REG - Rightmove Plc - Half-year Report <Origin Href="QuoteRef">RMV.L</Origin> - Part 2
28/07/2017 07:06
- Part 2: For the preceding part double click ID:nRSb3503Ma
- - - - (209) - (209)
Trade receivables(3) 19,040 5,266 24,306 2,188 - 139(4) 26,633
Other segment assets - - - - 33,753 68(4) 33,821
Segment liabilities - - - - (52,205) (207)(4) (52,412)
Capital expenditure(5) - - - - 1,759 - 1,759
(1) Operating profit is stated after the charge for depreciation and
amortisation.
(2) Operating profit for the six months ended 30 June 2017 includes
share-based payments charge of £2,714,000
(30 June 2016: £1,957,000) and NI charge on share-based incentives of
£736,000 (30 June 2016: credit of £218,000).
(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) These adjustments reflect the reclassification of credit balances in
accounts receivable and debit balances in accounts payable made on
consolidation for statutory accounts purposes.
(5) Capital expenditure consists of additions of property, plant and equipment
and intangible assets (excluding goodwill and intangibles on the acquisition
of The Outside View Analytics Limited).
(6) Operating profit for the year ended 31 December 2016 includes share-based
payments charge of £4,142,000 and NI charge on share-based incentives of
£451,000.
4 Share-based payments
The Group operates share-based incentive schemes for executive directors and
employees. Since flotation, the Company has awarded share options under the
Rightmove Unapproved Executive Share Option Plan (Unapproved Plan) and the
Rightmove Approved Executive Share Option Plan (Approved Plan). The Group also
operates a Savings Related Share Option Scheme (Sharesave Plan), a Deferred
Share Bonus Plan (DSP) and Performance Share Plan (PSP) and in November 2014,
the Rightmove Share Incentive Plan (SIP) was established.
All share-based incentives are subject to a service condition. Such conditions
are not taken into account in the fair value of the service received. The fair
value of services received in return for share-based incentives is measured by
reference to the fair value of share-based incentives granted. The estimate of
the fair value of the share-based incentives is measured using either the
Monte Carlo or Black Scholes pricing model as is most appropriate for each
scheme.
During 2013 the Group amended the rules of the Unapproved Plan to enable such
awards to be net settled whereby the number of shares released 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 2017
relating to all share-based incentive plans was £2,714,000 (2016:
£1,957,000).
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 2017 relating to all awards was £736,000 (2016: credit of
£218,000). The share price at 30 June 2017 was £42.50 (30 June 2016: £36.48).
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.
34,720 PSP awards were made on 1 March 2017 (the Grant Date) subject to
Earnings Per Share (EPS) and Total Shareholders Return (TSR) performance. A
further 3,457 awards were made to Peter Brooks-Johnson on 9 May 2017 to bring
his 2017 PSP award in line with his Chief Executive Officer salary.
Performance for all 2017 awards will be measured over three financial years (1
January 2017 - 31 December 2019). The vesting in March and May 2020 (Vesting
Date) of 25% of the 2017 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 2017 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 three year 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 92% of the 2016 internal performance targets,
38,416 nil cost deferred shares were awarded to executives and senior
management on 1 March 2017 with the right to the release of the shares
deferred until March 2019.
Share Incentive Plan (SIP)
In November 2014, the Group established the Rightmove Share Incentive Plan
(SIP). Employees were offered 50 free shares (2016: 50) subject to a three
year service period (the Vesting Period), with effect from 1 January 2017. The
SIP awards have been valued using the Black Scholes model and the resulting
share-based payments charge spread evenly over the Vesting Period of three
years. The SIP shareholders are entitled to a dividend paid in cash over the
Vesting Period.
The Rightmove Employees' Share Trust (EBT) used surplus cash held by the EBT
to purchase 20,000 shares in December 2016 to fund the share requirements of
the SIP. These shares were subsequently transferred into the SIP Trust in
2017.
5 Earnings per share (EPS)
Weighted average Total earnings Pence
number of ordinary shares £000 per share
Six months ended 30 June 2017
Basic EPS 92,419,550 70,745 76.55
Diluted EPS 93,419,854 70,745 75.73
Underlying basic EPS 92,419,550 74,195 80.28
Underlying diluted EPS 93,419,854 74,195 79.42
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
Year ended 31 December 2016
Basic EPS 93,960,353 129,542 137.87
Diluted EPS 94,967,543 129,542 136.41
Underlying basic EPS 93,960,353 134,135 142.76
Underlying diluted EPS 94,967,543 134,135 141.24
Weighted average number of ordinary shares (basic)
6 months ended 6 months ended Year ended
30 June 2017 30 June 2016 31 December 2016
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 95,096,841 97,318,120 97,318,120
Effect of own shares held in treasury (2,271,725) (2,322,314) (2,322,314)
Effect of own shares purchased for cancellation (458,764) (589,208) (1,069,275)
Effect of share-based incentives exercised 53,198 19,151 34,560
Effect of shares purchased by the EBT - (243) (738)
92,419,550 94,425,506 93,960,353
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 2017 30 June 2016 31 December 2016
Number of shares Number of shares Number of shares
Weighted average number of ordinary shares (basic) 92,419,550 94,425,506 93,960,353
Dilutive impact of share-based incentives outstanding 1,000,304 964,677 1,007,190
93,419,854 95,390,183 94,967,543
Underlying EPS is calculated by taking basic earnings for the year and adding
back the charge for share-based payments and the charge for 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 2017 30 June 2016 31 December 2016
£000 £000 £000
Basic earnings for the period 70,745 64,609 129,542
Share-based payments 2,714 1,957 4,142
NI on share-based incentives 736 (218) 451
Underlying earnings for the period 74,195 66,348 134,135
6 Dividends
Company dividends
Dividends declared and paid by the Company were as follows:
6 months ended 30 June 2017 6 months ended Year ended 31 December 2016
30 June 2016
Pence per share £000 Pence per share £000 Pence per share £000
2015 final dividend paid - - 27.0 25,442 27.0 25,442
2016 interim dividend paid - - - - 19.0 17,764
2016 final dividend paid 32.0 29,507 - - - -
32.0 29,507 27.0 25,442 46.0 43,206
After the period end an interim dividend of 22.0p (2016: 19.0p) per qualifying
ordinary share being £20,219,000 (2016: £17,936,000) was proposed by the Board
of directors.
The 2016 final dividend paid on 2 June 2017 was £29,507,000 (2015 final
dividend: £25,442,000) being a difference of £(189,000) compared to that
reported in the 2016 Annual Report which was due to a decrease in the ordinary
shares entitled to a dividend between 31 December 2016 and the final dividend
record date of 5 May 2017.
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 £16,792,000 (2016: £15,942,000) 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
six month period. The Group's consolidated effective tax rate for the six
months ended 30 June 2017 was 19.2% (2016: 19.8%). The difference between the
standard rate of 19.3% and the effective rate at 30 June 2017 is attributable
to a prior year adjustment of 0.2% in respect of tax relief, offset by
disallowable expenditure of 0.1%.
The deferred tax asset of £7,424,000 (2016: £6,791,000) is presented net on
the balance sheet in so far as a right of offset exists. The deferred tax
asset of £7,455,000 at 30 June 2017 (2016: £6,840,000) 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 £31,000 at 30 June 2017
(2016: £49,000) 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 1 April 2020) were
substantively enacted on 26 October 2015, and an
additional reduction to 17% (effective 1 April 2020) was substantively enacted
on 6 September 2016. This will reduce the Group's future tax charge
accordingly. The deferred tax asset at 30 June 2017 has been calculated based
on the rate of 19% which represents the average expected rate at which this
asset will reverse in the future.
8 Trade and other receivables
30 June 2017 30 June 2016 31 December 2016
£000 £000 £000
Trade receivables 30,515 27,952 27,061
Less provision for impairment of trade receivables (437) (446) (428)
Net trade receivables 30,078 27,506 26,633
Prepayments 4,030 3,317 2,826
Accrued income 326 338 338
Interest receivable 3 12 -
Other debtors 72 138 127
34,509 31,311 29,924
9 Trade and other payables
30 June 2017 30 June 2016 31 December 2016
£000 £000 £000
Trade payables 2,358 1,514 1,266
Trade accruals 8,028 7,083 7,644
Other creditors 204 261 46
Other taxation and social security 9,795 7,982 9,172
Deferred revenue 18,355 17,378 17,668
38,740 34,218 35,796
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 2017 was 1,039,297 (2016: 1,042,915 shares) representing 1.1%
(2016: 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
£42,490,000 (2016: £40,527,000). The maximum and minimum prices paid were
£43.00 (2016: £42.50) and £38.48 (2016: £33.11) per share respectively.
Own shares held - £000
EBT shares reserve£000 SIP shares reserve£000 Treasury shares£000 Totalown shares held£000
Own shares held as at 1 January 2016 (2,165) (852) (11,045) (14,062)
Shares purchased for SIP (10) - - (10)
Shares transferred to SIP 517 (517) - -
Share-based incentives exercised in the year 27 - 118 145
Increase in shares released due to rolled up dividend payments - - 4 4
Own shares held as at 30 June 2016 (1,631) (1,369) (10,923) (13,923)
Own shares held as at 1 January 2016 (2,165) (852) (11,045) (14,062)
Shares purchased for SIP (751) - - (751)
Shares transferred to SIP 517 (517) - -
Share-based incentives exercised in the year 107 - 232 339
SIP releases in the year - 17 - 17
Increase in shares released due to rolled up dividend payments 1 - 9 10
Shares held as at 31 December 2016 (2,291) (1,352) (10,804) (14,447)
Own shares held as at 1 January 2017 (2,291) (1,352) (10,804) (14,447)
Shares transferred to SIP 741 (741) - -
Share-based incentives exercised in the year 107 - 409 516
SIP releases in the year - 44 - 44
Increase in shares released due to rolled up dividend payments - - 15 15
Shares held as at 30 June 2017 (1,443) (2,049) (10,380) (13,872)
Own shares held - number of shares
EBT shares reserve SIP shares reserve Treasury shares Totalown shares held
Own shares held as at 1 January 2016 386,057 37,800 2,322,314 2,746,171
Shares purchased for SIP 250 - - 250
Shares transferred to SIP (12,950) 12,950 - -
Share-based incentives exercised in the year (12,224) - (24,799) (37,023)
Increase in shares released due to rolled up dividend payments - - (911) (911)
Own shares held as at 30 June 2016 361,133 50,750 2,296,604 2,708,487
Own shares held as at 1 January 2016 386,057 37,800 2,322,314 2,746,171
Shares purchased for SIP 20,250 - - 20,250
Shares transferred to SIP (12,950) 12,950 - -
Share-based incentives exercised in the year (49,985) - (48,750) (98,735)
SIP releases in the year - (600) - (600)
Increase in shares released due to rolled up dividend payments (97) - (1,839) (1,936)
Shares held as at 31 December 2016 343,275 50,150 2,271,725 2,665,150
Own shares held as at 1 January 2017 343,275 50,150 2,271,725 2,665,150
Shares transferred to SIP (20,000) 20,000 - -
Share-based incentives exercised in the year (30,313) - (86,027) (116,340)
SIP releases in the year - (1,400) - (1,400)
Increase in shares released due to rolled up dividend payments - - (3,058) (3,058)
Shares held as at 30 June 2017 292,962 68,750 2,182,640 2,544,352
(a) EBT shares reserve
This reserve represents the cost of own shares acquired by the EBT less any
exercises of share-based incentives. No shares were issued as a result of
rolled up dividend payments in relation to PSP shares (2016: 97).
At 30 June 2017, the EBT held 292,962 (2016: 361,133) ordinary shares in the
Company of £0.01 each, representing 0.3% (2016: 0.4%) of the ordinary shares
in issue (excluding shares held in treasury). The market value of the shares
held by the EBT at 30 June 2017 was £12,451,000 (2016: £13,174,000).
(b) SIP shares reserve
In November 2014, the Group established the Rightmove SIP Trust SIP. This
reserve represents the cost of acquiring shares less any exercises or releases
of SIP awards. On 3 January 2017 employees of the Group were offered 50 free
shares (4 January 2016: 50) subject to a three year service period.
At 30 June 2017 the SIP Trust held 68,750 (2016: 50,750) ordinary shares in
the Company of £0.01 each, representing 0.07% (2016: 0.05%) 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 £2,922,000 (30 June 2016:
£1,851,000).
(c) Treasury Shares
This represents the cost of acquiring shares held in treasury less any
exercises of share-based incentives. These shares were bought back in 2008 at
an average price of £4.76 and may be used to satisfy certain share-based
incentive awards. An additional 3,058 shares were issued as a result of rolled
up dividend payments in relation to performance shares (2016: 911).
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 (2016: £10,000)
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 £107,000 (2016:
£315,000) by Rightmove Group Limited in respect of balances owing under the
inter-group loan agreement dated 30 January 2008. As at 30 June 2017 the
balance owing under this agreement was £29,153,000 (2016: £29,279,000)
including capitalised interest.
On 30 May 2017 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
£741,000 (2016: £517,000), representing the cost of the SIP shares transferred
from the EBT to the SIP.
Inter-group transactions between subsidiaries
Following its acquisition on 31 May 2016, The Outside View Analytics Ltd
became a related party to Rightmove Group Limited. Since acquisition Rightmove
Group Limited has settled liabilities on behalf of The Outside View Analytics
Ltd and the balance owing under an inter-group loan agreement dated 13 June
2016 was £23,000 as at 30 June 2017 (2016: nil).
Transactions with key management staff
There were no transactions with key management in any period.
INDEPENDENT REVIEW REPORT TO RIGHTMOVE PLC
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2017 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.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2017 is not prepared, in all
material respects, in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU and the Disclosure Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures.
We read the other information contained in the half-yearly financial report
and consider whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA. As
disclosed in note 1, the annual financial statements of the Group are prepared
in accordance with International Financial Reporting Standards as adopted by
the EU. The directors are responsible for preparing the condensed set of
financial statements included in the half-yearly financial report in
accordance with IAS 34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company for our review work, for this
report, or for the conclusions we have reached.
K Wightman
for and on behalf of KPMG LLP
Chartered Accountants
Altius House
One North Fourth Street
Milton Keynes, MK9 1NE
28 July 2017
ADVISERS AND SHAREHOLDER INFORMATION
Contacts Registered office Corporate advisers
Chief Executive Officer: Peter Brooks-Johnson Rightmove plc Financial adviser
Finance Director: Company Secretary: Robyn PerrissSandra Odell Turnberry House UBS Investment BankJoint brokers
30 Caldecotte Lake Drive
Website: www.rightmove.co.uk CaldecotteMilton Keynes UBS LimitedNumis Securities Limited
MK7 8LE Joint brokers
UBS Limited
Registered inEngland no. 6426485 Numis Securities LimitedAuditor
Financial calendar 2017 KPMG LLP
Half year results 28 July 2017 Bankers
Interim dividend record date 6 October 2017 Barclays Bank Plc
Interim dividend payment 3 November 2017 Santander UK plc
Full year results 23 February 2018 Solicitors
Slaughter and May
Pinsent Masons
Registrar
Capita Asset Services*
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The Registry
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This information is provided by RNS
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