REG - Rightmove Plc - Half-year Report <Origin Href="QuoteRef">RMV.L</Origin> - Part 2
27/07/2016 07:05
- Part 2: For the preceding part double click ID:nRSa3025Fa
released and sold to
satisfy the award is equivalent to the gain due to the option holder.
Consequently no proceeds are received on exercise of unapproved share
options.
The total share-based payments charge for the six months ended 30 June 2016
relating to all share-based incentive plans was £1,957,000 (2015:
£1,805,000).
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 credit for the six months
ended
30 June 2016 relating to all awards was £218,000 (2015: charge of £1,804,000).
The share price at 30 June 2016 was £36.48 (30 June 2015: £32.77).
Approved and Unapproved Plans
There has been no award of share options since 5 March 2010.
Performance Share Plan (PSP)
The PSP permits awards of nil cost options or contingent shares which will
only vest in the event of prior satisfaction of a performance condition.
89,041 PSP awards were made on 1 March 2016 (the Grant Date) subject to
Earnings Per Share (EPS) and Total Shareholders Return (TSR) performance.
Performance will be measured over three financial years
(1 January 2016 - 31 December 2018). The vesting in March 2019 (Vesting Date)
of 25% of the 2016 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 2016 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 for the TSR element and the Black
Scholes model for the EPS element and the resulting charge is being spread
over the period between Grant Date and Vesting Date.
PSP award holders are entitled to receive dividends accruing between the Grant
Date and the Vesting Date and this value will be delivered in shares.
Deferred share bonus plan (DSP)
In March 2009 a DSP was established which allows executive directors and other
selected senior management the opportunity to earn a bonus determined as a
percentage of base salary settled in nil cost deferred shares. The award of
shares under the plan is contingent on the satisfaction of pre-set internal
targets relating to underlying drivers of long-term revenue growth (the
Performance Period). The right to the shares is deferred for two years from
the date of the award (the Vesting Period) and potentially forfeitable during
that period should the employee leave employment. The deferred share awards
have been valued using the Black Scholes model and the resulting share-based
payments charge is being spread evenly over the combined Performance Period
and Vesting Period of the shares, being three years.
Following the achievement of 100% of the 2015 internal performance targets,
36,276 nil cost deferred shares were awarded to executives and senior
management on 1 March 2016 with the right to the release of the shares
deferred until March 2018.
Share Incentive Plan (SIP)
In November 2014, the Group established the Rightmove Share Incentive Plan
(SIP). Employees were offered 50 free shares (2014: 100) subject to a three
year service period (the Vesting Period), with effect from 4 January 2016. The
SIP awards have been valued using the Black Scholes model and the resulting
share-based payments charge spread evenly over the Vesting Period of 3 years.
The SIP shareholders are entitled to a dividend paid in cash over the Vesting
Period.
The Rightmove Employees' Share Trust (EBT) used surplus cash held by the EBT
to purchase 12,700 shares in December 2015 to fund the share requirements of
the SIP, with a further 250 purchased in January 2016. These shares were
subsequently transferred into the Rightmove Share Incentive Plan (SIP) Trust
in 2016.
5 Earnings per share (EPS)
Weighted average Total earnings Pence
number of ordinary shares £000 per share
Six months ended 30 June 2016
Basic EPS 94,425,506 64,609 68.42
Diluted EPS 95,390,183 64,609 67.73
Underlying basic EPS 94,425,506 66,348 70.26
Underlying diluted EPS 95,390,183 66,348 69.55
Six months ended 30 June 2015
Basic EPS 96,435,311 53,200 55.17
Diluted EPS 97,512,732 53,200 54.56
Underlying basic EPS 96,435,311 56,809 58.91
Underlying diluted EPS 97,512,732 56,809 58.26
Year ended 31 December 2015
Basic EPS 96,014,753 109,468 114.01
Diluted EPS 97,097,566 109,468 112.74
Underlying basic EPS 96,014,753 116,564 121.40
Underlying diluted EPS 97,097,566 116,564 120.05
Weighted average number of ordinary shares (basic)
6 months ended 6 months ended Year ended
30 June 2016 30 June 2015 31 December 2015
Number of shares Number of shares Number of shares
Issued ordinary shares at 1 January less ordinary shares held by the EBT and SIP Trust 97,318,120 99,396,818 99,396,818
Effect of own shares held in treasury (2,322,314) (2,505,430) (2,505,430)
Effect of own shares purchased for cancellation (589,208) (515,665) (1,034,666)
Effect of share-based incentives exercised 19,151 59,588 158,344
Effect of shares purchased by the EBT (243) - (313)
94,425,506 96,435,311 96,014,753
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, SIP Trust and shares held in treasury.
6 months ended 6 months ended Year ended
30 June 2016 30 June 2015 31 December 2015
Number of shares Number of shares Number of shares
Weighted average number of ordinary shares (basic) 94,425,506 96,435,311 96,014,753
Dilutive impact of share-based incentives outstanding 964,677 1,077,421 1,082,813
95,390,183 97,512,732 97,097,566
Underlying EPS is calculated before the charge for share-based payments and NI
on share-based incentives but without any adjustment to the tax charge in
respect of these items. A reconciliation of the basic earnings for the period
to the underlying earnings is presented below:
6 months ended 6 months ended Year ended
30 June 2016 30 June 2015 31 December 2015
£000 £000 £000
Basic earnings for the period 64,609 53,200 109,468
Share-based payments 1,957 1,805 3,765
NI charge on share-based incentives (218) 1,804 3,331
Underlying earnings for the period 66,348 56,809 116,564
6 Dividends
Company dividends
Dividends declared and paid by the Company were as follows:
6 months ended 30 June 2016 6 months ended Year ended 31 December 2015
30 June 2015
Pence per share £000 Pence per share £000 Pence per share £000
2014 final dividend paid - - 22.0 21,162 22.0 21,162
2015 interim dividend paid - - - - 16.0 15,307
2015 final dividend paid 27.0 25,442 - - - -
27.0 25,442 22.0 21,162 38.0 36,469
After the period end an interim dividend of 19p (2015: 16.0p) per qualifying
ordinary share being £17,936,000 (2015: £15,353,000) was proposed by the Board
of directors.
The 2015 final dividend paid on 3 June 2016 was £25,442,000 (2014 final
dividend: £21,162,000) being a difference of £105,000 compared to that
reported in the 2015 Annual Report which was due to a decrease in the ordinary
shares entitled to a dividend between 31 December 2015 and the final dividend
record date of 6 May 2016.
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.
7 Taxation
The income tax expense of £15,942,000 (2015: £13,422,000) is recognised based
on management's best estimate of the weighted average annual income tax rate
expected for the full financial year applied to the profit before tax for the
interim period. The Group's consolidated effective tax rate for the six months
ended 30 June 2016 was 19.8% (2015: 20.2%). The difference between the
standard rate of 20.0% and the effective rate at 30 June 2016 is attributable
to a credit in respect of research and development for 2015 of 0.2%.
Deferred tax is presented net on the balance sheet in so far as a right of
offset exists. The deferred tax asset of £6,840,000 at 30 June 2016 (30 June
2015: £5,834,000) is in respect of equity settled share-based incentives and
depreciation in excess of capital allowances. The deferred tax asset arising
on equity settled share-based incentives was recognised in profit or loss to
the extent that the related equity settled share-based payments charge was
recognised in the statement of comprehensive income. The deferred tax
liability of £49,000 at 30 June 2016 (30 June 2015: nil) is in respect of the
intangible asset recognised on acquisition of The Outside View Analytics
Limited.
A reduction in the UK corporation tax rate from 21% to 20% (effective from 1
April 2015) was substantively enacted on
2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to
18% (effective from 1 April 2020) were substantively enacted on 26 October
2015. This will reduce the Group's future tax charge accordingly. The deferred
tax asset at 30 June 2016 has been calculated based on the rate of 19% which
represents the average expected rate at which this asset will reverse in the
future. An additional reduction to 17% (effective from 1 April 2020) was
announced in the Budget on
16 March 2016. This will reduce the company's future current tax charge and
net deferred tax asset accordingly.
8 Trade and other receivables
30 June 2016 30 June 2015 31 December 2015
£000 £000 £000
Trade receivables 27,952 25,008 25,055
Less provision for impairment of trade receivables (446) (459) (446)
Net trade receivables 27,506 24,549 24,609
Prepayments 3,317 2,471 2,529
Accrued income 338 222 301
Interest receivable 12 15 25
Other debtors 138 104 59
31,311 27,361 27,523
9 Trade and other payables
30 June 2016 30 June 2015 31 December 2015
£000 £000 £000
Trade payables 1,514 790 592
Trade accruals 7,083 6,475 7,336
Other creditors 261 254 69
Other taxation and social security 7,982 6,424 7,428
Deferred revenue 17,378 15,132 16,193
34,218 29,075 31,618
10 Reconciliation of movement in capital and reserves
Share buy back
In June 2007, the Company commenced a share buyback programme to purchase its
own ordinary shares. The total number of shares bought back in the six months
to 30 June 2016 was 1,042,915 (2015: 1,081,955 shares) representing 1.1%
(2015: 1.1%) of the ordinary shares in issue (excluding shares held in
treasury). All the shares bought back in the period were cancelled. The shares
were acquired on the open market at a total consideration (excluding costs) of
£40,527,000 (2015: £31,702,000). The maximum and minimum prices paid were
£42.50 (2015: £33.50) and £33.11 (2015: £21.18) per share respectively.
EBT shares reserve
This reserve represents the carrying value of own shares held by the EBT. An
additional 911 (2015: 2,173) shares were issued as a result of rolled up
dividend payments in relation to performance shares. On 22 December 2015, the
EBT used surplus cash held by the EBT to purchase 12,700 shares for use by the
SIP and a further 250 shares were acquired in
January 2016. There shares were transferred to the SIP in 2016.
At 30 June 2016, the EBT held 361,133 (2015: 449,380) ordinary shares in the
Company of £0.01 each, representing 0.4% (2015: 0.5%) of the ordinary shares
in issue (excluding shares held in treasury). The market value of the shares
held by the EBT at 30 June 2016 was £13,174,000 (2015: £14,726,000).
6 months ended 6 months ended Year ended
30 June 2016 30 June 2015 31 December 2015
Number of shares Number of shares Number of shares
Shares held in EBT at 1 January 386,057 596,499 596,499
Shares purchased for SIP 250 - 12,700
Shares transferred to SIP (12,950) (38,300) (38,300)
Share-based incentives exercised in period (12,224) (106,646) (181,552)
Increase in shares released from EBT due to rolled up dividend payments - (2,173) (3,290)
Shares held in EBT at period end 361,133 449,380 386,057
SIP shares reserve
In November 2014, the Group established the Rightmove Share Incentive Plan
Trust (SIP). This reserve represents the cost of acquiring shares less any
exercises or releases of SIP awards. On 4 January 2016 employees of the Group
were offered 50 free shares (2015: 100) subject to a three year service
period. During the period there were no (2015: 100) shares released by the SIP
in relation to good leavers and retirees.
At 30 June 2016 the SIP Trust held 50,750 (2015: 38,200) ordinary shares in
the Company of £0.01 each, representing 0.05% (2015: 0.04%) of the ordinary
shares in issue (excluding shares held in treasury). The market value of the
shares held in the SIP Trust at the period end was £1,851,000 (30 June 2015:
£1,252,000).
6 months ended 6 months ended Year ended
30 June 2016 30 June 2015 31 December 2015
Number of shares Number of shares Number of shares
Shares held in SIP at 1 January 37,800 - -
Shares transferred into SIP from EBT 12,950 38,300 38,300
SIP releases in the period - (100) (500)
Shares held in SIP at period end 50,750 38,200 37,800
10 Reconciliation of movement in capital and reserves (continued)
Treasury Shares
This represents the cost of acquiring shares held in treasury less any
exercises of share-based incentives. These shares were bought back in 2008 at
an average price of £4.76 and may be used to satisfy certain share-based
incentive awards.
6 months ended 6 months ended Year ended
30 June 2016 30 June 2015 31 December 2015
Number of shares Number of shares Number of shares
Shares at 1 January 2,322,314 2,505,430 2,505,430
Share-based incentives exercised in year (24,799) - (199,751)
Reduction in shares released due to net settlement - - 19,930
Increase in shares released due to rolled up dividend payments (911) - (3,295)
Shares at period end 2,296,604 2,505,430 2,322,314
Other reserves
This represents the Capital Redemption Reserve in respect of own shares bought
back and cancelled. The movement in other reserves of £10,000 (2015: £11,000)
comprises the nominal value of ordinary shares cancelled during the period.
Retained earnings
The loss on exercise of share-based incentives is the difference between the
value that the shares held by the EBT and treasury shares were originally
acquired at and the exercise price at which share-based incentives were
exercised during the period.
11 Related parties
Inter-group transactions with subsidiaries
During the period Rightmove plc was charged interest of £315,000 (2015:
£289,540) by Rightmove Group Limited in respect of balances owing under the
inter-group loan agreement dated 30 January 2008. As at 30 June 2016 the
balance owing under this agreement was £29,279,000 (30 June 2015: £31,283,000)
including capitalised interest.
On 30 June 2016 Rightmove Group Limited declared an interim dividend of 55p
per ordinary share to the Company. The dividend of £71,170,000 was settled via
a reduction in the inter-group loan balance owed by Rightmove plc to Rightmove
Group Limited. Rightmove Group Limited also declared a dividend in specie of
£517,000 (2015: nil), representing the cost of the SIP shares transferred from
the EBT to the SIP.
Transactions with key management staff
There were no transactions with key management staff in any period.
12 Acquisition of subsidiary
On 31st May 2016, Rightmove Group Limited, a subsidiary of Rightmove plc,
acquired the entire ordinary share capital of The Outside View Analytics
Limited ("Outside View"), a predictive analytics business. Outside View have
developed an algorithm to predict which homeowners are most likely to sell
their property in the next 180 days. Rightmove Group Limited plans to launch
an enhanced version of the product using its combined know how and unique
dataset. The product will help customers to identify and market to their
target audience and will complement the Local Valuation Alert product. The
total cash consideration paid of £2,096,000 excludes acquisition costs of
£42,000 recognised as an expense in the period within administrative expenses
in the Condensed Consolidated Interim Statement of Comprehensive Income.
The following table provides a reconciliation of the amounts included in the
consolidated statement of cash flows.
Net cash flow on acquisition 6 months ended
30 June 2016
£000
Cash paid for subsidiary (2,096)
Cash acquired 50
Net cash outflow (2,046)
In the month to 30 June 2016, Outside View contributed revenue of £47,000 and
profit of £24,000 to the Group's results.
12 Acquisition of subsidiary (continued)
The following table details the fair values of the assets and liabilities
acquired at the date of acquisition. The fair value adjustments detailed have
been determined on a provisional basis in accordance with IFRS 3:
Net assets acquired Carrying values pre-acquisition Fair value adjustments Fair values
£000 £000 £000
Non-current assets
Property, plant and equipment 9 - 9
Intangible assets - market appraisal algorithm - 309 309
Current assets
Trade and other receivables(1) 191 (2) 189
Cash and cash equivalents 50 - 50
Current liabilities (145) - (145)
Non-current liabilities
Deferred tax liabilities - (49) (49)
Fair value of net assets acquired 105 258 363
Cash consideration 2,096
Total consideration 2,096
Goodwill 1,733
(1) The receivables acquired (which principally comprised trade receivables)
with a fair value of £191,000 had gross contractual amounts of £210,000. The
best estimate at acquisition date of the contractual cash flows not expected
to be collected is £21,000.
The goodwill recognised on acquisition represents value arising from
intangible assets that are not separately identifiable under IFRS 3. These
items include the skills and knowledge of Outside View's workforce as well as
the ability to develop an enhanced product and service offering that the Board
believe will drive an increase in the quantity and quality of predictive
analytical data services provided to customers.
In addition to the goodwill recognised on consolidation, the market appraisal
algorithm and supporting technology obtained through the acquisition met the
requirements to be separately identifiable under IFRS 3. The fair value has
been obtained by estimating the cost of independently building similar
technology. The asset will be amortised over its useful economic life of three
years. A deferred tax liability has been recognised in respect of this asset
and will be unwound over the useful economic life.
INDEPENDENT REVIEW REPORT TO RIGHTMOVE PLC
Introduction
We have been engaged by the Company to review the condensed set of
consolidated financial statements in the half-yearly financial report for the
six months ended 30 June 2016 which comprises the Condensed Consolidated
Interim Statement of Comprehensive Income, Condensed Consolidated Interim
Statement of Financial Position, Condensed Consolidated Interim Statement of
Cash Flow and Condensed Consolidated Interim Statement of Changes in
Shareholders' Equity and the related explanatory notes. We have read the
other information contained in the half-yearly financial 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 Conduct Authority
("the UK FCA"). Our review has been undertaken so that we might state to the
company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company for our review work,
for this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this half-yearly financial 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
set of financial statements in the half-yearly financial report based on our
review.
Scope ofreview
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-yearly financial report for the six months ended 30 June 2016 is not
prepared, in all material respects, in accordance with IAS 34 as adopted by
the EU and the DTR of the UK FCA.
Karen Wightman
for and on behalf of KPMG LLP
Chartered Accountants
Altius House
One North Fourth Street
Milton Keynes
MK9 1NE
27 July 2016
ADVISERS AND SHAREHOLDER INFORMATION
Contacts Registered office Corporate advisers
Chief Executive Officer: Nick McKittrick Rightmove plc Financial adviser
Chief Operating Officer: Peter Brooks-Johnson Turnberry House UBS Investment Bank
Finance Director and Company Secretary:
Robyn Perriss 30 Caldecotte Lake Drive
Caldecotte Joint brokers
Milton Keynes UBS Limited
MK7 8LE Numis Securities Limited
Registered inEngland no. 6426485
Financial calendar 2016 Auditor
Half year results 27 July 2016 KPMG LLP
Interim dividend record date 7 October 2016 Bankers
Interim dividend payment 4 November 2016 Barclays Bank Plc
Full year results 24 February 2017 HSBC Bank Plc
Santander UK plc
Solicitors
Slaughter and May
Pinsent Masons
Registrar
Capita Asset Services*
*Shareholder enquiries
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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 Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Capita Asset Services is a trading name of Capita Registrars Limited.
Capita shareholder helpline: 0871 664 0300 (calls cost 10p per minute plus
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Email: shareholderenquiries@capita.co.uk
Share portal: www.capitashareportal.com
Through the website of our registrar, Capita Asset Services, shareholders are
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instructions.
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