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Rightmove upgrades pre-tax profit expectations

Rightmove expects to beat its 2009 pre-tax profit target, according to a management statement out today.

In its interim statement, the portal says: "Given the positive results so far this year, coupled with the subscription-based business model and the significantly lower costs, the board believes that 2009 pre-tax profits will be ahead of its previous expectations."

The statement reveals that Rightmove's estate agency membership remains unchanged so far in 2009, at 9,800, though its the number of lettings-only agents has grown by more than 300 to 3,500 - an increase of 10% since the end of 2008.

An increase in the number of estate agents expanding into the lettings market and upgrading their Rightmove membership accordingly has also led to the portal reporting average revenue per advertiser levels rising "modestly" for Q1 compared with the same period in 2008.

Nevertheless, the portal reveals some advertising decline, with fewer developments and overseas homes being advertised due to the reduced house building activity in the UK and abroad, with a particular challenge being the number of Housing Association developments that have withdrawn properties from sale and converted to social rent.

"Total development numbers stand just above 3,000, down 9% since the end of 2008, with around half of the decline being from Housing Associations," reveals the statement.

The portal claims that the levels of consumers using the site are running at similar levels to those seen before the downturn in the housing market, hence the maintenance of its market share of between 79% and 80% of the portal market.

Cost reduction strategies within the company are on schedule, with costs expected to be below £29m this year, £1m lower than previously indicated. A decision to restructure £255m of a £40m debt facility will also result in significantly lower interest payments.

Separately, Rightmove revealed two major subscription renewals, with Lending Solutions Ltd signing up for another two years and Halifax Estate Agents signing a new three-year contract.

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