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Rightmove Plc Half-year Report

07/08/2020 7:00am

UK Regulatory (RNS & others)


Rightmove (LSE:RMV)
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RNS Number : 4289V

Rightmove Plc

07 August 2020

Embargoed until 07.00 on 7 August 2020

Half year results for the six months ended 30 June 2020

Rightmove plc, the UK's largest property portal, today announces its unaudited results for the 6 months ended

30 June 2020.

Financial Highlights

 
                                                     H1 2020     H1 2019   Change 
-------------------------------------------  ---------------  ----------  ------- 
 Revenue                                            GBP94.8m   GBP143.9m     -34% 
 Operating profit                                   GBP61.7m   GBP108.2m     -43% 
 Interim dividend                                          -        2.8p    -100% 
 Basic earnings per share                               5.7p        9.9p     -42% 
 Average revenue per advertiser (ARPA) (1)            GBP712    GBP1,077     -34% 
 
 
 

-- Revenue down 34% year on year reflecting the impact of the 75% discount support offered to our customers for the period April to June 2020

   --        Cash at the end of the period of GBP50.3m (31 December 2019: cash and deposits GBP36.3m) 

-- Average revenue per advertiser (ARPA) down by 34% on the same period a year ago to GBP712 (1) per month (2019: GBP1,077)

Operational highlights

-- Membership numbers down 3.3% since the start of the year to 19,158 (31 December 2019: 19,809) reflecting a 3.5% decline in Agency branches, together with a 2.1% fall in New Homes developments. Branch based agents resilient with a decline of 300 (2%) since the start of the year. Q2 saw a decelerating trend in branch closures with Agency branches and New Homes developments being net positive in June

-- Rightmove's position as the place home hunters turn to first remains strong with market share of time on site at 88% (3)

-- Rightmove is the only place to find virtually the whole of the property market in one place with over 940,000 UK residential properties advertised on Rightmove. The listings lead over any other UK website has widened to over 50%

-- Continued traffic growth with visits up 5% year on year helped by a stronger than expected increase since the reopening of the property market in England in May with time on site and visits in June up over 50% year on year. Time on site averaging 1.1 billion (2) minutes per month over the period (2019: 1.1 billion)

-- Reaffirmation of the value of premium packages. Despite market uncertainty the proportion of customers taking either the Enhanced or Optimiser packages grew to 39% (December 2019: 38%), with 400 premium Optimiser 2020 packages sold in 2020, including nearly 100 during lockdown

-- Pace of product development accelerated despite lockdown with 300 software releases, 10% more than a year ago

Current trading and O utlook

Home hunter demand has been strong since our customers started re-opening their businesses from 13 May, supported by changes in consumer needs and the recent announcement of temporary stamp duty holidays across the UK. Since 13 May we have recorded 65 days beating Rightmove's previous traffic record set on 19 February 2020. Between 1 June and 31 July demand for sales properties has been 50% higher than the same period in 2019 with rental demand being over 20% higher.

The positive metrics in June and July allied to the stamp duty holidays give grounds for cautious optimism that housing transaction levels will increase from the low point in Q2. Rightmove data suggests that the significant increase in activity is being driven not only from the pent up demand from the period of lock down, but an increased number of home hunters who have decided to move following the experience of lock down. However, it is too early to assess whether the strength of this positive momentum in the housing market will be maintained against the threat of further lock downs and wider economic slowdown.

The strong demand has led to positive trading momentum since the beginning of June. The number of branch based Estate Agency branches increased in both June and July and the number of products sold to Estate Agents were 7% higher in July 2020 than July 2019.

Rightmove is uniquely placed to benefit from the return to a more normal property market. The strong traffic post the easing of the lockdown and the resilience in product and package adoption through the pandemic illustrate the strength of our network and the value our customers see in our products.

Rightmove's subscription advertising model, together with the strength of our proposition for both customers and consumers now and in the future, supports the Board's continued confidence in the long term prospects for the business.

Given these prospects we confirm our commitment to our long established policy of returning all free cash flow to shareholders through a mix of dividends and share buy backs as soon as prudent.

Peter Brooks-Johnson, Chief Executive Officer , said:

"In recent months Covid-19 has disrupted the lives of everyone across the UK. Our customers have shown incredible resilience and ingenuity to continue to trade through this exceptional period. I am grateful for both their continued support and also their proactive engagement to ensure that home hunters have been well informed and protected. I'm also immensely proud of the Rightmove team for the unerring dedication which has seen Rightmove operate seamlessly throughout this challenging period and offer unprecedented support to the industry through discounts and accelerated innovation.

Following the reopening of the housing market on 13 May housing market activity is at record levels, with evidence of new home hunters coming into the market with changing needs as they reassess their priorities and further incentivised by the temporary stamp duty holiday. Rightmove has extended its lead as the place home hunters turn to first for their move. It's quite incredible that 65 of our record days have been since 13 May. I'm pleased that our customers are choosing to invest in our digital solutions to take advantage of this record demand.

Despite the current strong market we're mindful that potential economic challenges and further Covid restrictions in the second half of the year make it hard to predict how sustained the increase in activity will be.

Rightmove's purpose is to make home moving easier in the UK and the restrictions placed on our daily lives because of Covid have shown the value of the innovations we are delivering to better enable this."

Half Year Statement

Our response to Covid-19

During the pandemic our priorities have been to: protect our people; support our customers; protect our liquidity and continue to make progress against our long-term strategic goals of making home moving easier in the UK by helping consumers to be transaction ready. Much to the credit of our people, we have continued to operate all aspects of our business without interruption and believe we are well placed for the future.

Looking after our people

On 17 March 2020 our employees seamlessly transitioned to working remotely which is a testament to the flexibility and professionalism of the Rightmove team.

Full time working from home brings with it new health and well-being challenges, augmented for many with the additional pressure of home schooling children or caring for relatives. We have supported our people, including those on furlough, through a series of Covid-19 tailored webinars on topics such as home schooling and mental well-being and additional practical support for those working such as an extra ten days' paid leave for those with caring responsibilities. We have also focussed on keeping the connections between teams that are such a key part of the Rightmove culture through regular business updates, including Company-wide 'Town Hall' webinars on a weekly basis.

Whilst our customers closed their offices many continued to work remotely through the lockdown period. Our customer facing teams were on hand to support them wherever possible, and during the period that the housing market was effectively closed (23 March to 13 May), the team made over 50,000 customer contacts to both answer questions and proactively offer support. The Rightmove product and technology team continued to deliver innovation, focused on both the short term needs of our customers, but also pursuing our longer term strategic development goals. In addition, during the lockdown period the team delivered nearly 300 software releases, 10% more than a year ago.

The Board would like to express its thanks for the unerring dedication of our employees and the support they have shown to each other and to our customers during this challenging time.

Supporting our customers

The Government measures taken to contain the spread of Covid-19 have had an unprecedented impact on the UK property market, which was effectively closed from 23 March until 13 May in England, 22 June in Wales and 29 June in Scotland. In the face of this closure, we took action to assist our customers, with a 75% discount for Agency and New Homes customers for April to July, as well as selective support across our other business units. Given that it takes an average of three months for housing transactions to complete, which impacts the cash flows of our agent customers and that it will also take time for agents to build a pipeline of vendors and new sales instructions, we are continuing to support agents in England with a 60% discount in August and a 40% discount in September. Agents in Scotland and Wales will receive a 75% discount in August and a 60% discount in September.

Beyond financial support, we have continued to provide advice and deliver innovative new tools to help the property market function whilst adhering to the social distancing guidelines and minimising unnecessary travel. Practical support includes a new tool which enables customers to securely deliver online viewing videos to home hunters in line with government advice. The integrated tool also offers usage reporting and functionality to make the process of responding to home hunter enquiries quicker and more efficient for agents; bespoke local market data to help agents target resources most efficiently and also to use with home buyers and sellers; consumer webinars and an accompanying consumer advice hub. Our weekly consumer email update is read by an average of 800,000 home hunters every week; and a series of 54 Covid-19 related webinars for agents have been attended by over 34,000 property professionals from over 5,200 branches.

Our customers have shown incredible resilience and ingenuity. We are grateful for both their continued support and also their proactive engagement to ensure that home hunters have been well informed over this period.

Protecting our liquidity

We took action to protect our liquidity through the decision to cancel the previously announced 2019 final dividend, and the suspension of our share buyback programme from 14 March. We also confirmed our eligibility to access the Government's Covid Corporate Financing Facility (CCFF), and extended the Group's committed revolving loan facility with Barclays Bank plc for 12 months, although no CCFF has been issued and no amounts drawn under the loan facility.

To conserve cash and reduce operating costs during the period, from 6 April around one third of the organisation was placed on furlough, predominantly those in customer facing roles, reflecting the reduced activity in the housing market. In recognition of the impact of Covid-19 on our stakeholders, the entire Board and the Group's Senior Leadership Team took a voluntary 20% reduction in salary with effect from 1 April to 31 July. We have also deferred GBP12m of VAT payments, which must be made before 31 March 2021.

With the reopening of the property market, we had returned all employees from furlough by the end of 31 July 2020. 'Doing the right thing' is central to the Rightmove culture and as the immediate uncertainty of the crisis passes and given our resilience in the year to date we intend to repay the grant from the Coronavirus Job Retention Scheme (CJRS) and we will not be taking the furlough bonus in January next year. We believe that repaying the CJRS grant of GBP0.7m supports both our brand and our responsibilities to the wider community.

Strategic highlights

Continued strategic innovation

In addition to the rapid response to the pandemic our focus on strategic innovation has continued through the period, with the importance of making the property marketplace more efficient for home hunters and agents throughout the home moving journey highlighted by the Covid-19 restrictions.

In the first half of 2020 we delivered functionality which further increases the appeal of Rightmove to home hunters and will also support future revenue growth as we help consumers become more transaction ready, including mortgage tools and insight and an enhanced version of the property details page

To enhance our reputation as the UK's favourite property research resource a new version of the sold price search launched in April. The new design responds more quickly, delivers a more flexible experience and contributed to an increase in traffic of over 20% to these pages together with an increase in valuation leads sent to our customers via the Local Valuation Alert product.

A new version of the property details page was rolled out to Overseas properties and entered beta testing for rental properties at the end of July. The new design provides a rich, highly visual experience for home hunters increasing image size by 50% and fully integrates video content on the page. The new page increased home hunter engagement by 40%.

The alpha testing of integrated appointment booking functionality for tenants completed in March. Building on the knowledge gained as part of the Van Mildert acquisition the next version of the appointment booking functionality will begin beta testing in August and will include the next iteration of the Rightmove Tenant Passport. The appointment booking functionality will allow home hunters to request an appointment electronically whilst enhancing the lead information with the passport details to allow agents to prioritise tenants most likely to pass a reference. Once a viewing is confirmed, tenants will receive automated reminders to help avoid missed appointments and unnecessary journeys for agents. Following the viewing, feedback is automatically gathered from the tenant saving the agent time and offering the home hunter the chance to express their interest in progressing towards tenancy. From the autumn, Agents will be able to seamlessly order a reference from Van Mildert without the need to re-enter applicant details.

Continuing our exploratory partnership with the Nationwide Building Society a number of enhancements have been made to the design and location of Rightmove mortgage calculator tools which has more than doubled home hunter engagement and provided valuable insight that will underpin our future plans.

The place home hunters turn to first

Rightmove brings together the UK's largest and most engaged property audience and the largest inventory of properties in one place.

Rightmove is the place that home hunters turn to first and engage with most when searching, researching and moving home with the market share of time spent in June at 88%. Our lead in available properties for sale has widened with over 50% more properties than any other website in the UK.

During lockdown, home hunters reduced their activity. Visits in April 2020 were around 60% of those recorded in April 2019, however the recovery in traffic has been particularly strong since 13 May. June 2020 saw a record 230m visits, over 60% higher than June 2019, helping visits for the last six months reach a new record level, 5% higher than a year ago. The amount of time spent by home hunters has also been encouraging with over 1.5 billion minutes in June, up over 50% year on year. Time on site for the period averaged 1.1 billion minutes per month, unchanged from the prior period.

Being synonymous with home hunting in the UK allows us to provide the most significant and effective exposure for our customers' brands and properties. Telephone and email leads in June were 5.7 million, up 57% year on year, and despite the hiatus during April and May leads for the period were up 3% year on year.

The increased home hunter engagement and our continuous product development increases the value of both our advertising and lead generation products. Leads from our Local Valuation Alert product which introduces agents to potential sellers were up over 20% in the second quarter compared with 2019.

Financial performance

Revenue

Revenue was impacted by the support we provided to our customers in the face of the significantly reduced property market activity as a result of Covid-19. We provided a 75% discount to our Agency and New Homes customers and selected discounts across our other business units between April and June, with a revenue impact in the period of GBP50.5m. As a result, revenue declined by 34% year on year to GBP94.8m (2019: GBP143.9m). We expect that the further discounts we have provided to our customers in the second half will have a revenue impact of GBP35m-GBP37m.

 
                           H1 2020   H1 2019   Change 
                              GBPm      GBPm 
---------------  -----------------  --------  ------- 
 Agency                       66.6     104.8     -36% 
 New Homes                    17.3      27.8     -38% 
 Other                        10.9      11.3      -4% 
---------------  -----------------  --------  ------- 
 Total revenue                94.8     143.9     -34% 
---------------  -----------------  --------  ------- 
 
 
                                    30 June 2020   31 December 2019   Change 
------------------------  ----------------------  -----------------  ------- 
 Agency branches                          15,767             16,347    -3.5% 
 New Homes developments                    3,391              3,462    -2.1% 
 Total membership                         19,158             19,809    -3.3% 
------------------------  ----------------------  -----------------  ------- 
 

Agency revenue decreased by GBP38.2m year on year to GBP66.6m, with the financial impact of the 75% discount offsetting the revenue growth in the first quarter. Encouragingly, the majority of Agency customers maintained their product and package adoption throughout the period, and product spend increased in June following the reopening of the property market. Agency ARPA fell by GBP338 to GBP685(4) (2019: GBP1,023) per branch per month as a result of the discount provided. Agency customer numbers declined by 580 branches, of which 280 related to a reduction in branch equivalents, being virtual branches based on average property stock levels, and typically applying to hybrid agencies. Over 90% of our agents are branch based agents who have been resilient over the period. The number of branch based agency members fell by 300 branches, 2% of the total, due primarily to the loss of lower stock and less established agents, who were particularly sensitive to the cash flow impacts of Covid-19.

New Homes revenue declined by GBP10.5m year on year to GBP17.3m, also largely driven by the impact of the 75% discount throughout the second quarter. Whilst some developers reduced discretionary spend on our suite of digital advertising products in order to conserve cash flow as property market activity reduced, we have seen a strong return of product spend in May and June as developers resumed site construction and sales and marketing activities. New Homes ARPA fell by GBP510 to GBP836 (5) (2019:GBP1,346) per development per month. The majority of our New Homes customers maintained their presence on Rightmove throughout lockdown, with robust development numbers in the first half of 2020, down only 2.1% since December 2019.

Other revenue, which includes Overseas, Data Services, Commercial and Third Party advertising services, declined by 4% in the first half of 2020 to GBP10.9m. We supported our Commercial and Overseas customers with discounts of 75% and 50% respectively throughout Q2, and this was partially offset by growth in our Third Party advertising revenues of GBP1.6m year on year, principally due to our mortgage sponsorship agreement with Nationwide, which commenced in September 2019.

Operating profit

 
                              H1 2020   H1 2019   Change 
                                 GBPm      GBPm 
------------------  -----------------  --------  ------- 
 Revenue                         94.8     143.9     -34% 
 Operating costs               (33.1)    (35.7)      -7% 
------------------  -----------------  --------  ------- 
 Operating profit                61.7     108.2     -43% 
------------------  -----------------  --------  ------- 
 

Operating profit declined by 43% to GBP61.7m (2019: GBP108.2m) and operating margin was 65.1% (2019: 75.2%). Operating costs decreased by GBP2.6m to GBP33.1m (2019: GBP35.7m) reflecting the following mitigating measures to reduce operating costs and to preserve cash from April 2020:

-- Board and Senior Leadership Team remuneration : In recognition of the impact of Covid-19 on our stakeholders, the entire Board and the Group's Senior Leadership Team took a voluntary 20% reduction in salary with effect from 1 April 2020 to 31 July 2020.

-- Furlough : From 6 April 2020 the Group furloughed around a third of its employees, predominantly in customer facing roles, under the Coronavirus Job Retention Scheme. All employees were brought back from furlough by the end of July 2020. Given the resumption of housing market activity and our performance in the year to date, we have decided to repay the cash received under the furlough scheme of GBP0.7m by December 2020.

-- Marketing spend : Marketing spend reduced in the period as we deferred planned spend in line with the significant reduction in UK housing market activity experienced in Q2. However, we plan to continue marketing activity over the second half of 2020 as we invest in our biggest ever national television marketing campaign to use the strength of our brand and consumer reach to support property market activity for the benefit of our customers.

-- Discretionary costs : With all employees working remotely at home since late March 2020, travel, accommodation and staff subsistence costs have reduced, resulting in a year on year saving of GBP0.3m in the period.

Costs were also impacted by a reduction in salary costs due to a fall in average headcount (excluding Van Mildert) to 490 (2019: 517) and reduction in other employee costs, offset by increased investment in technology and the inclusion of Van Mildert operating costs.

Full year costs are likely to be slightly more weighted to the second half principally due to the timing of recruitment of additional headcount which had been paused earlier in the year following the reduction in property market activity, and the phasing of marketing campaigns.

From 2020, operating profit is reported on a GAAP basis, including the charge or credit relating to share-based payments and National Insurance on share-based incentives. In accordance with IFRS 2, a non-cash credit of GBP0.2m (2019: GBP2.2m charge) was credited to income representing the amortisation of the fair value of share-based incentives granted. The reduction in the charge reflects both a reduction in the quantum of new share-based incentives granted in the period, together with the impact of performance conditions for historical awards for the executive directors which are now unlikely to be met. The full year IFRS 2 charge is estimated to be in the range of GBP1.0m to GBP1.3m.

NI is being accrued, where applicable at a rate of 13.8%, on the potential employee gain on share-based incentives. Based on a decline in the closing share price from GBP6.34 at 31 December 2019 to GBP5.46 at 30 June 2020 in respect of the outstanding share-based incentives granted, together with the realised NI cost on share-based incentives exercised in the period, there was a credit of GBP0.1m (2019: GBP0.6m charge) in the period.

Earnings per share (EPS)

Basic EPS declined by 42% to 5.7p (2019: 9.9p) reflecting the reduction in year on year profit, offset by the benefit of the share buyback programme in place during 2019 and at the start of the year which reduced the weighted average number of ordinary shares in issue to 871.7m (2019: 888.2m).

Cash position and balance sheet liquidity

Throughout the period, the Group was debt free and has continued to see strong cash generation with cash conversion in excess of 100%(6) . Cash generated in the period benefitted from a working capital reduction of GBP13.7m, primarily due to the reduction in debtors as a result of the discount provided to customers. This benefit is expected to reverse in the second half of the year. The Group's closing cash balance was GBP50.3m (31 December 2019: cash and money market deposits balance of GBP36.3m).

The Group has the benefit of a GBP10.0m committed revolving loan facility with Barclays Bank plc which was agreed on 7 February 2020 and replaced the previous GBP10.0m committed loan facility with Barclays Bank plc which was terminated on that date. In April 2020 a variation was agreed to the facility to extend the term beyond the original year to 7 February 2022 and introduce a covenant in relation to the ratio of net debt to EBITDA. No amount has been drawn under the facility.

On 27 April 2020 Rightmove received confirmation that it is eligible to access the UK Government's CCFF. Rightmove has not issued any commercial paper under the scheme.

Deferral of indirect taxation (VAT) payments: The UK government announced in March that all UK VAT-registered businesses had the option to defer any VAT payments due between 20 March 2020 and 30 June 2020. Payments must be made on or before 31 March 2021. During the period the Group deferred VAT payments of GBP12.1m. Given the positive start to the re-opening of the housing market, the Group intends to bring forward the settlement of the VAT deferrals to the end of 2020.

Returns to shareholders

Given the uncertainties caused by the impact of Covid-19, the Board considered it prudent to cancel the proposed final dividend payment of 4.4p per share (GBP38.5m in total) for the year ended 31 December 2019 in order to preserve cash and strengthen the Group's financial liquidity.

The Board would like to thank our shareholders for their support regarding the dividend cancellation which provided the cash flow headroom and flexibility for the Group to extend financial support to our customers.

The Board recognises the importance of the dividend to our shareholders; however, given that we believe it is in the best long-term interests of the Group and its shareholders that the Agency discount is extended for a further period until the end of September 2020, we have not declared an interim dividend. The Board will consider the appropriateness, quantum and timing of future dividend payments when it has a clearer view of the scale and duration of the impact of Covid-19 on the business.

The Group bought back and cancelled 5.0m ordinary shares (2019: 3.6m shares) in the period at a cost of GBP30.1m (2019: GBP18.5m) as part of its ongoing share buyback programme. On 14 March we announced our intention to pause our share buyback programme in order to conserve cash and strengthen our balance sheet.

Our long-term capital allocation policy is unchanged and the Board remains committed to returning substantially all free cash flows to shareholders through a combination of a progressive dividend policy and a share buyback programme.

Principal risks and uncertainties

The Group's principal risks and uncertainties and a summary of the mitigations for each are set out below.

Covid-19

The Covid-19 pandemic and measures taken to contain it have had an unprecedented impact on the UK economy and the property market. The business took immediate action to mitigate the impact of the pandemic on the Group, its employees, customers and other stakeholders. Key measures included:

-- Invoking business continuity procedures which have enabled the entire organisation to work remotely, for the safety of our employees and in accordance with Government guidelines. The transition to remote working has had no significant impact on business performance and can continue for as long as is required. We have been trialling a return to the London, Milton Keynes and Newcastle offices for a small number of employees since July, following a full risk assessment.

-- Providing financial support to our customers in response to the significant reduction in activity in the property market. Property transactions (7) which drive our customers' revenue, were down 57% year on year in April and 52% down year on year in May. We provided a discount of 75% of the invoice value for 4 months from April to July for our Agency and New Homes customers and selected support across other business units. The support has been extended with a 60% discount in August and 40% in September for Agency customers, and different arrangements in Wales and Scotland where the property market opened later than in England.

-- Continuing to innovate to ensure that we maximise our value to agents whilst activity in the property market was severely restricted, and to help agents work as effectively as possible during this period. This included new features on the Rightmove platforms such as highlighting properties where online viewing is available and giving agents the ability to deliver video content automatically in response to a Rightmove lead. The frequency of agent webinars has increased, together with advice on the website, to help agents navigate the new restrictions within the property market e.g. for viewings. Rightmove is also providing local market data to agents to provide insight in their area.

-- Preserving cash flow through the cancellation of the previously proposed 2019 final dividend (GBP38.5m), suspension of the share buyback programme from 14 March, and deferral of indirect taxation (VAT) payments of GBP12.1m.

-- Furloughing around one third of employees, predominantly in customer facing roles, from 6 April under the Coronavirus Job Retention Scheme. The Group intends to repay the furlough grant following the increase in activity since the property market reopened. The Board and Group's Senior Leadership team took a voluntary 20% reduction in salary with effect from 1 April to 31 July.

-- Ensuring liquidity through confirmation of eligibility to access the Government's CCFF, and extension of the Group's GBP10.0m committed revolving loan facility for 12 months to 7 February 2022.

The measures that the Government has taken and continues to take in order to contain the pandemic are expected to increase the macroeconomic risk on the business as detailed in the table below in risk 1, and the continued incidence of Covid-19 increases the risk of ensuring the right talent in the business as detailed below in risk 5 due to the increased risk of employee absence due to illness.

Withdrawal from the EU

Following the UK's departure from the European Union on 31 January 2020, the UK is now in a transition period which is due to end on 31(st) December 2020. The UK and the EU are currently in discussions regarding the parameters of future trading arrangements. If the UK and the EU are unable to reach an agreement on these arrangements the macroeconomic risk to the business increases as detailed in risk 1.

The Principal Risks and uncertainties remain as set out in detail in the Strategic Report of the 2019 Annual Report.

 
 Risk   Description                             Mitigation 
 1      Macroeconomic environment 
         The Group derives almost                 *    Continuing to provide the most significant and 
         all its revenue from the                      effective exposure for customers' brands and 
         UK and is therefore dependent                 properties, be the largest source of high quality 
         on the macroeconomic conditions               leads, offer value-adding products and packages, 
         surrounding the UK housing                    provide market insight and help drive operational 
         market and consumer confidence                efficiencies for our customers, thereby embedding the 
         which impacts on property                     value of our membership. 
         transaction levels. 
 
                                                  *    Maintaining a flexible cost base that can respond to 
                                                       changing conditions. 
       --------------------------------------  ------------------------------------------------------------- 
 2      Competitive environment 
         The Group operates in a                  *    Communication of the value of Rightmove membership to 
         competitive marketplace                       advertisers 
         with attractive margins 
         and low barriers to entry. 
         This may result in increased             *    Continued investment in our account management teams 
         competition from existing                     to ensure we stay close to our customers and local 
         competitors or new entrants                   markets and help our customers run their businesses 
         targeting the Group's primary                 more efficiently. 
         revenue markets. 
 
                                                  *    Sustained marketing investment in the Rightmove 
                                                       brand. 
 
 
                                                  *    Sustained investment and innovation in serving both 
                                                       home hunters and our customers. 
       --------------------------------------  ------------------------------------------------------------- 
 3      New or disruptive technologies 
         and changing consumer behaviours         *    Continual improvements to our platforms including 
         Rightmove operates in a                       ongoing investment in mobile and tablet platforms. 
         fast-moving online marketplace. 
         Failure to innovate or 
         adopt new technologies                   *    Developing our product proposition to meet our 
         or failure to adapt to                        customers' needs and evolving business models. 
         changing customer business 
         models and evolving consumer 
         behaviour may impact the                 *    Ongoing monitoring of consumer behaviour. 
         Group's ability to offer 
         the best products and services 
         to its advertisers and                   *    Large in-house technology team with culture of 
         the best consumer experience.                 innovation. 
 
 
                                                  *    Regular contact with the start-up and prop-tech 
                                                       communities to stay abreast of innovations in the 
                                                       marketplace. 
       --------------------------------------  ------------------------------------------------------------- 
 4      Cyber security and IT systems 
         The Group has a high dependency          *    Disaster Recovery and Business Continuity Plans in 
         on technology and internal                    place, subject to regular review and testing. 
         IT systems. In today's 
         digital world there are 
         increased risks associated               *    Use of three data centres to load balance and ensure 
         with external cyber-attacks                   optimal performance and business continuity 
         which could result in unavailability          capability. 
         of our platforms. A security 
         breach such as corruption 
         or loss of key data may                  *    Regular backups of key data 
         disrupt the efficiency 
         and functioning of the 
         Group's day to day operations.           *    Regular testing of the security of the IT systems and 
                                                       platforms including penetration testing and 
                                                       distributed denial of service attack procedures. 
 
 
                                                  *    Ongoing investment in security systems 
 
 
                                                  *    Ongoing monitoring of our corporate and web hosting 
                                                       systems by external specialists 
 
 
                                                  *    Regular internal security training and 'spear 
                                                       phishing' tests of minimise risk of social 
                                                       engineering attacks. 
 
 
                                                  *    Enhance the security of the corporate network to 
                                                       minimise risk relating to remote working. 
       --------------------------------------  ------------------------------------------------------------- 
 5      Securing and retaining 
         the right talent                         *    Ongoing succession planning and development of future 
         Our continued success is                      leaders. 
         dependent on our ability 
         to attract, recruit, retain 
         and motivate our highly                  *    Payment of competitive reward, including a blend of 
         skilled workforce.                            short and long-term incentives for senior management. 
 
 
                                                  *    The ability for employees to participate in the 
                                                       success of the Group through the SIP and SAYE 
                                                       schemes. 
 
 
                                                  *    Regular staff communication and engagement. 
 
 
                                                  *    Maintaining the culture of the Group, which generates 
                                                       significant staff loyalty. 
 
 
                                                  *    Enabling remote working as required by the business 
                                                       or in line with Government guidance to ensure the 
                                                       safety of employees. 
       --------------------------------------  ------------------------------------------------------------- 
 

Next trading update

Our next scheduled reporting date is 26 February 2021 when we will announce our results for the year ending

31 December 2020.

Andrew Fisher Peter Brooks-Johnson

Chairman Chief Executive Officer

7 August 2020

Notes to the half year results for the six months ended 30 June 2020

(1) Average Revenue per Advertiser (ARPA) is calculated as revenue from Agency and New Homes advertisers in a given month divided by the total number of advertisers during the month, measured as a monthly average over the six month period.

   (2)   Source: Google analytics. 
   (3)   Source: Comscore, June 2020 

(4) Agency ARPA is calculated as revenue from Agency advertisers in a given month divided by the total number of advertisers during the month, measured as a monthly average over the six month period.

(5) New Homes ARPA is calculated as revenue from New Homes advertisers in a given month divided by the total number of advertisers during the month, measured as a monthly average over the six month period.

(6) Cash generated from operating activities of GBP77.3m compared to operating profit as reported in the income statement of GBP61.7m.

   (7)   Source: HMRC transactions for England, Scotland and Wales 

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF YEAR REPORT 2020

We confirm that to the best of our knowledge:

The condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;

The interim management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group during that period; and any changes in the related party transactions described in the last annual report that could do so.

By order of the Board of directors

   Andrew Fisher                                                           Peter Brooks-Johnson 

Chairman Chief Executive Officer

07 August 2020

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2020

 
 
 
                                                          Note    6 months ended    6 months ended          Year ended 
                                                                    30 June 2020      30 June 2019    31 December 2019 
                                                                          GBP000            GBP000              GBP000 
------------------------------------------------------  ------  ----------------  ----------------  ------------------ 
 
 Revenue                                                  4,5             94,815           143,914             289,320 
------------------------------------------------------  ------  ----------------  ----------------  ------------------ 
 
 Administrative expenses                                                (33,116)          (35,723)            (75,590) 
 
 
 Operating profit                                                         61,699           108,191             213,730 
------------------------------------------------------  ------  ----------------  ----------------  ------------------ 
 Financial income                                                            131               141                 318 
 Financial expenses                                                        (259)             (250)               (486) 
------------------------------------------------------  ------  ----------------  ----------------  ------------------ 
 
 Net financial expenses                                                    (128)             (109)               (168) 
------------------------------------------------------  ------  ----------------  ----------------  ------------------ 
 
 Profit before tax                                                        61,571           108,082             213,562 
 Income tax expense                                        9            (11,615)          (20,632)            (40,473) 
------------------------------------------------------  ------  ----------------  ----------------  ------------------ 
 
 Profit for the period being total comprehensive 
  income                                                                  49,956            87,450             173,089 
------------------------------------------------------  ------  ----------------  ----------------  ------------------ 
 
 
   Attributable to: 
 Equity holders of the Parent                                             49,956            87,450             173,089 
------------------------------------------------------  ------  ----------------  ----------------  ------------------ 
 
 
 Earnings per share (pence) 
 Basic                                                     7                5.73              9.85               19.57 
 Diluted                                                   7                5.72              9.81               19.49 
 
 
 Dividends per share (pence)                               8                   -              4.00                6.80 
 Total dividends                                           8                   -            35,510              60,173 
 
 
 
 
 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

as at 30 June 2020

 
 
 
                                                                 Note   30 June 2020   30 June 2019   31 December 2019 
                                                                              GBP000         GBP000             GBP000 
--------------------------------------------------------------  -----  -------------  -------------  ----------------- 
Non-current assets 
Property, plant and equipment                                                 12,654         14,125             12,802 
Intangible assets                                                             22,324          2,861             21,954 
Deferred tax assets                                               9            2,654          3,109              2,718 
--------------------------------------------------------------  -----  -------------  -------------  ----------------- 
 
Total non-current assets                                                      37,632         20,095             37,474 
--------------------------------------------------------------  -----  -------------  -------------  ----------------- 
 
Current assets 
Trade and other receivables                                      10           12,751         25,594             23,985 
Contract assets                                                   5              428            364                429 
Money market deposits                                                              -          4,116              4,141 
Cash and cash equivalents                                                     50,306         50,020             32,117 
--------------------------------------------------------------  -----  -------------  -------------  ----------------- 
 
Total current assets                                                          63,485         80,094             60,672 
--------------------------------------------------------------  -----  -------------  -------------  ----------------- 
 
Total assets                                                                 101,117        100,189             98,146 
--------------------------------------------------------------  -----  -------------  -------------  ----------------- 
 
Current liabilities 
Trade and other payables                                         11         (22,517)       (17,134)           (19,516) 
Lease liabilities                                                            (1,706)        (1,397)            (1,709) 
Contract liabilities                                              5          (1,263)        (1,982)            (2,111) 
Income tax payable                                                             (927)       (20,523)           (18,930) 
Provisions                                                                     (558)          (255)              (256) 
--------------------------------------------------------------  -----  -------------  -------------  ----------------- 
 
Total current liabilities                                                   (26,971)       (41,291)           (42,522) 
 
Non-current liabilities 
Lease liabilities                                                            (9,768)       (11,170)           (10,499) 
Provisions                                                                   (2,941)          (445)            (2,914) 
Deferred tax liability                                                         (916)              -              (871) 
--------------------------------------------------------------  -----  -------------  -------------  ----------------- 
 
Total non-current liabilities                                               (13,625)       (11,615)           (14,284) 
--------------------------------------------------------------  -----  -------------  -------------  ----------------- 
 
Total liabilities                                                           (40,596)       (52,906)           (56,806) 
--------------------------------------------------------------  -----  -------------  -------------  ----------------- 
 
Net assets                                                                    60,521         47,283             41,340 
--------------------------------------------------------------  -----  -------------  -------------  ----------------- 
 
 
Equity 
Share capital                                                                    887            904                892 
Other reserves                                                                   545            528                540 
 
Retained earnings (net of own shares held)                                    59,089         45,851             39,908 
--------------------------------------------------------------  -----  -------------  -------------  ----------------- 
 
Total equity attributable to the equity holders of the Parent                 60,521         47,283             41,340 
--------------------------------------------------------------  -----  -------------  -------------  ----------------- 
 
 
 
 
 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

for the six months ended 30 June 2020

 
 
                                                         Note   6 months ended   6 months ended         Year ended 
                                                                  30 June 2020     30 June 2019   31 December 2019 
                                                                        GBP000           GBP000             GBP000 
------------------------------------------------------  -----  ---------------  ---------------  ----------------- 
Cash flows from operating activities 
Profit for the period                                                   49,956           87,450            173,089 
 
Adjustments for: 
Depreciation charges                                                     1,564            1,653              3,114 
Amortisation charges                                                       501              171                480 
Financial income                                                         (131)            (141)              (318) 
Financial expenses                                                         259              250                486 
Re-measurement of leased assets                                              -                -                283 
Share-based payments                                      6              (182)            2,198              4,911 
Income tax expense                                        9             11,615           20,632             40,473 
------------------------------------------------------  -----  ---------------  ---------------  ----------------- 
 
Operating cash flow before changes in working capital                   63,582          112,213            222,518 
 
Decrease/(increase) in trade and other receivables                      11,209          (3,101)              (481) 
Increase/(decrease) in trade and other payables                          3,021            (929)                 35 
Increase/(decrease) in provisions                                          329            (395)              (371) 
Decrease in contract assets                               5                  1               63                 28 
Decrease in contract liabilities                          5              (848)            (164)               (44) 
 
Cash generated from operating activities                                77,294          107,687            221,685 
 
Financial expenses paid                                                  (118)            (101)              (198) 
Income taxes paid                                                     (29,845)         (16,859)           (37,263) 
------------------------------------------------------  -----  ---------------  ---------------  ----------------- 
 
 Net cash from operating activities                                     47,331           90,727            184,224 
------------------------------------------------------  -----  ---------------  ---------------  ----------------- 
 
Cash flows used in investing activities 
  Interest received on cash and cash equivalents                           156              101                259 
Reduction in money market deposits                                       4,141                -                  - 
Acquisition of property, plant and equipment                           (1,249)            (391)              (543) 
Acquisition of intangible assets                                         (871)            (159)              (236) 
Acquisition of subsidiary, net of cash acquired                              -                -           (15,627) 
 
Net cash from investing activities                                       2,177            (449)           (16,147) 
------------------------------------------------------  -----  ---------------  ---------------  ----------------- 
 
  Cash flows from financing activities 
  Unclaimed dividends/(net dividends paid)                8                  2         (35,510)           (59,856) 
  Purchase of own shares for cancellation                12           (30,125)         (18,499)           (88,583) 
  Purchase of own shares for share incentive plans       12                  -          (1,285)            (2,112) 
  Share-related expenses                                                 (232)            (148)              (619) 
  Payment of lease liabilities                                         (1,043)            (823)            (1,535) 
Proceeds on exercise of share-based incentives                              79              160                898 
 
  Net cash used in financing activities                               (31,319)         (56,105)          (151,807) 
------------------------------------------------------  -----  ---------------  ---------------  ----------------- 
 
    Net increase in cash and cash equivalents                           18,189           34,173             16,270 
  Cash and cash equivalents at 1 January                                32,117           15,847             15,847 
------------------------------------------------------  -----  ---------------  ---------------  ----------------- 
 
 Cash and cash equivalents at period end                                50,306           50,020             32,117 
------------------------------------------------------  -----  ---------------  ---------------  ----------------- 
 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

for the six months ended 30 June 2020

 
                                    Own shares held               Reverse acquisition 
                            Share            GBP000       Other               reserve    Retained      Total 
                          capital                      reserves                GBP000    earnings     equity 
                           GBP000                        GBP000                            GBP000     GBP000 
----------------------  ---------  ----------------  ----------  --------------------  ----------  --------- 
 At 1 January 2019            908          (11,138)         386                   138      22,290     12,584 
 
 Total comprehensive 
  income 
  Profit for the 
  period                        -                 -           -                     -      87,450     87,450 
 
 Transactions with 
 owners recorded 
 directly in equity 
 Share-based payments           -                 -           -                     -       2,198      2,198 
 Tax credit in respect 
  of share-based 
  incentives 
  recognised directly 
  in equity                     -                 -           -                     -         314        314 
 Dividends to 
  shareholders                  -                 -           -                     -    (35,510)   (35,510) 
 Exercise of 
  share-based 
  incentives                    -               752           -                     -       (592)        160 
 Purchase of shares 
  for restricted share 
  plan                          -           (1,285)           -                     -           -    (1,285) 
 Cancellation of own 
  shares                      (4)                 -           4                     -    (18,499)   (18,499) 
 Share-related 
  expenses                      -                 -           -                     -       (129)      (129) 
----------------------  ---------  ----------------  ----------  --------------------  ----------  --------- 
 
  At 30 June 2019             904          (11,671)         390                   138      57,522     47,283 
----------------------  ---------  ----------------  ----------  --------------------  ----------  --------- 
 
 At 1 January 2019            908          (11,138)         386                   138      22,290     12,584 
 
 Total comprehensive 
 income 
 Profit for the year            -                 -           -                     -     173,089    173,089 
 
 Transactions with 
 owners recorded 
 directly in equity 
 Share-based payments           -                 -           -                     -       4,911      4,911 
 Tax credit in respect 
  of share-based 
  incentives 
  recognised directly 
  in equity                     -                 -           -                     -       1,028      1,028 
 Net dividends                  -                 -           -                     -    (59,856)   (59,856) 
 Exercise of 
  share-based 
  incentives                    -             1,506           -                     -       (608)        898 
 Purchase of shares 
  for share incentive 
  plan                          -           (2,112)           -                     -           -    (2,112) 
 Cancellation of own 
  shares                     (16)                 -          16                     -    (88,583)   (88,583) 
 Share-related 
  expenses                      -                 -           -                     -       (619)      (619) 
---------------------- 
 
  At 31 December 2019         892          (11,744)         402                   138      51,652     41,340 
----------------------  ---------  ----------------  ----------  --------------------  ----------  --------- 
 
 At 1 January 2020            892          (11,744)         402                   138      51,652     41,340 
 
 Total comprehensive 
  income 
  Profit for the 
  period                        -                 -           -                     -      49,956     49,956 
 
 Transactions with 
 owners recorded 
 directly in equity 
 Share-based payments           -                 -           -                     -       (182)      (182) 
 Tax debit in respect 
  of share-based 
  incentives 
  recognised directly 
  in equity                     -                 -           -                     -       (336)      (336) 
 Exercise of 
  share-based 
  incentives                    -               466           -                     -       (387)         79 
 Cancellation of own 
  shares                      (5)                 -           5                     -    (30,125)   (30,125) 
 Share-related 
  expenses                      -                 -           -                     -       (211)      (211) 
----------------------  ---------  ----------------  ----------  --------------------  ----------  --------- 
 
  At 30 June 2020             887          (11,278)         407                   138      70,367     60,521 
----------------------  ---------  ----------------  ----------  --------------------  ----------  --------- 
 
 

NOTES

   1   General information 

Rightmove plc (the Company) is a Company registered in England (Company no. 6426485) domiciled in the United Kingdom (UK). The condensed consolidated interim financial statements of the Company as at and for the six months ended 30 June 2020 comprise the Company and its interest in its subsidiaries (together referred to as the Group). Its principal business is the operation of the Rightmove platforms, which have the largest audience of any UK property portal (as measured by time on site).

The consolidated financial statements of the Group as at and for the year ended 31 December 2019 are available upon request to the Company Secretary from the Company's registered office at 2 Caldecotte Lake Business Park, Caldecotte Lake Drive, Caldecotte, Milton Keynes, MK7 8LE or are available on the corporate website at plc.rightmove.co.uk.

Basis of preparation

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, and should be read in conjunction with the Group's last annual consolidated financial statements, prepared in accordance with IFRS as adopted by the EU, as at and for the year ended 31 December 2019 ('last annual financial statements'). They do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.

The condensed consolidated interim financial statements were approved by the Board of directors on 7 August 2020. The half year results for the current and comparative period are unaudited. The auditor, KPMG LLP, has carried out a review of the condensed consolidated interim financial statements and its report is set out at the end of this document.

The comparative figures as at and for the year ended 31 December 2019 are extracted from the Group's statutory accounts for that financial year. Those accounts have been reported on by the auditor and delivered to the Registrar of Companies. The report of the auditor was:

(i) unqualified;

(ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and

(iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

The Group's financial risk management objectives and policies are consistent with that disclosed in the consolidated financial statements as at and for the year ended 31 December 2019.

Going concern

Due to the significant uncertainty arising from the Covid-19 pandemic, management has performed a detailed going concern review, testing the Group's liquidity in a range of scenarios as set out below.

Throughout the period, the Group was debt free, has continued to be cash generative and had cash balances of GBP50,306,000 at 30 June 2020 (31 December 2019: cash and money market deposits balance of GBP36,258,000).

The Group has the benefit of a GBP10.0m committed revolving loan facility with Barclays Bank plc which was agreed on 7 February 2020 and replaced the previous GBP10.0m committed loan facility with Barclays Bank plc which was terminated on that date. In April 2020 a variation was agreed to the facility to extend the term beyond the original year to 7 February 2022 and introduced a covenant in relation to the ratio of net debt to EBITDA. No amount has been drawn under the facility.

On 27 April 2020 Rightmove received confirmation that it is eligible to access the UK Government's Covid Corporate Financing Facility (CCFF) which will close to new issuers on 31 December 2020 under the terms of the CCFF Operating Procedures dated 19 June 2020, and which can be varied at the Bank of England's discretion. Rightmove has not issued any commercial paper under the scheme and did not require access to the CCFF for its Going Concern assessment.

Following the lockdown measures introduced in response to Covid-19, in particular the inability to physically view properties, activity in the housing market was significantly reduced in the UK from late March. In order to support our customers during this unprecedented shut down of the UK property market, we offered our Agency and New Homes customers a 75% discount on their invoice value for 4 months between April and July, with selected discount support across other business units.

   1   General information (continued) 

These discounts had a revenue impact of GBP50.5m in the period. The Group took immediate steps to preserve liquidity over the period, including the decision to suspend the share buyback programme from 14 March, and the cancellation of the previously announced 2019 dividend.

Activity in the housing market was restarted in England on 13 May and was followed in late June in Scotland and Wales. It takes time, however, for activity to convert into cash for our agents, with housing transactions taking on average three months to complete. We have therefore extended the support to our Agency customers for a further two months, and communicated a discount of 60% in August and 40% in September. Due to the delay in the restart of activity in Scotland and Wales, the discount in these areas has been extended to 75% in August and 60% in September.

In stress testing the cash flows of the Group, management modelled a range of scenarios, including severe, but plausible downside scenarios which considered the impact of a reduction in housing transaction numbers of varying severity during 2020, followed by improved transaction activity in 2021.

Under the various transaction scenarios, we have modelled likely timing of cash flows for our customers for the next 12 months and considered the impact on our key drivers of revenue being customer numbers and average revenue per advertiser (ARPA). We have also considered cost mitigation measures, where appropriate, including reducing headcount and lower marketing spend. In all of the scenarios tested the Group remained debt-free, did not require utilisation of the loan facility or the CCFF, and the loan facility covenant was not breached.

The Board of directors consider that the Group and the Company have adequate resources to continue in operation for at least 12 months from the date of these results and have therefore continued to adopt the going concern basis in preparing these condensed interim financial statements.

   2   Significant accounting policies 

The accounting policies applied by the Group in these condensed consolidated interim financial statements are in accordance with International Financial Reporting Standards as adopted by the European Union (Adopted IFRSs) and are the same as those applied by the Group in its consolidated financial statements as at and for the year ended

31 December 2019.

The same accounting policies are anticipated to be applied for the year ending 31 December 2020.

   3   Judgements and estimates 

The preparation of the condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in future periods if applicable.

Management has determined that there are no significant areas of estimation uncertainty or critical judgements in applying accounting policies that have a significant effect on the amounts recognised in the condensed consolidated interim financial statements of the Group.

   4   Operating segments 

The Group determines and presents operating segments based on internal information that is provided to the Chief Executive Officer, who is the Group's Chief Operating Decision Maker.

The Group's reportable segments are as follows:

-- The Agency segment which provides resale and lettings property advertising services on Rightmove's platforms; and

-- The New Homes segment which provides property advertising services to new home developers and housing associations on Rightmove's platforms.

The Other segment which represents activities under the reportable segments threshold, comprises Overseas and Commercial property advertising services and non-property advertising services which include our Third Party advertising and Data Services.

Management monitors the business segments at a revenue and trade receivables level separately for the purpose of making decisions about resources to be allocated and of assessing performance. All revenue in all periods are derived from third parties and there is no inter-segment revenue.

Operating costs, financial income, financial expenses and income taxes in relation to the Agency, New Homes and the Other segment are managed on a centralised basis at a Rightmove Group Limited level and as there are no internal measures of individual segment profitability, relevant disclosures have been shown under the heading of Central in the table below.

 
 
                                     New Homes 
                           Agency       GBP000    Sub total GBP000     Other    Central    Adjustments    Total GBP000 
                           GBP000                                     GBP000     GBP000         GBP000 
 
 Six months ended 
  30 June 2020 
 Revenue                   66,573       17,277              83,850    10,965          -              -          94,815 
 Operating profit(1)            -            -                   -         -     61,699              -          61,699 
 Depreciation and 
  amortisation                  -            -                   -         -    (2,065)            (-)         (2,065) 
 Financial income               -            -                   -         -        131              -             131 
 Financial expenses             -            -                   -         -      (259)              -           (259) 
 Trade receivables(2)       1,536        3,718               5,254     2,776          -         253(3)           8,283 
 Other segment assets           -            -                   -         -     92,684         150(3)          92,834 
 Segment liabilities            -            -                   -         -   (40,193)       (403)(3)        (40,596) 
 Capital expenditure(4)         -            -                   -         -      2,120              -           2,120 
-----------------------  --------  -----------  ------------------  --------  ---------  -------------  -------------- 
 
 
 Six months ended 
  30 June 2019 
 Revenue                          104,782   27,809   132,591   11,323          -          -    143,914 
 Operating profit(1)                    -        -         -        -    108,191          -    108,191 
 Depreciation and amortisation          -        -         -        -    (1,824)          -    (1,824) 
 Financial income                       -        -         -        -        141          -        141 
 Financial expenses                     -        -         -        -      (250)          -      (250) 
 Trade receivables(2)               6,527   11,462    17,989    1,821          -     194(3)     20,004 
 Other segment assets                   -        -         -        -     80,114      71(3)     80,185 
 Segment liabilities                    -        -         -        -   (52,641)   (265)(3)   (52,906) 
 Capital expenditure(4)                 -        -         -        -        550          -        550 
-------------------------------  --------  -------  --------  -------  ---------  ---------  --------- 
 
 
 Year ended 
  31 December 2019 
 Revenue                          209,268   55,482   264,750   24,570          -           -    289,320 
 Operating profit(1)                    -        -         -        -    213,730           -    213,730 
 Depreciation and amortisation          -        -         -        -    (3,594)           -    (3,594) 
 Financial income                       -        -         -        -        318           -        318 
 Financial expenses                     -        -         -        -      (486)           -      (486) 
 Trade receivables(2)               5,324   11,086    16,410    2,944          -     198 (3)     19,552 
 Other segment assets                   -        -         -        -     77,668      55 (3)     77,723 
 Segment liabilities                    -        -         -        -   (55,682)   (253) (3)   (55,935) 
 Capital expenditure(4)                 -        -         -        -      (779)           -      (779) 
-------------------------------  --------  -------  --------  -------  ---------  ----------  --------- 
 

(1) Operating profit is stated after the charge for depreciation, amortisation, share-based payments and NI on share-based incentives

(2) The only segment assets that are separately monitored by the Chief Operating Decision Maker relate to trade receivables net of any associated provision for impairment. All other segment assets are reported on a centralised basis.

(3) The adjustments column reflects the reclassification of credit balances in trade receivables and debit balances in accounts payable made on consolidation for statutory accounts purposes.

(4) Capital expenditure consists of purchases of property, plant and equipment and intangible assets.

   5   Revenue 

The Group's operations and main revenue streams are those described in the last annual financial statements. The Group's revenue is derived from contracts with customers.

Disaggregation of revenue

In the following table, revenue is disaggregated by property and non-property advertising revenue. The table also includes a reconciliation of the disaggregated revenue with the Group's reportable segments (see Note 4).

 
 Six months ended         Estate Agency   New Homes     Other     Total 
  30 June 2020 
                                 GBP000      GBP000    GBP000    GBP000 
 Revenue stream 
 Property products               66,573      17,277     4,828    88,678 
 Non-property products                -           -     6,137     6,137 
-----------------------  --------------  ----------  --------  -------- 
                                 66,573      17,277    10,965    94,815 
-----------------------  --------------  ----------  --------  -------- 
 
 Six months ended         Estate Agency   New Homes     Other     Total 
  30 June 2019                   GBP000      GBP000    GBP000    GBP000 
 Revenue stream 
 Property products              104,782      27,809     6,798   139,389 
 Non-property products                -           -     4,525     4,525 
-----------------------  --------------  ----------  --------  -------- 
                                104,782      27,809    11,323   143,914 
-----------------------  --------------  ----------  --------  -------- 
 
 Year ended               Estate Agency   New Homes     Other     Total 
  31 December 2019               GBP000      GBP000    GBP000    GBP000 
 Revenue stream 
 Property products              209,268      55,482    13,961   278,711 
 Non-property products                -           -    10,609    10,609 
-----------------------  --------------  ----------  --------  -------- 
                                209,268      55,482    24,570   289,320 
-----------------------  --------------  ----------  --------  -------- 
 

Contract balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers.

 
                                        30 June    30 June   31 December 
                                 Note      2020       2019          2019 
                                         GBP000     GBP000        GBP000 
----------------------------  -------  --------  ---------  ------------ 
 Trade receivables, which 
  are included in trade and 
  other receivables            10         9,166     20,777        20,285 
 Contract assets                            428        364           429 
 Contract liabilities                   (1,263)    (1,982)       (2,111) 
----------------------------  -------  --------  ---------  ------------ 
 
 

The contract assets primarily relate to the Group's rights to consideration for services provided but not invoiced at the reporting date. The contract assets are transferred to trade receivables when invoiced and the rights have become unconditional.

The contract liabilities primarily relate to the advance consideration received from Estate Agency, Overseas and Commercial customers, for which revenue is recognised as or when the services are provided.

   6   Share-based payments 

The Group operates share-based incentive schemes for executive directors and employees. Since flotation, the Company has awarded share options under the Rightmove Unapproved Executive Share Option Plan (Unapproved Plan) and the Rightmove Approved Executive Share Option Plan (Approved Plan). The Group also operates a Savings Related Share Option Scheme (Sharesave Plan), a Deferred Share Bonus Plan (DSP), Performance Share Plan (PSP) and the Rightmove Share Incentive Plan (SIP). In March 2019 a Restricted Share Plan (RSP) was established that awards shares to selected senior management.

All share-based incentives are subject to a service condition. Such conditions are not taken into account in the fair value of the service received. The fair value of services received in return for share-based incentives is measured by reference to the fair value of share-based incentives granted. The estimate of the fair value of the share-based incentives is measured using either the Monte Carlo or Black Scholes pricing model as is most appropriate for each scheme.

The total share-based payments credit for the six months ended 30 June 2020 relating to all share-based incentive plans was GBP182,000 (2019: GBP2,198,000 charge).

NI is being accrued, where applicable, at a rate of 13.8%, which management expects to be the prevailing rate when the awards are exercised, based on the share price at the reporting date. The total NI credit for the six months ended 30 June 2020 relating to all awards was GBP144,000 (2019: GBP573,000 charge). The share price at 30 June 2020 was GBP5.46

(30 June 2019: GBP5.35).

Approved and Unapproved Plans

There has been no award of share options under these plans since 5 March 2010.

Performance Share Plan (PSP)

The PSP permits awards of nil cost options or contingent shares which will only vest in the event of prior satisfaction of a performance condition.

PSP awards are dependent on a relative Total Shareholders Return performance condition (25% of the award) and an EPS growth target measured over a three-year performance period (75% of the award). PSP awards are valued using the Monte Carlo model for the TSR element and the Black Scholes model for the EPS element and the resulting charge is spread over the period between Grant Date and Vesting Date, typically three years. No PSP awards were made in the six month period to 30 June 2020.

PSP award holders are entitled to receive dividends accruing between the Grant Date and the Vesting Date and this value will be delivered in shares.

Deferred share bonus plan (DSP)

In March 2009 a DSP was established which allows executive directors and other selected senior management the opportunity to earn a bonus determined as a percentage of base salary settled in nil cost deferred shares. The award of shares under the plan is contingent on the satisfaction of pre-set internal targets relating to underlying drivers of long-term revenue growth (the Performance Period). The right to the shares is deferred for two years from the date of the award (the Vesting Period) and potentially forfeitable during that period should the employee leave employment. The deferred share awards have been valued using the Black Scholes model and the resulting share-based payments charge is being spread evenly over the combined Performance Period and Vesting Period of the shares, being three years.

Following the achievement of 65% of the 2019 internal performance targets, 357,152 nil cost deferred shares were awarded to executives and senior management on 4 March 2020 with the right to the release of the shares deferred until March 2022.

Share Incentive Plan (SIP)

In 2014, the Group established the Rightmove SIP. Employees were offered 450 free shares on 20 December 2019 as a gift, subject to a three-year service period from 21 December 2019 to 20 December 2022 (the Vesting Period). The SIP awards have been valued using the Black Scholes model and the resulting share-based payments charge spread evenly over the Vesting Period of three years. The SIP shareholders are entitled to a dividend paid in cash over the Vesting Period. No performance criteria are applied to the vesting of SIP free shares.

Restricted share plan (RSP)

In March 2019 an RSP was established that awards shares to selected senior management, subject only to service conditions. Participants are not entitled to receive dividends on these awards. RSP awards are valued using the Black Scholes model and the resulting share-based payments charge is being spread evenly over the Vesting Period of the shares, being three years. No RSP awards were made in the six month period to 30 June 2020.

   7   Earnings per share (EPS) 
 
                                                                       Pence per share 
                                 GBP000                Basic                    Diluted 
Six months ended 30 June 2020 
Earnings                         49,956                 5.73                       5.72 
 
Six months ended 30 June 2019 
Earnings                         87,450                 9.85                       9.81 
 
Year ended 31 December 2019 
Earnings                        173,089                19.57                      19.49 
 
 

Weighted average number of ordinary shares (basic)

 
                                                                6 months ended      6 months ended          Year ended 
                                                                  30 June 2020        30 June 2019    31 December 2019 
                                                              Number of shares    Number of shares    Number of shares 
----------------------------------------------------------  ------------------  ------------------  ------------------ 
 Issued ordinary shares at 1 January less ordinary shares 
  held by the EBT and SIP Trust                                    888,422,516         904,626,215         904,626,215 
 Less own shares held in treasury at the beginning of the 
  year                                                            (13,360,310)        (14,813,304)        (14,813,304) 
 Effect of own shares purchased for cancellation                   (3,525,393)         (1,867,483)         (6,097,026) 
 Effect of share-based incentives exercised                            166,506             399,973             863,996 
 Effect of shares purchased by the EBT                                       -           (161,700)           (216,744) 
 
                                                                   871,703,319         888,183,701         884,363,137 
----------------------------------------------------------  ------------------  ------------------  ------------------ 
 

Weighted average number of ordinary shares (diluted)

For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potentially dilutive shares. The Group's potential dilutive instruments are in respect of share-based incentives granted to employees, which will be settled by ordinary shares held by the Employees' Share Trust (EBT), SIP Trust and shares held in treasury.

 
                                                             6 months ended      6 months ended          Year ended 
                                                               30 June 2020        30 June 2019    31 December 2019 
                                                           Number of shares    Number of shares    Number of shares 
-------------------------------------------------------  ------------------  ------------------  ------------------ 
 
 Weighted average number of ordinary shares (basic)             871,703,319         888,183,701         884,363,137 
 
 Dilutive impact of share-based incentives outstanding            2,237,305           3,592,806           3,670,032 
                                                                873,940,624         891,776,507         888,033,169 
-------------------------------------------------------  ------------------  ------------------  ------------------ 
 
   8   Dividends 

Company dividends

Dividends declared and paid by the Company were as follows:

 
                          6 months ended 30 June 2020           6 months ended          Year ended 31 December 2019 
                                                                 30 June 2019 
                              Pence per share             Pence per share                Pence per share 
                                                 GBP000                       GBP000                          GBP000 
----------------------  ---------------------  --------  ----------------  ---------  ------------------  ---------- 
 2018 final dividend 
  paid                                      -         -              4.00     35,510                4.00      35,510 
 2019 interim dividend 
  paid                                      -         -                 -          -                2.80      24,663 
                                            -         -              4.00     35,510                6.80      60,173 
 --------------------------------------------  --------  ----------------  ---------  ------------------  ---------- 
 Unclaimed dividends returned                       (2)                                                        (317) 
---------------------------------------------  --------  ----------------  ---------  ------------------  ---------- 
 Net dividends included in the statement of 
  cash flows                                        (2)                       35,510                          59,856 
---------------------------------------------  --------  ----------------  ---------  ------------------  ---------- 
 
 

No interim dividend has been proposed by the Board of directors.

(2019: 2.8p per qualifying ordinary 1p share GBP24,845,000).

The 2019 final dividend proposed in the Annual Report of 4.4p per ordinary share being GBP38,483,000 was withdrawn from the AGM resolutions in May 2020 and cancelled in order to provide additional short-term balance sheet liquidity to Rightmove, given the uncertainties caused by the impact of Covid-19.

The terms of the EBT provide that dividends payable on the ordinary shares held by the EBT are waived.

   9   Taxation 

The income tax expense of GBP11,615,000 (2019: GBP20,632,000) is recognised based on management's best estimate of the consolidated effective tax rate expected for the full financial year applied to the profit before tax for the six month period. The Group's consolidated effective tax rate for the six months ended 30 June 2020 was 18.9%% (2019: 19.1%). The difference between the standard rate of 19.0% and the effective rate of 18.9% at 30 June 2020 is attributable to a rate change in respect of opening deferred tax assets.

The deferred tax asset of GBP2,654,000 at 30 June 2020 (2019: GBP3,109,000) is in respect of equity settled share-based incentives and depreciation in excess of capital allowances. The deferred tax asset arising on equity settled share-based incentives was recognised in profit or loss to the extent that the related equity settled share-based payments charge was recognised in the statement of comprehensive income. The deferred tax liability of GBP916,000 at 30 June 2020 (2019: nil) is in respect of the intangible asset recognised on acquisition of Van Mildert Landlord and Tenant Protection Limited.

The deferred tax asset at 30 June 2030 has been calculated at the rate of 19.0% which represents the expected rate at which the net deferred tax asset will reverse in the future.

 
10 Trade and other receivables 
                                                      30 June 2020   30 June 2019   31 December 2019 
                                                            GBP000         GBP000             GBP000 
---------------------------------------------------  -------------  -------------  ----------------- 
Trade receivables                                            9,166         20,777             20,285 
Less provision for impairment of trade receivables           (883)          (773)              (733) 
---------------------------------------------------  -------------  -------------  ----------------- 
Net trade receivables                                        8,283         20,004             19,552 
Prepayments                                                  4,155          5,423              3,922 
Interest receivable                                              7             38                 32 
Other debtors                                                  306            129                479 
---------------------------------------------------  -------------  ------------- 
                                                            12,751         25,594             23,985 
---------------------------------------------------  -------------  -------------  ----------------- 
 
 
11 Trade and other payables 
 
                                       30 June 2020    30 June 2019    31 December 2019 
                                             GBP000          GBP000              GBP000 
-----------------------------------  --------------  --------------  ------------------ 
Trade payables                                2,222           1,614               1,384 
Trade accruals                                7,393           5,050               6,705 
Other creditors                                 515             117                 481 
Other taxation and social security           12,387          10,353              10,946 
                                             22,517          17,134              19,516 
-----------------------------------  --------------  --------------  ------------------ 
 
   12   Reconciliation of movement in capital and reserves 

Share buyback

In June 2007, the Company commenced a share buyback programme to purchase its own ordinary shares. The total number of shares bought back in the six months to 30 June 2020 was 5,028,392 (2019: 3,630,257) representing 0.6% (2019: 0.4%) of the ordinary shares in issue (excluding shares held in treasury). All the shares bought back in the period were cancelled. The shares were acquired on the open market at a total consideration (excluding costs) of GBP30,125,000 (2019: GBP18,499,000). The maximum and minimum prices paid were GBP6.50 (2019: GBP5.60) and GBP5.05 (2019: GBP4.28) per share respectively.

 
 Own shares held - GBP000                                                                                        Total 
                                      EBT shares reserve     SIP shares reserve     Treasury shares    own shares held 
                                                  GBP000                 GBP000              GBP000             GBP000 
---------------------------------  ---------------------  ---------------------  ------------------  ----------------- 
 Own shares held as at 1 January 
  2019                                           (1,113)                (2,985)             (7,040)           (11,138) 
 Shares transferred to SIP                             -                      -                   -                  - 
 Shares purchased for RSP                        (1,285)                      -                   -            (1,285) 
 Share-based incentives exercised 
  in the period                                       26                    475                 251                752 
 Own shares held as at 30 June 
  2019                                           (2,372)                (2,510)             (6,789)           (11,671) 
---------------------------------  ---------------------  ---------------------  ------------------  ----------------- 
 
 Own shares held as at 1 January 
  2019                                           (1,113)                (2,985)             (7,040)           (11,138) 
 Shares purchased for SIP                        (2,112)                      -                   -            (2,112) 
 Shares transferred to SIP                           826                  (826)                   -                  - 
 Share-based incentives exercised 
  in the year                                        208                    424                 723              1,355 
 Reduction in shares released due 
  to net settlement                                    -                      -                (31)               (31) 
 SIP releases in the year                              -                    182                   -                182 
---------------------------------  ---------------------  ---------------------  ------------------  ----------------- 
 Own shares held as at 31 
  December 2019                                  (2,191)                (3,205)             (6,348)           (11,744) 
---------------------------------  ---------------------  ---------------------  ------------------  ----------------- 
 
 Own shares held as at 1 January 
  2020                                           (2,191)                (3,205)             (6,348)           (11,744) 
 Share-based incentives exercised 
  in the period                                       42                    329                  35                406 
 SIP releases in the period                            -                     60                   -                 60 
 
   Own shares held as at 30 June 
   2020                                          (2,149)                (2,816)             (6,313)           (11,278) 
---------------------------------  ---------------------  ---------------------  ------------------  ----------------- 
 

Own shares held - number of shares

 
                                                                                                                 Total 
                                      EBT shares reserve     SIP shares reserve     Treasury shares    own shares held 
---------------------------------  ---------------------  ---------------------  ------------------  ----------------- 
 Own shares held as at 1 January 
  2019                                         2,248,020                810,095          14,813,304         17,871,419 
 Shares purchased for RSP                        254,502                      -                   -            254,502 
 Share-based incentives exercised 
  in the period                                 (54,100)              (121,450)           (526,483)          (702,033) 
 Own shares held as at 30 June 
  2019                                         2,448,422                688,645          14,286,821         17,423,888 
---------------------------------  ---------------------  ---------------------  ------------------  ----------------- 
 Own shares held as at 1 January 
  2019                                         2,248,020                810,095          14,813,304         17,871,419 
 Shares purchased for SIP                        385,612                      -                   -            385,612 
 Shares transferred to SIP                     (131,110)                131,110                   -                  - 
 Share-based incentives exercised 
  in the year                                  (294,160)              (111,800)         (1,518,184)        (1,924,144) 
 Reduction in shares released due 
  to net settlement                                    -                      -              65,190             65,190 
 SIP releases in the year                              -               (44,275)                   -           (44,275) 
---------------------------------  ---------------------  ---------------------  ------------------  ----------------- 
 Shares held as at 31 December 
  2019                                         2,208,362                785,130          13,360,310         16,353,802 
---------------------------------  ---------------------  ---------------------  ------------------  ----------------- 
 
 Own shares held as at 1 January 
  2020                                         2,208,362                785,130          13,360,310         16,353,802 
 Share-based incentives exercised 
  in the period                                 (86,128)               (97,870)            (74,820)          (258,818) 
 SIP releases in the year                              -               (12,400)                   -           (12,400) 
 Shares held as at 30 June 2020                2,122,234                674,860          13,285,490         16,082,584 
---------------------------------  ---------------------  ---------------------  ------------------  ----------------- 
 

(a) EBT shares reserve

This reserve represents the cost of own shares acquired by the EBT less any exercises of share-based incentives.

At 30 June 2020, the EBT held 2,122,234 (2019: 2,448,422) ordinary shares in the Company, representing 0.2%

(2019: 0.3%) of the ordinary shares in issue (excluding shares held in treasury). The market value of the shares held by the EBT at 30 June 2020 was GBP11,587,000 (2019: GBP13,099,000).

(b) SIP shares reserve

In November 2014, the Group established the Rightmove Share Incentive Plan Trust (SIP). This reserve represents the cost of acquiring shares less any exercises or releases of SIP awards. Employees of the Group were offered 450 0.1 pence free shares in December 2019, subject to a three-year service period from January 2020 to December 2022.

At 30 June 2020 the SIP Trust held 674,860 (2019: 688,645) ordinary shares in the Company of 0.1 pence each, representing 0.08% (2019: 0.08%) of the ordinary shares in issue (excluding shares held in treasury). The market value of the shares held in the SIP Trust at the period end was GBP3,685,000 (30 June 2019: GBP3,684,000).

(c) Treasury Shares

This represents the cost of acquiring shares held in treasury less any exercises of share-based incentives. These shares were bought back in 2008 at an average price of 47.60 pence and may be used to satisfy certain share-based incentive awards.

Other reserves

This represents the Capital Redemption Reserve in respect of own shares bought back and cancelled. The movement in other reserves of GBP5,000 (2019: GBP4,000) comprises the nominal value of ordinary shares cancelled during the period.

Retained earnings

The loss on exercise of share-based incentives is the difference between the value that the shares held by the EBT, SIP and treasury shares were originally acquired at and the exercise price at which share-based incentives were exercised during the period.

   13   Related parties 

Inter-group transactions with subsidiaries

During the period Rightmove plc was charged interest of GBP113,000 (2019: GBP308,000) by Rightmove Group Limited in respect of balances owing under the inter-group loan agreement dated 30 January 2008. As at 30 June 2020 the balance owing under this agreement was GBP45,651,000 (2019: GBP1,805,000) including capitalised interest.

The Company grants share options to employees of Rightmove Group Limited. This transaction is recognised as a recharge arrangement with an increase in the carrying value of the investment of Rightmove Group Limited.

Inter-group transactions between subsidiaries

In 2018, Rightmove Rent Services Limited became a related party to the Company following its incorporation on

19 February 2018. During the period, Rightmove Group Limited has settled liabilities on behalf of Rightmove Rent Services Limited and the balance owing under the inter-group loan agreement dated 28 March 2018 was GBP1,515,000 as at 30 June 2020 (2019: GBP1,090,000). Under IFRS 9 this loan has been fully impaired within Rightmove Group Limited as it is not expected to be recovered. The interest charged under this agreement was GBP6,000 (2019: GBP5,000).

Following its acquisition on 30 September 2019 Van Mildert became a related party to the Company. Rightmove Group Limited has settled liabilities on behalf of Van Mildert and the balance owing under the inter-group loan agreement dated 30 September 2019 was GBP199,000 as at 30 June 2020 (2019: GBPnil). The interest charged under this agreement was nil (2019: nil). Rightmove Group Limited issued a subordinated loan agreement to Van Mildert for GBP400,000 on 7 February 2020 and a further GBP500,000 on 29 April 2020. These loans are not repayable within two years and provide liquidity for the business. The interest charged under this agreement was GBP2,000.

ADVISERS AND SHAREHOLDER INFORMATION

 
 Contacts                                       Registered office      Corporate advisers 
 Chief Executive         Peter Brooks-Johnson   Rightmove plc          Financial adviser 
  Officer: 
 Interim Group Finance   Georgina Hudson        2 Caldecotte Lake      UBS Investment 
  Director:               Sandra Odell           Business Park          Bank 
  Company Secretary:      www.rightmove.co.uk    Caldecotte Lake 
  Website:                                       Drive                  Joint brokers 
                                                Caldecotte             UBS AG London Branch 
                                                 Milton Keynes          Numis Securities 
                                                                        Limited 
                                                MK7 8LE 
                                                                         Auditor 
                                                                       KPMG LLP 
                                                Registered in 
                                                 England no. 6426485    Bankers 
 Financial calendar                                                    Barclays Bank Plc 
  2020 
 Full year results       26 February 2021                              Santander UK plc 
                                                                        HSBC UK Bank plc 
                                                                        Lloyds Banking 
                                                                        Group plc 
 
                                                                        Solicitors 
                                                                        EMW LLP 
                                                                        Slaughter and May 
                                                                       Herbert Smith Freehills 
                                                                        LLP 
 
                                                                       Registrar 
                                                                       Link Asset Services* 
 
 
 
 

*Shareholder enquiries

The Company's registrar is Link Asset Services (formerly Capita Asset Services). They will be pleased to deal with any questions regarding your shareholding or dividends. Please notify them of your change of address or other personal information. Their address details are:

Link Asset Services

The Registry

34 Beckenham Road

Beckenham

Kent

BR3 4TU

Link Asset Services is a trading name of Link Market Services Limited.

Shareholder helpline: 0371 664 0391 (calls cost 10p per minute plus network extras) (Overseas: +44 20 8639 3399)

Email: enquiries@linkgroup.co.uk

Share portal: www.signalshares.com

Through the website of our registrar, Link Asset Services, shareholders are able to manage their shareholding online and facilities include electronic communications, account enquiries, amendment of address and dividend mandate instructions.

INDEPENT REVIEW REPORT TO RIGHTMOVE PLC

Conclusion

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2020 which comprises the condensed consolidated interim statement of comprehensive income, condensed consolidated interim statement of financial position, condensed consolidated interim statement of cash flows, condensed consolidated interim statement of changes in shareholders' equity and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2020 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Anna Jones

for and on behalf of KPMG LLP

Chartered Accountants

The Pinnacle

170 Midsummer Boulevard

Milton Keynes

MK9 1BP

7 August 2020

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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