Strong half-year growth at Newcastle-based LSL Property Services

Newcastle-based property group LSL Property Services plc says it is well positioned to deliver increased shareholder value

Newcastle-based LSL Property Services has enjoyed a strong half-year that saw profit before tax rise 275%.

Interim results for the six months to June 30, show the figure went from £8.4m to £31.4m.

Group revenue, meanwhile, rose 18% to £139.8m, while underlying operating profit saw a 31% increase, to £15.1m.

The gains were partly driven by strong market growth in the first quarter, followed by more modest growth in the second. LSL, which is the parent company of Your Move, Reeds Rains and more, also achieved a particularly strong performance in its estate agency division, in which revenue increased by 20% to £108.6m and underlying operating profit rose 46% to £12.2m. Residential sales were up 27%, while lettings revenue rose 12% to £27.7m.

In the group’s surveying division, there was a 10% rise in revenue to £31.3m, and LSL also secured a multi-year valuation services contract with Barclays Bank.

A recent initial public offering of Zoopla likewise proved successful.

LSL chairman Roger Matthews said: “As a result of the sale of part of our shareholding, we have generated an £18m exceptional profit on disposal while still retaining a shareholding which has been revalued in the balance sheet at £27.2m.

“In addition, we received a total divided of £1.1m from Zoopla during the period, compared to £0.5m in 2013. The board has declared a special divided payable of 16.5p per share, which returns to shareholders the net after tax proceeds of £16.8m from the sale of the Zoopla shares.”

During the period, asset management revenue declined by 10% to £6.4m. However, the reduction compared to an estimated 20% decline in the repossession market from 28,900 in 2013 to 23,000 in 2014. LSL likewise said it was making good progress in developing new property management contracts, but that lengthy tender processes meant that financial benefit will be geared to the medium term.

The group said it remained “very cash generative at the operational level” and maintained a strong balance sheet, though it had continued high levels of PI cash outflows.

While net debt at June 30 sat at £18.7m, compared to £31.7m the year before, the £17.8m net benefit from the sale of Zoopla shares was a major factor. Discounting that, net bank debt actually rose by £4.8m.

The company’s half-year dividend will rise 21% from 3.3p to 4p.

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