TIDMLSL
RNS Number : 9754H
LSL Property Services
03 March 2010
+------------------------------+------------------------------+
| .For Immediate Release | 3 March 2010 |
+------------------------------+------------------------------+
LSL Property Services plc
("LSL" or "the Group")
PRELIMINARY RESULTS
LSL Property Services plc, a leading provider of residential property services,
incorporating both estate agency and surveying businesses, announces preliminary
results for the year ended 31 December 2009.
Group
- Group Revenue down 2.5% to GBP157.7m (2008: GBP161.8m)
- Underlying Group Operating Profit up 55% to GBP28.3m (2008: GBP18.2m)
- Increase in Underlying Operating Margin5 from 11.3% to 17.9%
- Operating costs reduced by 10% to GBP129.9m (2008: GBP144.3m)
- Profit Before Tax increased to GBP16.6m (2008: Loss of GBP6.2m-*)
- Adjusted Basic earnings per share up 93% to 18.1p (2008: 9.4p per
share*)
Basic earnings per share of 11.4p (2008: Basic loss of 4.6p*)
- Return to dividends: Interim dividend declared of 5.4p per share (2008:
nil)
- Significant cash generation during the year
- Net cash inflow from operations of GBP24.6m (2008: GBP3.2m)
- Net debt reduced by GBP23.5m to GBP25.7m (2008: GBP49.2m)
Surveying Performance
- Significantly outperformed the market, turnover down 12%, against a 34%3
decline in total mortgage approvals.
- Underlying Operating Profit1 of GBP23.5m (2008: GBP28.6m)
- Barclays contract extended and a new five year contract with Santander
Estate Agency and Financial Services Performance
- Delivered a significant turnaround in Profitability
Underlying Operating Profit1 of GBP6.7m (2008: Loss of GBP8.4m*)
- All our high street Estate Agency brands have been profitable in 2009,
despite market volumes being half historic norms.
- Significantly lower operating costs and excellent growth in asset
management
business - market share of 17% in Q4,2009.4
Acquisition of Halifax Estate Agencies Limited
- Establishes LSL as second largest Estate Agency business in UK.
- Acquisition completed on 15 January 2010. Integration completed on
schedule and targeted run-rate cost savings achieved.
*Please note that the Income Statement for 2008 was restated due to the adoption
of the amendment to IFRS 2 Share-based payments, details of the restatement are
given at note 1. All relevant figures in this report reflect the restatement
1Underlying Operating Profit is before exceptional costs, amortisation of
intangible assets and share based payments
2 The calculation of the Adjusted Basic Earnings per Share is given in note 4.
3 Bank of England Total Mortgage Approval for 2009
4 Council of Mortgage Lenders data on repossession 2009.
5 Underlying Operating Margin is Group Operating Profit before exceptional
costs, amortisation and share based payments shown as a percentage of turnover
Commenting on today's announcement, Roger Matthews, Chairman said:
"The Group has made substantial progress in 2009, and ends the year in a much
stronger position in both the surveying and estate agency divisions. The
increase in underlying operating profits of 55% to GBP28.3m is an excellent
result given the continuing challenging market conditions.
Whilst the short term outlook for the market remains uncertain, the business is
significantly more robust through the cycle with a lower cost base, a larger
lettings portfolio, a growing asset management business and a surveying business
which has extended a number of key contracts and grown its market share. As a
result , the Group is well positioned to deliver further increases in
profitability when the market recovers.
Longer term, the underlying macroeconomic conditions in the housing market
remain positive. The Group has a strong balance sheet with net debt of GBP25.7m
against an available facility of GBP75m. This, together with the cash generative
nature of the business, means that the Group is well placed to respond to
further acquisition opportunities which may arise as a result of market
conditions."
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 | 020 7466 5000 |
+--------------------------------------------+----------------+
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
We are delighted to report a strong increase in underlying operating profits of
55% to GBP28.3m in the year. Both our Surveying and Estate Agency divisions have
further enhanced their market positions and are well placed for longer term
growth. Surveying has extended a number of contracts with key clients and Estate
Agency has benefited from significant cost reductions and from the rapid growth
of its counter-cyclical income streams, in particular lettings and asset
management.
The above results demonstrate the Group's resilience despite transaction volumes
continuing to be at a relatively low point in the cycle. Transaction volumes
did improve in the second half of 2009 leading to a growth in mortgage approvals
for house purchase of 16% to 597,000 for the full year, against an historic norm
of in excess of 1.2m per annum. Total mortgage approvals declined by 34% in
2009, reflecting a significant reduction in re-mortgages.
The acquisition of the Halifax Estate Agencies Limited ("HEAL") which completed
on 15 January 2010, adds 206 branches to the agency network, and presents
further scale opportunities for the Group. This acquisition establishes LSL as
the second largest Estate Agency business in the United Kingdom.
Financial results
Group revenue declined by 2.5% to GBP157.7m (2008: GBP161.8m). However, the
Underlying Operating Profit has increased by 55% from GBP18.2m to GBP28.3m,
reflecting an increase in the Underlying Operating Profit margin from 11.3% to
17.9%. Operating costs were down by 10% from GBP144.3m to GBP129.9m.
The Estate Agency business delivered a significant turnaround moving from an
Underlying Operating loss of GBP8.4m to a profit of GBP6.7m. This is an
excellent performance against a back drop of a market which still remains at 50%
of the historic norms in housing transaction volumes and demonstrates the
benefits of a lower cost base and significant growth in counter cyclical income
streams.
The Surveying business has significantly outperformed the market, with turnover
down by only 12% against an overall 34% decline in mortgage approvals. However,
the result has been impacted by the materially lower levels of re-mortgage
activity and the lower volumes in our Barnwoods operation, resulting in
Underlying Operating Profit reducing from GBP28.6m to GBP23.5m.
The Group generated significant cash from operations in 2009 and as a result net
debt was reduced from GBP49.2m to GBP25.7m. This resulted in a reduction in net
finance costs from GBP4.0m to GBP2.2m. Exceptional costs were minimal in 2009 at
GBP0.4m (2008: GBP8.2m), resulting in an overall profit before tax and
amortisation of GBP25.2m (2008: GBP5.0m). Amortisation during the year was
GBP8.6m (2008: GBP10.1m), giving a profit before tax of GBP16.6m (2008: loss of
GBP5.1m). The profit after tax was GBP11.7m (2008: loss of GBP4.8m).
The adjusted earnings per share was 18.1p (2008: 9.4p)
On the basis of the strong operating performance during the year, the reduction
in net debt and the prospects for continued growth longer term, the Board has
decided to resume dividend payments in line with our previously stated dividend
policy. The policy, which stipulates dividends of between 30% to 40% of profit
after tax, reflects the cash generative nature of the business, the long term
earnings potential of the Group and the opportunities to invest in organic
growth and growth through selective acquisitions.
As a consequence, the Board has declared an interim dividend payable for 2009 of
5.4 pence per share, effectively replacing any final dividend payable. The
dividend will be paid on 31 March 2010 to shareholders on the register at 10
March 2010, with a Record Date of 12 March 2010.
Our Surveying division has made strong progress during the year and strengthened
its market position. It has continued its excellent track record of extending
contracts with its key clients. This includes extending the contract with
Barclays for a further two years and the recently announced five year expanded
contract with Santander, which commenced on 1 December 2009. This contract
significantly expands the volume of surveying services to be provided to the
Santander Group and includes the transfer of the remaining Santander operational
surveyors into e.surv. The contract is expected to make a significant
contribution to profitability in 2010, providing an excellent opportunity to
drive further operational efficiencies across the Surveying division.
Barnwoods' exclusive panel management contract with C&G continues to be a
material contract for the Surveying division. Turnover in 2009 declined in line
with the market, however there continues to be some uncertainty over the
mortgage branding strategy of Lloyds Banking Group, which may impact Barnwoods'
volumes.
Our Estate Agency division has continued to focus on growing counter-cyclical
income streams. Lettings income from our core brands has increased by 24% to
GBP19.6m. Our Corporate Client Department ("LSL CCD"), which provides
repossession asset management and corporate lettings services has had an
excellent year, securing a number of new contracts and has contributed
significantly to profits. These services were launched at the start of 2008, and
in favourable market conditions have generated income of GBP9.3m in 2009 (2008:
GBP1.8m). LSL CCD is an example of the Group developing new counter-cyclical
earning streams, as evidenced by asset management which has grown from a
standing start in 2008 to a 17% market share in Q4 2009. This will be
strengthened further in 2010 by St Trinity, our asset management business, set
up following the acquisition of HEAL.
The Group's acquisition of HEAL, which completed on 15 January 2010, is a
transformational deal for our Estate Agency division: acquiring 206 high quality
branches, an established asset management business and a pipeline of sales on
favourable commercial terms at a low point in the economic cycle. The
re-branding of the 206 branches to Your Move, Reeds Rains and Inter-County
brands will strengthen LSL's Estate Agency position in local markets. LSL
acquired HEAL for GBP1, which had proforma net assets at 31 December 2008 of
GBP38.4m, and at completion had cash of GBP25.9m to cover restructuring and
rebranding costs. The acquisition is expected to be cash positive in 2010 and
make a significant contribution when more normal market conditions resume.
We are pleased to report that all significant project milestones relating to the
integration of HEAL have been achieved. This includes the re-branding of all
branches, the implementation of our systems, the back-office service integration
and restructuring of the entire HEAL operation. A significant level of targeted
run-rate cost savings have been achieved and the focus in 2010 is on growing
market share and maximising income opportunities such as lettings.
The Board was strengthened by the appointment of Mark Pain on 1 July 2009 as a
Non-Executive Director and as Chairman of the Remuneration Committee. Mark has
considerable experience in the residential property market and financial
services industry, having held senior public company Board positions at Barratt
Development plc and Abbey National. Mark is currently a Non-Executive Director
of Johnston Press plc, Punch Taverns plc and Northern Rock plc and is a welcome
addition to the Board. He will add a valuable contribution to the growth and
development of the business. Mark Warburton resigned on 1st July 2009 to
concentrate on other business interests and we wish Mark well for the future.
Paul Latham has announced his retirement from the Board as Executive Director,
Surveying division with effect from 31st May 2010. However, Paul has agreed to
stay on as a Non- Executive Director so we can continue to benefit from his
expertise and industry knowledge. In addition, it is our intention to appoint a
further independent non-executive director during the course of the year.
Alison Traversoni, will replace Paul as Executive Director, Surveying division
and will be appointed to the Board on 31 May 2010. In addition, David Newnes,
currently Managing Director of Your Move, will also be appointed to the Board on
31 May 2010 as Managing Director of the Estate Agency division. Alison and David
have significant industry experience and both have been part of the senior
management team since the MBO in 2004 and have contributed to the success of the
Group.
People
I would like to welcome all new employees to the Group in a period where there
have been significant additions to the Group through both the Santander contract
and the HEAL acquisition.
LSL is a people business and as such we are reliant on the commitment and
enthusiasm of our employees on whom we depend to provide the high level of
service that we strive to achieve for our customers.
LSL operates two employee share schemes, a Save As You Earn and a Buy As You
Earn, offering employees the opportunity to share in the future success of LSL.
The 2007 SAYE scheme matured in January 2010 at an option price of GBP1.74 per
share.
A number of senior management employees, including the Executive Directors,
currently own approximately 32 % of LSL (2008: 31%). The interests of these
senior managers and directors are closely aligned with the interests of other
shareholders.
I would also like to thank everyone in the business for making the year a great
success in market conditions which remain challenging, and in particular thank
everyone involved in the acquisition and integration of HEAL, which has been a
huge effort and a great success to date as well as an important transformational
acquisition for the Group.
Current Trading & Outlook
The Group has made substantial progress in 2009 and ends the year in a much
stronger position in both the surveying and estate agency divisions. The
increase in underlying operating profits of 55% to GBP28.3m is an excellent
result given the continuing challenging market conditions.
Despite the increase in house purchase transaction volumes in the second half of
2009, overall volumes remained at half of historic norms. The longer term
underlying macroeconomic conditions in the housing market remain positive and
the Group is extremely well placed to deliver growth.
The short term outlook for the market remains uncertain. The continued shortage
of available mortgage finance and the impact of fiscal tightening on consumer
spending may impact the timing of any recovery. However, the business is
significantly more robust through the cycle with a lower cost base, a larger
lettings portfolio, a growing asset management business and a surveying business
which has extended a number of key contracts and grown its market share. As a
result, the Group is well positioned to deliver further increases in
profitability when the market recovers further.
Activity to the end of February is in line with our expectations and reflects a
continuation of run-rates in the second half of 2009.
The Group has a strong balance sheet with net debt of GBP25.7m against an
available facility of GBP75m. This, together with the cash generative nature of
the business, means that the Group is well placed to respond to further
acquisition opportunities which may arise as a result of market conditions.
Roger Matthews
3 March 2010
Business Review & Directors' Report
Introduction
LSL provides a broad range of services to its two key customer groups, who are
mortgage lenders and private consumers. The Group provides various property
services to consumers including estate agency, lettings, valuation, surveying,
and advice on mortgages and non-investment insurance products. The Group also
provides mortgage lenders with surveys and panel management services, asset
management and property management services and also refers mortgage business
from its private customers to mortgage lenders.
Key Strengths
LSL has the following key strengths:
· It is one of the leading residential property services groups in the UK
· LSL has demonstrated some resilience against the cycles of the housing
market, largely due to the performance of its surveying division and the level
of counter-cyclical business in estate agency.
· Since the 15 January 2010 the estate agency division has a network of 575
branches, making it the second largest estate agency business in the UK
· The Group is strongly cash generative with low capital expenditure of
GBP0.7m (2008: GBP1.0m) and in spite of the unprecedented market conditions has
generated net cash inflow from operating activities of GBP24.6m (2008: GBP3.2m)
· The current Executive Directors have been with the Group since 2001 and
have a track record of improving profitability as a result of organic growth and
a number of successful acquisitions since 2004.
Strategy
The Group's strategy is to grow long term profitability in the provision of
residential property services in the United Kingdom and to continue to develop
counter-cyclical income streams that will strengthen its ability to trade
successfully through market downturns.
Profit growth will be achieved through surveying by continuing the development
of strong relationships with lenders and maintaining service excellence in order
to continue to drive market share. Profitable growth will be achieved in the
Estate Agency division by continuing to provide a service proposition that
recognises the customers' needs and maximises income across the value chain.
In addition, LSL continues to review opportunities for organic growth and will
continue to assess value creating acquisition opportunities in residential
property services throughout 2010.
The market backdrop provides significant opportunities for market share growth
for well capitalised and managed businesses across the estate agency and
surveying segments. Overall, LSL continues to be well placed to benefit from a
recovery in the UK housing market.
LSL's Corporate Asset Management business comprising its Corporate Client
Department and St Trinity will look to continue growing market share through
innovative solutions and strong service delivery.
Principal Risks & Uncertainties
The Board continues to identify, evaluate and manage material risks and
uncertainties which could adversely affect the business, operating results and
financial condition of LSL. These risks are recorded and managed through a risk
register, and the principal risks and uncertainties identified are:
* The continued volatility and uncertainty of the UK housing market. In
particular, transaction volumes (both house purchase and remortgage), house
prices and the availability of credit which will adversely affect the
profitability and cash flow of all our key brands and businesses.
* Loss of any licences or permissions necessary for the performance of the Group
business.
* Liability for inaccurate professional services advice to clients (e.g.
inaccurate valuations). This risk and the level of Professional Indemnity claims
has increased significantly as a result of an increased level of repossessions.
Associated with this risk is LSL's ability to maintain appropriate risk
management arrangements
* Loss of key surveying or asset management clients or contracts at their
renewal date or significant reduction in volumes, either as a result of adverse
market conditions, market consolidation, competition or inadequate service
delivery.
* The reputation and profitability of LSL could be adversely affected by the
actions of one or a limited number of employees or franchisees.
* Failure or interruptions of information technology services on which the Group
is reliant for operational performance and financial information.
* 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.
* Changes in legislation or regulation (for example HIPs) may impact on business
results or the UK housing market in general.
* The significant increase in the size of the estate agency branch network
changes the operational gearing of the Group.
* Our ability to renew banking facilities as they fall due as a result of
constraints in the banking market.
Further information relating to the management of these risks and uncertainties
is set out in the Corporate Governance Review (Internal Controls) of the Annual
Report.
Business Review & Directors' Report - Surveying Division
+------------------------------------+--------+--------+--------+
| | | | |
| Financial | 2009 | 2008 | % |
| | | | change |
+------------------------------------+--------+--------+--------+
| | | | |
+------------------------------------+--------+--------+--------+
| | GBPm | GBPm | |
+------------------------------------+--------+--------+--------+
| Turnover | 70.0 | 80.0 | -13% |
+------------------------------------+--------+--------+--------+
| Expenditure | -46.5 | -51.4 | -10% |
+------------------------------------+--------+--------+--------+
| Underlying Operating Profit | 23.5 | 28.6 | -18% |
+------------------------------------+--------+--------+--------+
| | | | |
+------------------------------------+--------+--------+--------+
| KPIs | | | |
+------------------------------------+--------+--------+--------+
| | | | |
+------------------------------------+--------+--------+--------+
| Profit margin % | 34% | 36% | -2% |
+------------------------------------+--------+--------+--------+
| Jobs performed 000s | 439 | 461 | -5% |
+------------------------------------+--------+--------+--------+
| Income per job GBP | 159 | 174 | -9% |
+------------------------------------+--------+--------+--------+
| Professional Indemnity Insurance | 7.5 | 5.6 | |
| provision GBPm | | | |
+------------------------------------+--------+--------+--------+
| | | | |
+------------------------------------+--------+--------+--------+
| | | | |
+------------------------------------+--------+--------+--------+
Surveying Division Performance
The Surveying division has significantly outperformed the market delivering
profits of GBP23.5m (2008: GBP28.6m) and a profit margin of 34% in 2009 (2008:
36%)
Reflecting the strength of its market position total job numbers of all types
fell by only 5% to 439,000 (2008: 461,000) in the face of a 34% decline in
mortgage approvals to 1.34m (2008: 1.98m).
As a result of significant focus on productivity and cost saving initiatives
commenced in 2008 but continued throughout 2009 the cost base has been reduced
by 10% from GBP51.4m to GBP46.5m. These cost savings were achieved despite an
overall increase in Professional Indemnity Insurance provisioning of GBP1.9m,
reflecting the rise in the number of repossessions.
During the year, the residential surveying division extended its contract to
supply exclusive UK panel residential survey management services to Abbey
National plc and Alliance & Leicester plc, who are both members of the Santander
group of companies ("Santander") through an arrangement which saw the transfer
of the remaining operational surveying staff into e.surv. This 5 year contract
effective from 1 December 2009 consolidates the current outsourced service
supply arrangement already partly administered by e.surv for the provision of
surveying services to Santander. The contract is expected to enhance earnings
significantly as it provides an excellent opportunity to further leverage the
surveying assets across the Group.
The C&G contract in Barnwoods' remains a material contract for the division.
Turnover has reduced from GBP21.7m in 2008 to GBP15.5m in 2009 due to lower
remortgage activity generally and also due to the new mortgage strategy
implemented since Lloyds Banking Group's acquisition of HBOS.
In line with market conditions and the level of repossessions, Professional
Indemnity Insurance remains a key risk for the Surveying division. As a result
the Group has increased its Professional Indemnity Provision from GBP5.6m to
GBP7.5m.
Lender Relationships & Service Quality
LSL's surveying division has panel management arrangements with a significant
number of lenders. A number of these arrangements are exclusive and they will
involve the servicing and distribution of valuation instructions to these
lenders' own teams of employed surveyors and/or other valuation providers. LSL
has strong relationships with these lenders.
Service and quality is a significant factor in maintaining relationships with
these lenders and in seeking to win new panel management contracts. An example
of this was e.surv winning the Mortgage Strategy Awards 2010 Best
Surveyor/Valuer category.It also differentiates LSL's surveying division from
its competitors. One of the key factors that lenders use in assessing service
is turnaround time for valuation instructions. LSL's turnaround time is
consistently better than many of its competitors, largely as a result of the
flexibility of the panel management model and its use of sophisticated
technology.
Competition
LSL's major competitors in the surveying market are principally other national
estate agency chains which provide panel management services, such as
Countrywide and Connells. While Automated Valuation Models (AVMs) are a
competitor to traditional valuation methods, their use in the current market is
under careful review by lenders.
Business Review & Directors' Report - Estate Agency Division
The Estate Agency business delivered a significant turnaround moving from an
Underlying Operating loss of GBP8.4m to a profit of GBP6.7m.
+-----------------------+---------------------+-------+--------+
| | 2009 | 2008 | |
+-----------------------+---------------------+-------+--------+
| | GBPm | GBPm | % |
| | | | change |
+-----------------------+---------------------+-------+--------+
| Total income | 87.7 | 81.7 | 7% |
+-----------------------+---------------------+-------+--------+
| Expenditure | -81.0 | -90.1 | -10% |
+-----------------------+---------------------+-------+--------+
| Underlying Operating | 6.7 | -8.4 | 180% |
| Profit | | | |
+-----------------------+---------------------+-------+--------+
| | | | |
+-----------------------+---------------------+-------+--------+
| | | | |
+-----------------------+---------------------+-------+--------+
| KPIs | | | |
+-----------------------+---------------------+-------+--------+
| Exchange units | 14815 | 13682 | 8% |
+-----------------------+---------------------+-------+--------+
| | | | |
+-----------------------+---------------------+-------+--------+
| | GBPm | GBPm | |
+-----------------------+---------------------+-------+--------+
| Exchange fees* | 28.1 | 28.6 | -2% |
+-----------------------+---------------------+-------+--------+
| Financial Services | 11.0 | 14.7 | -25% |
| Income* | | | |
+-----------------------+---------------------+-------+--------+
| Lettings income* | 19.6 | 15.8 | 24% |
+-----------------------+---------------------+-------+--------+
| Asset Management | 9.3 | 1.8 | 417% |
| income | | | |
+-----------------------+---------------------+-------+--------+
| Other income | 19.7 | 20.8 | -5% |
+-----------------------+---------------------+-------+--------+
*these figures reflect Your Move and Reeds Rains only
· Strong established high street brands and, with 575 branches, LSL is ranked
second largest in the UK by Estate Agency News (January 2010)
· Strong and growing counter-cyclical income streams, such as the generation
of lettings and asset management income.
· Growing repossessions asset management business with a strong service ethos
· Highly profitable business in normal market conditions
· Technically advanced proprietary browser based IT systems (including
Preview and Quicklet) with one IT solution across all brands, providing a
customer relationship management ability to sell income streams on an automated
basis
· Successful franchise model
· www.your-move.co.uk-the number 1 UK estate agency branded website by
Hitwise (February 2010)
The Estate Agency business delivered a significant turnaround in 2009. This was
supported by a stronger than anticipated level of housing transactions in the
second half of 2009, but still reflected housing transactions at a relative low
(597,000 mortgage approvals as opposed to a normal annualised level of 1.2m
approvals). The cost actions taken in 2008 resulted in a 10% reduction in
expenditure from GBP90.1m to GBP81.0m. Estate Agency exchange income was
maintained at its 2009 levels, but counter cyclical income from lettings and
asset management continued to grow significantly. The decline in FS income
reflected the overall decline in mortgage approvals - and the company's focus on
reducing the cost base. The numbers of mortgage advisers and the quantum of
financial services income are expected to increase in 2010. Overall we are
delighted with the turnaround achieved by the Estate Agency segment.
The main drivers of estate agency revenue are:
* Exchange fee income, which is linked to housing transaction volumes, house
prices and commission rates
* Franchising income, which is generated from initial deposits on new openings,
a monthly service fee of 8% of turnover, plus charges for the provision of IT
services
* Lettings income, which is generated from providing a range of services to
landlords and tenants.
* Additional commission income generated through the sale of general insurance,
conveyancing services, HIPS, Home Reports, utilities and other products and
services to clients of the branch network
* Financial services income
* Repossession Asset Management income
LSLi
This business was launched in early 2007 and is the primary vehicle through
which LSL has pursued its strategy to acquire small to medium independent Estate
Agency businesses. At 31 December 2009 it operated a network of 18 branches
(2008: 15 branches) based in the Home Counties under the following strong local
brands:
* ICIEA Limited, trading as "Intercounty" (11 branches 2008: 8 branches)
* David Frost Estate Agents Limited, trading as "Frosts" with (3 branches 2008:
3 branches)
* JNP (Estate Agents) Limited, trading as "The JNP Partnership" with 4 branches
(2008: 4 branches)
LSL's Estate Agency businesses place strong emphasis on the quality of service
they provide to customers and are founder members of the Property Ombudsman
Scheme. As such our businesses undertake to follow the Code of Practice for
Residential Estate Agents, which has been approved by the Office of Fair Trading
and exceeds the legal requirements of the Consumers, Estate Agents and Redress
Act 2007 (CEARA). All branch based employees of the Estate Agency business
complete a specially designed training programme and the quality of service is
monitored on a monthly basis.
Awards
During the year both Your Move and Reeds Rains won several major industry
service awards. Your Move won the Gold Award for the Best Large Estate Agency of
the Year, the Gold Award for the Best Large Lettings Agency of the Year, a
Silver Award for the Best Financial Services and the Gold Award for the Best
Technology and Web, in the Sunday Times, Estate Agency of the Year Awards 2009.
Reeds Rains won the Gold award for Innovation and a Bronze award for Best
Financial Services in the Sunday Times, Estate Agency of the Year Awards 2009, a
particularly impressive achievement as it was the first time they had entered
the awards. Reeds Rains also won the Openwork network award for Best Large
Practice - General Insurance.
Your Move and First Complete are directly authorised by the FSA in relation to
the sale of mortgage, pure protection and general insurance products, while all
of the other estate agency businesses and Linear are appointed representatives
of Openwork. Reeds Rains is also an appointed representative of Letsure for the
sale of rent indemnity insurance. LSL's financial services business places
strong emphasis on the quality of service it provides to customers and all
advisers complete a specially designed comprehensive training programme which is
supplemented by effective supervision, regular monitoring and regular refresher
training sessions. As a result of Reeds Rains' and Linear's appointments by
Openwork, LSL through those companies has a small indirect shareholding of
Openwork.
LSL's major competitors in the estate agency market vary from national estate
agency chains such as Countrywide and Connells to local independent estate
agents. It is estimated that the top five estate agency chains, including LSL,
account for circa 20% of all estate agency branches in the UK, regional chains
account for a further 10%, and independents make up the rest.
As previously reported, we set up LSL Corporate Client Department (a trading
name of First Complete), our repossessions asset manager at the start of 2008.
The Corporate Client Department, which provides repossessions asset management
and corporate lettings services has had an excellent year securing a number of
new contracts and has contributed significantly to profits.
In addition LSL CCD has invested in a corporate residential property management
team focused on major landlords and aspiring multiple property landlords across
the UK, and which has successfully secured a number of key contracts during the
year. As a result, it is expected to support the continued growth of lettings
income across the estate agency brands in 2010. This is another example of the
Group investing and growing its counter-cyclical income streams.
St Trinity
The repossession asset management business established as part of the
acquisition of HEAL will provide the Group with additional counter-cyclical
income streams.
The key drivers of the financial performance of LSL are summarised below.
Revenue
Revenue fell by 2.5% in the year ended 31 December 2009 from GBP161.8m to
GBP157.7m reflecting the ongoing market conditions.
Underlying Operating Profit was GBP28.3m (2008: GBP18.2m) with the Underlying
Operating Profit margin up 11.3% to 17.9%.
Exceptional costs in the year ended 31 December 2009 amounted to GBP0.4m (2008:
GBP8.2m)
Net financial costs amounted to GBP2.2m (2008: GBP4.0m)
The effective rate of corporation tax after excluding the effect of the deferred
tax adjustment to goodwill for the year is 29.3% (2008: 11.7%)
The Adjusted Basic Earnings Per Share (as calculated in note 4) is 18.1p (2008:
9.4p). The directors consider this provides a better and more consistent
indicator of the Group's underlying performance.
Total capital expenditure in the year amounted to GBP0.7m (2008: GBP1.0m). The
capital expenditure predominantly comprised fixtures, fittings and computer
equipment.
As at 31 December 2009 net debt was GBP25.7m (2008: GBP49.2m). LSL has a GBP75m
revolving credit facility in place (2008: GBP75m).
The business is cash generative and has low capital expenditure requirements.
The Group generated net cash from operations of GBP24.6m (2008: GBP3.2m). The
improved cash generation is due principally to an increase in profitability, the
lower level of exceptional costs incurred and a positive movement in working
capital of GBP1.1m.
The net assets as at 31 December 2009 were GBP45.9m (2008: GBP33.7m).
LSL has an active debt management policy and had purchased an interest rate cap,
which expired in August 2009 and restricted LIBOR to 6% on GBP30.0m of debt. In
addition, LSL entered into three interest rate swap agreements in April and May
2009 to protect itself against an increase in interest rates in the future for
GBP25m of the Group's bank borrowings based on the forecast utilisation of the
borrowing facilities over the period of the hedge. The interest rate swap
agreements restrict the LIBOR to 2.93% until April and May 2014. LSL does not
hold or issue derivatives or other financial instruments for trading purposes.
International Financial Reporting Standards (IFRS)
The Financial Statements have been prepared under IFRS as adopted by the
European Union. LSL commenced reporting under IFRS from 1 January 2005.
Group Income Statement
For the year ended 31 December 2009
+------------------------------------------+------+-----------+-----------+
| | | 2009 | 2008 |
+------------------------------------------+------+-----------+-----------+
| | | | restated* |
+------------------------------------------+------+-----------+-----------+
| |Note | GBP'000 | GBP'000 |
+------------------------------------------+------+-----------+-----------+
| | | | |
+------------------------------------------+------+-----------+-----------+
| Revenue | 2 | 157,703 | 161,773 |
+------------------------------------------+------+-----------+-----------+
| | | | |
+------------------------------------------+------+-----------+-----------+
| Operating expenses: | | | |
+------------------------------------------+------+-----------+-----------+
| Employee and subcontractor costs | | 80,100 | 88,912 |
+------------------------------------------+------+-----------+-----------+
| Establishment costs | | 10,991 | 12,485 |
+------------------------------------------+------+-----------+-----------+
| Depreciation on property, plant and | | 1,407 | 2,299 |
| equipment | | | |
+------------------------------------------+------+-----------+-----------+
| Other | | 37,374 | 40,638 |
+------------------------------------------+------+-----------+-----------+
| | | (129,872) | (144,334) |
+------------------------------------------+------+-----------+-----------+
| | | | |
+------------------------------------------+------+-----------+-----------+
| Rental income | | 488 | 765 |
+------------------------------------------+------+-----------+-----------+
| | | | |
+------------------------------------------+------+-----------+-----------+
| Group operating profit before | | | |
| exceptional costs, amortisation and | 2 | 28,319 | 18,204 |
| share-based payments | | | |
+------------------------------------------+------+-----------+-----------+
| | | | |
+------------------------------------------+------+-----------+-----------+
| Share-based payments | | (532) | (1,551) |
+------------------------------------------+------+-----------+-----------+
| Amortisation of intangible assets | | (8,635) | (10,111) |
+------------------------------------------+------+-----------+-----------+
| Exceptional costs | 3 | (400) | (7,735) |
+------------------------------------------+------+-----------+-----------+
| | | | |
+------------------------------------------+------+-----------+-----------+
| Group operating profit/(loss) | | 18,752 | (1,193) |
+------------------------------------------+------+-----------+-----------+
| | | | |
+------------------------------------------+------+-----------+-----------+
| Dividend income | | 24 | 334 |
+------------------------------------------+------+-----------+-----------+
| Finance income | | 54 | 190 |
+------------------------------------------+------+-----------+-----------+
| Finance costs | | (2,221) | (4,035) |
+------------------------------------------+------+-----------+-----------+
| Exceptional finance costs | 3 | - | (432) |
+------------------------------------------+------+-----------+-----------+
| Net financial costs | | (2,143) | (3,943) |
+------------------------------------------+------+-----------+-----------+
| | | | |
+------------------------------------------+------+-----------+-----------+
| Profit/(loss) before tax before | | 16,609 | (5,136) |
| adjustment to goodwill | | | |
+------------------------------------------+------+-----------+-----------+
| | | | |
+------------------------------------------+------+-----------+-----------+
| Adjustment to goodwill in respect of | | - | (1,048) |
| subsequent recognition of deferred tax | | | |
| asset | | | |
+------------------------------------------+------+-----------+-----------+
| Profit/(loss)before tax | | 16,609 | (6,184) |
+------------------------------------------+------+-----------+-----------+
| | | | |
+------------------------------------------+------+-----------+-----------+
| Taxation | | | |
+------------------------------------------+------+-----------+-----------+
| - related to exceptional costs | | 112 | 2,022 |
+------------------------------------------+------+-----------+-----------+
| - others | | (4,974) | (600) |
+------------------------------------------+------+-----------+-----------+
| | | (4,862) | 1,422 |
+------------------------------------------+------+-----------+-----------+
| Profit/(loss) for the year * | | 11,747 | (4,762) |
+------------------------------------------+------+-----------+-----------+
| | | | |
+------------------------------------------+------+-----------+-----------+
| | | | |
+------------------------------------------+------+-----------+-----------+
| | | | |
+------------------------------------------+------+-----------+-----------+
| Earnings/(loss) per share expressed in | | | |
| pence per share: | | | |
+------------------------------------------+------+-----------+-----------+
| Basic | 4 | 11.4 | (4.6) |
+------------------------------------------+------+-----------+-----------+
| Diluted | 4 | 11.4 | (4.6) |
+------------------------------------------+------+-----------+-----------+
* Restatement of 2008 figures is due to the adoption of IFRS 2 (Amendment) which
increased the share-based payment charge and the loss for the year by
GBP1,413,000. See note 1 for details.
Group Statement of Comprehensive Income
For the year ended 31 December 2009
+------------------------------------------+------+----------+-----------+
| | | 2009 | 2008 |
| | | | restated* |
+------------------------------------------+------+----------+-----------+
| | Note | GBP'000 | GBP'000 |
+------------------------------------------+------+----------+-----------+
| | | | |
+------------------------------------------+------+----------+-----------+
| Profit/(loss) for the year | | 11,747 | (4,762) |
+------------------------------------------+------+----------+-----------+
| | | | |
| Valuation losses on available-for-sale | | - | (1,600) |
| investments | | | |
+------------------------------------------+------+----------+-----------+
| | | | |
+------------------------------------------+------+----------+-----------+
| | | | |
+------------------------------------------+------+----------+-----------+
| Net loss on cash flow hedge | | (87) | - |
+------------------------------------------+------+----------+-----------+
| Income tax effect | | 24 | - |
+------------------------------------------+------+----------+-----------+
| | | (63) | - |
+------------------------------------------+------+----------+-----------+
| Other comprehensive loss for the year, | | (63) | (1,600) |
| net of tax | | | |
+------------------------------------------+------+----------+-----------+
| | | | |
+------------------------------------------+------+----------+-----------+
| Total comprehensive income/(loss) for | | 11,684 | (6,362) |
| the year, net of tax** | | | |
+------------------------------------------+------+----------+-----------+
| | | | |
+------------------------------------------+------+----------+-----------+
| **all attributable to equity holders of | | | |
| the parent | | | |
+------------------------------------------+------+----------+-----------+
* the details of the restatement of the 2008 figures are given in note 1.
Group balance sheet
As at 31 December 2009
+----------------------------------------+------+---------+-----------+
| | | 2009 | 2008 |
| | | | restated* |
+----------------------------------------+------+---------+-----------+
| |Note | GBP'000 | GBP'000 |
+----------------------------------------+------+---------+-----------+
| | | | |
+----------------------------------------+------+---------+-----------+
| Non-current assets | | | |
+----------------------------------------+------+---------+-----------+
| Goodwill | | 66,472 | 66,422 |
+----------------------------------------+------+---------+-----------+
| Other intangible assets | | 22,895 | 31,413 |
+----------------------------------------+------+---------+-----------+
| Property, plant and equipment | | 2,077 | 2,841 |
+----------------------------------------+------+---------+-----------+
| Financial assets | | 4,052 | 4,052 |
+----------------------------------------+------+---------+-----------+
| Deferred tax assets | | 621 | - |
+----------------------------------------+------+---------+-----------+
| Total non-current assets | | 96,117 | 104,728 |
+----------------------------------------+------+---------+-----------+
| | | | |
+----------------------------------------+------+---------+-----------+
| Current assets | | | |
+----------------------------------------+------+---------+-----------+
| Trade and other receivables | | 20,052 | 13,924 |
+----------------------------------------+------+---------+-----------+
| Current tax assets | | - | 255 |
+----------------------------------------+------+---------+-----------+
| Cash and cash equivalents | | 858 | 647 |
+----------------------------------------+------+---------+-----------+
| Total current assets | | 20,910 | 14,826 |
+----------------------------------------+------+---------+-----------+
| Total assets | | 117,027 | 119,554 |
+----------------------------------------+------+---------+-----------+
| | | | |
+----------------------------------------+------+---------+-----------+
| Current liabilities | | | |
+----------------------------------------+------+---------+-----------+
| Financial liabilities | | 993 | 1,273 |
+----------------------------------------+------+---------+-----------+
| Trade and other payables | | 33,209 | 27,564 |
+----------------------------------------+------+---------+-----------+
| Current tax liabilities | | 2,183 | - |
+----------------------------------------+------+---------+-----------+
| Provisions for liabilities and charges | | 748 | 1,195 |
+----------------------------------------+------+---------+-----------+
| Total current liabilities | | 37,133 | 30,032 |
+----------------------------------------+------+---------+-----------+
| | | | |
+----------------------------------------+------+---------+-----------+
| Non-current liabilities | | | |
+----------------------------------------+------+---------+-----------+
| Financial liabilities | 7 | 25,573 | 48,611 |
+----------------------------------------+------+---------+-----------+
| Trade and other payables | | 27 | 39 |
+----------------------------------------+------+---------+-----------+
| Deferred tax liability | | - | 557 |
+----------------------------------------+------+---------+-----------+
| Provisions for liabilities and charges | | 8,437 | 6,586 |
+----------------------------------------+------+---------+-----------+
| Total non-current liabilities | | 34,037 | 55,793 |
+----------------------------------------+------+---------+-----------+
| Net assets | | 45,857 | 33,729 |
+----------------------------------------+------+---------+-----------+
| | | | |
+----------------------------------------+------+---------+-----------+
| Equity | | | |
+----------------------------------------+------+---------+-----------+
| Share capital | | 208 | 208 |
+----------------------------------------+------+---------+-----------+
| Share premium account | | 5,629 | 5,629 |
+----------------------------------------+------+---------+-----------+
| Share-based payment reserve | | 2,259 | 1,944 |
+----------------------------------------+------+---------+-----------+
| Treasury shares | | (2,805) | (2,934) |
+----------------------------------------+------+---------+-----------+
| Unrealised gain reserve | | 3,900 | 3,900 |
+----------------------------------------+------+---------+-----------+
| Hedging loss | | (63) | - |
+----------------------------------------+------+---------+-----------+
| Retained earnings | | 36,729 | 24,982 |
+----------------------------------------+------+---------+-----------+
| Total equity | | 45,857 | 33,729 |
+----------------------------------------+------+---------+-----------+
* Restatement of 2008 figures is due to the adoption of IFRS 2 (Amendment) which
reduced the retained earnings by GBP1,413,000. See note 1 for details.
Group cash flow statement
For year ended 31 December 2009
+----------------------------+------+----------+---------+---------+-+---------+---------+
| | | | 31 Dec | | 31 Dec |
| | | | 2009 | | 2008 |
| | | | | | restated* |
+----------------------------+------+----------+-------------------+-+-------------------+
| | Note | | GBP'000 | GBP'000 | | GBP'000 | GBP'000 |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Cash generated from | | | | | | | |
| operating activities | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Profit/(loss) before tax | | | | 16,609 | | | (6,184) |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Adjustments to reconcile | | | | | | | |
| profit/(loss) before tax | | | | | | | |
| to net cash inflows from | | | | | | | |
| operating activities | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Amortisation of intangible | | | 8,635 | | | 10,111 | |
| assets | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Dividend income | | | (24) | | | (334) | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Finance income | | | (54) | | | (190) | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Finance costs | | | 2,221 | | | 4,035 | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Share-based payments | | | 574 | | | 1,551 | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Adjustment in relation to | | | - | | | 1,048 | |
| deferred tax asset | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| | | | | 11,352 | | | 16,221 |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Group operating profit | | | | | | | |
| before amortisation and | | | | 27,961 | | | 10,037 |
| share-based payments | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Depreciation | | | 1,407 | | | 2,299 | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Impairment of goodwill | | | 126 | | | 1,036 | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Impairment of intangible | | | - | | | 38 | |
| assets | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Gain on sale of property, | | | 6 | | | 419 | |
| plant and equipment | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| | | | 1,539 | | | 3,792 | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| (Increase)/decrease in | | | | | | | |
| trade and other | | | (6,128) | | | 7,663 | |
| receivables | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Increase/(decrease)in | | | | | | | |
| trade and other payables | | | 7,233 | | | (9,152) | |
| and provisions | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| | | | | 2,644 | | | 2,303 |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Cash generated from | | | | 30,605 | | | 12,340 |
| operations | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Interest paid | | | (2,397) | | | (3,993) | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Tax paid | | | (3,578) | | | (5,126) | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| | | | | (5,975) | | | (9,119) |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Net cash generated from | | | | 24,630 | | | 3,221 |
| operating activities | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Cash flows from investing | | | | | | | |
| activities | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Purchase of subsidiary | | | | | | | |
| undertakings, minority | | | (150) | | | (276) | |
| interest and commercial | | | | | | | |
| business | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Interest received | | | 54 | | | 190 | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Dividends received | | | 24 | | | 334 | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Purchase of property, | | | (662) | | | (1,043) | |
| plant and equipment | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Proceeds from sale of | | | | | | | |
| property, plant and | | | 13 | | | 84 | |
| equipment | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Purchase of available for | | | - | | | (2) | |
| sale financial assets | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| Net cash expended on | | | | (721) | | | (713) |
| investing activities | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| | | | | 23,909 | | | 2,508 |
+----------------------------+------+----------+---------+---------+-+---------+---------+
| | | | | | | | |
+----------------------------+------+----------+---------+---------+-+---------+---------+
Group cash flow statement
For year ended 31 December 2009
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| | | | 31 Dec 2009 | 31 Dec 2008 |
| | | | | restated* |
+----------------------------+------+----------+---------------------+------------------------------+
| | Note | | GBP'000 | GBP'000 | | GBP'000 | GBP'000 |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| | | | | | | | |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| Net cash from operating | | | | 23,909 | | | 2,508 |
| activities less cash | | | | | | | |
| expended on investing | | | | | | | |
| activities | | | | | | | |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| | | | | | | | |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| Cash flows from financing | | | | | | | |
| activities | | | | | | | |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| Repayment of loans | | | (23,698) | | | - | |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| Proceeds from loans | | | - | | | 44 | |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| Purchase of treasury | | | - | | | (265) | |
| shares | | | | | | | |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| Dividends paid | | | - | | | (3,966) | |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| | | | | | | | |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| Net cash used in financing | | | | | | | |
| activities | | | | (23,698) | | | (4,187) |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| | | | | | | | |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| Net increase/(decrease) in | | | | | | | |
| cash and cash equivalents | | | | 211 | | | (1,679) |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| Cash and cash equivalents | | | | | | | |
| at the beginning of the | | | | 647 | | | 2,326 |
| year | | | | | | | |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
| Cash and cash equivalents | | | | | | | |
| at the end of the year | | | | 858 | | | 647 |
+----------------------------+------+----------+----------+----------+----------+---------+---------+
* the details of the restatement of the 2008 figures are given in note 1.
Group statement of changes in equity
Year ended 31 December 2009
+----------------+---------+----------+----------+-----------+------------+----------+-----------+---------+-----------+---------+
| | | | Share- | | | | | | | |
| | | Share | based | | Unrealised | | | | | |
| | Share | premium | payment | Treasury | gains | Hedging | Retained | Total | Minority | |
| | capital | account | reserve | shares | reserve | loss | earnings | equity | interest | Total |
+----------------+---------+----------+----------+-----------+------------+----------+-----------+---------+-----------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------+---------+----------+----------+-----------+------------+----------+-----------+---------+-----------+---------+
| At 1 January | 208 | 5,629 | 531 | (2,934) | 3,900 | - | 26,395 | 33,729 | - | 33,729 |
| 2009 | | | | | | | | | | |
+----------------+---------+----------+----------+-----------+------------+----------+-----------+---------+-----------+---------+
| Change in | | | | | | | | | | |
| accounting | - | - | 1,413 | - | - | - | (1,413) | - | - | - |
| policy | | | | | | | | | | |
| (note 1) | | | | | | | | | | |
+----------------+---------+----------+----------+-----------+------------+----------+-----------+---------+-----------+---------+
| Restated | 208 | 5,629 | 1,944 | (2,934) | 3,900 | - | 24,982 | 33,729 | - | 33,729 |
| balance | | | | | | | | | | |
+----------------+---------+----------+----------+-----------+------------+----------+-----------+---------+-----------+---------+
| Profit for the | - | - | - | - | - | - | 11,747 | 11,747 | - | 11,747 |
| year | | | | | | | | | | |
+----------------+---------+----------+----------+-----------+------------+----------+-----------+---------+-----------+---------+
| Other | - | - | - | - | - | (63) | - | (63) | - | (63) |
| comprehensive | | | | | | | | | | |
| loss | | | | | | | | | | |
+----------------+---------+----------+----------+-----------+------------+----------+-----------+---------+-----------+---------+
| Total | 208 | 5,629 | 1,944 | (2,934) | 3,900 | (63) | 36,729 | 45,413 | - | 45,413 |
| comprehensive | | | | | | | | | | |
| income | | | | | | | | | | |
+----------------+---------+----------+----------+-----------+------------+----------+-----------+---------+-----------+---------+
| Reissuance of | - | - | (109) | 129 | - | - | - | 20 | - | 20 |
| treasury | | | | | | | | | | |
| shares | | | | | | | | | | |
+----------------+---------+----------+----------+-----------+------------+----------+-----------+---------+-----------+---------+
| Share-based | - | - | 424 | - | - | - | - | 424 | - | 424 |
| payments | | | | | | | | | | |
+----------------+---------+----------+----------+-----------+------------+----------+-----------+---------+-----------+---------+
| At 31 December | 208 | 5,629 | 2,259 | (2,805) | 3,900 | (63) | 36,729 | 45,857 | - | 45,857 |
| 2009 | | | | | | | | | | |
+----------------+---------+----------+----------+-----------+------------+----------+-----------+---------+-----------+---------+
Group statement of changes in equity
Year ended 31 December 2008 (restated)
+----------------------+---------+---------+---------+-----------+------------+----------+---------+----------+---------+
| | | | Share- | | | | | | |
| | | Share | based | | Unrealised | | | | |
| | Share | premium | payment | Treasury | gains | Retained | Total | Minority | |
| | capital | account | reserve | shares | reserve | earnings | equity | interest | Total |
+----------------------+---------+---------+---------+-----------+------------+----------+---------+----------+---------+
| | 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 | - | - | - | - | (1,600) | - | (1,600) | - | (1,600) |
| loss | | | | | | | | | |
+----------------------+---------+---------+---------+-----------+------------+----------+---------+----------+---------+
| 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 |
| (restated*) | | | | | | | | | |
+----------------------+---------+---------+---------+-----------+------------+----------+---------+----------+---------+
* the details of the restatement of the 2008 figures is given in note 1.
Notes to the Preliminary Results
As at 31 December 2009
1. The financial information in this preliminary announcement does not
constitute LSL's statutory financial statements for the year ended 31 December
2009 but has been extracted from the financial statements, and as such, does not
contain all information required to be disclosed in the financial statements
prepared in accordance with IFRS.
Statutory financial statements for this year will be filed following the Annual
General Meeting. The auditors have reported on these financial statements.
Their report was unqualified and did not contain a statement under section 498
(2) or (3) of the Companies Act 2006.
Basis of preparation
The accounting policies adopted are consistent with those of the previous
financial year except for 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 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 2, 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.
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 39Financial Instruments: Recognition and Measurement
The applied IFRS accounting policies were selected by management considering all
applicable International Financial Reporting Standards issued by the
International Accounting Standards Boards (IASB) as adopted by the European
Union as they apply to the financial statements of the Group for the year ended
31 December 2009 as applied in accordance with the provisions of the Companies
Act 2006.
2. Segment reporting
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 the
sale and letting of housing via a network of high street branches. In addition,
it provides repossession asset management services to a range of lenders. 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 all the revenue and
expense arises in the United Kingdom and all assets are situated in the United
Kingdom.
Operating segments
The following table presents revenue and profit/(loss) information regarding the
group's operating segments for the financial year ended 31 December 2009 and
financial year ended 31 December 2008 respectively.
Year ended 31 December 2009
+------------------------+-------------+-----------+-------------+---------+
| | Estate | | | |
| | agency | Surveying | | |
| | and | and | | |
| | related | valuation | | |
| | activities | services | Unallocated | Total |
| | GBP'000 | | | |
| | | GBP'000 | GBP'000 | GBP'000 |
+------------------------+-------------+-----------+-------------+---------+
| Income statement | | | | |
| information | | | | |
+------------------------+-------------+-----------+-------------+---------+
| | | | | |
+------------------------+-------------+-----------+-------------+---------+
| Segmental revenue | 87,655 | 70,048 | - | 157,703 |
+------------------------+-------------+-----------+-------------+---------+
| | | | | |
+------------------------+-------------+-----------+-------------+---------+
| Segmental result: | | | | |
+------------------------+-------------+-----------+-------------+---------+
| - before | | | | |
| exceptional costs, | | | | |
| amortisation and | 6,705 | 23,554 | (1,940) | 28,319 |
| share-based | | | | |
| payments | | | | |
+------------------------+-------------+-----------+-------------+---------+
| - after exceptional | | | | |
| costs, | | | | |
+------------------------+-------------+-----------+-------------+---------+
| amortisation and | | | | |
| share-based | 4,910 | 15,782 | (1,940) | 18,752 |
| payments | | | | |
+------------------------+-------------+-----------+-------------+---------+
| | | | | |
+------------------------+-------------+-----------+-------------+---------+
| Dividend income | | | | 24 |
+------------------------+-------------+-----------+-------------+---------+
| Finance income | | | | 54 |
+------------------------+-------------+-----------+-------------+---------+
| Finance costs | | | | (2,221) |
| | | | | |
+------------------------+-------------+-----------+-------------+---------+
| Profit before tax | | | | 16,609 |
+------------------------+-------------+-----------+-------------+---------+
| Taxation | | | | (4,862) |
+------------------------+-------------+-----------+-------------+---------+
| | | | | |
| Profit for the year | | | | 11,747 |
+------------------------+-------------+-----------+-------------+---------+
In 2008, the revenue from one customer that accounts to 10% or more of the
Group's total revenue amounted to GBP20,017,000. The revenue from this customer
was included within both the above mentioned segments. In 2009, there is no
revenue from one customer that accounts to 10% or more of the Group's total
revenue.
Notes to the Preliminary Results
As at 31 December 2009
2. Segmented reporting (continued)
Year ended 31 December 2008 (restated)
+------------------------+-------------+-----------+-------------+----------+
| | Estate | Surveying | | |
| | agency | and | | |
| | and | valuation | | |
| | related | services | Unallocated | Total |
| | activities | | | |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------+-------------+-----------+-------------+----------+
| Income statement | | | | |
| information | | | | |
+------------------------+-------------+-----------+-------------+----------+
| | | | | |
+------------------------+-------------+-----------+-------------+----------+
| Segmental revenue | 81,700 | 80,073 | - | 161,773 |
+------------------------+-------------+-----------+-------------+----------+
| | | | | |
+------------------------+-------------+-----------+-------------+----------+
| Segmental result: | | | | |
+------------------------+-------------+-----------+-------------+----------+
| - before | | | | |
| exceptional costs, | | | | |
+------------------------+-------------+-----------+-------------+----------+
| amortisation and | | | | |
| share-based | (8,435) | 28,590 | (1,951) | 18,204 |
| payments | | | | |
+------------------------+-------------+-----------+-------------+----------+
| - after exceptional | | | | |
| costs, | | | | |
+------------------------+-------------+-----------+-------------+----------+
| amortisation and | | | | |
| share-based | (15,834) | 16,621 | (1,980) | (1,193) |
| payments | | | | |
+------------------------+-------------+-----------+-------------+----------+
| | | | | |
+------------------------+-------------+-----------+-------------+----------+
| Dividend income | | | | 334 |
+------------------------+-------------+-----------+-------------+----------+
| Finance income | | | | 190 |
+------------------------+-------------+-----------+-------------+----------+
| Finance costs | | | | (4,035) |
+------------------------+-------------+-----------+-------------+----------+
| Exceptional finance | | | | (432) |
| costs | | | | |
+------------------------+-------------+-----------+-------------+----------+
| Loss before tax before | | | | |
| adjustment to | | | | (5,136) |
| goodwill | | | | |
+------------------------+-------------+-----------+-------------+----------+
| Adjustment to goodwill | | | | |
| in respect of | | | | |
| subsequent recognition | | | | (1,048)# |
| of deferred tax asset | | | | |
+------------------------+-------------+-----------+-------------+----------+
| Loss before tax | | | | (6,184) |
+------------------------+-------------+-----------+-------------+----------+
| Taxation | | | | 1,422 |
+------------------------+-------------+-----------+-------------+----------+
| Loss for the year | | | | (4,762) |
+------------------------+-------------+-----------+-------------+----------+
# this relates to the estate agency and related activities segment.
* the details of the restatement of the 2008 figures are given in note 1.
Notes to the Preliminary Results
As at 31 December 2009
3. Exceptional costs
+--------------------------------------------+---------+---------+
| | 2009 | 2008 |
+--------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+--------------------------------------------+---------+---------+
| | | |
+--------------------------------------------+---------+---------+
| Establishment costs | | |
+--------------------------------------------+---------+---------+
| Onerous leases provision due to branch | - | 1,709 |
| closures | | |
+--------------------------------------------+---------+---------+
| Employee costs | | |
+--------------------------------------------+---------+---------+
| Redundancy costs due to branch closures | 232 | 2,410 |
| and business reorganisation | | |
+--------------------------------------------+---------+---------+
| Accelerated share-based payments | | |
| | 42 | - |
+--------------------------------------------+---------+---------+
| Other | | |
+--------------------------------------------+---------+---------+
| Impairment of brand | - | 38 |
+--------------------------------------------+---------+---------+
| Impairment of goodwill | 126 | 1,036 |
+--------------------------------------------+---------+---------+
| Costs of aborted acquisition of businesses | - | 242 |
| and financing project | | |
+--------------------------------------------+---------+---------+
| Accelerated depreciation due to branch | - | 269 |
| closures | | |
+--------------------------------------------+---------+---------+
| Provision for professional indemnity | - | 2,031 |
| claims | | |
+--------------------------------------------+---------+---------+
| Total Operating Exceptional Costs | 400 | 7,735 |
| Finance Costs | | |
+--------------------------------------------+---------+---------+
| Banking fees incurred for renegotiation of | - | 432 |
| facility | | |
+--------------------------------------------+---------+---------+
| | 400 | 8,167 |
+--------------------------------------------+---------+---------+
During the year, property-careers.com Limited ceased trading and an impairment
review was conducted in accordance with the accounting policy. As a result of
this impairment review, the entire value of goodwill in intangible assets of
GBP126,000 was impaired. In addition, some employee costs were incurred due to
the cessation of trading of this operation.
In 2008, exceptional costs were incurred as shown above, reflecting the
unprecedented market conditions and the need to restructure the business in line
with lower activity levels.
In 2008 given the deterioration in the UK housing market the Board has decided
that it was appropriate to make a one-off increase in its professional indemnity
claims provision of GBP2,031,000 to take account of the increase in numbers of
recovery claims made and likely to be made for inaccurate valuations.
In 2008, Linear Financial Services Limited and Linear Mortgage Network Limited
continued to incur operating losses and an impairment review was conducted in
accordance with the accounting policy. As a result of this impairment review the
entire value of the brand in intangible assets of GBP38,000 and carrying value
of goodwill relating to both companies of GBP1,036,000 were impaired.
Notes to the Preliminary Results
As at 31 December 2009
4. Earnings/(loss) per share
Basic earnings/(loss) per share amounts are calculated by dividing net
profit/(loss) for the year attributable to ordinary equity holders of the parent
by the weighted average number of ordinary shares outstanding during the year.
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 year 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.
+------------------+---------+-------------+--------+-----------+-------------+-----------+
| | | Weighted | 2009 | | Weighted | 2008 |
| | Profit | average | Per | Loss | | Per |
| | | number | share | after | average | share |
| | after | of | amount | tax | number | |
| | tax | shares | | restated* | of | amount |
| | | | Pence | | shares | |
| | GBP'000 | | | GBP'000 | | restated* |
| | | | | | | Pence |
+------------------+---------+-------------+--------+-----------+-------------+-----------+
| | | | | | | |
+------------------+---------+-------------+--------+-----------+-------------+-----------+
| Basic EPS | 11,747 | 102,818,875 | 11.4 | (4,762) | 102,845,156 | (4.6) |
+------------------+---------+-------------+--------+-----------+-------------+-----------+
| Effect of | - | 360,830 | - | - | 195,615 | - |
| dilutive share | | | | | | |
| options | | | | | | |
+------------------+---------+-------------+--------+-----------+-------------+-----------+
| Diluted EPS | 11,747 | 103,179,705 | 11.4 | (4,762) | 103,040,771 | (4.6) |
+------------------+---------+-------------+--------+-----------+-------------+-----------+
| | | | | | | |
+------------------+---------+-------------+--------+-----------+-------------+-----------+
There have been no other transactions involving ordinary shares or potential
ordinary shares between the reporting date and the date of completion of these
financial statements.
The Directors consider that the adjusted earnings shown below give a better and
more consistent indication of the Group's underlying performance:
+------------------------------------------------------+---------+-----------+
| | | |
| | | 2008 |
| | 2009 | restated* |
| | GBP'000 | GBP'000 |
+------------------------------------------------------+---------+-----------+
| | | |
+------------------------------------------------------+---------+-----------+
| Profit/(loss) after tax | 11,747 | (4,762) |
+------------------------------------------------------+---------+-----------+
| Adjusted after tax for: | | |
+------------------------------------------------------+---------+-----------+
| Exceptional costs | 288 | 6,145 |
+------------------------------------------------------+---------+-----------+
| Amortisation | 6,217 | 7,229 |
+------------------------------------------------------+---------+-----------+
| Share-based payment | 383 | 1,109 |
+------------------------------------------------------+---------+-----------+
| Adjusted profit after tax | 18,635 | 9,721 |
+------------------------------------------------------+---------+-----------+
Adjusted basic and diluted EPS
+----------------+----------+-------------+--------+-----------+-------------+-----------+
| | Adjusted | Weighted | 2009 | Adjusted | Weighted | 2008 |
| | profit | average | Per | profit | average | Per |
| | after | number | share | after | number | share |
| | tax1 | of | amount | tax1 | of | amount |
| | GBP'000 | shares | Pence | restated* | shares | restated* |
| | | | | GBP'000 | | Pence |
+----------------+----------+-------------+--------+-----------+-------------+-----------+
| | | | | | | |
+----------------+----------+-------------+--------+-----------+-------------+-----------+
| Adjusted Basic | 18,635 | 102,818,875 | 18.1 | 9,721 | 102,845,156 | 9.5 |
| EPS | | | | | | |
+----------------+----------+-------------+--------+-----------+-------------+-----------+
| Effect of | - | 360,830 | - | - | 195,615 | - |
| dilutive share | | | | | | |
| options | | | | | | |
+----------------+----------+-------------+--------+-----------+-------------+-----------+
| Adjusted | 18,635 | 103,179,705 | 18.1 | 9,721 | 103,040,771 | 9.4 |
| Diluted EPS | | | | | | |
+----------------+----------+-------------+--------+-----------+-------------+-----------+
1 This represents adjusted profit after tax attributable to equity holders of
the parent.
* the details of the restatement of the 2008 figures are given in note 1.
Notes to the Preliminary Results
As at 31 December 2009
5. Dividends paid and proposed
+-----------------------------------------------+----------+----------+
| | 2009 | 2008 |
+-----------------------------------------------+----------+----------+
| | GBP'000 | GBP'000 |
+-----------------------------------------------+----------+----------+
| Declared and paid during the year: | | |
+-----------------------------------------------+----------+----------+
| Equity dividends on ordinary shares: | | |
+-----------------------------------------------+----------+----------+
| Final dividend for 2007: 3.86 pence | - | 3,966 |
+-----------------------------------------------+----------+----------+
| | | |
+-----------------------------------------------+----------+----------+
| Dividends on ordinary shares proposed (not | | |
| recognised as a liability as at 31 December): | | |
+-----------------------------------------------+----------+----------+
| Equity dividends on ordinary shares: | | |
+-----------------------------------------------+----------+----------+
| Dividend : 5.40 pence per share (2008: nil | 5,555 | - |
| pence) | | |
+-----------------------------------------------+----------+----------+
6. Taxation
Tax on profit/(loss)
The major components of income tax charge/(credit) in the group income
statements are:
+--------------+--------------------------------+-----------+----------+
| | 2009 | 2008 |
+-----------------------------------------------+-----------+----------+
| | GBP'000 | GBP'000 |
+-----------------------------------------------+-----------+----------+
| | | |
+-----------------------------------------------+-----------+----------+
| UK | - current year | 5,615 | 755 |
| corporation | | | |
| tax | | | |
+--------------+--------------------------------+-----------+----------+
| | - tax | 401 | (42) |
| | underprovided/(overprovided) | | |
| | in prior year | | |
+--------------+--------------------------------+-----------+----------+
| | - utilisation of tax losses | - | (800) |
+--------------+--------------------------------+-----------+----------+
| | 6,016 | (87) |
+-----------------------------------------------+-----------+----------+
| Deferred tax: | | |
+-----------------------------------------------+-----------+----------+
| Origination and reversal of temporary | (603) | (1,271) |
| differences | | |
+-----------------------------------------------+-----------+----------+
| Adjustment in respect of prior year | (551) | (64) |
+-----------------------------------------------+-----------+----------+
| Total deferred tax | (1,154) | (1,335) |
+-----------------------------------------------+-----------+----------+
| Total tax charge/(credit) in the income | 4,862 | (1,422) |
| statement | | |
+--------------+--------------------------------+-----------+----------+
Income tax credited directly to equity is GBP24,000 (2008: nil) which relates to
deferred tax on the net loss on the cash flow hedge.
The tax assessed in the profit and loss account is higher (2008: higher) than
the standard UK corporation tax rate, because of the following factors:
+---------------------------------------------+----------+----------+
| | 2009 | 2008 |
| | | restated |
+---------------------------------------------+----------+----------+
| | GBP'000 | GBP'000 |
+---------------------------------------------+----------+----------+
| | | |
+---------------------------------------------+----------+----------+
| Profit/(loss) on ordinary activities before | 16,609 | (6,184) |
| tax | | |
+---------------------------------------------+----------+----------+
| | | |
+---------------------------------------------+----------+----------+
| Profit/(loss) on ordinary activities | | |
| multiplied by rate of corporation tax rate | 4,651 | (1,732) |
| in the UK of 28% (2008: 28%) | | |
+---------------------------------------------+----------+----------+
| Non taxable income | (26) | (164) |
+---------------------------------------------+----------+----------+
| Disallowable expenses | 387 | 1,350 |
+---------------------------------------------+----------+----------+
| Change in current tax rate in period | - | 17 |
+---------------------------------------------+----------+----------+
| Other | - | 13 |
+---------------------------------------------+----------+----------+
| | 5,012 | (516) |
+---------------------------------------------+----------+----------+
| Utilisation of tax losses on which deferred | | |
| tax asset was not recognised previously | - | (800) |
+---------------------------------------------+----------+----------+
| Prior period adjustments - current tax | 401 | (42) |
+---------------------------------------------+----------+----------+
| Prior period adjustment - deferred tax | (551) | (64) |
+---------------------------------------------+----------+----------+
| Total taxation (credit)/charge | 4,862 | (1,422) |
+---------------------------------------------+----------+----------+
Notes to the Preliminary Results
As at 31 December 2009
7. Financial liabilities
Included in the non-current financial liabilities are the secured bank loans
totalling GBP25.1 m (2008: GBP47.8m). They are secured by a debenture over the
Group's assets excluding certain subsidiaries.
The secured bank loans relate to 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 (2008: GBP75m). The banking facility expires
in July 2010 but can be extended until July 2011 only at the option of the
company. As at the year end, the intention of the company is to extend the
facility until July 2011 and hence the bank loans have been classified under
non-current liabilities.
8. Net Debt Summary
+----------------------------------------------+---------+---------+
| | 2009 | 2008 |
+----------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+----------------------------------------------+---------+---------+
| | | |
+----------------------------------------------+---------+---------+
| Interest bearing loans and borrowings | 26,566 | 49,884 |
+----------------------------------------------+---------+---------+
| Less: Cash and short term deposit | (858) | (647) |
+----------------------------------------------+---------+---------+
| Net debt | 25,708 | 49,237 |
+----------------------------------------------+---------+---------+
| | | |
+----------------------------------------------+---------+---------+
9. Post balance sheet events
On 15 January 2010, the Group acquired the entire share capital of Halifax
Estate Agents Limited for the consideration of GBP1. The details of the effect
of the acquisition on the Group's assets and liabilities have not been disclosed
as the Group is currently in the process of determining the fair value of the
net assets acquired.
On 9 February 2010, the Group acquired the entire share capital of
Templeton LPA Limited for the initial consideration of GBP462,000 and an element
of contingent consideration, which is dependent on the future performance of the
company. The details of the effect of the acquisition on the Group's assets and
liabilities have not been disclosed as the Group is currently in the process of
determining the fair value of the net assets acquired.
10. Annual General Meeting
The Annual General Meeting will be held on 21 April 2010.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAXDAEFNEEFF
Lsl Property Services (LSE:LSL)
Historical Stock Chart
From Jun 2024 to Jul 2024
Lsl Property Services (LSE:LSL)
Historical Stock Chart
From Jul 2023 to Jul 2024