start of the year. Established competitors have increased their level of marketing activity over the last six months, but the gap between Rightmove and the nearest competitor has widened, providing further evidence that home hunter habits are increasingly deeply engrained in Rightmove. Since April 2009 Rightmove has been growing its property advertising revenue during a period in which spend in newspapers appears to have continued to fall after the large declines of 2008. Based on our own reported numbers we believe that Rightmove is growing much faster than any other form of property advertising media with meaningful revenues. Dividend, share buy backs and balance sheet The Board intends to pay an interim dividend of 7.0p (2010: 5.0p). As part of the Board's commitment to return cash promptly to shareholders, we have decided to increase the interim dividend at a faster rate than the increase in the underlying operating profit* in the half year. The interim dividend will be paid on 11 November 2011 to members on the register on 14 October 2011. Cash at the end of the period was Â£17.9m (2010: Â£22.9m). The final dividend paid in June together with Â£23.4m of share buy backs means that we have returned the cash generated by the business during the period. 2.3m shares were bought back during the period at an average price of Â£10.23 (2010: Â£6.68). Current trading and outlook Rightmove's trading in July has been in line with that during the first half of the year and our subscription revenue model gives us confidence in achieving our expected out-turn for the year. We do not believe that flat or modest falls in house prices would materially affect the outlook, provided that transaction volumes do not take a sharp downward turn, and expect to make further progress in 2012. Scott Forbes, Chairman Ed Williams, Managing Director 3 August 2011 * From continuing operations before share-based payments and National Insurance (NI) on share-based incentives. _______________________________________________________________________________ RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF YEAR REPORT 2011 We confirm that to the best of our knowledge: * The condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; * The interim management report includes a fair review of the information required by: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the financial year; and (b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group during that period; and any changes in the related party transactions described in the last annual report that could do so. By order of the Board of directors Scott Forbes, Chairman Ed Williams, Managing Director 3 August 2011 ____________________________________________________________________________________ CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME for the six months ended 30 June 2011 6 months 6 months ended ended Year ended Note 30 June 2011 30 June 2010 31 December 2010 Â£000 Â£000 Â£000 Continuing operations Revenue 3 46,957 39,222 81,556 Administrative expenses (18,219) (14,593) (29,490) Operating profit before share-based payments and NI on share-based 33,408 26,833 56,563 incentives Share-based payments 4 (1,171) (989) (1,846) NI on share-based 4 (3,499) (1,215) (2,651) incentives Operating profit 28,738 24,629 52,066 Financial income 5 96 62 171 Financial (expenses)/ 6 (85) (159) 8 credit Net financial income/ 11 (97) 179 (expenses) Profit before tax 28,749 24,532 52,245 Income tax expense 10 (7,210) (6,736) (13,710) Profit from continuing 21,539 17,796 38,535 operations Discontinued operation Profit from discontinued operation 7 234 17,278 19,467 (net of income tax) Profit for the period being total comprehensive 21,773 35,074 58,002 income Attributable to: Equity holders of the 21,773 35,074 58,002 Parent Earnings per share (pence) Basic 8 20.61 32.22 53.69 Diluted 8 19.91 31.25 52.08 Continuing operations Basic 8 20.39 16.35 35.67 Diluted 8 19.70 15.85 34.60 Dividends per share 9 9.00 7.00 12.00 (pence) Total dividends 9 9,499 7,586 12,957 . CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION as at 30 June 2011 Note 30 June 2011 30 June 2010 31 December 2010 Â£000 Â£000 Â£000 Non-current assets Property, plant and 1,212 1,256 1,488 equipment Intangible assets 1,331 1,376 1,463 Trade and other receivables 7,11 1,000 1,000 1,000 Contingent consideration 7 667 2,917 667 Deferred tax assets 10 9,524 3,771 6,675 Total non-current assets 13,734 10,320 11,293 Current assets Trade and other receivables 11 13,787 11,594 11,865 Contingent consideration 7 4,671 - 4,437 Cash and cash equivalents 12 17,902 22,866 23,148 Total current assets 36,360 34,460 39,450 Total assets 50,094 44,780 50,743 Current liabilities Trade and other payables 13 (19,847) (13,785) (15,989) Income tax payable (7,407) (6,911) (6,890) Total current liabilities (27,254) (20,696) (22,879) Net assets 22,840 24,084 27,864 Equity Share capital 1,124 1,173 1,147 Other reserves 308 259 285 Retained earnings 21,408 22,652 26,432 Total equity attributable to equity holders of the 14 22,840 24,084 27,864 Parent CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS for the six months ended 30 June 2011 Note 6 months ended 6 months ended Year ended 30 June 2011 30 June 2010 31 December 2010 Â£000 Â£000 Â£000 Cash flows from operating activities Profit for the period 21,773 35,074 58,002 Adjustments for: Depreciation charges 309 281 575 Amortisation charges 145 187 336 Loss on disposal of property, plant and - 33 76 equipment Loss on disposal of - - 1 intangible assets Financial income (96) (62) (171) Financial expenses/(credit) 85 159 (8) Share-based payments charge 4 1,171 989 1,846 Gain on sale of discontinued operation 7 (234) (16,502) (18,691) (net of income tax) Income tax expense 7,210 7,040 14,014 Operating cash flow before changes in working capital 30,363 27,199 55,980 Increase in trade and other (1,968) (2,516) (2,734) receivables Increase in trade and other 3,858 2,769 5,585 payables Increase in provisions - 4 4 Cash generated from 32,253 27,456 58,835 operations Interest paid (35) (103) (136) Income taxes paid (6,903) (4,878) (12,198) Net cash from operating 25,315 22,475 46,501 activities Cash flows from investing activities Interest received 142 53 109 Acquisition of property, (33) (322) (906) plant and equipment Acquisition of intangible (13) (7) (245) assets Proceeds on disposal of property, plant and - - 15 equipment Disposal of discontinued operation 7 - 13,693 13,284 (net of cash disposed of) Net cash from investing 96 13,417 12,257 activities Cash flows from financing activities Dividends paid 9 (9,499) (7,586) (12,957) Subsidiary dividends paid to minority shareholders 9 - (300) (300) Purchase of shares for 14 (23,359) (10,548) (29,358) cancellation Share related expenses 14 (163) (73) (206) Proceeds on exercise of 14 2,414 2,163 3,893 share options Repayment of borrowings - (22,500) (22,500) Debt issue costs (50) (75) (75) Net cash used in financing (30,657) (38,919) (61,503) activities Net decrease in cash and (5,246) (3,027) (2,745) cash equivalents Cash and cash equivalents at 23,148 25,893 25,893 1 January Cash and cash equivalents at 12 17,902 22,866 23,148 period end CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY for the six months ended 30 June 2011 EBT Reverse Share shares Treasury Other acquisition Retained Total capital reserve shares reserves reserve earnings equity Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 At 1 January 2010 1,189 (16,185) (11,917) 105 138 29,863 3,193 Total comprehensive - - - - - 35,074 35,074 income Profit for the period Transactions with owners recorded directly in equity Equity settled share-based - - - - - 989 989 incentives charge Tax in respect of share-based incentives - - - - - 873 873 recognised directly in equity Dividends to - - - - - (7,586) (7,586) shareholders Exercise of share - 1,317 - - - 846 2,163 options Cancellation of (16) - - 16 - (10,548) (10,548) own shares Share related - - - - - (74) (74) expenses At 30 June 2010 1,173 (14,868) (11,917) 121 138 49,437 24,084 At 1 January 2010 1,189 (16,185) (11,917) 105 138 29,863 3,193 Total comprehensive income Profit for the - - - - - 58,002 58,002 year Transactions with owners recorded directly in equity Equity settled share-based - - - - - 1,846 1,846 incentives charge Tax in respect of share-based incentives - - - - - 3,451 3,451 recognised directly in equity Dividends to - - - - - (12,957) (12,957) shareholders Exercise of share - 2,248 - - - 1,645 3,893 options Cancellation of (42) - - 42 - (29,358) (29,358) own shares Share related - - - - - (206) (206) expenses At 31 December 1,147 (13,937) (11,917) 147 138 52,286 27,864 2010 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 Equity settled share-based - - - - - 1,171 1,171 incentives charge Tax in respect of share-based incentives - - - - - 2,639 2,639 recognised directly in equity Dividends to - - - - - (9,499) (9,499) shareholders Exercise of share - 1,472 - - - 942 2,414 options 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 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 2011 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 2010 are available upon request to the Company Secretary from the Company's registered office at 4th Floor, 33 Soho Square, London, W1D 3QU or from the investor relations website at www.rightmove.co.uk/investors.rsp. Basis of preparation The condensed consolidated interim financial statements have been prepared 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 2010. The condensed consolidated interim financial statements were approved by the Board of directors on 3 August 2011. The half year results for the current and comparative period are unaudited. The auditor, KPMG Audit Plc, has carried out a review of the 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 2010 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 2010. Going concern Since the repayment of the Â£25,000,000 term loan in February 2010, the Group has been debt free and has continued to generate significant cash with cash balances of Â£17,902,000 (2010: Â£22,866,000). The Group entered into an agreement with Barclays Bank Plc for a Â£10,000,000 uncommitted money market loan on 15 February 2010. The loan was extended on 11 February 2011 for a further 12 month period. No amount was drawn down under this facility in either period. After making enquiries, the Board of directors have a reasonable 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 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, except as described below, are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2010. The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2011: (i) Amendment to IFRS 1 `First time adoption' - financial instrument disclosures provides first-time adopters with the same transition provisions as included in the amendments to IFRS 7, `Financial instruments: Disclosures', regarding comparative information for the new three-level classification disclosures. As the Group is not a first time adopter this amendment has had no impact on the Group's consolidated financial statements. (ii) Amendment to IAS 24 Related Party Disclosures removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. This has had no impact on the Group's consolidated financial statements. The same accounting policies are anticipated to be applied for the year ending 31 December 2011. Judgments and estimates The preparation of financial statements in conformity with Adopted IFRSs 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 7 Measurement of the contingent consideration receivable in relation to the disposal of the Holiday Lettings segment regarding the estimate of future profitability 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 internally 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 homes developers and Housing Associations on www.rightmove.co.uk. The Other segment which represents activities under the reportable segments threshold comprises overseas property advertising services on www.rightmove.co.uk and non-property advertising services which include business and information services and Automated Valuation Model services. Management monitors the business segments at a revenue and trade receivables level separately for the purpose of making decisions about resources to be allocated and of assessing performance. All revenues in all periods are derived from third parties and there are no inter-segment revenues. Operating costs, financial income, financial expenses and income taxes in relation to the Agency, New Homes and the Other segment are managed on a centralised basis at a Rightmove Group Limited level and as there are no internal measures of individual segment profitability relevant disclosures have been shown under the heading of Central in the table overleaf. 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 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 segments Six months ended 30 June 2011 Revenue 37,367 8,258 45,625 1,332 - - 46,957 Operating profit - - - - 33,408 (4,670) (2) 28,738 (1) Depreciation and - - - - (454) - (454) amortisation Financial income - - - - 96 - 96 Financial - - - - (85) - (85) expenses Trade receivables 8,996 2,956 11,952 244 - 44(4) 12,240 (3) Other segment - - - - 37,837 17 (5) 37,854 assets Segment - - - - (27,193) (61)(4)(5) (27,254) liabilities Capital - - - - 46 - 46 expenditure(6) Six months ended 30 June 2010 Revenue 30,166 7,652 37,818 1,404 - - 39,222 Operating profit - - - - 26,833 (2,204) 24,629 (1) (7) Depreciation and - - - - (401) - (401) amortisation Financial income - - - - 62 - 62 Financial credit - - - - (159) - (159) Trade receivables 7,498 2,407 9,905 411 - 48 (4) 10,364 (3) Other segment - - - - 34,416 - 34,416 assets Segment - - - - (20,629) (67) (4) (20,696) liabilities (5) Capital - - - - 290 32 (8) 322 expenditure(6) Year ended 31 December 2010 Revenue 63,795 15,078 78,873 2,683 - - 81,556 Operating profit - - - - 56,563 (4,497) 52,066 (1) (9) Depreciation and - - - - (845) - (845) amortisation Financial income - - - - 171 - 171 Financial - - - - 8 - 8 expenses Trade receivables 7,878 2,156 10,034 115 - 40 (4) 10,189 (3) Other segment - - - - 40,539 15 (5) 40,554 assets Segment - - - - (22,824) (55)(4)(5) (22,879) liabilities Capital - - - - 1,119 32 (8) 1,151 expenditure(6) (1) Operating profit is stated after the charge for depreciation and amortisation. (2) Operating profit for the six months ended 30 June 2011 does not include share-based payments charge (Â£1,171,000) and National Insurance (NI) on share-based incentives (Â£3,499,000). (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 adjustment 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 2010 does not include share-based payments charge (Â£989,000) and Employer's NI on share-based incentives (Â£1,215,000). (8) The adjustments column reflects capital expenditure of Â£32,000 in respect of the discontinued Holiday Lettings segment. (9) Operating profit for the year ended 31 December 2010 does not include share-based payments charge (Â£1,846,000) and NI on share-based incentives (Â£2,651,000). 4 Share-based payments Share awards Since flotation, the Company has awarded share options to executive directors and other selected employees designed to align the interests of employees with the long-term success of the business. Following approval by shareholders at the Annual General Meeting in May 2011, the executive unapproved and approved share option plans have been replaced by The Rightmove 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. All share-based incentives are subject to a service condition. The IFRS 2 charge for the six months ended 30 June 2011 relating to share-based incentive plans was Â£1,171,000 (2010: Â£989,000). Share options An IFRS 2 charge of Â£778,000 (2010: Â£785,000) is included in the statement of comprehensive income, being the amortisation of the value of all share options granted since 2006. There was no award of executive unapproved share options in the six months ended 30 June 2011 (2010: 440,919). The executive unapproved share options on 5 March 2010 were granted at an exercise price of Â£6.66. 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. NI is being accrued, where applicable, at a rate of 13.8%, which management expect to be the prevailing rate when the existing share options are exercised, on the difference between the share price at the period end date and the average exercise price of the share options. The charge for the six month period ended 30 June 2011 is Â£3,290,000 (2010: Â£1,172,000). Performance Share Plan In May 2011 following shareholder approval, a PSP was established. 164,258 PSP awards were made to executive directors and senior managers on 4 May 2011 (the Grant date) subject to EPS and TSR performance. Performance will be measured over three financial years (1 January 2011 - 31 December 2013). The vesting in March 2014 (Vesting date) of 25% of the 2011 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 2011 PSP award will be dependent on the satisfaction of an EPS growth target measured over a three-year performance period. The PSP awards have been valued using the Monte Carlo model and the resulting IFRS 2 charge is being spread evenly over the period between the Grant date and the Vesting date, being 34 months. The charge for the six months ended 30 June 2011 is Â£90,000 (2010: Â£nil). NI is being accrued, where applicable, at a rate of 13.8%, which management expects to be the prevailing rate when the PSP shares are released to the employees, based on the share price at the reporting date. The charge for the six month period ended 30 June 2011 is Â£15,000 (2010: Â£nil). Deferred share bonus plan (DSB) In March 2009 a DSB Plan was established which allows certain executive directors and senior managers the opportunity to earn a bonus determined as a percentage of base salary settled in deferred shares. The award of shares under the plan is contingent on the satisfaction of pre-set internal targets relating to underlying drivers of long-term revenue growth (the Performance period). The right to the shares is deferred for two years from the date of the award (the Vesting period) and potentially forfeitable during that period should the employee leave employment. The IFRS 2 charge is being spread evenly over the combined Performance period and Vesting period of the shares, being three years. Following the achievement of the 2010 internal performance targets, 118,467 nil cost option deferred shares were awarded to executive directors and senior management on 4 March 2011 (the Award date) with the right to the release of the shares deferred until March 2013. The IFRS 2 charge for the six months ended 30 June 2011 is Â£303,000 (2010: Â£204,000). NI is being accrued, where applicable, at a rate of 13.8%, which management expects to be the prevailing rate when the deferred shares are released to the employees, based on the share price at the reporting date. The charge for the six month period ended 30 June 2011 is Â£194,000 (2010: Â£43,000). All existing share-based incentives can be satisfied from shares held in The Rightmove Employees' Share Trust (EBT) or from shares held in treasury, without any requirement to issue further shares. 5 Financial income 6 months ended 6 months ended Year ended 30 June 2011 30 June 2010 31 December 2010 Â£000 Â£000 Â£000 Interest income on cash 96 62 171 balances 6 Financial expenses/(credit) 6 months ended 6 months ended Year ended 30 June 2011 30 June 2010 31 December 2010 Â£000 Â£000 Â£000 Debt issue costs 50 75 (125) Interest expense - 52 52 Other financial expenses 35 32 65 85 159 (8) 7 Discontinued operation On 21 June 2010 the Group sold its 66.7% shareholding in Holiday Lettings Holdings Limited (HLHL), which owned 100% of the shares in the trading entity Holiday Lettings Limited (HLL), to TripAdvisor Limited. 6 months ended 6 months ended Year ended 30 June 2011 30 June 2010 31 December 2010 Â£000 Â£000 Â£000 Results of discontinued operation Revenue - 3,059 3,059 Administrative expenses - (1,979) (1,979) Results from operating - 1,080 1,080 activities Income tax - (304) (304) Results from operating activities - 776 776 (net of income tax) Gain on sale of discontinued 234 16,502 18,691 operation Income tax on gain on sale of discontinued operation - - - Effect on profit for the period 234 17,278 19,467 Earnings per share (pence) Basic 0.22 15.87 18.02 Diluted 0.21 15.40 17.48 6 months ended 6 months ended Year ended 30 June 2011 30 June 2010 31 December 2010 Â£000 Â£000 Â£000 Cash flows from discontinued operations Net cash from operating - 1,856 1,856 activities Net cash from investing - 13,661 13,661 activities Net cash used in financing - (300) (300) activities Net cash from discontinued - 15,217 15,217 operation 6 months ended Year ended 30 June 2010 31 December 2010 Â£000 Â£000 Effect of the disposal on the financial position of the Group Property, plant and equipment (145) (145) Intangible assets (13,059) (13,059) Trade and other receivables (352) (352) Cash and cash equivalents (1,484) (1,484) Trade and other payables 3,238 3,238 Income tax payable 638 638 Deferred consideration 8,909 8,909 Provisions 10 10 Deferred tax liabilities 64 64 Net assets disposed of (2,181) (2,181) Consideration received, satisfied in cash 15,177 15,185 Contingent consideration 2,917 5,104 Amounts held in Escrow 1,000 1,000 Less costs to sell (411) (417) Net consideration 18,683 20,872 Consideration received, satisfied in cash 15,177 15,185 Cash and cash equivalents disposed of (1,484) (1,484) Less costs to sell - (417) Net cash inflow 13,693 13,284 The value of the contingent consideration is dependent on the performance of the Holiday Lettings segment for the 12 month period from 1 April 2010 to 31 March 2011. The value of the contingent consideration was revised upwards from Â£2,917,000 reported as at 30 June 2010 to Â£5,104,000 as at 31 December 2010 and has been further revised upwards to Â£5,338,000 as at 30 June 2011 based on unaudited results of the Holiday Lettings segment for the three months to 31 March 2011. The first Â£667,000 of contingent consideration will be transferred into an Escrow account, in addition to the Â£1,000,000 of completion proceeds already held in Escrow. The total estimated future cash consideration is Â£6,338,000 of which Â£1,667,000 has been 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 Â£000 Â£000 Â£000 per share Six months ended 30 June 2011 Basic EPS 105,628,029 21,539 234 21,773 20.61 Diluted EPS 109,334,879 21,539 234 21,773 19.91 Underlying basic EPS 105,628,029 26,209 234 26,443 25.03 Underlying diluted EPS 109,334,879 26,209 234 26,443 24.19 Six months ended 30 June 2010 Basic EPS 108,872,581 17,796 17,278 35,074 32.22 Diluted EPS 112,226,520 17,796 17,278 35,074 31.25 Underlying basic EPS 108,872,581 20,000 17,278 37,278 34.24 Underlying diluted EPS 112,226,520 20,000 17,278 37,278 33.22 Year ended 31 December 2010 Basic EPS 108,021,339 38,535 19,467 58,002 53.69 Diluted EPS 111,361,386 38,535 19,467 58,002 52.08 Underlying basic EPS 108,021,339 43,032 19,467 62,499 57.86 Underlying diluted EPS 111,361,386 43,032 19,467 62,499 56.12 Weighted average number of ordinary shares (basic) 6 months ended 6 months ended Year ended 30 June 2011 30 June 2010 31 December 2010 Number of shares Number of shares Number of shares Issued ordinary shares at 1 January less ordinary 108,439,105 111,504,537 111,504,537 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 (677,861) (492,599) (1,560,101) Effect of share options 372,215 366,073 582,333 exercised 105,628,029 108,872,581 108,021,339 Weighted average number of ordinary shares (diluted) For diluted EPS, the weighted average number of ordinary shares in issue 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 2011 30 June 2010 31 December 2010 Number of shares Number of shares Number of shares Weighted average number of ordinary shares (basic) 105,628,029 108,872,581 108,021,339 Dilutive impact of own shares held by the EBT and 3,706,850 3,353,939 3,340,047 shares held in treasury 109,334,879 112,226,520 111,361,386 Underlying EPS is calculated before the charge for share-based payments and NI on share-based incentives. A reconciliation of the basic earnings for the period to the underlying earnings is presented below: 6 months ended 6 months ended Year ended 30 June 2011 30 June 2010 31 December 2010 Â£000 Â£000 Â£000 Basic earnings for the 21,539 17,796 38,535 period Share-based payments 1,171 989 1,846 NI on share-based 3,499 1,215 2,651 incentives Earnings from continuing 26,209 20,000 43,032 operations Earnings from discontinued 234 17,278 19,467 operation Underlying earnings for the 26,443 37,278 62,499 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 2011 30 June 2010 31 December 2010 Pence per Pence per Pence per share Â£000 share Â£000 share Â£000 2009 final - - 7.0 7,586 7.0 7,586 dividend paid 2010 interim - - - - 5.0 5,371 dividend paid 2010 final 9.0 9,499 - - - - dividend paid 9.0 9,499 7.0 7,586 12.0 12,957 After the period end an interim dividend of 7.0p (2010: 5.0p) per qualifying ordinary share being Â£7,306,000 (2010: Â£5,403,000) was proposed by the Board of directors. The 2010 final dividend paid on 10 June 2011 was Â£9,499,000 (31 December 2010: Â£7,586,000) being a difference of Â£35,000 compared to that reported in the 2010 Annual Report which was due to a reduction in the ordinary shares entitled to a dividend between 31 December 2010 and the final dividend record date of 13 May 2011. The terms of the EBT provide that dividends payable on the ordinary shares held by the EBT are waived. No provision was made for the interim dividend in either period and there are no income tax consequences. Subsidiary dividends Dividends of Â£300,000 were paid in 2010 by HLHL to minority shareholders. As no minority interest was recognised in the consolidated statement of financial position and the Group consolidated 100% of HLHL's results prior to its disposal, the dividends paid in 2010 were treated as an addition to goodwill. 10 Taxation The income tax expense is recognised based on management's best estimate of 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 2011 was 25% (2010: 27%). The difference between the standard rate and the effective rate at 30 June 2011 is attributable to credits as a result of the increase in the deferred tax asset arising on share-based incentives and corporation tax deductions arising on exercise of share options. The net deferred tax asset of Â£9,524,000 at 30 June 2011 (2010: Â£3,771,000) is in respect of equity settled share-based incentives and depreciation in excess of capital allowances. 11 Trade and other receivables 30 June 2011 30 June 2010 31 December 2010 Â£000 Â£000 Â£000 Trade receivables 12,590 10,580 10,560 Less provision for impairment of (350) (216) (371) trade receivables Net trade receivables 12,240 10,364 10,189 Amounts held in Escrow (refer 1,000 1,000 1,000 Note 7) Prepayments and accrued income 1,496 1,186 1,577 Interest receivable 16 9 62 Other debtors 35 35 37 14,787 12,594 12,865 Non-current 1,000 1,000 1,000 Current 13,787 11,594 11,865 14,787 12,594 12,865 12 Cash and cash equivalents 30 June 2011 30 June 2010 31 December 2010 Â£000 Â£000 Â£000 Bank accounts 17,902 22,866 23,148 Cash balances were placed on deposit for varying lengths between one day and two weeks during the period and attracted interest at a weighted average rate of 0.6% (2010: 0.7%). 13 Trade and other payables 30 June 2011 30 June 2010 31 December 2010 Â£000 Â£000 Â£000 Trade payables 505 409 1,033 Trade accruals 7,620 3,809 4,734 Other creditors 49 237 240 Other taxation and social 3,901 3,006 3,223 security Deferred revenue 7,772 6,324 6,759 19,847 13,785 15,989 14 Reconciliation of movement in capital and reserves EBT Reverse Share shares Treasury Other acquisition Retained Total capital reserve shares reserves reserve earnings equity Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 At 1 January 2010 1,189 (16,185) (11,917) 105 138 29,863 3,193 Total comprehensive - - - - - 35,074 35,074 income Profit for the period Equity settled share-based - - - - - 989 989 incentives charge Tax in respect of share-based incentives - - - - - 873 873 recognised directly in equity Dividends to - - - - - (7,586) (7,586) shareholders Exercise of share - 1,317 - - - 846 2,163 options Cancellation of (16) - - 16 - (10,548) (10,548) own shares Share related - - - - - (74) (74) expenses At 30 June 2010 1,173 (14,868) (11,917) 121 138 49,437 24,084 At 1 January 2010 1,189 (16,185) (11,917) 105 138 29,863 3,193 Total comprehensive income Profit for the - - - - - 58,002 58,002 year Equity settled share-based - - - - - 1,846 1,846 incentives charge Tax in respect of share-based incentives - - - - - 3,451 3,451 recognised directly in equity Dividends to - - - - - (12,957) (12,957) shareholders Exercise of share - 2,248 - - - 1,645 3,893 options Cancellation of (42) - - 42 - (29,358) (29,358) own shares Share related - - - - - (206) (206) expenses At 31 December 2010 1,147 (13,937) (11,917) 147 138 52,286 27,864 2010 At 1 January 2011 1,147 (13,937) (11,917) 147 138 52,286 27,864 Total comprehensive - - - - - 21,773 21,773 income Profit for the period Equity settled share-based - - - - - 1,171 1,171 incentives charge Tax in respect of share-based incentives - - - - - 2,639 2,639 recognised directly in equity Dividends to - - - - - (9,499) (9,499) shareholders Exercise of share - 1,472 - - - 942 2,414 options 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 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 2011 was 2,283,615 (2010: 1,578,775 shares) representing 2.0% (2010: 1.3%) of the ordinary shares in issue (excluding shares held in treasury). All the shares bought back in the period were cancelled and no shares were transferred to treasury. The shares were acquired on the open market at a total consideration (excluding costs) of Â£23,359,000 (2010: Â£10,548,000). The maximum and minimum prices paid were Â£10.99 (2010: Â£6.90) and Â£9.04 (2010: Â£6.09) 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. 718,178 options were exercised in the period (2010: 642,613) at an average price of Â£3.36 (2010: Â£3.38) per ordinary share, which were satisfied by shares held in the EBT. At 30 June 2011 the EBT held 5,604,151 (2010: 6,776,261) ordinary shares of Â£0.01 each in the Company representing 5.1% (2010: 5.9%) 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 Â£66,801,000 (2010: Â£42,690,000). Other reserves The movement on other reserves of Â£23,000 (2010: Â£16,000) comprises the nominal value of ordinary shares cancelled during the period. Retained earnings The gain on exercise of share options is the difference between the value that the shares held by the EBT were originally acquired at and the price at which share options were exercised during the year. 15 Related parties Inter-group transactions with subsidiaries During the period Rightmove plc was charged interest of Â£152,000 (2010: Â£392,000) by Rightmove Group Limited in respect of balances owing under the inter-group loan agreement dated 30 January 2008. As at 30 June 2011 the balance owing under this agreement was Â£57,236,000 (2010: Â£90,723,000) including capitalised interest of Â£152,000 (2010: Â£2,229,000). 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 set of financial statements in the half year report for the six months ended 30 June 2011 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 set of 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 set of 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 set of 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 set of financial statements in the half year report for the six months ended 30 June 2011 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 3 August 2011 _________________________________________________________________________________ ADVISERS AND SHAREHOLDER INFORMATION Contacts Managing Director Ed Williams Chief Operating Officer and Finance Director Nick McKittrick Company Secretary Liz Taylor Website www.rightmove.co.uk Financial Calendar 2011 Half year results 3 August 2011 Interim dividend record date 14 October 2011 Interim Management Statement 10 November 2011 Interim dividend payment 11 November 2011 Full year results 24 February 2012 Registered office Rightmove plc 4th Floor 33 Soho Square London W1D 3QU Registered in England no. 6426485 Corporate advisers Financial adviser UBS Investment Bank Joint brokers UBS Limited Numis Securities Limited Auditor KPMG Audit Plc Bankers Barclays Bank Plc HSBC Bank Plc Solicitors Slaughter and May Pinsent Masons Registrar Capita Registrars 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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