Record year for Newcastle-based LSL Property Services as underlying operating profit hits £42m

Company chairman says group has 'robust' balance sheet and is well position to capitalise on changing market conditions

Chris Ison/PA Wire

The Newcastle-based LSL Property Services plc has reported a record year.

Financial results for the 12 months ended December 31, 2014, show the company achieved underlying operating profit of £42m, up 13% from £37.1m in 2013.

This was highest figure ever attained by the firm, even during the peak of the property market boom.

Group revenues, meanwhile, rose 11%, from £258.6m to £287.5m, while profit before tax increased 87%, from £17.1m to £31.9.

According to a report accompanying the results, the group managed to make strong progress “against a rapidly changing market backdrop”.

The estate agency division, which runs the likes of Your Move and Reeds Rains, in particular delivered an impressive performance, increasing operating profit by 16% to £33.9m and growing profit-per-branch - excluding Marsh & Parsons - by 44% to £46,000.

In the surveying business, meanwhile, underlying profit performance was maintained as a result of contract wins and efficiency improvements offset by a decline in volumes.

During the year, LSL acquiring Hawes & Co, a London-based agent with six branches, along with 10 small lettings books purchased for a consideration of £1.8m.

The company, which says it will continue to acquire attractive businesses, likewise benefited significantly from the IPO of Zoopla, an initial investment cost of £1.9m increasing in value to £44.1m.

The report said: “We took the decision to sell 48.9% of our shareholding in Zoopla at IPO. As a result, we have generated a £19.8m exceptional profit on disposal while still retaining a 2.6% shareholding, which has been revalued in the balance sheet at £21.3m.

“In addition, we received a total dividend of £1.1m from Zoopla during the year.”

The company, which saw headcount drop during the perid from 5,299 to 5,222 “in light of the softening in the market”, is proposing a final ordinary dividend per share of 8.3p, up from 7.2p in 2013, growing the full year ordinary dividend by 17% to 12.3p.

LSL group chairman Simon Embley said: “I am very pleased to report that 2014 was a record year for the group with underlying operating profit higher than LSL achieved in the property market peak of 2007.

“The year saw the orderly transition of senior management, with Ian Crabb’s first full year as Group CEO and Adrian Gill assuming responsibility for the estate agency division.

“The year also saw the achievement of our profitability per branch target that we set in 2011, whilst Marsh & Parsons expanded its branch footprint in a difficult market. The surveying division secured new contracts on improved margins.”

He added that the group had a robust balance sheet, was extremely cash generative at the operational level and was well positioned to capitalise on changing market conditions to increase shareholder value.

Looking forward, he said: “The forthcoming year is expected to see uncertain market conditions in the first half with the potential for improved market conditions during the second half of the year.

“Year on year market comparatives in the first quarter are expected to be adverse in part due to the lower opening pipeline of activity following the weaker last quarter of 2014.

“Whilst we are seeing improvements in February, the second quarter is expected to be impacted by the upcoming general election.

“Against this uncertain market backdrop, the group remains committed to driving profitable organic growth across the business.”

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