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Rightmove FY Results show profit growth despite low UK home sales

Web-based UK property search-portal Rightmove (LSE: RMV) reported underlying operating profit growth  of 2% from £41.0m to £41.9min in the full year ended 31 December 2009, and noted that the number of advertisers using the portal increased by 6% to 17,664.

“Rightmove's performance during 2009 reflects the widespread recognition across the residential property industry of the primary importance of the internet as a marketing channel”, Rightmove Chairman Scott Forbes commented. “Research recently conducted indicates that half of all successful UK home buyers in 2009 first saw the property they bought on the internet and two thirds of this group first saw the property on Rightmove”.

Although revenues actually fell 6% from the previous year to £74m, Rightmove’s underlying Earnings per share (NYSEARCA:EPS) increased by 28% as the company improved margins, repaid debts and bought-back shares. The company proposed a 7p final dividend, taking the year’s total dividend to 10p, in-line with 2008.

The company’s debt situation has greatly improved, at 31 December 2009, Rightmove had net cash of £3.4m, compared with a net debt of £16.9m in the previous year. The company also retired the outstanding £22.5m debt in early February 2010, with no penalties.

The company emphasised that it had achieved underlying profit growth despite historically low home sales in the housing market, with sharply lower numbers of estate agents and new home developments.

According to Rightmove, this growth was the result of prompt cost reduction initiatives, undertaken in 2008, and Increased average online advertising spending. The company also noted an improving trend, with second half revenues 7% higher than in the first half, and monthly revenues were close to their all time peak prior to the collapse in the property market.

Looking forward, Rightmove’s board said it is confident of future success based on increased investment, new advertising products and the prospect of a significant increase in customer numbers.

Disclosure: The author holds no positions in the company