Last checked at 26 Apr 2018 07:00
For Immediate Release 26th April 2018
LSL Property Services plc ("LSL" or "Group")
AGM Statement
LSL Property Services plc, a leading provider of residential property services incorporating both estate agency and surveying businesses, will hold its Annual General Meeting (AGM) today in London, where the following comments will be made regarding current trading, financial performance and outlook for the current financial year.
Overview:
Market conditions in Q1 2018 have been softer than the Board's expectations and the equivalent period in 2017. Despite this backdrop, Group revenue for the three months ended 31st March 2018 has increased by 0.4% year on year. Based on the current trading outlook of the business, LSL remains confident of delivering a full year 2018 result in-line with the Board's expectations.
Market Backdrop:
The number of House Purchase Approvals1 for the two months to 28th February 2018 were down by 3.0% compared to the same period in 2017. Although market volumes from the Bank of England are not yet available for March 2018, market estimates indicate that Bank of England House Purchase Approvals for March 2018 will be down against March 2017.
Remortgage1 volumes were up by 6.8% for the two months to 28th February 2018 against the same comparative period last year reflecting continued low mortgage costs and availability. The number of Total Mortgage Approvals1 for the two months to 28th February 2018, were up 1.0% relative to the corresponding period last year.
Group Performance:
The percentage changes in revenue for each of the two and three month periods ended 28th February 2018 and 31st March 2018 respectively are set out below:
| 2 months to 28 February | 3 months to 31 March |
|
|
|
Revenue |
|
|
Group | +2.6% | +0.4% |
Estate Agency | +3.5% | +2.4% |
Surveying | -0.6% | -6.9% |
Estate Agency and Related Services:
The Estate Agency Division has traded broadly in line with the Board's expectations during the first three months of 2018. The continued growth in Lettings income and Financial Services income more than offset the impact on exchange income from reduced exchange unit volumes:
· Total Estate Agency revenue increased by 2.4% year on year
· Exchange income decreased by 15.3% year on year reflecting the softer market conditions, the closure of eight owned branches in Q4 2017, the timing of national bank holidays in Q1 2018 compared to Q1 2017 and the weather conditions in March 2018
· Lettings delivered income growth of 4.2% year on year (organic growth 4.2%)
· Financial Services income growth of 20.1% year on year (organic growth 10.3%)
· Marsh & Parsons revenue decreased by 1.4% year on year reflecting reduced exchange volumes
· Marsh & Parsons Lettings income performance was strong delivering growth of 5.9% year-on-year
· In line with our strategy Marsh & Parsons opened a new branch in Chiswick during April 2018
Surveying and Valuation Services:
Trading in the Surveying Division for the first two months of 2018 was broadly flat against 2017 which was a robust performance against the softer market. March 2018 was impacted by the timing of national bank holidays in 2018 compared to 2017 and the weather conditions in March 2018, contributing to the Q1 2018 performance being below the comparative period in Q1 2017:
· Surveying income reduced by 6.9% year on year
· Continued focus on capacity utilisation together with the successful roll-out of the new technology platform partly offset lower mortgage volumes
· Professional indemnity costs continued to be well managed during the period
· The technology roll-out continues during 2018 with further functionality releases designed to further enhance quality and drive efficiencies
Outlook:
Market conditions in 2018 have been softer than the Board's expectations and the equivalent period in 2017. LSL's financial performance in Q1 2018 has tracked slightly below the Board's expectations.
LSL expects to see a reduction in the volume of house purchase transactions compared to the prior year, with the rate of House Price Inflation inside and outside London continuing to soften. Mortgage costs continue to be low by historic standards and mortgage availability remains good. The medium to longer term fundamentals of the UK housing market remain solid.
Based on the current trading outlook of the business and the potential for self-help measures, LSL remains confident of delivering a full year 2018 result in-line with the Board's expectations. The self-help measures include initiatives to drive organic growth in Estate Agency, in both Financial Services income and Lettings income and the recommencement of LSL's letting book acquisition programme. We expect the financial performance to be slightly more weighted to H2 in 2018 compared to the same period in 2017.
The Group has a robust balance sheet with relatively low levels of gearing and is very cash generative at an operational level. The business is well placed to capitalise on market conditions to increase shareholder value.
1. Source: Bank of England for "House Purchase Approvals", "Total Mortgage Approvals" and "Remortgage levels" 2017 & 2018
For further information, please contact:
Ian Crabb, Group Chief Executive Officer
Adam Castleton, Group Chief Financial Officer
LSL Property Services plc 0207 382 0360
David Rydell
Sophie Wills
Buchanan 0207 466 5000
Notes on LSL:
LSL is a leading provider of residential property services to its key customer groups. Services to consumers include: residential sales, lettings, surveying, conveyancing and mortgage, pure protection and general insurance brokerage services. Services to mortgage lenders include: valuations and panel management services, asset management and property management services. For further information, please visit LSL's website: www.lslps.co.uk