LSL profits ahead as it looks at further acquisitions
LSL Property Services, which became Britain’s second largest estate agency chain after completing the purchase of Halifax Estate Agencies in January, today said it is looking for further acquisitions as the housing market recovers.
The York-based group, which operates the estate agency chains Your Move, Reeds Rains and InterCounty, agreed to buy the loss-making, 218-branch business from the Lloyds Banking Group for £1.
Today LSL announced a move back into profit with pre-tax profits of £16.6m for the year to December 31 compared to a loss of £6.2m the previous year.
Chairman Roger Matthews said: “The group has a strong balance sheet with net debt of £25.7m against an available facility of £75m. This, together with the cash generative nature of the business, means that the group is well placed to respond to further acquisition opportunities which may arise as a result of market conditions.”
Group revenue was down 2.5% to £157.7m while underlying group operating profit was up 55% to £28.3m.
The group said it had reduced operating costs by 10% to £129.9m and will resume its dividend payment with an interim dividend of 5.4p.
LSL said that its surveying operation had “significantly outperformed the market” with turnover down 12%, against a 34% decline in total mortgage approvals while it had extended its contract with Barclays and won a new five year contract with Santander.
Its estate agency business delivered a “significant turnaround in profitability” with underlying operating profit of £6.7m compared to a loss of £8.4m.
“All our high street estate agency brands have been profitable in 2009, despite market volumes being half historic norms,” it said in a statement.
Mr Matthews added: “The group has made substantial progress in 2009, and ends the year in a much stronger position in both the surveying and estate agency divisions. The increase in underlying operating profits of 55% to £28.3m is an excellent result given the continuing challenging market conditions.
“Whilst the short term outlook for the market remains uncertain, the business is significantly more robust through the cycle with a lower cost base, a larger lettings portfolio, a growing asset management business and a surveying business which has extended a number of key contracts and grown its market share. As a result, the gtroup is well positioned to deliver further increases in profitability when the market recovers.”
“Longer term, the underlying macroeconomic conditions in the housing market remain positive.”
