TIDMLSL
RNS Number : 8795W
LSL Property Services
05 August 2009
For immediate release5 August 2009
LSL Property Services plc ("LSL")
Interim Results
LSL Property Services plc (LSL), a leading provider of residential property
services, announces interim results for the six months ended 30 June 2009.
Highlights
* Group
* Group revenue declined to GBP74.1m (2008: GBP93.1m).
* Underlying Group Operating Profit up 17% to GBP10.9m (2008: GBP9.3m). Profit
before tax was GBP4.3m (2008: loss before tax of GBP1.8m)
* Management focus on reducing costs has resulted in operating costs down by 25%
and operating margin up from 10.0% to 14.6%.
* Group profit before tax, amortisation and exceptional costs up 39% to GBP9.4m
(2008: GBP6.8m).
* Underlying Adjusted Earnings Per Share up 27% to 6.5p (2008: 5.1p).Basic
earnings per share was 2.6p per share (2008: Basic loss per share was 1.5p).
* Surveying Performance
* Resilient surveying profit despite 48% fall in mortgage approvals. Underlying
Operating Profit down by 17% to GBP12.7m (2008: GBP15.4m).
* Extensions secured during the period for two of our important surveying
contracts.
* Estate Agency
* Significant improvement in estate agency trading. Underlying Operating Losses1
reduced from GBP5.2m to GBP0.9m.
* Result underpinned by growth in counter-cyclical income streams and significant
cost reductions.
* Cash Management
* Significant focus on cash management.
* Net debt reduced by GBP18.6m over the last 12 months to GBP43.1m.
Roger Matthews, Chairman, commented:
"The Group's flexible business model has enabled us to deliver a strong first
half year result in the context of a difficult market. During this period we
have continued to focus on our cost base and developing counter-cyclical income
streams. The Group is well placed to build on the first half's performance
during the remainder of 2009 and to deliver significant growth when market
conditions improve."
For further information, please contact:
Simon Embley, Group Chief Executive Officer
Dean Fielding, Group Finance Director
LSL Property Services plc 01904 715 324
Richard Darby, Nicola Cronk, Catherine Breen
Buchanan Communications 0207 466 5000
An analysts' briefing will be held today at 10.00 am at the offices of Buchanan
Communications, 45 Moorfields London, EC2Y 9AE.
Notes to Editors:
LSL Property Services plc is one of the leading residential property services
companies in the UK and provides a broad range of services to its clients who
are principally mortgage lenders, as well as buyers and sellers of residential
properties. For further information, please visit our website: www.lslps.co.uk.
CHAIRMAN'S STATEMENT
I am pleased to report an increase of 17% in Underlying Group Operating Profit
to GBP10.9m for the six months ended 30 June 2009 (2008: GBP9.3m).
Whilst there has been a 35% fall in house sale exchanges, year on year, overall
market activity has been stronger than anticipated during the first half of
2009, principally supported by an increased appetite from cash buyers. However,
market conditions remain uncertain due to the continued shortage of widely
available mortgage products, particularly for first time buyers.
Against this backdrop our estate agency business has made strong progress with
Underlying Operating Losses reduced from GBP5.2m to GBP0.9m.
The growth in counter-cyclical income streams has made a significant
contribution to the improvement in the agency result. Residential lettings
income has increased by 35% to GBP9.4m (2008: GBP7.0m). The Corporate Client
Department, which was set up in 2008, produced income of GBP4.0m from its
activity in corporate lettings, portfolio management and asset management (2008:
GBP0.3m).
The estate agency result has been further underpinned by the significant cost
reduction measures implemented in the first half of 2008, with costs reduced by
27%.
Our surveying division continues to be resilient and performed well in the first
half of 2009 despite a 48% contraction in mortgage approvals. Turnover fell by
20% with underlying operating profit down by 17% to GBP12.7m (2008: GBP15.4m).
As with our estate agency business this result has been underpinned by
substantial cost base reductions with year on year costs down by 21%.
Across all operating businesses within the Group, there has been a significant
focus on cash management. The Group has been strongly cash generative with net
debt reduced from GBP61.7m at 30 June 2008 to GBP43.1m at 30 June 2009.
Financial results
* Group revenue declined by 20% to GBP74.1m (2008: GBP93.1m)
* Underlying Group Operating Profit increased by 17% to GBP10.9m (2008: GBP9.3m).
* Operating margin increased to 14.6% (2007: 10.0%).
* The surveying division's turnover declined by 20% to GBP36.0m (2008: GBP44.9m)
and the Underlying Operating Profit decreased by 17% to GBP12.7m (2008
GBP15.4m). The overall surveying margin, however, increased from 34% to 35%.
* Estate agency turnover decreased by 21% to GBP38.1m (2008: GBP48.2m) with an
Underlying Operating Loss of GBP0.9m (2008: GBP5.2m loss).
* Net interest payable was GBP1.1m (2008: GBP1.8m).
* Group profit before tax, amortisation and exceptional costs, was GBP9.4m (2008:
GBP6.8m)
* Profit before tax was GBP4.3m (2008: GBP1.7m loss)
* Exceptional costs were minimal for the half year at GBP0.2m and related
principally to redundancy and restructuring costs for one of our smaller
subsidiaries. No further exceptional costs are anticipated during the second
half of 2009.
* The effective tax rate was 36.1% (2008: 11.3%)
* The underlying adjusted earnings per share was 6.5p (2008: 5.1p); basic earnings
per share was 2.6p (2008: loss per share of 1.5p)
Balance Sheet
Net assets at 30 June 2009 were GBP37.1m, an increase of GBP3.3m from the
previous year end. Net debt as at 30 June 2009 was GBP43.1m, representing a
reduction of GBP18.6m since June 2008. The Group has a borrowing facility of
GBP75.0m in place through to mid 2011.
Cashflow and capital expenditure
The cash inflow from operations was GBP6.2m for the first half year (2008: cash
outflow of GBP8.4m). This reflects strong management of cash and working capital
during the first half of 2009.
Interim dividend
Although the Board recognises the strong cash generation of the business during
the first half of 2009, given the continued market uncertainty it has decided
not to pay an interim dividend. The Board will consider whether to recommend the
payment of a full year dividend when the preliminary results are announced in
March 2010.
Development
The Group continues to focus on developing new income streams and growing
existing income streams across each of its business segments. LSL has a track
record of profitability and business development, both organically and through
acquisition. We are well placed to benefit from the opportunities that will
arise to grow the market share in each of our businesses through the current
cycle.
Estate Agency
The launch of our Corporate Client Department in 2008 to provide corporate
lettings, portfolio management and asset management, with a service driven
proposition, has enabled us to quickly secure a number of new contracts. This
will continue to de-risk our Estate Agency business by providing a strong
counter-cyclical income and profit stream. The growth in activity of this
operation has been impressive and we see further opportunities to increase our
penetration in this section of the market.
Surveying
In our surveying division, our policy of continued technology investment to
deliver an increasingly valued service to lender clients has continued to serve
the business well and earlier in the year we managed to secure extensions to two
of our important contracts. In addition, our contract with Cheltenham
& Gloucester (C&G) which is now in its third year, continues to make a
significant contribution to the Group's profitability. Accordingly, we will
continue to look for more opportunities to further strengthen our long term
position in this market.
As previously indicated, in a market characterised by substantial falls in house
prices, the first half of 2009 has seen an increase in valuation claims across
the surveying industry causing a significant increase in related costs. As a
consequence the Group has set up a captive insurance arrangement to sit
alongside its other risk management controls and insurance arrangements.
Board
Mark Warburton, a Non Executive Director, resigned from the Board as at the end
of June 2009 to concentrate on other business interests. We wish Mark well for
the future.
I am pleased to welcome Mark Pain as a Non Executive Director as from 1 July
2009. Mark was formerly Group Finance Director of Barratt Developments PLC,
prior to which he was Group Finance Director at Abbey National Group PLC.
Mark is currently a Non Executive Director of Punch Taverns PLC and Johnston
Press PLC and I am confident that, with his experience, he will make a valuable
contribution to the development of the business.
Outlook
The Group has reported a strong first half year result in the context of a
market which has improved from the unprecedented lows of 2008 but continues to
be difficult.
Given the macro environment and the continued shortage of funding for mortgages
despite improving transaction volumes, underlying market conditions remain
uncertain. Our surveying business continues to be resilient. Our agency
business, supported by the growth of counter cyclical income streams has a more
robust business model that will trade profitably in the second half of 2009 and
through the cycle.
The Group is well placed to build on the first half's performance during the
remainder of 2009 and to deliver significant growth when market conditions
improve. In addition, the Group will continue to assess value enhancing
acquisition opportunities.
Roger Matthews
5 August 2009
Principal Risks and Uncertainities
The principal risks and uncertainties the Group faces in 2009 have not changed
significantly from those set out in the 2008 Annual Report and Accounts save for
the well publicised issue or the risk of a flu pandemic and its impact on both
staff attendance and customer behaviour, which may adversely affect the
performance of the Group's business.
For more information on the principal risks and uncertainties faced by LSL,
please see page 7 of the 2008 Annual Report and Account, 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
Forward Looking Statements:
This statement may contain forward-looking statements with respect to certain
plans and current goals and expectations relating to the future financial
condition, business performance and results of LSL Property Services plc
("LSL"). By their nature, all forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances that are
beyond the control at LSL including, amongst other things, UK domestic and
global economic and business conditions, market related risks such as
fluctuations in interest rates, inflation, deflation, the impact of competition,
changes in customer preferences, delays in implementing proposals, the timing,
impact and other uncertainties of future acquisitions or other combinations
within relevant industries, the policies and actions of regulatory authorities,
the impact of tax or other legislation and other regulations in the UK. As a
result LSL's actual future condition, business performance and results may
differ materially from the plans, goals and expectations expressed or implied in
these forward-looking statements. Nothing in this statement should be construed
as a profit forecast.
Interim Group Income Statement
for the six months ended 30 June 2009
+-------------------------------------------------+--------+-------------+-------------+-------------+-------------+
| | | | Unaudited | Audited |
+-------------------------------------------------+--------+-------------+---------------------------+-------------+
| | | | Six Months Ended | Year Ended |
+-------------------------------------------------+--------+-------------+---------------------------+-------------+
| | | | 30 June | 30 June | 31 Dec |
+-------------------------------------------------+--------+-------------+-------------+-------------+-------------+
| | | | 2009 | 2008 | 2008 |
+-------------------------------------------------+--------+-------------+-------------+-------------+-------------+
| | | | | restated* | restated* |
+-------------------------------------------------+--------+-------------+-------------+-------------+-------------+
| | | Note | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------------------+--------+-------------+-------------+-------------+-------------+
| | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Revenue | | 3 | 74,118 | 93,086 | 161,773 |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Operating expenses: | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Employee | | | 39,542 | 54,243 | 88,912 |
| and | | | | | |
| subcontractor | | | | | |
| costs | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Establishment | | | 4,955 | 6,673 | 12,485 |
| costs | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Depreciation | | | 757 | 1,122 | 2,299 |
| on property, | | | | | |
| plant and | | | | | |
| equipment | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Other | | | 18,269 | 22,249 | 40,638 |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| | | | (63,523) | (84,287) | (144,334) |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Rental income | | | 264 | 466 | 765 |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Group operating profit | | | 10,859 | 9,265 | |
| before exceptional costs, | | | | | 18,204 |
| amortisation and | | | | | |
| share-based payments | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Share-based payments | | 1 | (332) | (931) | (1,551) |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Amortisation of | | | (4,960) | (5,159) | (10,111) |
| intangible assets | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Exceptional costs | | 5 | (234) | (3,416) | (7,735) |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Group operating | | | 5,333 | (241) | (1,193) |
| profit/(loss) | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Dividend | | | - | 296 | 334 |
| income | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Finance income | | | - | 161 | 190 |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Finance costs | | | (1,069) | (1,962) | (4,035) |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Exceptional finance | | 5 | - | - | (432) |
| costs | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Net financial costs | | | (1,069) | (1,505) | (3,943) |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Profit/(loss) before | | 3 | 4,264 | (1,746) | (5,136) |
| tax before | | | | | |
| adjustment to | | | | | |
| goodwill | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Adjustment to | | | - | - | (1,048) |
| goodwill in respect | | | | | |
| of subsequent | | | | | |
| recognition of | | | | | |
| deferred tax asset | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Profit/(loss) before tax | | | 4,264 | (1,746) | (6,184) |
| | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Taxation | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| - | | | 75 | - | 2,022 |
| related | | | | | |
| to | | | | | |
| exceptional | | | | | |
| costs | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| - | | | (1,615) | 198 | (600) |
| others | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| | | 7 | (1,540) | 198 | 1,422 |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| | | | | | |
+-------------------------------------------------+ +-------------+-------------+-------------+-------------+
| Profit/(loss) for | | | 2,724 | (1,548) | (4,762) |
| the period/year | | | | | |
+-------------------------------------------------+--------+-------------+-------------+-------------+-------------+
| | | | | | |
+-------------------------------------------------+--------+-------------+-------------+-------------+-------------+
| Earnings/(loss) per share expressed in pence per share: | | |
+--------------------------------------------------------------------------------------+-------------+-------------+
| Basic | | 4 | 2.6 | (1.5) | (4.6) |
+-------------------------------------------------+--------+-------------+-------------+-------------+-------------+
| Diluted | | 4 | 2.6 | (1.5) | (4.6) |
+-------------------------------------------------+--------+-------------+-------------+-------------+-------------+
* the details of the restatement of the 2008 figures is given in note 1.
Interim Statement of Group Comprehensive Income
for the six months ended 30 June 2009
+----------------------------------------+----------+------------+-------------+
| | Unaudited | Audited |
+----------------------------------------+-----------------------+-------------+
| | Six Months Ended | Year Ended |
+----------------------------------------+-----------------------+-------------+
| | 30 June | 30 June | 31 Dec |
| | | | |
+----------------------------------------+----------+------------+-------------+
| | 2009 | 2008 | 2008 |
+----------------------------------------+----------+------------+-------------+
| | | restated* | restated* |
+----------------------------------------+----------+------------+-------------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------+----------+------------+-------------+
| | | | |
+----------------------------------------+----------+------------+-------------+
| Profit/(loss) for the period | 2,724 | (1,548) | (4,762) |
+----------------------------------------+----------+------------+-------------+
| | | | |
+----------------------------------------+----------+------------+-------------+
| Valuation losses on | - | - | (1,600) |
| available-for-sale investments | | | |
+----------------------------------------+----------+------------+-------------+
| | | | |
+----------------------------------------+----------+------------+-------------+
| Net gain on cash flow hedge | 431 | - | - |
| (note 8) | | | |
+----------------------------------------+----------+------------+-------------+
| Income tax | (121) | - | - |
+----------------------------------------+----------+------------+-------------+
| | 310 | - | - |
+----------------------------------------+----------+------------+-------------+
| | | | |
+----------------------------------------+----------+------------+-------------+
| Other | 310 | - | (1,600) |
| comprehensive | | | |
| income/(loss) for | | | |
| the period, net of | | | |
| tax | | | |
+----------------------------------------+----------+------------+-------------+
| | | | |
+----------------------------------------+----------+------------+-------------+
| Total | 3,034 | (1,548) | (6,362) |
| comprehensive | | | |
| income/(loss) for | | | |
| the period, net of | | | |
| tax ^ | | | |
+----------------------------------------+----------+------------+-------------+
^ all attributable to the equity shareholders of the parent.
* the details of the restatement of the 2008 figures is given in note 1.
Interim Group Balance Sheet
as at 30 June 2009
+---------------------------------+------+-----------+-----------+-----------+
| | | Unaudited | Audited |
+---------------------------------+------+-----------------------+-----------+
| | | At 30 June | At 31 Dec |
+---------------------------------+------+-----------------------+-----------+
| | | 2009 | 2008 | 2008 |
+---------------------------------+------+-----------+-----------+-----------+
| | | | restated* | restated* |
+---------------------------------+------+-----------+-----------+-----------+
| | | GBP'000 | GBP'000 | GBP'000 |
+---------------------------------+------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+------+-----------+-----------+-----------+
| Non-current assets | | | | |
+---------------------------------+------+-----------+-----------+-----------+
| Goodwill | 8 | 66,316 | 69,851 | 66,422 |
| Other intangible assets | | 26,569 | 36,403 | 31,413 |
| Property, plant and equipment | | 2,277 | 3,725 | 2,841 |
| Financial assets | | 4,479 | 5,650 | 4,052 |
| Other receivables | | - | 118 | 5 |
| Deferred tax asset | | 389 | - | - |
+---------------------------------+------+-----------+-----------+-----------+
| Total non-current assets | | 100,030 | 115,747 | 104,733 |
+---------------------------------+------+-----------+-----------+-----------+
| Current assets | | | | |
+---------------------------------+------+-----------+-----------+-----------+
| Trade and other receivables | | 19,312 | 26,544 | 13,919 |
+---------------------------------+------+-----------+-----------+-----------+
| Current tax assets | | - | - | 255 |
+---------------------------------+------+-----------+-----------+-----------+
| Cash and cash equivalents | | 840 | 1,164 | 647 |
+---------------------------------+------+-----------+-----------+-----------+
| Total current assets | | 20,152 | 27,708 | 14,821 |
+---------------------------------+------+-----------+-----------+-----------+
| Total assets | | 120,182 | 143,455 | 119,554 |
+---------------------------------+------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+------+-----------+-----------+-----------+
| Current liabilities | 8 | 1,191 | 618 | 1,273 |
| Financial liabilities | | 29,285 | 33,900 | 27,564 |
| Trade and other payables | | | | |
+---------------------------------+------+-----------+-----------+-----------+
| Current tax liabilities | | 1,199 | 1,480 | - |
+---------------------------------+------+-----------+-----------+-----------+
| Provisions for liabilities and | | 1,068 | 997 | 1,195 |
| charges | | | | |
+---------------------------------+------+-----------+-----------+-----------+
| Total current liabilities | | 32,743 | 36,995 | 30,032 |
+---------------------------------+------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+------+-----------+-----------+-----------+
| Non-current liabilities | | | | |
+---------------------------------+------+-----------+-----------+-----------+
| Financial liabilities | 8 | 42,737 | 62,222 | 48,611 |
+---------------------------------+------+-----------+-----------+-----------+
| Trade and other payables | | 72 | - | 39 |
+---------------------------------+------+-----------+-----------+-----------+
| Deferred tax liability | | - | 872 | 557 |
+---------------------------------+------+-----------+-----------+-----------+
| Provisions for liabilities and | | 7,569 | 5,362 | 6,586 |
| charges | | | | |
+---------------------------------+------+-----------+-----------+-----------+
| Total non-current liabilities | | 50,378 | 68,456 | 55,793 |
+---------------------------------+------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+------+-----------+-----------+-----------+
| Net assets | | 37,061 | 38,004 | 33,729 |
+---------------------------------+------+-----------+-----------+-----------+
| | | | | |
+---------------------------------+------+-----------+-----------+-----------+
| Equity | | | | |
+---------------------------------+------+-----------+-----------+-----------+
| Share capital | | 208 | 208 | 208 |
+---------------------------------+------+-----------+-----------+-----------+
| Share premium account | | 5,629 | 5,629 | 5,629 |
+---------------------------------+------+-----------+-----------+-----------+
| Share-based payment reserve | | 2,242 | 1,416 | 1,944 |
+---------------------------------+------+-----------+-----------+-----------+
| Investment in treasury shares | | (2,934) | (2,935) | (2,934) |
+---------------------------------+------+-----------+-----------+-----------+
| Unrealised gain reserve | | 3,900 | 5,500 | 3,900 |
+---------------------------------+------+-----------+-----------+-----------+
| Hedging reserve | | 310 | - | - |
+---------------------------------+------+-----------+-----------+-----------+
| Retained earnings | | 27,706 | 28,186 | 24,982 |
+---------------------------------+------+-----------+-----------+-----------+
| Total equity | | 37,061 | 38,004 | 33,729 |
+---------------------------------+------+-----------+-----------+-----------+
* the details of the restatement of the 2008 figures is given in note 1.
Interim Group Cash Flow Statement
for the six months ended 30 June 2009
+------------------------------------+----+------------+-------+-+----------+---------+-----------+----------+-+-+
| | | Unaudited | Audited |
| | | Six Months Ended | Year Ended |
| | | 30 June | 31 Dec |
| | | 30 June | |
+------------------------------------+----+-------------------------------------------+------------------------+
| | | 2009 | 2008 | 2008 |
| | | | restated* | restated* |
+------------------------------------+----+--------------------+----------------------+------------------------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+-----------------------------------------+------------+---------+----------+---------+-----------+----------+
| Cash generated from operating | | | | | | | |
| activities | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Profit/(loss) before tax | | | 4,264 | | (1,746) | | (6,184) |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Adjustments | | | | | | | |
| to | | | | | | | |
| reconcile | | | | | | | |
| profit/(loss) | | | | | | | |
| before tax to | | | | | | | |
| net cash | | | | | | | |
| inflows from | | | | | | | |
| operating | | | | | | | |
| activities | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Amortisation of intangible | | 4,960 | | 5,159 | | 10,111 | |
| assets | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Dividend income | | - | | (296) | | (334) | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Finance income | | - | | (161) | | (190) | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Finance costs | | 1,069 | | 1,962 | | 4,035 | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Share-based payments | | 332 | | 931 | | 1,551 | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Adjustment in relation to | | - | | - | | 1,048 | |
| deferred tax asset | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| | | | 6,361 | | 7,595 | | 16,221 |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Group operating profit before | | | 10,625 | | 5,849 | | 10,037 |
| amortisation and share-based | | | | | | | |
| payments | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Depreciation | | 757 | | 1,122 | | 2,299 | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Impairment of goodwill | | 126 | | - | | 1,036 | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Impairment of intangible | | - | | - | | 38 | |
| assets | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Loss/(profit) on sale of | | - | | 200 | | 419 | |
| property, plant | | | | | | | |
| and equipment | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| | | 883 | | 1,322 | | 3,792 | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| (Increase)/decrease in trade | | (5,388) | | (5,075) | | 7,663 | |
| and other receivables | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Decrease/(increase) in trade | | 2,485 | (2,020) | (4,261) | (8,014) | (9,152) | 2,303 |
| and other payables and | | | | | | | |
| provisions | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Cash generated from/(expended | | | 8,605 | | (2,165) | | 12,340 |
| on) operations | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Interest paid | | (1,209) | | (1,962) | | (3,993) | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Tax paid | | (1,153) | | (4,299) | | (5,126) | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| | | | (2,362) | | (6,261) | | (9,119) |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Net cash | | | 6,243 | | (8,426) | | 3,221 |
| generated | | | | | | | |
| from/(expended | | | | | | | |
| on) operating | | | | | | | |
| activities | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Cash flows from investing | | | | | | | |
| activities | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Purchase | | (135) | | (279) | | (276) | |
| of | | | | | | | |
| subsidiary | | | | | | | |
| undertakings, | | | | | | | |
| minority | | | | | | | |
| interest and | | | | | | | |
| commercial | | | | | | | |
| business | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Dividends received | | - | | 296 | | 334 | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Interest received | | - | | 161 | | 190 | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Purchase | | (193) | | (684) | | (1,043) | |
| of | | | | | | | |
| property, | | | | | | | |
| plant and | | | | | | | |
| equipment | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Proceeds | | - | | 237 | | 84 | |
| from sale | | | | | | | |
| of | | | | | | | |
| property, | | | | | | | |
| plant and | | | | | | | |
| equipment | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Proceeds | | 4 | | - | | - | |
| from sale | | | | | | | |
| of | | | | | | | |
| subsidiary | | | | | | | |
| undertakings, | | | | | | | |
| minority | | | | | | | |
| interest and | | | | | | | |
| commercial | | | | | | | |
| business | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Purchase | | - | | - | | (2) | |
| of | | | | | | | |
| available | | | | | | | |
| for sale | | | | | | | |
| financial | | | | | | | |
| assets | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| Net cash | | | (324) | | (269) | | (713) |
| expended on | | | | | | | |
| investing | | | | | | | |
| activities | | | | | | | |
+------------------------------------+----+------------+---------+----------+---------+-----------+----------+
| | | | 5,919 | | (8,695) | | | |
| | | | | | | | 2,508 | |
+------------------------------------+----+------------+-------+-+----------+---------+-----------+----------+-+-+
Interim Group Cash Flow Statement
for the six months ended 30 June 2009
+------------------------------------------+----+---------+---------+-----------+---------+-----------+----------+
| | | Unaudited | Audited |
| | | Six Months Ended | Year Ended |
+------------------------------------------+----+-------------------------------+--------------------------------+
| Net cash from operating | | 30 | GBP'000 | 30 June | GBP'000 | 31 Dec | GBP'000 |
| activities less cash expended | | June | 5,919 | 2008 | (8,695) | 2008 | 2,508 |
| on investing activities | | 2009 | | restated* | | restated* | |
| | | GBP'000 | | GBP'000 | | GBP'000 | |
+------------------------------------------+----+---------+---------+-----------+---------+-----------+----------+
| Cash flows from financing | | | | | | | |
| activities | | | | | | | |
+------------------------------------------+----+---------+---------+-----------+---------+-----------+----------+
| Repayment of loans | 8 | (5,726) | | (116) | | - | |
+------------------------------------------+----+---------+---------+-----------+---------+-----------+----------+
| Proceeds from | | - | | 11,891 | | 44 | |
| loans | | | | | | | |
+------------------------------------------+----+---------+---------+-----------+---------+-----------+----------+
| Purchase of | | - | | (266) | | (265) | |
| treasury shares | | | | | | | |
+------------------------------------------+----+---------+---------+-----------+---------+-----------+----------+
| Dividends paid | | - | | (3,976) | | (3,966) | |
+------------------------------------------+----+---------+---------+-----------+---------+-----------+----------+
| Net cash | | | (5,726) | | 7,533 | | |
| (used)/generated | | | | | | | (4,187) |
| in | | | | | | | |
| financing | | | | | | | |
| activities | | | | | | | |
+------------------------------------------+----+---------+---------+-----------+---------+-----------+----------+
| Net | | | 193 | | (1,162) | | (1,679) |
| (decrease)/increase | | | | | | | |
| in cash | | | | | | | |
| and cash | | | | | | | |
| equivalents | | | | | | | |
+------------------------------------------+----+---------+---------+-----------+---------+-----------+----------+
| Cash and cash equivalents at | | | 647 | | 2,326 | | 2,326 |
| the beginning of the period | | | | | | | |
+------------------------------------------+----+---------+---------+-----------+---------+-----------+----------+
| Cash and cash equivalents at | 8 | | 840 | | 1,164 | | 647 |
| the | | | | | | | |
| end of the period | | | | | | | |
+------------------------------------------+----+---------+---------+-----------+---------+-----------+----------+
* the details of the restatement of the 2008 figures is given in note 1.
Interim Group Reconciliation of changes in equity
for the six months ended 30 June 2009
Unaudited six months ended 30 June 2009
+--------------------------+---------+----------+----------+------------+------------+----------+----------+---------+----------+---------+
| | Share | Share | Share- |Investment |Unrealised | Hedging |Retained | Total |Minority | Total |
| |capital | premium | based | in | gains | reserve |earnings | equity |interest | |
| | | account | payment | treasury | reserve | | | | | |
| | | | reserve | shares | | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+----------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------+---------+----------+----------+------------+------------+----------+----------+---------+----------+---------+
| At 1 January 2009 | 208 | 5,629 | 531 | (2,934) | 3,900 | - | 26,395 | 33,729 | - | 33,729 |
+--------------------------+---------+----------+----------+------------+------------+----------+----------+---------+----------+---------+
| Change in accounting | - | - | 1,413 | - | - | - | (1,413) | - | - | - |
| policy (note 1) | | | | | | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+----------+---------+----------+---------+
| Restated balance | 208 | 5,629 | 1,944 | (2,934) | 3,900 | - | 24,982 | 33,729 | - | 33,729 |
+--------------------------+---------+----------+----------+------------+------------+----------+----------+---------+----------+---------+
| Profit for the period | - | - | - | - | - | - | 2,724 | 2,724 | - | 2,724 |
+--------------------------+---------+----------+----------+------------+------------+----------+----------+---------+----------+---------+
| Other comprehensive | - | - | - | - | - | 310 | - | 310 | - | 310 |
| income | | | | | | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+----------+---------+----------+---------+
| Total comprehensive | 208 | 5,629 | 1,944 | (2,934) | 3,900 | 310 | 27,706 | 36,763 | - | 36,763 |
| income | | | | | | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+----------+---------+----------+---------+
| Share-based payments | - | - | 298 | - | - | - | - | 298 | - | 298 |
+--------------------------+---------+----------+----------+------------+------------+----------+----------+---------+----------+---------+
| At 30 June 2009 | 208 | 5,629 | 2,242 | (2,934) | 3,900 | 310 | 27,706 | 37,061 | - | 37,061 |
+--------------------------+---------+----------+----------+------------+------------+----------+----------+---------+----------+---------+
Interim Group Reconciliation of changes in equity
for the six months ended 30 June 2009
Unaudited six months ended 30 June 2008
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| | Share | Share | Share- |Investment |Unrealised |Retained | Total |Minority | Total |
| |capital | premium | based | in | gains |earnings | equity |interest | |
| | | account | payment | treasury | reserve | | | | |
| | | | reserve | shares | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| At 1 January 2008 | 208 | 5,629 | 560 | (2,669) | 5,500 | 33,710 | 42,938 | - | 42,938 |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| Loss for the period | - | - | - | - | - | (1,548) | (1,548) | - | (1,548) |
| (restated*) | | | | | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| Other comprehensive | - | - | - | - | - | - | - | - | - |
| income | | | | | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| Total comprehensive | 208 | 5,629 | 560 | (2,669) | 5,500 | 32,162 | 41,390 | - | 41,390 |
| income | | | | | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| Purchase of treasury | - | - | - | (266) | - | - | (266) | - | (266) |
| shares | | | | | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| Dividends paid | - | - | - | - | - | (3,976) | (3,976) | - | (3,976) |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| Share-based payments | - | - | 856 | - | - | - | 856 | - | 856 |
| (restated*) | | | | | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| | | | | | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| At 30 June 2008 | 208 | 5,629 | 1,416 | (2,935) | 5,500 | 28,186 | 38,004 | - | 38,004 |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
* the details of the restatement of the 2008 figures is given in note 1.
Interim Group Reconciliation of changes in equity
for the six months ended 30 June 2009
Year ended 31 December 2008
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| | Share | Share | Share- |Investment |Unrealised |Retained | Total |Minority | Total |
| |capital | premium | based | in | gains |earnings | equity |interest | |
| | | account | payment | treasury | reserve | | | | |
| | | | reserve | shares | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| At 1 January 2008 | 208 | 5,629 | 560 | (2,669) | 5,500 | 33,710 | 42,938 | - | 42,938 |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| Loss for the period | - | - | - | - | - | (4,762) | (4,762) | - | (4,762) |
| (restated*) | | | | | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| Other comprehensive loss | - | - | - | - | (1,600) | - | (1,600) | - | (1,600) |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| Total comprehensive | 208 | 5,629 | 560 | (2,669) | 3,900 | 28,948 | 36,576 | - | 36,576 |
| income | | | | | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| Purchase of treasury | - | - | - | (265) | - | - | (265) | - | (265) |
| shares | | | | | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| Dividends paid | - | - | - | - | - | (3,966) | (3,966) | - | (3,966) |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| Share-based payments | - | - | 1,384 | - | - | - | 1,384 | - | 1,384 |
| (restated*) | | | | | | | | | |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
| At 31 December 2008 | 208 | 5,629 | 1,944 | (2,934) | 3,900 | 24,982 | 33,729 | - | 33,729 |
+--------------------------+---------+----------+----------+------------+------------+----------+---------+----------+---------+
* the details of the restatement of the 2008 figures is given in note 1.
Notes to the interim condensed group financial statements
The interim condensed group financial statements for the six months ended 30
June 2009 was approved by the board of directors on 3 August 2009. The Group's
published financial statements for the year ended 31 December 2008 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 2009 and the equivalent period in 2008 has not been audited.
The figures for the year ended 31 December 2008 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 condensed group financial statements for the six months ended 30
June 2009 have been prepared in accordance with IAS 34 Interim Financial
Reporting. The interim condensed group financial statements have been prepared
on a going concern basis.
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 2008.
Significant accounting policies
The accounting policies adopted in the preparation of the interim condensed
group financial statements are consistent with those followed in the preparation
of the Group's annual financial statements for the year ended 31 December 2008,
except of the adoption of new Standards and Interpretations as of 1 January 2009
which are applicable to the group, as noted below:
IFRS 2 Share-based Payment - Vesting Conditions and Cancellations
The amendment to IFRS 2 restricts the definition of vesting conditions to
include only service conditions (requiring a specified period of service to be
completed) and performance conditions (requiring the other party to achieve a
personal goal or contribute to achieving a corporate target). All other features
are not vesting conditions and, whereas a failure to achieve such a condition
was previously regarded as a forfeiture (giving rise to a reversal of amounts
previously charged to profit), it must be reflected in the grant date fair value
of the award and treated as a cancellation, which results in either an
acceleration of the expected charge, or a continuation over the remaining
vesting period, depending on whether the condition is under the control of the
entity or counterparty.
The group treated the employees' withdrawal from the SAYE schemes as
cancellation, which resulted in acceleration of the charge because the
withdrawal is under the control of the employees. The adoption of this amendment
had the effect of increasing the loss by GBP948,000 for the period ended 30 June
2008 and by GBP1,413,000 for the year ended 31 December 2008, with the
corresponding impact on equity. There is no impact on the financial statements
as of 1 January 2008.
IFRS 8 Operating Segments
This Standard requires disclosure of information about the Group's operating
segments based on information presented to the Board and replaces the
requirement to determine primary (business) and secondary (geographical)
reporting segments of the Group. Adoption of the Standard did not have any
effect on the financial position or performance of the Group. The group
determined that the operating segments were slightly different to the business
segments previously identified under IAS 14 Segment Reporting. The financial
services business is considered by the Group to be part of the estate agency
business and as such has now been included within the "Estate agency and related
activities" segment. Additional disclosures about each of these segments are
shown in Note 3, including revised comparative information.
IAS 1 Revised Presentation of Financial Statements
The Standard introduces the statement of comprehensive income: it presents all
items of recognised income and expense, either in one single statement, or in
two linked statements. The Group has elected to present two statements.
Notes to the interim condensed group financial statements
1. Basis of preparation (continued)
Significant accounting policies (continued)
Improvements to IFRSs
In May 2008 the IASB issued its first omnibus of amendments to its standards,
primarily with a view to removing inconsistencies and clarifying wording. There
are separate transitional provisions for each standard. The adoption of the
following amendments resulted in changes to accounting policies but did not have
any impact on the financial position or performance of the Group.
* lAS 1 Presentation of Financial Statements: Assets and liabilities classified as
held for trading in accordance with lAS 39 Financial Instruments: Recognition
and Measurement are not automatically classified as current in the statement of
financial position. The Group amended its accounting policy accordingly and
analysed whether Management's expectation of the period of realisation of
financial assets and liabilities differed from the classification of the
instrument. This did not result in any re-classification of financial
instruments between current and non-current in the statement of financial
position.
* lAS 16 Property, Plant and Equipment: Replace the term "net selling price" with
"fair value less costs to sell". The Group amended its accounting policy
accordingly, which did not result in any change in the financial position.
* lAS 38 Intangible Assets: Expenditure on advertising and promotional activities
is recognised as an expense when the Group either has the right to access the
goods or has received the service. This amendment has no impact on the Group
because it does not enter into such promotional activities. The reference to
there being rarely, if ever, persuasive evidence to support an amortisation
method of intangible assets other than a straight-line method has been removed.
The Group reassessed the useful lives of its intangible assets and concluded
that the straight-line method was still appropriate.
The amendments to the following standards below did not have any impact on the
accounting policies, financial position or performance of the Group:
* IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
* IFRS 7 Financial Instruments: Disclosures
* lAS 8 Accounting Policies, Change in Accounting Estimates and Error
* lAS 10 Events after the Reporting Period
* lAS 16 Property, Plant and Equipment
* lAS l8 Revenue
* lAS 19 Employee Benefits
* IAS 20 Accounting for Government Grants and Disclosures of Government
Assistance
* IAS 23 Borrowing Costs
* lAS 27 Consolidated and Separate Financial Statements
* lAS 28 Investment in Associates
* lAS 31 Interest in Joint ventures
* lAS 34 Interim Financial Reporting
* lAS 36 Impairment of Assets
* lAS 39 Financial Instruments: Recognition and Measurement
Hedge accounting
As mentioned in Note 8, during the half year the group entered into interest
rate swap agreements and the group has updated its accounting policy to adopt
hedge accounting and treated this as a cash flow hedge.
For those derivatives designated as hedges and for which hedge accounting is
desired, the hedging relationship is documented at its inception. This
documentation identifies the hedging instrument, the hedged item or transaction,
the nature of the risk being hedged and how effectiveness will be measured
throughout its duration. Such hedges are expected at inception to be highly
effective.
For the purpose of hedge accounting, hedge is classified as cash flow hedge when
hedging exposure to variability in cash flows that is either attributable to a
particular risk associated with a recognised asset or liability or a highly
probable forecast transaction.
Notes to the interim condensed group financial statements
1. Basis of preparation (continued)
Significant accounting policies (continued)
Any gains or losses arising from changes in the fair value of derivatives that
do not qualify for hedge accounting are taken to the income statement. For cash
flow hedges, the effective portion of the gain or loss on the hedging instrument
is recognised directly in equity, while the ineffective portion is recognised in
profit or loss. Amounts taken to equity are transferred to the income statement
when the hedged transaction affects profit or loss, such as when a forecast sale
or purchase occurs. Where the hedged item is the cost of a non-financial asset
or liability, the amounts taken to equity are transferred to the initial
carrying amount of the non-financial asset or liability.
If a forecast transaction is no longer expected to occur, amounts previously
recognised in equity are transferred to profit or loss. If the hedging
instrument expires or is sold, terminated or exercised without replacement or
rollover, or if its designation as a hedge is revoked, amounts previously
recognised in equity remain in equity until the forecast transaction occurs and
are transferred to the income statement or to the initial carrying amount of a
non-financial asset or liability as above. If the related transaction is not
expected to occur, the amount is taken to profit or loss.
2. Seasonality of operations
Due to the seasonal nature of the property sector, sales are normally highest
during the period April to September mainly attributed to the desire by
customers to sell their homes during the spring and summer months, with the
lowest sales during January to March. However, this trend has recently been
affected by the volatility and uncertainty in the UK housing market.
3. Segment analysis of revenue and operating profit
For management purposes, the group is organised into business units based on
their products and services and has two reportable operating segments as
follows:
* The estate agency and related activities provides services related to housing
transactions via a network of high street branches. It also 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.
* The surveying and valuation segment provides a professional survey service of
domestic properties to various lending corporations.
No operating segments have been aggregated to form the above reported operating
segments.
Management monitors the operating results of its business units separately for
the purpose of making decisions about resource allocation and performance
assessment. Segment performance is evaluated based on operating profit or loss
which in certain respects, as explained in the table below, is measured
differently from operating profit or loss in the consolidated financial
statements. Head office costs, group financing (including finance costs and
finance incomes) and income taxes are managed on a group basis and are not
allocated to operating segments.
The 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.
Notes to the interim condensed group financial statements
3. Segment analysis of revenue and operating profit (continued)
Operating segments
The following table present revenue and profit/(loss) information regarding the
group's operating segments for the six months ended 30 June 2009 and 2008, and
financial year ended 31 December 2008 respectively.
Six months ended 30 June 2009
+------------------------------+-------------+-----------+-------------+----------+
| | Estate | Surveying | Unallocated | Total |
| | agency | and | GBP'000 | GBP'000 |
| | and | valuation | | |
| | related | services | | |
| | activities | | | |
| | GBP'000 | GBP'000 | | |
+------------------------------+-------------+-----------+-------------+----------+
| Income statement information | | | | |
+------------------------------+-------------+-----------+-------------+----------+
| Segmental revenue | 38,095 | 36,023 | - | 74,118 |
+------------------------------+-------------+-----------+-------------+----------+
| | | | | |
+------------------------------+-------------+-----------+-------------+----------+
| Segmental result: | | | | |
+------------------------------+-------------+-----------+-------------+----------+
| - before exceptional costs, | | | | |
| amortisation | | | | |
+------------------------------+-------------+-----------+-------------+----------+
| and share-based payments | (844) | 12,725 | (1,022) | 10,859 |
+------------------------------+-------------+-----------+-------------+----------+
| - after exceptional costs, | | | | |
| amortisation | | | | |
+------------------------------+-------------+-----------+-------------+----------+
| and share based payments | (1,841) | 8,196 | (1,022) | 5,333 |
+------------------------------+-------------+-----------+-------------+----------+
| | | | | |
+------------------------------+-------------+-----------+-------------+----------+
| Finance income | | | | - |
+------------------------------+-------------+-----------+-------------+----------+
| Finance costs | | | | (1,069) |
+------------------------------+-------------+-----------+-------------+----------+
| Profit before tax | | | | 4,264 |
+------------------------------+-------------+-----------+-------------+----------+
| | | | | |
+------------------------------+-------------+-----------+-------------+----------+
| Taxation | | | | (1,540) |
+------------------------------+-------------+-----------+-------------+----------+
| Profit for the period | | | | 2,724 |
+------------------------------+-------------+-----------+-------------+----------+
Six months ended 30 June 2008
+------------------------------+-----------+----+------------+-------------+------+----+----+
| | Estate | Surveying | Unallocated | Total |
| | agency and | and | restated* | |
| | related | valuation | GBP'000 | restated* |
| | activities | services | | GBP'000 |
| | restated* | restated* | | |
| | GBP'000 | GBP'000 | | |
+------------------------------+----------------+------------+-------------+-----------+
| Income statement information | | | | |
+------------------------------+----------------+------------+-------------+-----------+
| Segmental revenue | 48,197 | 44,889 | - | 93,086 |
+------------------------------+----------------+------------+-------------+-----------+
| | | | | |
+------------------------------+----------------+------------+-------------+-----------+
| Segmental result: | | | | |
+------------------------------+----------------+------------+-------------+-----------+
| - before exceptional costs, | | | | |
| amortisation | | | | |
+------------------------------+----------------+------------+-------------+-----------+
| and share-based payments | (5,204) | 15,392 | (923) | 9,265 |
+------------------------------+----------------+------------+-------------+-----------+
| - after exceptional costs, | | | | |
| amortisation | | | | |
+------------------------------+----------------+------------+-------------+-----------+
| and share based payments | (9,509) | 10,564 | (1,296) | (241) |
+------------------------------+----------------+------------+-------------+-----------+
| | | | | |
+------------------------------+----------------+------------+-------------+-----------+
| Dividend | | | | 296 |
| income | | | | |
+------------------------------+----------------+------------+-------------+-----------+
| Finance income | | | | 161 |
+------------------------------+----------------+------------+-------------+-----------+
| Finance costs | | | | (1,962) |
+------------------------------+----------------+------------+-------------+-----------+
| Loss before tax | | | | (1,746) |
+------------------------------+----------------+------------+-------------+-----------+
| Taxation | | | | 198 |
+------------------------------+----------------+------------+-------------+-----------+
| Loss for the period | | | | (1,548) |
+------------------------------+----------------+------------+-------------+-----------+
| | | | | |
+------------------------------+-----------+----+------------+-------------+------+----+----+
Notes to the interim condensed group financial statements
3. Segment analysis of revenue and operating profit (continued)
Operating segments (continued)
Year ended 31 December 2008
+------------------------------+-------------+-----------+-------------+-------------+
| | Estate | Surveying | Unallocated | Total |
| | agency | and | restated* | |
| | and | valuation | GBP'000 | restated* |
| | related | services | | GBP'000 |
| | activities | | | |
| | restated* | restated* | | |
| | GBP'000 | GBP'000 | | |
+------------------------------+-------------+-----------+-------------+-------------+
| Income statement information | | | | |
+------------------------------+-------------+-----------+-------------+-------------+
| Segmental revenue | 81,700 | 80,073 | - | 161,773 |
+------------------------------+-------------+-----------+-------------+-------------+
| | | | | |
+------------------------------+-------------+-----------+-------------+-------------+
| Segmental result: | | | | |
+------------------------------+-------------+-----------+-------------+-------------+
| - before exceptional costs, | | | | |
| amortisation | | | | |
+------------------------------+-------------+-----------+-------------+-------------+
| and share-based payments | (8,435) | 28,590 | (1,951) | 18,204 |
+------------------------------+-------------+-----------+-------------+-------------+
| - after exceptional costs, | | | | |
| amortisation | | | | |
+------------------------------+-------------+-----------+-------------+-------------+
| and share-based payments | (15,834) | 16,621 | (1,980) | (1,193) |
+------------------------------+-------------+-----------+-------------+-------------+
| | | | | |
+------------------------------+-------------+-----------+-------------+-------------+
| Dividend income | | | | 334 |
+------------------------------+-------------+-----------+-------------+-------------+
| Finance income | | | | 190 |
+------------------------------+-------------+-----------+-------------+-------------+
| Finance costs | | | | (4,035) |
+------------------------------+-------------+-----------+-------------+-------------+
| Exceptional finance costs | | | | (432) |
+------------------------------+-------------+-----------+-------------+-------------+
| Loss before tax before | | | | (5,136) |
| adjustment to goodwill | | | | |
+------------------------------+-------------+-----------+-------------+-------------+
| Adjustment to goodwill in | | | | |
| respect of subsequent | | | | (1,048)# |
| recognition of deferred tax | | | | |
| asset | | | | |
+------------------------------+-------------+-----------+-------------+-------------+
| Loss before tax | | | | (6,184) |
+------------------------------+-------------+-----------+-------------+-------------+
| Taxation | | | | 1,422 |
+------------------------------+-------------+-----------+-------------+-------------+
| Loss for the year | | | | (4,762) |
+------------------------------+-------------+-----------+-------------+-------------+
| | |
| # this relates to estate agency and related | |
| activities segment. | |
| | |
+------------------------------+-------------+-----------+-------------+-------------+
* the details of the restatement of the 2008 figures is given in note 1.
4. Earnings/(loss) per share
Basic earnings/(loss) per share amounts are calculated by dividing net
profit/(loss) for the period attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares outstanding during the
period.
Diluted earnings/(loss) per share amounts are calculated by dividing the net
profit/(loss) 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 | | | Weighted | 2009 | | Weighted | 2008 |
| June | Profit | | average | Per | | average | Per |
| | | | number of | share | Loss | number of | share |
| | after | | shares | Amount | after | shares | Amount |
| | tax | | | Pence | tax | | Pence |
| | GBP'000 | | | | GBP'000 | | |
| | | | | | restated* | | restated* |
+-----------------------+---------+---+-------------+--------+-----------+---------------+-----------+
| | | | | | | | |
+-----------------------+---------+---+-------------+--------+-----------+---------------+-----------+
| Basic EPS | 2,724 | | 102,811,731 | 2.6 | (1,548) | 102,911,731 | (1.5) |
+-----------------------+---------+---+-------------+--------+-----------+---------------+-----------+
| Effect of dilutive | - | | 195,615 | - | - | 195,615 | - |
| share | | | | | | | |
| options | | | | | | | |
+-----------------------+---------+---+-------------+--------+-----------+---------------+-----------+
| Diluted EPS | 2,724 | | 103,007,346 | 2.6 | (1,548) | 103,107,346 | (1.5) |
+-----------------------+---------+---+-------------+--------+-----------+---------------+-----------+
Notes to the interim condensed group financial statements
4. Earnings/(loss) per share (continued)
Year ended 31 December 2008 (restated)
+----------------------+-----------+--+--------------+-------------+
| | | | Weighted | 2008 |
| | Loss | | average | Per share |
| | after | | number of | Amount |
| | tax | | shares | Pence |
| | GBP'000 | | | restated* |
| | restated* | | | |
+----------------------+-----------+--+--------------+-------------+
| | | | | |
+----------------------+-----------+--+--------------+-------------+
| Basic EPS | (4,762) | | 102,845,156 | (4.6) |
+----------------------+-----------+--+--------------+-------------+
| Effect of dilutive | - | | 195,615 | - |
| share | | | | |
| options | | | | |
+----------------------+-----------+--+--------------+-------------+
| Diluted EPS | (4,762) | | 103,040,771 | (4.6) |
+----------------------+-----------+--+--------------+-------------+
The Directors consider that the adjusted earnings shown below give a better and
more consistent indication of the Group's underlying performance:
+------------------------------------------------+-----------+-----------+-----------+
| | Six months ended | Year |
| | | ended |
+------------------------------------------------+-----------------------+-----------+
| | 30 June | 30 June | 31 Dec |
| | 2009 | 2008 | 2008 |
| | GBP'000 | restated* | restated* |
| | | GBP'000 | GBP'000 |
+------------------------------------------------+-----------+-----------+-----------+
| Profit/(loss) after tax | 2,724 | (1,548) | (4,762) |
+------------------------------------------------+-----------+-----------+-----------+
| Adjusted after tax for: | | | |
+------------------------------------------------+-----------+-----------+-----------+
| Exceptional costs | 168 | 2,460 | 6,145 |
+------------------------------------------------+-----------+-----------+-----------+
| Amortisation of intangible assets | 3,571 | 3,714 | 7,229 |
+------------------------------------------------+-----------+-----------+-----------+
| Share-based payment | 239 | 670 | 1,109 |
+------------------------------------------------+-----------+-----------+-----------+
| Adjusted profit after tax | 6,702 | 5,296 | 9,721 |
+------------------------------------------------+-----------+-----------+-----------+
Adjusted basic and diluted EPS
Six months ended 30 June
+-----------------------+----------+---+-------------+---------+----------+---------------+---------+
| | Adjusted | | Weighted | 2009 | Adjusted | Weighted | 2008 |
| | Profit | | average | Per | Profit | average | Per |
| | after | | number of | share | after | number of | Share |
| | tax1 | | shares | amount | tax | shares | Amount |
| | GBP'000 | | | Pence | GBP'000 | | Pence |
+-----------------------+----------+---+-------------+---------+----------+---------------+---------+
| | | | | | | | |
+-----------------------+----------+---+-------------+---------+----------+---------------+---------+
| Adjusted Basic EPS | 6,702 | | 102,811,731 | 6.5 | 5,296 | 102,911,731 | 5.1 |
+-----------------------+----------+---+-------------+---------+----------+---------------+---------+
| Effect of dilutive | - | | 195,615 | | - | 195,615 | |
| share options | | | | | | | |
+-----------------------+----------+---+-------------+---------+----------+---------------+---------+
| Adjusted Diluted EPS | 6,702 | | 103,007,346 | 6.5 | 5,296 | 103,107,346 | 5.1 |
+-----------------------+----------+---+-------------+---------+----------+---------------+---------+
Year ended 31 December 2008 (restated)
+-----------------------+----------+---+----------------+----------------+
| | Adjusted | | Weighted | Per share |
| | Profit | | average number | amount |
| | after | | of shares | Pence |
| | tax1 | | | |
| | GBP'000 | | | |
+-----------------------+----------+---+----------------+----------------+
| | | | | |
+-----------------------+----------+---+----------------+----------------+
| Adjusted Basic EPS | 9,721 | | 102,845,156 | 9.5 |
+-----------------------+----------+---+----------------+----------------+
| Effect of dilutive | - | | 195,615 | - |
| share options | | | | |
+-----------------------+----------+---+----------------+----------------+
| Adjusted Diluted EPS | 9,721 | | 103,040,771 | 9.4 |
+-----------------------+----------+---+----------------+----------------+
1 This represents adjusted profit after tax attributable to equity holders of
the parent.
Notes to the interim condensed group financial statements
5. Exceptional costs
+----------------------------------------------+------------+------------++----------++
| | Six months Ended | Year |
| | | Ended |
+----------------------------------------------+--------------------------+----------+
| | 30 June | 30 June | 31 Dec |
| | 2009 | 2008 | 2008 |
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------------------+------------+------------+------------+
| Establishment costs | | | |
+----------------------------------------------+------------+------------+------------+
| Onerous leases provision due to branch | - | 1,382 | 1,709 |
| closures | | | |
+----------------------------------------------+------------+------------+------------+
| Employee costs | | | |
+----------------------------------------------+------------+------------+------------+
| Redundancy costs due to branch closures and | 66 | 1,446 | 2,410 |
| business reorganisation | | | |
+----------------------------------------------+------------+------------+------------+
| Other | | | |
+----------------------------------------------+------------+------------+------------+
| Accelerated depreciation due to branch | - | 270 | 269 |
| closures | | | |
+----------------------------------------------+------------+------------+------------+
| Impairment of goodwill | 126 | - | 1,036 |
+----------------------------------------------+------------+------------+------------+
| Impairment of brand | - | - | 38 |
+----------------------------------------------+------------+------------+------------+
| Others | 42 | 318 | - |
+----------------------------------------------+------------+------------+------------+
| Costs of aborted acquisition of business and | - | - | 242 |
| financing project | | | |
+----------------------------------------------+------------+------------+------------+
| Provision for professional indemnity claims | - | - | 2,031 |
+----------------------------------------------+------------+------------+------------+
| Total operating exceptional costs | 234 | 3,416 | 7,735 |
+----------------------------------------------+------------+------------+------------+
| Finance costs | | | |
+----------------------------------------------+------------+------------+------------+
| Banking fees incurred for renegotiation of | - | - | 432 |
| facility | | | |
+----------------------------------------------+------------+------------+------------+
| | 234 | 3,416 | 8,167 |
+----------------------------------------------+------------+------------++----------++
6. Dividends paid and proposed
+------------------------------------------------++------------+----------+----------+
| | SSix months Ended | Year |
| | | Ended |
+------------------------------------------------+------------------------+----------+
| 30 June | 30 | 31 Dec |
| 2009 | June | 2008 |
| | 2008 | |
+--------------------------------------------------------------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 |
+-------------------------------------------------+------------+----------+----------+
| | | |
+-------------------------------------------------+------------+---------------------+
| Equity dividends on ordinary shares: | | |
+-------------------------------------------------+------------+---------------------+
| Final dividend for 2008: nil pence (2007: 3.86 | - | 3,976 | 3,966 |
| pence) | | | |
+-------------------------------------------------+------------+----------+----------+
| Dividends on ordinary shares proposed (not | | | |
| recognised as a liability as at 30 June): | | | |
+-------------------------------------------------+------------+----------+----------+
| Interim dividend for 2009: nil pence per share | - | - | - |
| (2008: nil pence) | | | |
+------------------------------------------------++------------+----------+----------+
Notes to the interim condensed group financial statements
7. Taxation
The major components of income tax charge/(credit) in the interim group income
statements are:
+------------------------------------------------+-----------+-----------+-----------+
| | Six months Ended | Year |
| | | Ended |
+------------------------------------------------+-----------------------+-----------+
| | 30 June | 30 June | 31 Dec |
| | 2009 | 2008 | 2008 |
+------------------------------------------------+-----------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 |
+------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------+-----------+-----------+-----------+
| UK corporation tax - current year | 2,417 | 822 | 755 |
+------------------------------------------------+-----------+-----------+-----------+
| - tax under/(over) provided in prior year | 190 | - | (42) |
+------------------------------------------------+-----------+-----------+-----------+
| - utilisation of tax losses | - | - | (800) |
+------------------------------------------------+-----------+-----------+-----------+
| | 2,607 | 822 | (87) |
+------------------------------------------------+-----------+-----------+-----------+
| | | | |
+------------------------------------------------+-----------+-----------+-----------+
| Deferred tax: | | | |
+------------------------------------------------+-----------+-----------+-----------+
| Origination and reversal of temporary | (1,067) | (1,020) | (1,271) |
| differences | | | |
+------------------------------------------------+-----------+-----------+-----------+
| Adjustment in respect of prior year | - | - | (64) |
+------------------------------------------------+-----------+-----------+-----------+
| Total deferred tax | (1,067) | (1,020) | (1,335) |
+------------------------------------------------+-----------+-----------+-----------+
| Total tax charge/(credit) in the income | 1,540 | (198) | (1,422) |
| statement | | | |
+------------------------------------------------+-----------+-----------+-----------+
The Group's current taxation charge comprises corporation tax calculated at
estimated effective tax rates for the year.
8. Analysis of net debt
+-----------------------------------------+-----------+----------+------------+
| | Six months Ended | Year Ended |
| | | |
+-----------------------------------------+----------------------+------------+
| | 30 June | 30 | 31 Dec |
| | 2009 | June | 2008 |
| | | 2008 | |
+-----------------------------------------+-----------+----------+------------+
| | GBP'000 | GBP'000 | GBP'000 |
+-----------------------------------------+-----------+----------+------------+
| | | | |
+-----------------------------------------+-----------+----------+------------+
| Interest bearing loans and borrowings | 43,928 | 62,840 | 49,884 |
+-----------------------------------------+-----------+----------+------------+
| Less: cash and short-term deposits | (840) | (1,164) | (647) |
+-----------------------------------------+-----------+----------+------------+
| Net debt at the end of the period | 43,088 | 61,676 | 49,237 |
+-----------------------------------------+-----------+----------+------------+
During the six months ended 30 June 2009, the Group has repaid GBP5.7m of the
revolving credit facility. The utilisation of this revolving credit facility may
vary each month as long as this does not exceed the maximum GBP75m facility. The
banking facility expires in July 2010 and can be extended at that date until
July 2011 only at the option of the company. The revolving credit facility is
repayable when funds permit.
The interest rate applicable to the facility is LIBOR plus a margin rate of
1.75%. The margin rate is linked to the leverage ratio of the Group and the
margin rate is reviewed at six monthly intervals.
During April and May 2009, the group entered into three fixed interest rate swap
arrangements with their banker for a total principal amount of GBP25m to hedge
against potential increase in future LIBOR payable on the revolving credit
facility. This hedge has been treated as cash flow hedge and accounted for under
hedge accounting.
The terms of the interest rate swap agreements are expected to match the terms
of the commitments. The cash flow hedge of the expected future interest payment
were assessed to be highly effective and as at 30 June 2009 an unrealised gain
of GBP431,000, with a deferred tax charge of GBP121,000 relating to the hedging
instrument is included in equity.
Independent Review Report to 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
2009 which comprises interim group income statement, interim statement of group
comprehensive income, interim group balance sheet, interim group cash flow
statement, interim reconciliation of changes in equity and the related notes 1
to 8.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.
Independent Review Report to LSL Property Services plc
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 2009 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
5 August 2009
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EZLFBKVBEBBQ
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