LONDON (Alliance News) - Shares in LSL Property Services PLC dropped in early trade on Tuesday after the company said its pretax profit fell thanks to a one-off gain booked a year earlier and due to investments it made in the business in preparation for better second half conditions in the UK property market.
LSL said its pretax profit for the first half was GBP7.5 million, sharply lower than the GBP32.3 million it posted a year earlier, partially thanks to an GBP18.1 million exceptional gain it booked a year earlier but also due to a rise in costs which outset its marginal increase in revenue.
Revenue for the group was up to GBP140.2 million from GBP139.8 million, but this was comfortably offset by a near-GBP4 million rise in its operating costs in the half. Lettings and financial services revenue saw double-digit growth in the half, but residential sales exchange revenue was sharply lower due to weak housing market conditions in the first half, while profitability in its estate agency business was pushed lower by additional investments the group made ahead of an expected improvement in market conditions in the second half.
LSL said it remains confident on meeting its expectations for operating profit growth in the year and said the improving conditions in the residential housing market post the UK General Election will leave it well positioned.
LSL said it will pay a flat interim dividend of 4 pence per share.
"The group has delivered a resilient first half performance in an evolving market. Key economic growth indicators, the political landscape and consumer confidence all remain positive although the market is seeing lower levels of estate agency instructions and availability of stock outside of London and the South East," said Simon Embley, LSL's chairman.
"The outlook from lenders remains positive with historically low mortgage rates and increased distribution of products through intermediary channels. As a result, we expect the market to return to year on year growth in the second half of the year and the board remains confident in delivering year on year operating profit growth in the second half of 2015 and a full year result in line with expectations," Embley added.
LSL shares were down 7.7% to 345.97 pence early Tuesday, one of the worst performers in the FTSE All-Share.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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