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March 2009

Rightmove profits up 40 per cent

City Correspondent

MORE than a fifth of estate agencies left the business last  year, but a shift from print media advertising  to the internet and the development of other activities resulted in Rightmove, the leading property website, reporting a 40 per cent rise in pre tax profits for 2008.

Rightmove’s full year results lifted the share price above 200p, as they were better than the City expected.

Pre-tax profits rose from £27.1 million to £38.2 million, while revenues increased by 31 per cent from £56.7 million to £74 million.Earnings per share rose 27 per cent from 15.16p to 22.49p. Shareholders are to receive a 7p final dividend, making a 10 p total for the year, a 25 per cent increase.

Rightmove estimated that a fifth of estate agencies went out of business last year with up to 300 of its website subscribers leaving every month, but the rate of fall has since halved.

However, average revenue per advertiser rose 26 per cent to £307 per month, and the holiday home and letting web site businesses expanded.

Ed Williams, chief executive, said Rightmove benefited from the “mass migration” of  advertising from print to online and estimated that during the past 12 months, about 20 per cent of advertising spend has migrated from traditional media to online.

There are signs of some recovery in housing  transactions as January traffic from would-be homebuyers was at a high level. However, the fall in activity last winter will affect 2009 results and Rightmove is making £5 million cost savings.

Meanehile, Skipton Building Society, owners of Connells, netted a £22.3 million profit from Connells’ sale of Rightmove shares last year, the society’s accounts reveal.

Connells made £10.4 million trading profit in 2008, compared with £59.7 million in 2007.

David Cutter, chief executive of the Skipton, said the fact Connells made a profit at all was   “remarkable” given the state of the housing market.

The building society’s own profits plunged from £164 million to only £22.5 million partly due to losses on lending but also due to one-offs such as a £11 million exposure to Icelandic banks and a £16.3 million provision  for its share in financing the Government’s deposit compensation scheme  which compensates  savers when a bank fails.