March 2008

Rightmove and LSL results reassure

BOTH Rightmove and LSL Property Services issued reassuring figures when they reported their full year profits for 2007 at the end of February.

Property website Rightmove revealed revenue of £56.7 million, up 69 per cent on 2006, and pre-tax profit of £27.1 million, compared with £7.7 million. Earnings per share worked out at 15.2p, and shareholders receive 8p per share dividend.

The number of advertisers using Rightmove rose 18 per cent to 19,267 and average monthly revenue per advertiser rose 35 per cent from £192 to £259, as result of an increase in charges.

More than one in five agents now use Rightmove Choice, a premium service introduced last year.

Rightmove managing director Ed Williams said the tougher housing market actually brought some benefits to Rightmove, as estate agents found website advertising more cost-effective than other media.

He admitted some agents had ceased to trade but they tended to be the weaker ones which contributed least to revenues.

Rightmove figures were right in line with the forecasts in its trading statement of early January and which were previously reported in the February City column.

However, immediate City reaction was a 27p fall in the share price to 502p, perhaps due to profit taking. The shares ended 2007 at 464p.

Results from LSL Property Services, owners of Your Move and ReedsRains, boosted the share price after they were announced.

They were better than might have been expected, following a trading statement in early January which admitted to a sharp down turn in estate agency business towards the end of last year, and a reduction in staff and branches (see City column February)

In the event, full year profit from Your Move and Reeds Rains retreated 6.5 per cent to £13.7 million, as fee income from sales fell 8.8 per cent to £69.3 million and the number of exchanges fell 11.3 per cent to 35,255.

During the second half of 2007, business was down by about a third compared to its peak.

The group’s development of the surveying business paid off as it now represents 72 per cent of operating profit.

The division‘s operating profit rose 25 per cent to £26.3 million on turnover up 27 per cent to £90 million.

Overall, LSL underlying profit was up 13 per cent to £36.5 million and adjusted earnings per share rose 17 per cent to 23.3 pence. Borrowings were up from £34 million to £49 million but net cash flow was £30 million.