RNS Number : 7219A
LSL Property Services
06 August 2008
For Immediate Release 6 August 2008
INTERIM RESULTS
LSL Property Services plc (LSL), a leading provider of residential property services, announces interim results for the six months ended
30 June 2008.
Highlights
* Satisfactory half year results, despite 54% fall in mortgage approvals for house purchase
* * Group revenue down 10% to �93.1m (2007: �102.9m)
* Underlying Group Operating Profit1 down 41% to �9.3m (2007: �15.6m)
* Group profit before tax, amortisation and exceptionals of �7.8m (2007: �14.7m). Loss before tax was �0.8m (2007: Profit before tax of
�12.1m)
* Exceptional restructuring costs of �3.4m (2007: nil)
* Underlying Adjusted Earnings per Share2 of 5.4p (2007: 10.1p) (Basic loss per share was 0.6p (2007: earnings per share of 8.1p)
* Strong underlying operating results from surveying division
* * Surveying profits up 32% to �15.4m (2007: �11.7m)
* Barnwoods (C&G contract secured during 2007) contributed �6.1m profit in the first half of 2008 (2007: nil)
* Surveying margin increased to 34.3% (2007: 29.1%)
* Estate agency and financial services impacted by unprecedented market conditions
* * Your Move and Reeds Rains exchange income down by 48% and turnover down 27%
* Non exchange income in Your Move and Reeds Rains up 11% (from �20.4m in 2007 to �22.7m in 2008) despite market conditions
* Significant cost efficiencies achieved
* Cashflow generation impacted by seasonality and one offs - outflow from operations of �8.4m (2007: inflow �10.0m).
* No interim dividend payable in 2008 (2007: 3p per share) - prudent to conserve cash until market conditions improve.
* Net debt of �61.7m at 30 June 2008 (2007: �56.3m)
* Well positioned for future growth both organically and from acquisitions when market recovers
1 Underlying Group Operating Profiting is before exceptional costs and amortisation of intangibles.
2 Underlying Adjusted Basic Earning per Share reflects the after tax effect of adjusted earnings as calculated in note 4 divided by the
weighted average number of shares in issue for the six months period ending 30th June 2008.
Roger Matthews, Chairman commented:
"The Group has reported a satisfactory first half result in a very difficult market. Although house purchase activity levels have
stabilised in recent weeks (albeit at a very low level) after nine months of declines, we expect market conditions to remain challenging for
some time.
Our surveying division is proving to be resilient and we expect to make further progress over the year as a whole.
This resilience, together with the continued investment in other counter cyclical growth opportunities, such as lettings and
repossessions, leaves the Group well placed to trade satisfactorily through the remainder of 2008 and deliver significant growth when the
market improves."
For further information, please contact:
Simon Embley, Group Chief Executive Officer
Dean Fielding, Group Finance Director
LSL Property Services plc 01904 715 324
Registered in England (Company Number: 5114014)
Registered Office: Newcastle House, Albany Court, Newcastle upon Tyne, NE4 7YB
Nicola Cronk, Mark Edwards, Catherine Breen
Buchanan Communications 0207 466 5000
Notes to editors:
LSL is one of the leading residential property services companies in the UK and provides a broad range of services to its customer who
are principally mortgage lenders, as well as buyers and sellers of residential properties. LSL's main operations are its surveying business,
which operates under the e.surv, Barnwoods and Chancellors Associates brands, its estate agency business, which includes the Your Move and
Reeds Rains brands, and its financial services business.
For further information, please visit LSL's website: www.lslps.co.uk
Chairman's Statement
I am pleased to report a Underlying Group Operating Profit[1] of �9.3m for the six months ended 30 June 2008 (2007: �15.6m), despite
extremely difficult market conditions, which have particularly affected our estate agency division. As has been widely reported, conditions
in the housing market have deteriorated significantly, particularly in the second quarter, and the current level of housing transaction
volumes is at an unprecedented low level.
Our surveying division has proven to be resilient and performed strongly in the first half of 2008, with underlying operating profit
increasing by 32% to �15.4m (2007: �11.7m). This result has been supported by a robust re-mortgage market, last year's major contract wins
and strong relationships with lenders.
Our estate agency and financial services business has been impacted in line with the market with house sale exchanges down by 47%
against last year, resulting in a combined underlying operating loss of �5.2m (2007: underlying operating profit �5.3m).
The Board expects the difficult market conditions to remain for some time. As a result the management team continue to be focussed on
delivering significant cost efficiencies, maximising non exchange income, and growing counter cyclical businesses such as lettings and
repossessions.
Financial Results
* Group revenues declined by 10% to �93.1m (2007: �102.9m)
* Underlying Group Operating Profit[1] decreased by 41% to �9.3m (2007: �15.6m) and the operating margin decreased to 10% (2007:
15.2%)
* The surveying division turnover rose by 12% to �44.9m (2007: �40.0m) and the underlying operating profit increased by 32% to
�15.4m (2007: �11.7m). The overall surveying margin, which increased from 29.1% to 34.3%, was underpinned by a robust re-mortgage market,
last year's major contract wins and strong relationships with lenders.
* The estate agency turnover decreased by 25% to �39.4m (2007: �52.8m) and the underlying operating loss was �4.1m (2007: profit
�6.5m).
* The financial services division turnover fell by 13% to �8.8m (2007: �10.1m) and the underlying operating loss was flat at �1.1m
(2007: loss �1.1m).
* Net interest payable was �1.8m (2007: �1.2m), reflecting the average borrowing of �60m during the first half of 2008.
* Group profit before tax, amortisation and exceptional costs was �7.8m (2007: �14.7m). Loss before tax was �0.8m (2007: Profit
before tax of �12.1m).
* Exceptional costs for the half year were �3.4m (2007: � nil) and related principally to previously reported restructuring costs
(�1.4m), and lease provisions and accelerated depreciation of �1.7m. The business will continue to review its cost base in light of market
activity levels and further one off costs are therefore possible in the second half of 2008.
* The effective tax rate was 24.8% (2007: 29.0%).
* The Underlying Adjusted Basic Earnings per Share[2] was 5.4p (2007: 10.1p) (Basic loss per share was 0.6p (2007: Earnings per
share of 8.1p).
Balance Sheet
Net assets as at 30 June 2008 were �38.0m, a reduction of �4.9m from the previous year end. Net debt as at 30 June 2008 was �61.7m, an
increase of �13m from the previous year end. The Group has a borrowing facility of �95m in place until July 2010, of which �36.9m was
undrawn at 30 June 2008.
Cash flow and Capital Expenditure
The cash outflow from operations was �8.4m for the first half year (2007: cash inflow of �10m). This has resulted from a reduction in
operating profit of �6.3m, the exceptional costs of �3.4m and a working capital outflow of �9.3m (2007: �1.4m). The outflow is due to the
normal seasonality in the business and as a result of a number of one off factors linked to lower activity levels (such as lower bonus
accruals), a reduction in outsourced surveys and the introduction of Home Information Packs for which the Group initially provided short
term credit. Cash generation is traditionally much stronger in the second half of the year and the introduction of a third party finance
arrangement for the payment of Home Information Packs will have a positive impact on cash flow.
Interim Dividend
We have decided not to pay an interim dividend. The significant deterioration in the housing market makes it prudent to conserve cash
until there is greater visibility over when market conditions are likely to improve. The Board will consider the payment of the full year
dividend when the preliminary results are announced in February 2009 and this decision will be made in light of the financial results for
the year, the trading outlook at that time and the potential for value creating acquisitions that are likely to arise as a result of the
current market conditions. In the longer term the Board remains committed to our stated dividend policy.
Development
Our surveying business continues to make strong progress, underpinned by the two major contract gains, announced last year, with
Barclays and C&G. Barnwoods, which was appointed as the exclusive panel manager of C&G, reported turnover in the first half of the year of
�12.0m (2007: nil) and operating profit of �6.1m (2007: nil), in line with our expectations. Although house purchase activity is
dramatically down, the volume of valuations has been supported by an active re-mortgage market. The division has continued to deliver a high
quality of service, a key factor in maintaining its excellent relationship with the lender community.
In a more challenging market, the estate agency business is focussed on delivering cost efficiencies and maximising all non exchange
income opportunities (such as financial services, lettings and the sale of Home Information Packs). Home Information Packs have been
successfully introduced, insurance and mortgage penetration rates are up and lettings income is up 13% in Your Move and Reeds Rains. As a
result, despite a 48% fall in exchange income in Your Move and Reeds Rains, our estate agency revenue is down by only 27%. As previously
announced, we closed our loss making in-house conveyancing operation, incurring losses/closure costs of �0.3m in the first half of 2008.
In line with our strategy of developing non cyclical income streams, we have invested �0.6m in a repossession asset management business,
under our First Complete brand. This has involved the implementation of new systems and investment in additional resources and expertise in
this area. This business has already secured a number of new contracts and we expect it to contribute significantly to profits in the longer
term.
Board
Peter Hales, a non executive director, resigned from the Board as at the end of June 2008 to concentrate on other business interests. We
wish Peter well for the future.
I am pleased to welcome Robert Sharpe as a non executive director as from the 1 September 2008. Robert has over 30 years of experience
in the financial services sector, and I am confident will make a valuable contribution to the growth of the business over the coming years.
Outlook
The Group has reported a satisfactory first half result in a very difficult market. Although house purchase activity levels have
stabilised in recent weeks (albeit at a very low level) after nine months of declines, we expect market conditions to remain challenging for
some time.
Our surveying division is proving to be resilient and we expect to make further progress over the year as a whole.
This resilience, together with the continued investment in other counter cyclical growth opportunities, such as lettings and
repossessions, leaves the Group well placed to trade satisfactorily through the remainder of 2008 and deliver significant growth when the
market improves.
Roger Matthews
6 August 2008
Interim Group Income Statement
for the six months ended 30 June 2008
Unaudited Audited
Six Months Ended Year Ended
30 June 30 June 31 Dec
2008 2007 2007
(reclassified)*
Note �'000 �'000 �'000
Revenue 3 93,086 102,894 219,518
Operating expenses:
Employee and subcontractor
costs 54,243 54,783 120,054
Share-based payment 8 (17) 265 650
Total employee and 54,226 55,048 120,704
subcontractor costs
Establishment costs 6,673 6,003 12,364
Depreciation on property,
plant and equipment 1,122 1,074 2,227
Other 22,249 25,863 48,804
(84,270) (87,988) (184,099)
Rental income 466 706 1,125
Group operating profit before
exceptional costs and
amortisation
9,282 15,612 36,544
Amortisation of intangible (5,159) (2,664) (9,145)
assets
Exceptional costs 5 (3,416) - (1,413)
Group operating profit 707 12,948 25,986
Dividend income 296 298 373
Finance income 161 134 357
Finance costs (1,962) (1,322) (3,429)
Net financial costs (1,505) (890) (2,699)
(Loss)/profit before tax
before adjustment to goodwill 3 (798) 12,058 23,287
Adjustment to goodwill in
respect of subsequent
recognition of deferred tax
asset - - (1,000)
(Loss)/profit before tax (798) 12,058 22,287
Taxation 7 198 (3,505) (5,867)
(Loss)/profit for the period (600) 8,553 16,420
Attributable to:
Equity holders of the parent (600) 8,458 16,420
Minority interests - 95 -
(600) 8,553 16,420
(Loss)/earnings per share expressed in pence per share:
Basic 4 (0.6) 8.1 15.8
Diluted 4 (0.6) 8.1 15.7
* The subcontractor costs of �3.5m were classified as part of other operating expenses during the previous year. This has been
reclassified and included under employee and subcontractor costs as these relate to outsourced surveying.
LSL Property Services plc
Interim Statement of Group Recognised Income and Expense
for the six months ended 30 June 2008
Total recognised income and expense for the period:
Unaudited Audited
Six Months Ended Year Ended
30 June 30 June 31 Dec
2008 2007 2007
�'000 �'000 �'000
(Loss)/profit for the period (600) 8,553 16,420
Available-for-sale investments:
Valuation gains taken to equity - - 5,500
Total recognised income and expense (600) 8,553 21,920
- Attributable to equity holders of the parent (600) 8,458 21,920
- Attributable to minority interest - 95 -
(600) 8,553 21,920
LSL Property Services plc
Interim Group Balance Sheet
as at 30 June 2008
Unaudited Audited
At 30 June At 31 Dec
2008 2007 2007
�'000 �'000 �'000
Non-current assets
Goodwill 69,851 66,850 69,572
Other intangible assets 36,403 46,321 41,562
Property, plant and equipment 3,725 4,256 4,600
Financial assets 5,650 148 5,650
Other receivables 118 134 129
Total non-current assets 115,747 117,709 121,513
Current assets
Trade and other receivables 26,544 26,883 21,458
Cash and cash equivalents 1,164 486 2,326
Total current assets 27,708 27,369 23,784
Total assets 143,455 145,078 145,297
Current liabilities
Financial liabilities 618 4,988 17,350
Trade and other payables 33,900 40,502 39,909
Current tax liabilities 1,480 6,170 4,957
Provisions for liabilities and charges 997 95 339
Total current liabilities 36,995 51,755 62,555
Non-current liabilities
Financial liabilities 62,222 51,845 33,640
Trade and other payables - - 97
Deferred tax liability 872 2,639 1,892
Provisions for liabilities and charges 5,362 3,727 4,175
Total non-current liabilities 68,456 58,211 39,804
Net assets 38,004 35,112 42,938
Equity
Share capital 208 208 208
Share premium account 5,629 5,629 5,629
Share-based payment reserve 468 278 560
Investment in treasury shares (2,935) (298) (2,669)
Unrealised gain reserve 5,500 - 5,500
Retained earnings 29,134 28,872 33,710
38,004 34,689 42,938
Minority interests - 423 -
Total equity 38,004 35,112 42,938
LSL Property Services plc
Interim Group Cash Flow Statement
for the six months ended 30 June 2008
Unaudited Audited
Six Months Ended Year Ended
30 June 30 June 31 December
2008 2007 2007
Note �'000 �'000 �'000 �'000 �'000 �'000
Cash generated from operating
activities
Profit before tax (798) 12,058 22,287
Adjustments to reconcile
profit before tax to net cash
inflows from operating
activities
Amortisation 5,159 2,664 9,145
Dividend income (296) (298) (373)
Finance income (161) (134) (357)
Finance costs 1,962 1,322 3,429
Adjustment in relation to - - 1,000
deferred tax
6,664 3,554 12,844
Group operating profit before
amortisation 5,866 15,612 35,131
Depreciation 1,122 1,074 2,227
Impairment of goodwill - - 130
Impairment of property, plant - - 207
& equipment
Loss/(profit) on sale of
property, plant 200 - (30)
and equipment
Share-based payments (17) 265 650
1,305 1,339 3,184
(Increase)/decrease in trade
and other receivables (5,075) (4,978) 2,050
(Decrease)/increase in trade
and other payables (4,261) (8,031) 3,609 (30) 2,139 7,373
Cash (expended on)/generated
from operations (2,165) 15,582 42,504
Interest paid (1,962) (1,322) (3,429)
Tax paid (4,299) (4,303) (9,662)
(6,261) (5,625) (13,091)
Net cash (expended
on)/generated from operating (8,426) 9,957 29,413
activities
Cash flows from investing
activities
Purchase of subsidiary
undertakings, minority
interest and commercial
business (279) (1,077) (3,806)
Purchase of intangible assets - (30,217) (30,192)
Dividend received 296 298 373
Interest received 161 134 357
Purchase of property, plant
and (684) (927) (2,422)
equipment
Proceeds from sale of
property, 237 3 139
plant and equipment
Purchase of available for sale
financial assets - - (2)
Net cash expended on investing
activities (269) (31,786) (35,553)
(8,695) (21,829) (6,140)
Unaudited Audited
Six Months Ended Year Ended
30 June 30 June 31 December
2008 2007 2007
Note �'000 �'000 �'000 �'000 �'000 �'000
Net cash from operating
activities less cash expended
on investing activities
(8,695) (21,829) (6,140)
Cash flows from financing
activities
Repayment of loans (116) (582) (5,402)
Proceeds from loans 11,891 22,319 18,785
Purchase of treasury shares (266) - (2,371)
Dividends paid (3,976) - (3,124)
Net cash generated in
financing activities
7,533 21,737 7,888
Net (decrease)/increase in
cash (1,162) (92) 1,748
and cash equivalents
Cash and cash equivalents at
the beginning of the period 2,326 578 578
Cash and cash equivalents at
the 9 1,164 486 2,326
end of the period
LSL Property Services plc
Reconciliation of changes in equity
for the six months ended 30 June 2008
Audited
Unaudited Year ended
Six months ended
30 June 30 June 31 Dec
2008 2007 2007
�'000 �'000 �'000
Total equity at the start of the period 42,938 25,966 25,966
Purchase of treasury shares (266) - (2,371)
Minority interest on acquisition of - 328 -
subsidiaries
Share-based payments (92) 265 547
Revaluation of available-for-sale financial - - 5,500
assets
Dividends paid (3,976) (3,124)
(Loss)/profit for the period (600) 8,553 16,420
Total equity at the end of the period 38,004 35,112 42,938
Notes to the interim condensed group financial statements
The interim condensed group financial statements for the six months ended 30 June 2008 was approved by the board of directors on 6
August 2008. The Group's published financial statements for the year ended 31 December 2007 have been reported on by the Group's auditors
and filed with the Registrar of Companies. The auditor's report on those accounts, which have been filed with the Registrar of Companies,
was unqualified and did not contain any statement under section 237 (2) or (3) of the Companies Act 1985. The financial information for the
half year ended 30 June 2008 and the equivalent period in 2007 has not been audited.
The figures for the year ended 31 December 2007 do not constitute the Company's statutory accounts for that period but have been
extracted from the statutory accounts.
1. Basis of preparation
The interim results have been prepared using the accounting policies disclosed in the Annual Report and Accounts 2007, which were
prepared in accordance with IFRSs as adopted by the European Union.
The interim condensed group financial statements for the six months ended 30 June 2008 have been prepared in accordance with IAS 34
Interim Financial Reporting.
The interim condensed group financial statements do not include all the information and disclosures required in the annual financial
statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2007.
2. Seasonality of operations
Due to the seasonal nature of the property sector, higher revenues and operating profits are usually expected in the second and third
quarters of the calendar year. Higher sales during the period April to September are mainly attributed to the desire by customers to sell
their homes during the spring and summer months.
3. Segment analysis of revenue and operating profit
The primary segment reporting format is determined to be business segments as the Group's risks and rates of return are affected
predominantly by differences in the products and services provided. Secondary segment information (geographic segment) has not been reported
separately as the majority of the revenue and expense arises in the United Kingdom and all assets are situated in the United Kingdom.
The estate agency segment provides services related to housing transactions via a network of high street branches.
The surveying and valuation segment provides a professional survey service of domestic properties to various lending corporations.
The financial services segment sells mortgages for a number of lenders and sells life assurance and critical illness policies, etc for a
number of insurance companies via the estate agency branch and Linear network.
3. Segment analysis of revenue and operating profit (continued)
Six months ended 30 June 2008
Estate Surveying and valuation
agency Services
and
related Financial
�'000 services
activiti Unallocated Total
es
�'000
�'000 �'000 �'000
Income statement information
Segmental revenue 39,387 44,889 8,810 - 93,086
Segmental result:
- before exceptional costs
and
amortisation of intangible (4,064) 15,409 (1,140) (923) 9,282
assets
- after exceptional costs
and
amortisation of intangible (7,220) 10,896 (1,673) (1,296) 707
assets
Dividend income 296
Finance income 161
Finance costs (1,962)
Loss before tax (798)
Taxation 198
Loss for the period (600)
Six months ended 30 June 2007
Estate Surveying and valuation
agency Services
and
related Financial
�'000 services
activiti Unallocated Total
es
�'000
�'000 �'000 �'000
Income statement information
Segmental revenue 52,795 40,016 10,083 - 102,894
Segmental result:
- before exceptional costs
and
amortisation of intangible 6,472 11,661 (1,147) (1,374) 15,612
assets
- after exceptional costs
and
amortisation of intangible 5,671 10,285 (1,634) (1,374) 12,948
assets
Dividend income 298
Finance income 134
Finance costs (1,322)
Profit before tax 12,058
Taxation (3,505)
Profit for the period 8,553
3. Segment analysis of revenue and operating profit (continued)
Year ended 31 December 2007
Estate Surveying and
agency and valuation
related Services
Financial
activities services
�'000 Unallocated Total
�'000
�'000
�'000 �'000
Income statement information
Segmental revenue 107,110 89,866 22,542 - 219,518
Segmental result:
- before exceptional costs
and
amortisation of intangible 13,708 26,312 (870) (2,606) 36,544
assets
- after exceptional costs
and
amortisation of intangible 10,373 20,149 (1,995) (2,541) 25,986
assets
Dividend income 373
Finance income 357
Finance costs (3,429)
Profit before tax before 23,287
adjustment goodwill
Adjustment to goodwill in (1,000)*
respect of subsequent
recognition of deferred asset
Profit before tax 22,287
Taxation (5,867)
Profit for the year 16,420
* This relates to estate agency and related activities
segment.
4. (Loss)/earnings per share
Basic (loss)/earnings per share amounts are calculated by dividing net (loss)/profit for the period attributable to ordinary equity
holders of the parent by the weighted average number of ordinary shares outstanding during the period.
Diluted (loss)/earnings per share amounts are calculated by dividing the net (loss)/profit attributable to ordinary equity holders of
the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary
shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.
Six months ended 30 June
2008
Weighted average number of shares Per Weighted average 2007
share number of shares Per
Amoun share
t Earnings Amount
Loss Pence �'000 Pence
�'000
Basic EPS (600) 102,911,731 (0.6) 8,458 104,158,950 8.1
Effect of dilutive share
options - 195,615 - - 716,546 -
Diluted EPS (600) 103,107,346 (0.6) 8,458 104,875,496 8.1
4. Earnings per share (continued)
Year ended 31 December 2007
Weighted average number of shares 2006
Per
share
Amount
Pence
Earning
s
�'000
Basic EPS 16,420 103,647,347 15.8
Effect of dilutive share
options - 609,076 -
Diluted EPS 16,420 104,256,423 15.7
The Directors consider that the adjusted earnings shown below give a better and more consistent indication of the Group's underlying
performance, and is calculated as follows:
Year ended
Six months ended
30 June 30 June 31 Dec
2008 2007 2007
�'000 �'000 �'000
(Loss)/profit after tax (600) 8,458 16,420
Adjusted after tax for:
Exceptional costs 2,460 - 989
Amortisation of intangible assets 3,714 1,865 6,401
Share-based payment (12) 185 455
Adjusted profit after tax 5,562 10,508 24,265
5. Exceptional costs
Six months Ended Year Ended
30 June 30 June 31 Dec
2008 2007 2007
�'000 �'000 �'000
Onerous lease costs due to branch closures 1,382 - 501
Redundancy costs due to branch closures 1,446 - 575
Accelerated depreciation on property, plant 270
and equipment due to branch closures
Impairment of goodwill - - 207
Impairment of property, plant and equipment - - 130
Others 318 - -
3,416 - 1,413
6. Dividends paid and proposed
Six months Ended
30 June 30 June
2008 2007
�'000 �'000
Dividends on ordinary shares declared and paid during the
six month period:
Final dividend for 2007: 3.86p (2006: nil) 3,976 -
Dividends on ordinary shares proposed (not recognised as
a liability as at 30 June):
Interim dividend for 2008: nil (2007: 3.0p) - 3,170
7. Taxation
The major compontents of income tax (credit)/charge in the interim group income statements are:
Six months Ended Year Ended
30 June 30 June 31 Dec
2008 2007 2007
�'000 �'000 �'000
UK corporation tax - current year 822 4,598 9,494
- tax over provided in prior year - - (285)
- utilisation of tax losses - - (1,000)
822 4,598 8,209
Deferred tax:
Origination and reversal of temporary (1,020) (868) (2,342)
differences
Adjustment due to change in tax rate - (225) -
Total tax in income statement (198) 3,505 5,867
The Group's current taxation charge comprises corporation tax calculated at estimated effective tax rates for the year.
8. Share-based payment
New 'Save-as-you-earn' scheme
In March 2008, the Group announced a new 'Save-as-you-earn' scheme effective from March 2008. This scheme is open to all qualifying
employees and provide for an exercise price equal to the daily average market price on the date of grant less 15%. The options will vest if
the employee remains in the service for the full duration of the option scheme (three years). There are no cash settlement alternatives. The
estimated number of share options granted under the scheme was 1,799,000 at an exercise price of �1.15. The fair value of options granted
during the six months ended 30 June 2008 was �0.50 and it was estimated on the date of grant using the Black Scholes model with the
following assumptions:
Weighted average share price at grant date (�) 1.34
Exercise price (�) 1.15
Expected volatility (%) 46
Expected dividend growth rate (%) 2.15
Risk-free interest rate (%) 5.25
Old 'Save-as-you-earn' scheme
In addition, during the six months ended 30 June 2008, certain number of staff have withdrawn from the old 'Save-as-you-earn' scheme.
The withdrawal from the scheme has been treated as non-fulfilment of vesting condition and �316,000 of accumulated share-based payment
charge has been reversed to the income statement for the six months ended 30 June 2008.
9. Cash and cash equivalents
Six months Ended Year Ended
30 June 30 June 31 Dec
2008 2007 2007
�'000 �'000 �'000
Short - term deposits 1,164 486 2,326
1,164 486 2,326
The fair value of cash and cash equivalents is �1.2m (30 June 2007: �0.5m and 31 December 2007: �2.3m). At 30 June 2008, the Group had
available �36.9m of undrawn committed borrowing liabilities in respect of which all conditions precedent had been met (30 June 2007: �29.3m
and 31 December 2007: �47.8m).
10. Analysis of net debt
Six months Ended Year Ended
30 June 30 June 31 Dec
2008 2007 2007
�'000 �'000 �'000
Interest bearing loans and borrowings 62,840 56,833 50,990
Less: cash and short-term deposits (1,164) (486) (2,326)
Net debt at the end of the period 61,676 56,347 48,664
During the six months ended 30 June 2008, the Group has drawn down additional �11.8m under the revolving credit facility. The
utilisation of this revolving credit facility may vary each month as long as this does not exceed the maximum �95m facility. The banking
facility expiry date has been extended from July 2009 to July 2010 and can be further extended until July 2011. The revolving credit
facility is repayable when funds permit.
The interest rate applicable to the facility is LIBOR plus a margin rate of 0.65%. The margin rate is linked to the leverage ratio of
the Group and the margin rate is reviewed at six monthly intervals.
Principal Risks and Uncertainties
The risks to the business over the remaining six months of the year include:-
* The continued volatility and uncertainty of the UK housing market. In particular transaction volumes (both house purchase and
re-mortgage) which will adversely affect the profitability and cash flow of all our key brands/businesses.
* Loss of key surveying clients or significant reduction in volumes either as a result of adverse market conditions, market
consolidation, competition or inadequate service delivery.
* The development of alternative products and services in competition with traditional estate agency and surveying services, such as
supermarket property websites and Automated Valuation Models.
* Liability for negligent provision of services to customers (eg inaccurate surveys).
* Failure or interruptions of information technology services on which the Group is reliant for operational performance and
financial information.
* Changes in legislation or regulation may impact on business results or the UK housing market in general.
* The reputation and profitability of LSL could be adversely affected by the actions of one or a limited number of employees or
franchisees.
* Loss of any licences or permission necessary for the performance of the Group businesses.
Further information relating to the management of these and other risks and uncertainties can be found in LSL's Annual Report & Accounts
2007 which is available at www.lslps.co.uk.
Statement of Directors' Responsibilities
The Directors confirm that this condensed set of financial statements has been prepared in accordance with IAS34 as adopted by the
European Union, and the interim management report herein includes a fair review of the information required by DTR 4.2.7R (an indication of
important events during the first six months and a description of the principal risks and uncertainties for the remaining six months of the
year) and by DTR 4.2.8R (a disclosure of related party transactions and charges therein) of the Disclosure and Transparency Rules.
By order of the Board
Simon Embley Dean Fielding
Chief Executive Officer Group Finance Director
Report on review of interim condensed group financial statements to the shareholders of LSL Property Services plc
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six
months ended 30 June 2008 which comprises interim group income statement, interim statement of group recognised income and expense, interim
group balance sheet, interim group cash flow statement, reconciliation of changes in equity and the related notes 1 to 10. We have read the
other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in ISRE 2410 (UK and Ireland) "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the
conclusions we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for
preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial
Services Authority.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European
Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with
International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial
report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United
Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
Ernst & Young LLP
Leeds
6 August 2008
This information is provided by RNS
The company news service from the London Stock Exchange
END
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