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13 Nov 2014 07:00
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For Immediate Release | 13 November 2014 |
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LSL Property Services plc
("LSL" or "the Group")
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Interim Management Statement
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LSL, a leading provider of residential property services, incorporating Estate Agency and Surveying businesses, issues this Interim Management Statement for the period from 1 July 2014 to 12 November 2014.
Group Performance
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All parts of the Group have traded well since June despite the lower activity levels in the market, following a particularly strong first half to the year. Performance reflects the strength of the Group through its broad range of businesses across the residential property services sector.
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The percentage change in turnover for the four months ended 31 October 2014 and also for the ten months ended 31 October 2014 compared with the same periods in 2013 is set out below:
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4 months to 31 Oct | 10 months to 31 Oct | |
Group | 8% | 14% |
Estate Agency | 10% | 16% |
Surveying | 2% | 6% |
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Market
The number of Total Mortgage Approvals(1) for the nine months to 30 September 2014 was 4.8% higher than for the same period in 2013. House Purchase Approvals(1) were 12.2% higher on the same comparative basis. Market data is not yet available for October. However, as shown in the table below, market growth has slowed significantly - particularly in Q3.
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Year on year growth in | Total Approvals | House Purchase Approvals |
Q1 | 25% | 35% |
Q2 | (1%) | 7% |
Q3 | (5%) | 1% |
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Estate Agency & Related Services:
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LSL's Estate Agency division has traded well during the period July to October 2014 and has benefitted from its geographical exposure to the whole of the UK property market:
- Total income up 10% year on year
- Exchange income increased by 10% year on year
- Lettings income growth of 12% year on year
- Financial Services income up 19% year on year
- Pipeline volumes are in line with prior year at 31 October
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Marsh & Parsons trading reflects lower activity levels in the central London market, however lettings income growth remains strong. Marsh & Parsons branch rollout programme is on track with 4 new offices already opened in 2014.
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Surveying & Valuation Services:
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As market volumes have declined, the Surveying division has grown between July and October 2014 with revenue increasing by 2% year on year.
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In September we are pleased to have signed a new contract with Lloyds Banking Group (LBG). The LBG contract operates on a non-exclusive basis for a multi-year term and the contract terms reflect improved conditions in the mortgage valuation market. Securing this contract diversifies the surveying business's customer base and further strengthens this business.
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Professional Indemnity (PI) costs have tracked broadly as expected during the period. As stated in the 2014 interim results, notification levels have remained at a high level but we are still expecting these to reduce significantly in the near future. PI costs remain a risk area and a key area of monitoring and focus.
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Strategy:
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LSL is a leading UK integrated residential property services group, which encompasses estate agency, surveying, financial services and asset management - the Group's consistent focus is on delivering growth both organically and through selective acquisitions. Within estate agency, a key focus for the past 4 years has been and remains growing the counter cyclical lettings income stream - lettings income has grown at an annual rate of 26% for the 10 month period ended 31 October 2014 as compared to the 10 month period ended 31 October 2010. LSL's businesses all have a significant national presence.
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Outlook:
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Although key economic indicators remain positive, the impact of implementation of the Mortgage Market Review (MMR) and tighter lending criteria has affected transaction levels and sentiment in the housing market.
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2014 is set to be a record year for LSL and we expect to deliver double digit year on year growth in Group Underlying Operating Profit(2), albeit marginally below our previous expectations reflecting recent lower activity levels across the market.
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With the recent reduction in activity levels and the further uncertainty around the general election next year, we are cautious on the market outlook for 2015. However, the medium to longer term fundamentals of the housing market remain positive.
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Against this backdrop LSL will continue with its strategy of delivering organic growth and evaluating selective acquisitions. The business is very cash generative at the operational level and has a strong balance sheet. The Group is extremely well positioned to benefit from future opportunities in the market and to deliver increased shareholder value.
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(1) Source: Bank of England
(2) Underlying Operating ProfitΒ Β is before exceptional gains and costs, amortisation of intangible assets and share based payments
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For further information, please contact:
Ian Crabb, Group Chief Executive Officer
Steve Cooke, Group Finance Director
LSL Property Services plc 0207 382 0360
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Richard Darby, Sophie McNulty and Sophie Cowles
Buchanan 0207 466 5000
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Notes to Editors:
LSL Property Services plc is a leading provider of residential property services to its two key customer groups. Services to consumers include: residential sales, lettings, surveying and advice on mortgages and non-investment insurance products. Services to mortgage lenders include: valuations and panel management services, asset management and property management services. For further information, please visit our website: www.lslps.co.uk.
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