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Last Updated: Friday, 1 September 2006, 07:27 GMT 08:27 UK
House pack costs knock Rightmove
Rightmove website
Rightmove says it is among the top websites for page impressions
The costs of an aborted investment in Home Information Packs (Hips) has hit profits at property website Rightmove.

The company reported pre-tax profits of 1.6m ($3m) for the six months to 30 June, down from 3.4m a year ago.

The fall was a result of Rightmove's decision to scrap a 22m investment in developing a Hips business, which came after the government altered the packs.

However, Rightmove said that operating profits had more than doubled thanks to healthy growth in online advertising.

Operating profit before costs relating to the Hips project, the company's flotation and share options was up 138% to 8.3m.

Home condition reports

Announcing its results, Rightmove said it had already invested 7m in developing its Hips business before deciding not to proceed, and would now also incur another 1.2m in exit costs.

The board considered... there was no realistic prospect of developing a profitable Rightmove Hips business
Rightmove statement

The decision to abandon the Hips business - announced in July - was prompted by a government decision to make home condition reports - a key element of Hips - voluntary, rather than compulsory.

Under the government's original plans, the packs were to contain a report into the condition of the property for sale - as well as information on title deeds, energy efficiency and local authority searches.

All this was to be done at the seller's expense, with a price tag estimated at close to 1,000.

But the government said in July that the home condition report element of the pack would no longer be mandatory.

The home condition report was set to be by far the most expensive part of the pack.

"The board considered these changes and concluded that there was no realistic prospect of developing a profitable Rightmove Hips business," said Rightmove.

New homes

Rightmove is majority-owned by Countrywide, HBOS and Connells, part of the Skipton Group.

"The first six months have seen rapid growth in our on-line advertising business with over 5,000 new advertisers subscribing to Rightmove," the company said.

"Growth has been particularly strong with estate agency, lettings and new homes advertisers across all regions of Great Britain."

It said that in 2006 Rightmove had "regularly been in the top 10 UK websites in terms of page impressions" and had gained market share on its competitors.




SEE ALSO
Rightmove halts house pack cash
26 Jul 06 |  Business
What is going on with HIPs?
19 Jul 06 |  Business
House pack change hits Rightmove
19 Jul 06 |  Business
Rightmove unveils float plans
15 Feb 06 |  Business

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