Acquisition of Van Mildert Landlord and Tenant Protection Limited (Van Mildert)
Rightmove plc (LON: RMV), the UK’s number one property website, has today announced the acquisition of 100% of the issued share capital of Van Mildert, a company that provides tenant referencing services and rent guarantee insurance products.
Van Mildert has a strong brand and is well positioned within the rental marketplace.
The products and operational experience of the company will further augment the Rightmove Tenant Passport proposition and Rightmove’s vision of servicing the under-served rental marketplace.
Van Mildert’s founder, Christian Balshan will continue to lead the Van Mildert team from their Newcastle office and work to leverage the scale benefits that the Rightmove platform can bring to their referencing proposition.
Van Mildert is growing strongly having delivered audited net revenues of £3.6m[1] and profit before taxation of £1.4m for the year ended 30 November 2018, both up 19%. Van Mildert had gross assets of £3.3m as at 30 November 2018.
The purchase price comprises initial cash consideration of £16m, which will be funded from Rightmove’s existing cash reserves. Future deferred consideration is payable in 2022 covering the two-year period from January 2020 to December 2021 based on the revenue performance of the business, and is capped at £4m. Any deferred consideration is payable in cash. The acquisition is expected to be enhancing to Rightmove’s earnings per share in the first full year of ownership.
The transaction is subject to FCA change of control regulatory approval and is anticipated to complete by 31 October 2019.
Peter Brooks-Johnson, CEO of Rightmove said
“We’re looking forward to welcoming Van Mildert, a highly respected tenant referencing company, to the Rightmove family.
We believe the combination of Rightmove’s unrivalled reach and Van Mildert’s products and operational experience will augment the Rightmove Tenant Passport, helping in our quest to make renting a property faster, easier and more efficient for tenants, landlords, and agents alike.”
Half year results for the six months ended 30 June 2019
Financial Highlights
| H1 2019 | H1 2018 | Change | |
| Revenue | £143.9m | £131.1m | +10% |
| Operating profit | £108.2m | £98.2m | +10% |
| Underlying operating profit(1) | £111.0m | £101.0m | +10% |
| Basic earnings per share(2) | 9.9p | 8.8p | +12% |
| Underlying basic earnings per share(2)(3) | 10.2p | 9.1p | +12% |
| Interim dividend(2) | 2.8p | 2.5p | +12% |
- Revenue up 10% year on year driven by continued growth in our Agency and New Homes businesses
- Underlying operating profit(1) and operating profit both up 10%
- Underlying basic earnings per share(3) and basic earnings per share both up 12%
- £54.0m (2018: £76.9m) cash returned to shareholders through dividends and share buybacks in the period
- Interim dividend increased by 0.3p to 2.8p (2018: 2.5p(2)) per ordinary share, up 12%
Operational Highlights
- Average revenue per advertiser (ARPA) grew more strongly than anticipated, up £90 on the same period a year ago to £1,077(4) per month (2018: £987)
- Membership numbers down 1% since the start of the year to 20,209 (31 December 2018: 20,454) reflecting a 3% decline in mainly low-stock Agency branches offset by strong growth in New Homes development numbers
- Penetration of higher value Enhanced and Optimiser packages reached 35% of estate agency customers (2018: 27%)
- Virtually the whole of the property market in one place with 1.1 million UK residential properties advertised on Rightmove, which is more than any other UK portal
- Continued traffic growth with visits up 2% year on year, averaging nearly 141 million(5) visits per month driven by growth in mobile traffic. Time on site was flat year on year, averaging 1.1 billion(5) minutes per month
- Progress with rental innovation. Version 2 of the Rightmove Tenant Passport launched and addition of tenant referencing capability with the agreement to acquire Van Mildert Landlord and Tenant Protection
Guidance and outlook
In the first half of the year we saw ARPA growth ahead of our expectations, as our customers took advantage of the exposure and efficiencies which Rightmove offers. The 4.6% drop in sales transactions year to date compared to 2018 and the lengthening of time to completion and therefore delay in short-term cash flows has disproportionately impacted some low-stock agents who have left the industry. The strong ARPA growth and a meaningful increase in the number of New Homes developments have offset the impact of a decline in branch numbers. We expect the second half to follow a similar pattern for both ARPA and low-stock branches, with development numbers stable.
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 delivering its expectations for the full year.
Peter Brooks-Johnson, Rightmove plc Chief Executive Officer, said:
“In the first half of 2019 home hunters visited Rightmove a record 845 million times. Home hunters continue to turn to Rightmove first to search and research properties in the only place you can see virtually the whole of the UK market. Our restless innovation delivers the fastest and easiest way to ‘find your happy’ from the 1.1 million UK residential properties on Rightmove.
A 4.6% drop in transactions compared to 2018 has put pressure on some low-stock agency branches and created opportunity for others. We’re focused on helping all our customers succeed by delivering the most significant and effective exposure for their properties and brands to compete to win home sale instructions and also by being the largest source of high quality leads. We’ve seen strong adoption of our new digital solutions and existing packages by new homes developers and agents as they recognise the value of the UK’s largest property audience and Rightmove’s unique data insight.
We’re looking forward to welcoming Van Mildert, a highly respected tenant referencing company, to the Rightmove family which will augment our Rightmove Tenant Passport in our quest to make renting a property faster, easier and more efficient for tenants, landlords, and agents alike.”
Half Year Statement
Strategic Highlights
Rightmove is the platform people turn to first and engage with most when searching, researching and moving home. In the first half of the year Rightmove attracted a record 845(5) million visits resulting in home hunters spending 6.5(5) billion minutes across our mobile, app and web platforms.
Being synonymous with home hunting in the UK allows us to provide the most significant and effective exposure for our customers’ brands and properties. Against the backdrop of a housing marketplace with hesitant buyers and sellers, estate agents continue to recognise the value of our additional marketing products and packages with penetration of the Enhanced and Optimiser packages reaching 35% of estate agency customers, up from 27% in December 2018. Access to our unique in-market audience of home hunters also saw New Homes developers spend a record £4.6m in the first six months of 2019 on our digital marketing solutions (up from £3.8m in H1 2018).
We continue to launch valuable new products – for example, Auto Featured Property was launched in May to further help higher stock agents stand out to potential sellers with over 400 branches signed up as at 30 June 2019; and June saw the early roll out of our next generation digital marketing product, Rightmove Active Extension (RAE), which microtargets home hunters on websites beyond Rightmove based on their search behaviour.
By combining our commitment to innovative software, data analysis capability and our unique view of the whole market, we also help our customers drive operational efficiencies and inform their business decisions. To further enhance our market leading RightmovePlus system, we have launched a new suite of tools to help agents identify the most valuable markets they operate in and a new version of the Best Price Guide to help reduce the time spent preparing for property appraisals.
Our strategic focus to innovate to create a simpler and more efficient market for agents and tenants remains unabated with the launch of a new version of the Rightmove Passport, which includes a tenant credit report, and the announcement of our agreement to acquire the entire issued share capital of Van Mildert Landlord And Tenant Protection Limited. Van Mildert will give us tenant referencing and rent guarantee insurance capabilities and their products and operational experience will further augment our tenant passport proposition and Rightmove’s vision of servicing the under-served rental marketplace. The Van Mildert and Rightmove teams will work together to leverage the scale benefits that the Rightmove platform can bring to the referencing proposition.
The purchase price comprises initial cash consideration of £16.0m together with maximum deferred consideration of £4.0m. The transaction is subject to regulatory approval, with completion anticipated to be 31 October 2019. Further details have been announced separately today.
Agency
Agency ARPA was up £83 year on year to £1,023(6) (2018: £940) per branch per month partly as a result of further adoption of our higher value Enhanced and Optimiser product packages together with membership price increases. The number of Agency offices was down 3% at 30 June at 16,768 (31 December 2018: 17,328) reflecting a slowing in housing market activity since the start of the year. Those agents who left the industry were typically low-stock, lower spending sales and rental branches creating a positive mix effect on ARPA.
New Homes
New Homes ARPA increased by £60 year on year to £1,346(7) (2018: £1,286) per development per month with the growth being driven by the sale of additional advertising products, including digital marketing campaigns, and by increases to core membership prices. The number of developments was up 10% since the start of the year at 3,441 (31 December 2018: 3,126).
