Embargoed for release at 07.00 hours, Thursday 13 November 2008
INTERIM MANAGEMENT STATEMENT
Rightmove plc ("Rightmove"), the UK's number one property search website,
publishes its Interim Management Statement for the period from 1 July 2008 to
13 November 2008 with management and financial information relating to the
period 1 July 2008 to 31 October 2008.
The UK housing market continues to be challenging, with very low housing
transaction volumes resulting in a significant number of estate agents leaving
the market. The net monthly decline in the number of estate agents peaked in
July before falling back to around 250-300 per month for August to October.
While the number of new home developments coming to market is very low, the
impact has been partially offset by a slow down in the rate at which
developments are sold. Advertising spend on existing developments is holding up
well as developers attempt to move inventory.
The number of advertisers on the Rightmove site at the end of October stands at
around 17,500, down 9% on a year earlier.
Activity on the websites is similar to the same period a year ago with, for
instance, page impressions in October up 4% on the same month in 2007. Although
overall home hunters are less active, enquiry levels are holding up well. As a
result of a number of changes to the rightmove.co.uk website, October enquiry
levels to advertisers were up 10% year-on-year and continue to run at 1m per
Rightmove estate agency membership fell to 10,700 by the end of October, a 15%
decline from a high point of around 12,600 a year ago. At least three out every
four estate agents who have left Rightmove over the last year have either gone
out of business or were removed for non-payment (which in practice is
frequently a precursor to going out of business). Average revenue per
advertiser (ARPA) was up slightly compared to the first half of the year aided
by the number of estate agents that are opting to also advertise rental
The number of new developments coming to market is very low though this is
partially offset by the length of time it is taking to sell developments. The
overall decline in developments being advertised at the end of October is
principally the result of two developers, accounting for approximately 400
developments, ceasing advertising. Total development numbers stand at 3,400,
down 11% on a year ago. ARPA continues to grow healthily, aided by the success
of email campaigns, though December in particular is likely to see a low level
of additional discretionary spend by developers.
Lettings agents advertising on Rightmove continued to increase as have the
number of estate agents who also now pay to advertise rental properties.
Lettings only agents have grown to 2,900, up 25% on a year ago. A price rise of
around 30% implemented during the most recent period and the introduction of
further Choice products for lettings has resulted in a significant uplift in
average revenue per advertiser in this category.
The overseas homes advertising market is increasingly tough with many overseas
markets now viewing the UK as a deteriorating source of buyers. As a
consequence the number of overseas advertisers is down 4% on a year ago albeit
ARPA was up by a corresponding amount compared to the first half of the year.
Holiday Lettings, in which Rightmove has a 66.7% interest, continues to trade
strongly having increased the annual price per property advert (to £185 from £
149 for new advertisers and from £119 to £149 for renewals) from the beginning
of August. Retention rates continue to run at around 75% and new sales in
recent months have been in line with the same period in 2007 leading to
continued strong overall growth in the number of properties advertised as well
as the ARPA.
Under normal circumstances the business has a relatively fixed cost base in the
short-term. However, recently the Company announced its intention to undertake
a significant reduction in its overheads to underpin operating margins and to
reinvest in marketing to help advertisers attract more business. These actions
will reduce the cost base by £5m (although the net reduction in the overall
cost base will be less as a result of the intention to increase marketing spend
in 2009). The related one-off expense will be taken in 2008 and is not expected
to be material.
The outlook for the UK property market remains negative. While anticipated
falls in house prices are damaging to consumer confidence, they offer some
opportunity for the volume of housing transactions to improve especially if
combined with government efforts to make mortgages more readily available. So
far, the overall size of the property advertising market including print
advertising appears to have halved over the last 15 months, based on the
property advertising revenue numbers being reported by Rightmove's local
newspaper industry competitors.
Rightmove's own business is proving much more robust than other forms of
property advertising in this challenging environment. Consequently, the Board
continues to have confidence in meeting its expectations for the current year.
Graham Zacharias, Group Finance Director, Rightmove plc 0207 087 0661