TIDMLSL
RNS Number : 8603I
LSL Property Services
31 July 2012
FOR IMMEDIATE RELEASE 31 July 2012
Interim Results For the six months ended 30 june 2012
LSL Property Services plc (LSL) a leading provider of
residential property services incorporating estate agency and
surveying businesses (Group), announces its interim results for the
six months ended 30 June 2012.
Highlights 2012 2011 Change
------------------------------------------------------------------------------------- ---------- ---------- -------
Group revenue GBP120.8m GBP103.4m +17%
Group Underlying Operating Profit(1) GBP14.5m GBP11.8m +23%
Overall operating margin 12.0% 11.5% +0.5%
------------------------------------------------------------------------------------- ---------- ---------- -------
Like-for-like Group revenue (2) GBP108.0m GBP103.4m +4.5%
Like-for-like Group Underlying Operating Profit (2) GBP11.6m GBP11.8m -1.7%
Like-for-like operating profit margin 10.7% 11.5% -0.8%
------------------------------------------------------------------------------------- ---------- ---------- -------
(Loss)/Profit before tax (GBP7.9m) GBP6.5m -222%
Basic (loss)/earnings per share (6.0p) 4.7p -228%
Adjusted basic earnings per share 9.6p 7.7p +25%
Continued strong cash generation - cash inflow from operations before exceptional
costs GBP13.4m GBP7.2m +86%
Half year dividend 3.1p 2.8p +11%
------------------------------------------------------------------------------------- ---------- ---------- -------
-- Strong financial performance underpinned by Marsh &
Parsons Limited (Marsh & Parsons)
-- Impressive growth in the Estate Agency division
-- Continuing to invest in lettings, market share and counter
cyclical income streams
-- Surveying division impacted by contract renewals and
provision for professional indemnity claims (PI)
-- Excellent cash generation and interim dividend up 11%
-- Remain cautious on market conditions
-- Additional exceptional PI provision of GBP17.3m (after tax
GBP13.1m) relating to valuations completed between 2004 and 2008
which was a high risk period for the surveying industry. Cash flow
impact is estimated to be spread over the next three years
-- Disposal of freehold properties acquired as part of the
Halifax Estate Agencies Limited (HEAL) acquisition is expected to
realise proceeds of GBP10m (after tax GBP9.0m) over the next two
years
-- Net bank debt(3) was GBP36.8m at 30 June 2012 (30 June 2011:
GBP4.4m) following the acquisition of Marsh & Parsons for an
initial consideration of GBP45.4m
Surveying Performance
-- Underlying Operating Profit was GBP9.7m (2011: GBP12.8m).
Operating margin was 28.2% (2011: 33.3%)
-- Profit decline driven by contract renewals and reduction in
market share of certain key lenders
-- Continued growth in the provision of surveying services to
private buyers with revenue of GBP1.8m during the period (2011:
GBP1.3m)
Estate Agency Performance
-- Underlying Operating Profit was GBP6.5m (2011: GBP0.6m)
-- Like-for-like Underlying Operating Profit (2) was GBP3.6m
(2011: GBP0.6m)
-- Like-for-like lettings revenue growth of 24% to GBP16.8m
(2011: GBP13.6m) and like-for-like financial services growth of 17%
to GBP14.4m (2011: GBP12.3m)
-- Marsh & Parsons delivered a strong first six month
contribution, in line with expectations
______________________________
(1) Underlying Operating Profit is before exceptional costs,
amortisation of intangible assets and share-based payments
(2) Excluding Marsh & Parsons which was acquired in November 2011
(3) Refer to note 8 of the Condensed Group Financial Statements for calculation
Commenting on today's announcement, Roger Matthews, Chairman,
said:
"The Group expects to build on the first half results in
lettings and financial services and to continue to drive the
strategic initiatives to increase the provision of surveying
services to private buyers and to grow market share in estate
agency. Marsh & Parsons will contribute significantly to
profits in the second half and provide further growth potential in
the strategically important Central London market.
The Group is highly cash generative with relatively low levels
of gearing providing scope for further selective acquisitions,
which combined with various organic growth initiatives leaves us
well placed to increase shareholder value in the medium term, even
without market recovery."
For further information, please contact:
Simon Embley, Group Chief Executive Officer
Steve Cooke, Group Finance Director
LSL Property Services plc 0207 382 0360
Richard Darby, Nicola Cronk
Buchanan 0207 466 5000
Notes to Editors:
LSL is a leading provider of residential property services to
its key customer groups. Services to consumers include: residential
sales, lettings, surveying, and advice on mortgages and non
investment insurance products. Services to mortgage lenders
include: valuations and panel management services, asset management
and property management services. For further information, and for
a copy of the half yearly report for the period to 30 June 2012,
please visit LSL's website: www.lslps.co.uk
Chairman's Statement
Introduction
I am pleased to report a 17% increase in Group revenue to
GBP120.8m (2011: GBP103.4m) and a 23% increase in Group Underlying
Operating Profit to GBP14.5m (2011: GBP11.8m) for the six months
ended 30 June 2012. This is a very good performance as, despite
some small improvement, housing market transactions remain at a
significantly depressed level compared to historical norms. Total
mortgage approvals(4) of 589,000 were 2% lower than 2011 although
house purchase approvals(4) of 304,000 were 7% higher than the
prior year.
The Estate Agency division has delivered an impressive growth in
Underlying Operating Profit, with strong increases reported in all
income streams across residential sales, lettings, financial
services and asset management. The division has also benefited from
a full six month contribution from Marsh & Parsons, which has
delivered in line with expectations.
As previously announced, the Surveying division has been
impacted by a major contract renewal and also by reduction in
market share of certain key lenders. Despite this, the division
remains the clear market leader in the provision of residential
mortgage valuations and panel management services, and maintains
its leadership in customer service and innovation to its client
base. The demand for surveying services from private buyers
continues to grow and we have expanded the distribution channels
for these products.
During the period we have substantially increased our PI
provisions following a recent deterioration in our claims
experience for the high risk period of 2004 to 2008. This is a
disappointing development and reflects a deterioration in claims
experience resulting from certain lenders using solicitors on a 'no
win - no fee' basis and pursuing claims we previously considered
dormant. In addition, new claims are continuing at a high level and
as a result our estimation of future claims likely to arise
relating to this period has also increased significantly. However,
as these claims relate to an historic period, these provisions do
not impact current trading and the cash flow impact, estimated to
be spread over the next three years, is expected to be largely
offset by a programme for the disposal of freehold properties.
The business is very cash generative, with cash inflow from
operations before exceptional costs of GBP13.4m (2011: GBP7.2m).
Net bank debt at the half year was GBP36.8m and the Group has
committed bank facilities of GBP75m through to March 2014. I am
delighted to report an increase in our interim dividend of 11% to
3.1 pence per share. The dividend will be paid on 10 September 2012
to shareholders on the register at 10 August 2012.
Financial Results
-- Group revenue increased by 17% to GBP120.8m (2011: GBP103.4m)
-- Like-for-like Group revenue (1) increased by 4.5% to GBP108.0m (2011: GBP103.4m)
-- Group Underlying Operating Profit(2) increased by 23% to GBP14.5m (2011: GBP11.8m)
-- Like-for-like Group Underlying Operating Profit (2) was GBP11.6m (2011: GBP11.8m)
-- Overall operating margin was 12.0% (2011: 11.5%).
Like-for-like operating profit margin was 10.7% (2011: 11.5%)
-- Net interest payable was GBP1.7m (2011: GBP0.8m) and the
Group profit before tax, amortisation and exceptional cost/profit
was GBP12.4m (2011: GBP10.7m).
-- Loss before tax was GBP7.9m (2011: profit before tax
GBP6.5m), including total exceptional charges of GBP17.3m (2011:
GBP0.2m).
-- Loss per share of 6.0p (2011: earnings per share of 4.7p).
Adjusted basic earnings per share of 9.6p (2011: 7.7p)
-- Interim dividend increased by 11% to 3.1p per share (2011 : 2.8p)
(1) Excluding Marsh & Parsons which was acquired in November 2011
(2) Underlying Operating Profit is before exceptional costs,
amortisation of intangible assets and share-based payments
(3) Refer to note 8 of the Condensed Group Financial Statements for calculation
(4) Source: Bank of England for "House Purchase Approvals" and "Total Mortgage Approvals"
Cash flow and Balance Sheet
The Group has again delivered strong operating cash generation
in the first half of 2012with cash inflow from operations before
exceptional costs of GBP13.4m (2011: GBP7.2m). Total capital
expenditure during the first half of 2012 increased by GBP0.8m to
GBP2.4m (2011: GBP1.6m) with all of the increase relating to Marsh
& Parsons.
Operating cash flow included PI payments of GBP3.8m (2011:
GBP1.2m) which related to settlements for incorrect valuations in
the 2004 to 2008 period. The increase in payments was driven by the
continuation of the trend for previously disputed cases moving to
negotiated settlement more quickly.
Net assets at 30 June 2012 were GBP60.7m (2011: GBP66.3m). Net
bank debt at 30 June 2012 was GBP36.8m representing an increase of
GBP32.4m from 30 June 2011 which was driven mainly by the
acquisition of Marsh & Parsons. Compared to 31 December 2011,
net bank debt has increased by GBP0.3m due to the relatively weak
seasonal Estate Agency division cashflows, planned cash outflows
relating to dividends and tax, higher PI payments and payment of
the initial consideration for the acquisition of Davis Tate Limited
(Davis Tate).
Interim Dividend
The Board has declared an interim dividend payable of 3.1 pence
per share, an increase of 11% on last year (2011: 2.8p). The
dividend payment reflects the very good growth in underlying
earnings and the contribution from our successful acquisition of
Marsh & Parsons. Our strong cash generation and balance sheet
underpin our confidence in future prospects. The dividend will be
paid on 10 September 2012 to shareholders on the register at 10
August 2012.
Surveying Division and PI
-- Surveying turnover decreased by 10% to GBP34.4m (2011:
GBP38.3m), and the Underlying Operating Profit decreased by 24% to
GBP9.7m (2011: GBP12.8m). The overall Surveying operating margin
was 28.2% (2011: 33.3%)
Our Surveying division has continued to focus on delivering
excellent service to lender clients against the backdrop of some
significant contract changes and further volatility in lender
market shares. Revenue was impacted as expected by a major contract
renewal which was effective from 1 January 2012. We had previously
indicated that we were unlikely to renew the C&G contract at
the end of its five year term and this work has now been taken in
house by the Lloyds Banking Group from 1 July 2012. In addition
some other key lenders have seen their market shares fall in the
period which has directly impacted the Group's revenues.
We have made good progress growing revenues from the provision
of surveying services for private buyers. Revenue for the six
months to 30 June 2012 was GBP1.8m (2011: GBP1.3m) though this was
held back during the first quarter as lenders who were experiencing
lower market share provided reduced levels of referrals for private
surveys. During the second quarter we expanded our distribution
channels further which resulted in an overall 38% increase in
revenue compared to the first quarter and the annualised June 2012
revenue run rate was GBP4.1m.
We have made additional PI provision of GBP17.3m, GBP13.1m after
tax due to the recent deterioration in claims experience relating
to the 2004 to 2008 period. This was a period of relatively high
risk lending characterised by higher house prices, high
loan-to-value ratios and considerable levels of buy-to-let and
sub-prime lending. High levels of claims have been an industry wide
problem. Since then, the market has changed materially and, as
previously announced, we have tightened our own internal processes
and controls. We have however continued to build a provision for
estimated PI costs relating to valuations completed since 2009, and
an Income Statement charge has been made in these results.
The increase in the PI provision is partly driven by lenders,
most of whom are no longer active in the market, pursuing
notifications and claims previously considered dormant. It has also
been necessary to make additional provisions for existing claims
which are being aggressively pursued by lenders who often use
solicitors engaged on a no win, no fee basis. This trend has
increased recently in advance of April 2013 when it is expected
that the legislation governing civil litigation will change. Both
these factors have had a significant impact on the 'Incurred But
Not Reported' (IBNR) provision required for notifications and
claims estimated to be received in the future for the 2004 to 2008
period. The primary statutory limitation for this period ends
during 2014. It should be noted this is the Board's best estimate
of future claims and the conclusions on the appropriate level of
IBNR provision are sensitive to small changes in assumptions and
are therefore highly subjective.
The GBP13.1m after tax cashflow impact of the exceptional PI
provision is estimated to occur over the next three years and will
be partly offset by a programme to dispose of freehold properties
currently held in the balance sheet. As discussed further below,
this is expected to raise circa GBP9.0m after tax over the next two
years.
Estate Agency Division
-- Estate Agency turnover increased by 33% to GBP86.4m and
generated an Underlying Operating Profit of GBP6.5m (2011:
GBP0.6m)
-- On a like-for-like basis Estate Agency turnover increased by
14% to GBP73.6m (2011: GBP64.8m) and generated an Underlying
Operating Profit of GBP3.6m (2011: GBP0.6m)
-- Marsh & Parsons contributed to the trading result with an
operating profit of GBP2.9m (turnover GBP12.8m).
The Estate Agency division delivered an excellent first half
underpinned by strong performances from recent acquisitions and by
high levels of lettings and financial services growth.
Like-for-like lettings revenue increased by 24% to GBP16.8m (2011:
GBP13.6m) and now represents 61% of residential sales income (2011:
54%). Our medium term objective is to increase lettings revenue to
a similar level to residential sales income which increased by 10%
to GBP27.5m (2011: GBP25.1m). The increase in residential sales
income has been driven by the investments made last year in various
market share improvement initiatives, including 'The Bridge' call
centre. However, residential sales income has been impacted by
lower levels of house exchanges caused by a recent tightening of
mortgage lending criteria.
Financial services revenue across our Estate Agency branches and
intermediary networks increased by 17% to GBP14.4m (2011: GBP12.3m)
and in total the Group arranged mortgage lending of GBP3.6bn (2011:
GBP3.2bn). The performance of our intermediary networks, trading as
Pink, First Complete and Linear, have continued to improve and by
2013 we will have rolled out a new common platform in these
businesses which will both improve customer service and increase
operational efficiency.
The lettings and financial services revenue growth has
contributed to further improvement in the profitability of the
branches that were acquired in 2010 as part of the HEAL acquisition
and this trend is expected to continue as the lettings and
financial income streams continue to mature.
We are pleased with the progress made by Marsh & Parsons
during its first full six months under our ownership. The London
market has been challenging with residential sales income
constrained by lack of stock coming to the market. Lettings growth
has partly compensated for this and overall revenue growth of 3%
and operating profit of GBP2.9m (2011: GBP2.8m) was on plan. The
business has increased market share in both residential sales and
lettings in the period. Profit was impacted as a result of the
planned costs of opening a new office in Earls Court, which has
performed in line with expectations. The Marsh & Parsons
management team has exciting growth plans for the future and a
second new office is currently on track for opening in the Autumn.
In addition, we are prepared to augment these plans with 'bolt on'
acquisition opportunities where appropriate.
Together with lettings, our other key counter cyclical income
stream is asset management, which contributed revenue of GBP8.1m
during the first half of the year. This was 9% higher than the
first half of 2011 and compares to what we estimate to have been a
flat market in repossessions in the first six months of 2012 at
18,900 reposessions (2011: 18,900). Asset management has just won a
significant new property management contract which will come on
stream during the second half and will contribute annualised
revenue of circa GBP1.3m from 2013.
The residential sales market has now been operating at half of
normal historic levels of volume for over four years and our view
is that this is not likely to improve significantly in the medium
term. Therefore we have conducted a review of our Estate Agency
branches and decided to close a number of Your Move and Reeds Rains
branches. These are predominantly Northern branches which we have
been unable to improve to viable levels of trading in the current
market. The financial impact of these closures in 2012 is expected
to be a GBP1m improvement in operating profit in the second half of
2012 and one off exceptional costs of closure of GBP1m.
The Group operates a leasehold business model though a number of
freehold properties were acquired as part of the acquisition of
HEAL in 2010. During the first half of 2012 we have started a
disposal programme for these properties which will involve leasing
back those which are still occupied. It is expected that this
programme will raise circa GBP9.0m after tax over the next two
years and GBP2.5m has been received as at 30 June 2012.
We have continued with our strategy of selective acquisitions.
In January 2012 the Group increased its Estate Agency branch
footprint in the South East by acquiring majority stakes in Davis
Tate, a 11 branch estate agency chain operating in 14 locations
within the Thames Valley for a cash consideration GBP1.6m and,
Lauristons Limited (Lauristons), a 5 branch estate agency chain in
South West London for a cash consideration of GBP1.8m during July
2012. Together, these businesses are expected to contribute between
GBP0.5m and GBP1.0m of operating profit in the second half of the
year.
In 2010 we acquired an investment on a joint venture basis in
the TM Group (a property search company) and in 2011 we invested on
a joint venture basis in the Legal Marketing Services Limited group
(LMS), primarily a residential conveyancing and remortgage panel
management business. Both investments are performing strongly and
have contributed GBP0.4m of operating profit to the Group for the
half year. We were also delighted that the merger between Zoopla
and the Digital Property Group received early regulatory approval
and has now been completed. We were able to increase our
shareholding in Zoopla in advance of the merger and the Group now
owns 4.8% of the new group. Performance since the transaction has
been very strong and this now represents an excellent strategic
shareholding for the Group.
Outlook
Housing market volumes remain constrained by a shortage of
available mortgage finance and the continued general economic
uncertainty. In addition, banks have recently enforced considerably
tighter lending criteria and this has been impacting the levels of
exchanges on house purchases. We retain a cautious view on the
market and in the short term it is still unclear how the Olympics
may impact the market.
However, the Group expects to build on the first half results in
lettings and financial services and to continue to drive the
strategic initiatives to increase the provision of surveying
services to private buyers and to grow market share in Estate
Agency. Marsh & Parsons will contribute significantly to
profits in the second half and provide further growth potential in
the strategically important Central London market. Overall the
Board is confident of delivering further progress in 2012.
The Group is in a strong financial position as it is highly cash
generative with relatively low levels of gearing. This provides
scope for further selective acquisitions which combined with the
various organic growth initiatives results in the Group being well
placed to increase shareholder value in the medium term, even
without market recovery.
Roger Matthews
31 July 2012
Principal risks and uncertainties
There are a number of risks and uncertainties facing the
business in the second half of the financial year, especially, the
current economic uncertainty within the Euro zone and the
consequent difficulties in the financial markets could have further
adverse impacts of lender behaviour in the UK market affecting
mortgage availability.
The Board has reconsidered the risks and uncertainties listed
below:
-- Impact on lender behaviour caused by volatility and economic
uncertainty both in the Euro zone and within the UK
-- New exposure to central London property market
-- Loss of key surveying or corporate services clients or contracts
-- Liability for inaccurate professional services advice
-- Failure to effectively delivery and manage the market share initiatives for Estate Agency
-- Change in legislation, regulation or government policy.
These risks and uncertainties and mitigating factors are
described in more detail on pages 24 and 25 of the 2011 Report
& Accounts, dated 1 March 2012 (a copy of which is available on
the Group's website at www.lslps.co.uk). Having reconsidered these
risks and uncertainties the Board consider these to be still
appropriate.
Forward-Looking Statements
This statement may contain forward-looking statements with
respect to certain plans, goals and expectations relating to the
future financial condition, business performance and results of
LSL. By their nature, all forward-looking statements involve risk
and uncertainty because they relate to future events and
circumstances that are beyond the control of LSL, and they may
cause the actual results or performance of LSL to be materially
different from the results or performance implied by such
statements. Any forward-looking statements will be by reference to
the date of this statement only and must not be regarded as
guarantees of future performance. Further, nothing in this
statement should be construed as a profit forecast. Some of the
factors which may affect LSL's actual future financial conditions,
business performance and results are contained within the Business
Review in the 'principal risks and uncertainties section' on pages
24 and 25 of LSL's Annual Report and Accounts 2011 and on page 7 of
this statement, together with information on the management of the
principal risks and uncertainties faced by LSL.
Responsibility statement of the directors in respect of the
half-yearly financial report
We confirm that to the best of our knowledge:
-- The condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU;
-- The interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
By order of the Board
Sapna B FitzGerald
Company Secretary
Interim Group Income Statement
for the six months ended 30 June 2012
Unaudited Audited
Six Months Ended Year Ended
30 June 30 June 31 December
2012 2011 2011
Note GBP'000 GBP'000 GBP'000
--------- -------- -----------
Revenue 3 120,786 103,365 218,381
Operating expenses:
Employee and subcontractor costs (70,255) (60,308) (124,786)
Establishment costs (9,603) (8,485) (15,886)
Depreciation on property, plant
and equipment (1,634) (1,121) (2,581)
Other (25,867) (22,448) (45,734)
--------- -------- -----------
(107,359) (92,362) (188,987)
Rental income 722 555 1,044
Group's share in post tax profits
of joint ventures 362 286 679
Group operating profit before exceptional
(costs)/income, amortisation and
share-based payments 3 14,511 11,844 31,117
Share-based payments (568) (340) (787)
Amortisation of intangible assets (3,001) (3,952) (8,472)
Exceptional costs 5 (17,310) (245) (2,214)
Group operating (loss)/profit 3 (6,368) 7,307 19,644
Finance income 3 6 4
Finance costs (1,658) (821) (1,874)
Fair value movement of interest
rate swap 146 - (182)
---------
Net financial costs (1,509) (815) (2,052)
(Loss)/profit before tax 3 (7,877) 6,492 17,592
Taxation credit/(charge)
- related to exceptional costs 4,118 69 570
- others (2,415) (1,779) (4,927)
--------- -------- -----------
7 1,703 (1,710) (4,357)
(Loss)/profit for the period/year (6,174) 4,782 13,235
--------- -------- -----------
Attributable to:
- Owners of the parent (6,183) 4,794 13,217
- Non-controlling interest 9 (12) 18
(Loss)/earnings per share expressed
in pence per share:
Basic and diluted 4 (6.0) 4.7 12.9
Adjusted - Basic and diluted 4 9.6 7.7 21.0
Interim Group Statement of Comprehensive Income
for the six months ended 30 June 2012
Unaudited Audited
Six Months Ended Year Ended
30 June 30 June 31 December
2012 2011 2011
GBP'000 GBP'000 GBP'000
---------- ------- -----------
(Loss)/profit for the period/year (6,174) 4,782 13,235
Other comprehensive income for the period/year,
net of tax - - -
Total comprehensive income for the period/year,
net of tax (6,174) 4,782 13,235
========== ======= ===========
Interim Group Balance Sheet
as at 30 June 2012
Unaudited Audited
six months ended Year Ended
Note At 30 June At 30 June 31 December
2012 2011 2011
GBP'000 GBP'000 GBP'000
----------- ----------- ------------
Non-current assets
Goodwill 118,781 74,932 116,452
Other intangible assets 18,041 13,661 21,042
Property, plant and equipment 13,683 14,350 17,491
Financial assets 1,244 347 347
Investments accounted for under
the equity method 1,382 700 1,768
Total non-current assets 153,131 103,990 157,100
----------- ----------- ------------
Current assets
Trade and other receivables 33,401 30,795 28,681
Current tax asset 3,341 - -
Cash and cash equivalents 337 269 435
----------- ----------- ------------
Total current assets 37,079 31,064 29,116
----------- ----------- ------------
Assets held for sale 9 2,576 - -
----------- ----------- ------------
Total assets 192,786 135, 054 186,216
----------- ----------- ------------
Current liabilities
Financial liabilities (1,496) - (2,246)
Trade and other payables (52,590) (46,924) (46,603)
Current tax liabilities - (1,903) (3,372)
Provisions for liabilities 10 (5,839) (440) (706)
----------- ----------- ------------
Total current liabilities (59,925) (49,267) (52,927)
----------- ----------- ------------
Non-current liabilities
Financial liabilities (48,003) (6,494) (46,782)
Deferred tax liability (5,460) (2,135) (4,772)
Provisions for liabilities 10 (18,692) (10,848) (9,352)
----------- ----------- ------------
Total non-current liabilities (72,155) (19,477) (60,906)
----------- ----------- ------------
Net Assets 60,706 66,310 72,383
----------- ----------- ------------
Equity
Share capital 208 208 208
Share premium account 5,629 5,629 5,629
Share-based payment reserve 1,447 467 912
Treasury shares (2,691) (3,109) (2,747)
Retained earnings 56,051 63,092 68,328
----------- ----------- ------------
Equity attributable to owners
of parent 60,644 66,287 72,330
Non-controlling interests 62 23 53
Total Equity 60,706 66,310 72,383
----------- ----------- ------------
Interim Group Statement of Cash Flows
for the six months ended 30 June 2012
Audited Year
Unaudited Six Months Ended Ended
31 December
30 June 2012 30 June 2011 2011
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- -------- --------- ---------
Cash generated from operating
activities
(Loss)/profit before tax (7,877) 6,492 17,592
Adjustments to reconcile profit
before tax to net cash generated
from operating activities
Exceptional operating costs 17,310 245 2,214
Amortisation of intangible
assets 3,001 3,952 8,472
Fair value movement of interest
rate swap (146) - 182
Finance income (3) (6) (4)
Finance costs 1,658 821 1,874
Share-based payments 568 340 787
22,388 5,352 13,525
Group operating profit before
exceptional costs, amortisation
and share-based payments 14,511 11,844 31,117
Share of post tax profit of
joint venture (362) (286) (679)
Depreciation 1,634 1,121 2,581
Loss on sale of property,
plant and equipment 88 6 8
-------- -------- ---------
1,360 841 1,910
(Increase)/decrease in trade
and other receivables (4,582) (6,640) (2,054)
Increase/(decrease) in trade
and other payables and provisions 2,070 1,194 (5,359)
-------- -------- ---------
(2,512) (5,446) (7,413)
-------- -------- ---------
Cash generated from operations
pre exceptional costs 13,359 7,239 25,614
Exceptional costs paid (188) (245) (1,315)
Cash generated from operations 13,171 6,994 24,299
Interest paid (1,225) (821) (1,422)
Tax paid (4,322) (113) (3,235)
Net cash from operating activities 7,624 6,060 19,642
Cash flows from investing
activities
Cash acquired on purchase
of subsidiary undertakings
and commercial business 239 - 5,707
Purchase of subsidiary undertakings
and commercial business (1,776) (150) (46,826)
Dividends received from joint
venture 748 336 332
Interest received 3 6 4
Purchase of property, plant
and equipment (2,420) (1,627) (3,243)
Proceeds from sale of property,
plant and equipment 2,752 - -
Purchase of available-for-sale
financial asset (897) - -
Proceeds from sale of available-for-sale
financial asset - - 1,962
Investment in Joint Venture - - (671)
Repayment of amounts due from - 981 -
sale of available-for-sale
financial asset
Net cash from investing activities (1,351) (454) (42,735)
------------------------------------------ -------- -------- -------- -------- --------- ---------
Interim Group Statement of Cash Flows
for the six months ended 30 June 2012
Audited Year
Unaudited Six Months Ended Ended
31 December
30 June 2012 30 June 2011 2011
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- -------- -------- --------
Cash flows from financing
activities
Proceeds from revolving credit
facility - 1,247 32,939
Repayment of revolving credit
facility (300) - -
Purchase of treasury shares
(net of consideration received
on reissue of treasury shares) - (857) (804)
Dividends paid (6,071) (6,065) (8,945)
Net cash used in financing
activities (6,371) (5,675) 23,190
Net increase/(decrease) in
cash and cash equivalents (98) (69) 97
Cash and cash equivalents
at the beginning of the year 435 338 338
Cash and cash equivalents
at the end of the year 337 269 435
--------------------------------- -------- -------- -------- -------- -------- --------
Interim Group Statement of Changes in Equity
for the six months ended 30 June 2012
Unaudited six months ended 30 June 2012
Share- Investment
Share based in
Share premium payment treasury Retained Total Non-controlling
capital account reserve shares earnings equity interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2012 208 5,629 912 (2,747) 68,328 72,330 53 72,383
Loss for the
period - - - - (6,183) (6,183) 9 (6,174)
Other - - - - - - - -
comprehensive
income
----------- ---------- ---------- ----------- ---------- ----------- ---------------- --------
Total
comprehensive
income 208 5,629 912 (2,747) 62,145 66,147 62 66,209
Reissuance of
treasury
shares - - (33) 56 (23) - - -
Share-based
payments - - 568 - - 568 - 568
Dividend paid - - - - (6,071) (6,071) - (6,071)
At 30 June
2012 208 5629 1,447 (2,691) 56,051 60,644 62 60,706
----------- ---------- ---------- ----------- ---------- ----------- ---------------- --------
Treasury shares represent the cost of LSL Property Services plc
shares purchased in the market and held by the Employee Benefit
Trust to satisfy future exercise of options under the Group's share
options schemes. At 30 June 2012 the Group held 1,246,288
(31December 2011: 1,269,389) of its own shares at an average cost
of GBP2.33 (31 December 2011: GBP2.28). The market value of the
shares at 30 June 2012 was GBP2,907,000. The nominal value of each
share is 0.2p.
Unaudited six months ended 30 June 2011
Share- Investment
Share based in
Share premium payment treasury Retained Total Non-controlling
capital account reserve shares earnings equity interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2011 208 5,629 1,014 (3,139) 64,363 68,075 35 68,110
Profit for the
period - - - - 4,794 4,794 (12) 4,782
Other
comprehensive - - - - - - - -
income
----------- ---------- ---------- ----------- ---------- ----------- ---------------- --------
Total
comprehensive
income 208 5,629 1,014 (3,139) 69,157 72,869 23 72,892
Investment in
treasury
shares - - - (1,751) - (1,751) - (1,751)
Reissuance of
treasury
shares - - (887) 1,781 - 894 - 894
Share-based
payments - - 340 - - 340 - 340
Dividend paid - - - - (6,065) (6,065) - (6,065)
At 30 June
2011 208 5,629 467 (3,109) 63,092 66,287 23 66,310
----------- ---------- ---------- ----------- ---------- ----------- ---------------- --------
Interim Group Statement of Changes in Equity
Year ended 31 December 2011
Share- Investment
Share based in
Share premium payment treasury Retained Total Non-controlling
capital account reserve shares earnings equity interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2011 208 5,629 1,014 (3,139) 64,363 68,075 35 68,110
Profit for the
year - - - - 13,217 13,217 18 13,235
Other
comprehensive
income
Total
comprehensive
income 208 5,629 1,014 (3,139) 77,580 81,292 53 81,345
Purchase of
treasury
shares - - - (1,762) - (1,762) - (1,762)
Reissuance of
treasury
shares - - (889) 2,154 (307) 958 - 958
Share-based
payments - - 787 - - 787 - 787
Dividend paid - - - - (8,945) (8,945) - (8,945)
At 31 December
2011 208 5,629 912 (2,747) 68,328 72,330 53 72,383
----------- ---------- ---------- ----------- ---------- ----------- ---------------- --------
Notes to the Interim Condensed Group Financial Statements
The interim condensed group financial statements for the period
ended 30 June 2012 was approved by the board of directors on 31
July 2012. The interim financial statements are not the statutory
accounts. The financial information for the year ended 31 December
2011 is extracted from the statutory accounts for the year ended 31
December 2011, which have been filed with the Registrar of
Companies, was unqualified and did not contain an emphasis of
matter paragraph, and did not make a statement under section 498
(2) or (3) of the Companies Act 2006.
1 Basis of preparation
The interim condensed group financial statements for the period
ended 30 June 2012 have been prepared in accordance with the
Disclosure and Transparency Rules of the Financial Services
Authority and IAS 34 Interim Financial Reporting (as adopted by the
EU). The interim condensed group financial statements have been
prepared on a going concern basis.
The interim condensed group financial statements do not include
all the information and disclosures required in the annual
financial statements, and should be read in conjunction with the
Group's annual financial statements as at 31 December 2011.
Significant accounting policies
The accounting policies adopted in the preparation of the
interim condensed group financial statements are consistent with
those followed in the preparation of the Group's annual financial
statements for the year ended 31 December 2011.
Judgements and estimates
The preparation of financial information in conformity with IFRS
as adopted by European Union requires management to make
judgements, estimates and assumptions that affect the application
of policies and reporting amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
The key assumptions concerning the future and other key sources
of estimation uncertainty at the balance sheet date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next six months are
largely the same as those as at 31 December 2011. These assumptions
are discussed in detail on page 65 and in notes 14 and 22 of the
Group's annual financial statements for the year ended 31 December
2011. The assumptions discussed are as follows:
-- Impairment of intangible assets
-- Professional indemnity claims (also see notes 5 and 10)
New standards and interpretations
The amendments to the following standards below did not have any
impact on the accounting policies, financial position or
performance of the Group:
-- Amendments to IFRS 7 Disclosures - Transfers of financial assets
-- Amendments to IAS 12 Deferred Tax: Recovery of Underlying Assets
1. Basis of preparation (continued)
Significant accounting policies (continued)
Going concern
The Group has in place borrowing facilities to March 2014 to a
maximum of GBP75m. These facilities are subject to financial
performance covenants. The Board has prepared a working capital
forecast based upon assumptions as to trading and has concluded
that the Group has adequate working capital, will meet the
financial performance covenants and that therefore it is
appropriate to use the going concern basis of preparation for this
financial information.
2. Seasonality of operations
Due to the seasonal nature of the property market turnover is
normally higher in the second half of the year.
3. Segment analysis of revenue and operating profit
For management purposes, the Group is organised into business
units based on their products and services and has two reportable
operating segments as follows:
-- The estate agency and related services provides services
related to the sale and letting of housing. It operates 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. It also operates
as a mortgage and insurance distribution company providing products
and services to financial intermediaries. The results of the
financial services segment, which does not meet the quantitative
criteria for separate reporting under IFRS have been aggregated
with those of estate agency and related services.
-- The surveying and valuation segment provides a professional
survey service of domestic properties to various lending
corporations and individual customers.
Each segment has various products and services and the revenue
from these products and services are disclosed on pages 14 and 15
under Business Review the Group's annual financial statements for
the year ended 31 December 2011.
Operating segments
The following table present revenue and profit information
regarding the group's operating segments for the six months ended
30 June 2012 and 2011.
Six Months ended 30 June 2012 Estate
agency and Surveying
related and valuation
activities services Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000
----------- -------------- ------------ --------
Income statement information
Segmental revenue 86,348 34,438 - 120,786
----------- -------------- ------------ --------
Segmental result:
* before exceptional costs, amortisation and
share-based payments 6,543 9,698 (1,730) 14,511
----------- -------------- ------------ --------
* after exceptional costs, amortisation and share based
payments 5,564 (10,065) (1,867) (6,368)
----------- -------------- ------------ --------
Finance income 3
Finance costs (1,658)
Fair value movement of interest
rate swap 146
--------
Loss before tax (7,877)
Taxation 1,703
--------
Loss for the period (6,174)
--------
In the period ended 30 June 2012, there is no revenue from one
customer that accounts for 10% or more of the Group's total revenue
(2011 - none).
3. Segment analysis of revenue and operating profit (continued)
Six Months ended 30 June 2012
Estate agency and
related activities Surveying and valuation
Balance sheet information GBP'000 services
GBP'000 Unallocated Total
GBP'000 GBP'000
------------------------------ ------------------------------- ------------ ---------
Segment assets - intangible 127,054 9,767 - 136,821
Segment assets - other 40,355 9,237 6,373 55,965
------------------------------ ------------------------------- ------------ ---------
Total Segment assets 167,409 19,004 6,373 192,786
Total Segment liabilities (50,478) (37,252) (44,350) (132,080)
------------------------------ ------------------------------- ------------ ---------
Net assets/(liabilities) 116,931 (18,248) (37,977) 60,706
------------------------------ ------------------------------- ------------ ---------
Unallocated net liabilities comprise certain property, plant and
equipment (GBP51,000), financial assets (GBP1,244,000), investments
in joint ventures (GBP1,382,000), trade and other receivables
(GBP18,000), current tax asset (GBP3,341,000), cash and bank
balances (GBP337,000), other taxes and liabilities (GBP393,000),
other creditors (GBP43,000), accruals (GBP1,510,000) financial
liabilities (GBP35,825,000), deferred tax liabilities
(GBP5,460,000), interest rate swap (GBP1,119,000).
Six months ended 30 June 2011
Estate
agency and Surveying
related and valuation
activities services Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000
----------- -------------- ------------ --------
Income statement information
Segmental revenue 65,011 38,354 - 103,365
----------- -------------- ------------ --------
Segmental result:
* before exceptional costs, amortisation and
share-based payments 583 12,789 (1,528) 11,844
----------- -------------- ------------ --------
* after exceptional costs, amortisation and share based
payments (743) 9,624 (1,575) 7,307
----------- -------------- ------------ --------
Finance income 6
Finance costs (821)
--------
Profit before tax 6,492
Taxation (1,710)
--------
Profit for the period 4,782
--------
Estate agency and
related activities Surveying and valuation
Balance sheet information GBP'000 services
GBP'000 Unallocated Total
GBP'000 GBP'000
------------------------------ ------------------------------- ------------ --------
Segment assets - intangible 72,651 15,944 - 88,595
Segment assets - other 32,249 12,706 1,504 46,459
------------------------------ ------------------------------- ------------ --------
Total Segment assets 104,900 28,650 1,504 135,054
Total Segment liabilities (34,229) (23,939) (10,576) (68,744)
------------------------------ ------------------------------- ------------ --------
Net assets/(liabilities) 70,671 4,711 (9,072) 66,310
------------------------------ ------------------------------- ------------ --------
Unallocated net liabilities comprise certain property, plant and
equipment (GBP88,000), financial assets (GBP347,000), investments
in joint ventures (GBP700,000), trade and other receivables
(GBP100,000), cash and bank balances (GBP269,000), other taxes and
liabilities (GBP310,000), other creditors (GBP282,000), accruals
(GBP930,000) financial liabilities (GBP3,933,000), current and
deferred tax liabilities (GBP4,038,000), interest rate swap
(GBP1,083,000).
3. Segment analysis of revenue and operating profit (continued)
Year ended 31 December 2011
Estate
agency and Surveying
related and valuation
activities Services Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000
----------- -------------- ----------- --------
Income statement information
Segmental revenue 141,811 76,570 - 218,381
----------- -------------- ----------- --------
Segmental result:
- before exceptional costs,
amortisation 10,280 23,722 (2,885) 31,117
and share-based payments
----------- -------------- ----------- --------
- after exceptional costs,
amortisation
and share-based payments 6,049 16,753 (3,158) 19,644
----------- -------------- ----------- --------
Dividend income
Finance income 4
Finance costs (1,874)
Exceptional finance costs (182)
--------
Profit before tax 17,592
Taxation (4,357)
--------
Profit for the year 13,235
--------
Estate
agency and Surveying and valuation
Balance sheet information related services
activities GBP'000 Unallocated Total
GBP'000 GBP'000 GBP'000
--------------- ------------------------ ------------ ---------
Segment assets - intangible 125,327 12,167 - 137,494
Segment assets - other 36,212 9,891 2,619 48,722
--------------- ------------------------ ------------ ---------
Total Segment assets 161,539 22,058 2,619 186,216
Total Segment liabilities (45,556) (21,632) (46,645) (113,833)
--------------- ------------------------ ------------ ---------
Net assets/(liabilities) 115,983 426 (44,026) 72,383
--------------- ------------------------ ------------ ---------
Unallocated net liabilities comprise certain property, plant and
equipment (GBP69,000), financial assets (GBP347,000), investments
in joint ventures (GBP1,768,000), cash and bank balances
(GBP435,000), other taxes and liabilities (GBP393,000), other
creditors (GBP93,000), accruals (GBP1,832,000) financial
liabilities (GBP34,918,000), deferred and current tax liabilities
(GBP8,144,000), interest rate swap (GBP1,265,000).
4. (Loss)/earnings per share
Basic earnings/(loss) per share amounts are calculated by
dividing net profit/(loss) for the period attributable to ordinary
equity holders of the parent by the weighted average number of
ordinary shares outstanding during the period.
Diluted earnings/(loss) per share amounts are calculated by
dividing the net profit/(loss) attributable to ordinary equity
holders of the parent by the weighted average number of ordinary
shares outstanding during the period plus the weighted average
number of ordinary shares that would be issued on the conversion of
all the dilutive potential ordinary shares into ordinary
shares.
Six months ended 30 June
2011
Weighted 2012 Profit Weighted Per
Loss average Per share after average share
after tax number of Amount tax number amount
GBP'000 shares Pence GBP'000 of shares Pence
---------- ----------- ---------- -------- ----------- -------
Basic EPS (6,183) 102,912,662 (6.0) 4,794 102,847,841 4.7
Effect of dilutive
share options - - - - 66,451 -
Diluted EPS (6,183) 102,912,662 (6.0) 4,794 102,914,292 4.7
---------- ----------- ---------- -------- ----------- -------
4. Earnings per share (continued)
Year ended 31 December
2011 2011
Profit Weighted Per
After average Share
tax number Amount
GBP'000 of shares Pence
-------- ----------- -------
Basic EPS 13,217 102,889,561 12.9
Effect of dilutive
share options - 1,829 -
Diluted EPS 13,217 102,891,390 12.9
-------- ----------- -------
The Directors consider that the adjusted earnings shown below
give a better and more consistent indication of the Group's
underlying performance:
Six months ended Year Ended
30 June 30 June 31 December
2012 2011 2011
GBP'000 GBP'000 GBP'000
Group operating profit before exceptional
costs, share-based payments and amortisation
(excluding amount attributable to
non-controlling interests) 14,502 11,856 31,099
Net finance costs (excluding unwinding
of discount on contingent consideration
and provisions of GBP305,000) (1,350) (815) (1,766)
Normalised taxation (3,222) (3,089) (7,773)
Adjusted profit after tax(1) before
exceptional costs, share-based payments
and amortisation 9,930 7,952 21,560
--------- --------- ------------
Adjusted basic and diluted EPS
Six months ended 30 June
2011
Adjusted Adjusted Per share
Profit 2012 Profit amount
after Weighted Per share after Weighted Restated
tax(1) average amount tax average Pence
GBP'000 number Pence GBP'000 number
of shares of shares
Adjusted Basic EPS 9,930 102,912,662 9.6 7,952 102,847,841 7.7
Effect of dilutive -
share options - - - - 66,451
Adjusted Diluted
EPS 9,930 102,912,662 9.6 7,952 102,914,292 7.7
---------- ------------ ----------- ---------- ------------ -----------
Year ended 31 December 2011
2011
Adjusted Per share
Profit amount
after Weighted Restated
tax average Pence
GBP'000 number
of shares
Adjusted Basic EPS 21,560 102,889,561 21.0
Effect of dilutive - 1,829 -
share options
Adjusted Diluted
EPS 21,560 102,891,390 21.0
---------- ------------ -----------
(1) This represents adjusted profit after tax attributable to
equity holders of the parent. Tax has been adjusted to exclude the
prior year tax adjustments, and the tax impact of exceptional
items, amortisation and share-based payments. The effective tax
rate used is 24.5% (30 June 2011- 28%; 31 December 2011 -
26.5%).
5. Exceptional (profit) /costs
Six Months Ended Year Ended
30 June 30 June 31 December
2012 2011 2011
GBP'000 GBP'000 GBP'000
Employee costs
Redundancy costs due to branch closures
and business reorganisation 188 180 266
Other
Acquisition related costs 65 1,629
Gain on disposal of freehold properties (782) - -
Onerous leases 92 - -
Contingent consideration in acquisitions
linked to employment 539 - 166
Provision for professional indemnity
claims/notifications (see note below) 17,273 - -
Impairment of Brand - - 153
Total operating exceptional costs 17,310 245 2,214
Finance costs
Fair value movement of Interest rate
swap (146) - 182
-------- -------- -----------
(146) - 182
-------- -------- -----------
17,164 245 2,396
-------- -------- -----------
Provision for professional indemnity claims/notifications
During 2012 the Group has seen a deterioration in claims
experience relating to the 2004 to 2008 period, which was a period
of relatively high risk lending characterised by higher house
prices, high loan-to-value ratios and considerable levels of
buy-to-let and sub-prime lending.
The increase in the PI provision is partly driven by lenders,
most of whom are no longer active in the market, pursuing
notifications and claims previously considered dormant. It has also
been necessary to make additional provisions for existing claims
which are being aggressively pursued by lenders who often use
solicitors engaged on a no win, no fee basis. This trend has
increased recently in advance of April 2013 when it is expected
that the legislation governing civil litigation will change. Both
these factors have had a significant impact on the 'Incurred But
Not Reported' (IBNR) provision required for notifications and
claims estimated to be received in the future for the 2004 to 2008
period. The primary statutory limitation for this period ends
during 2014. It should be noted this is the Board's best estimate
of future claims and the conclusions on the appropriate level of
IBNR provision are sensitive to small changes in assumptions and
are therefore highly subjective. The additional charge relating to
the 2004 to 2008 risk years has been included as an exceptional
item.
Further, we have however continued to build a provision for
estimated PI costs relating to valuations completed since 2009, and
an Income Statement charge has been made in these results and the
charge has been considered as an operating expense rather than as
an exceptional cost.
6. Dividends paid and proposed
Six Months Ended Year Ended
30 June 30 June 31 December
2012 2011 2011
GBP'000 GBP'000 GBP'000
-------- -------- -----------
Declared and paid during the period:
Equity dividends on ordinary shares:
Final dividend for full year 2011:5.9
pence 6,071 6,065 8,945
======== ======== ===========
Dividends on ordinary shares proposed
(not recognised as a liability as at
30 June):
Interim dividend for 2012: 3.1 pence
per share (2011 - 2.8 pence) 3,090 2,879 6,070
======== ======== ===========
7. Taxation
The major components of income tax charge/(credit) in the
interim group income statements are:
Six Months Ended Year Ended
30 June 30 June 31 December
2012 2011 2011
GBP'000 GBP'000 GBP'000
-------- -------- -----------
UK corporation tax
- current year (1,705) 1,767 5,383
- tax underprovided/(overprovided)
in prior year (686) (9) 160
-------- -------- -----------
(2,391) 1,758 5,543
Deferred tax:
Origination and reversal of temporary
differences 524 (210) (764)
Impact of rate change on deferred tax - - -
Adjustment in respect of prior year 164 162 (422)
-------- -------- -----------
Total deferred tax 688 (48) (1,186)
-------- -------- -----------
Total tax charge/(credit) in the income
statement (1,703) 1,710 4,357
-------- -------- -----------
The Group's current taxation credit comprises corporation tax
calculated at estimated effective tax rates for the year.
In March 2012 the UK Government announced proposals to reduce
the main rate of corporation tax to 22% over 3 years with effect
from 1 April 2012. As of 30 June 2012 the initial reduction to 24%
has been enacted. If the subsequent reductions in the tax rate had
been substantively enacted, the deferred tax liability at 30 June
2012 would have reduced by GBP455,000. .
8. Analysis of net bank debt
Six Months Ended Year Ended
30 June 30 June 31 December
2012 2011 2011
GBP'000 GBP'000 GBP'000
--------- ------- -----------
Interest bearing loans and borrowings 49,499 6,494 49,028
Less: 2% unsecured loan notes (1,496) - (1,496)
Less: 12% unsecured loan notes (8,660) - (8,660)
Less: Contingent and deferred consideration (2,219) (1,813) (1,939)
Less: cash and short-term deposits (337) (269) (435)
Net bank debt at the end of the period/year 36,787 4,412 36,498
--------- ------- -----------
In the Annual Report for the year ended 31 December 2011,
contingent and deferred consideration were not deducted in
calculating the net debt. However, it has been excluded in the
above calculation, for the current and prior periods, as it is not
relevant to calculate the Group's banking covenant. In summary,
none of the items excluded in calculating the net bank debt are
relevant in calculating the Group's banking covenants.
9. Assets held for sale
The assets held for sale are freehold properties which are
currently being actively marketed. There was no gain or loss
recognised upon classification of these assets as held for sale.
These assets are part of the Estate Agency and related activities
segment.
10. Provisions for liabilities
2012 2011
Professional Professional Onerous
indemnity Onerous indemnity leases Total
claim provision leases Total claim provision
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------------ ----------- ----------------- ----------- -----------
Balance at 1 January 9,641 417 10,058 10,901 992 11,893
Amount utilised (3,775) (37) (3,812) (1,202) (239) (1,441)
Unwinding of
discount 122 - 122 122 - 122
Provided in the
period (including
exceptional costs) 18,071 92 18,163 715 - 715
Balance at 30 June 24,059 472 24,531 10,536 753 11,289
-------------------- ------------ ----------- ----------------- ----------- -----------
Current 5,645 194 5,839 240 200 440
Non-current 18,414 278 18,692 10,296 553 10,849
24,059 472 24,531 10,536 753 11,289
-------------------- ------------ ----------- ----------------- ----------- -----------
Year ended 31 December 2011
Professional
indemnity Onerous
claim provision leases Total
GBP'000 GBP'000 GBP'000
-------------------- ------------ -----------
Balance at 1 January 10,901 992 11,893
Amount utilised (4,031) (243) (4,274)
Amount released - (334) (334)
Unwinding of discount 266 - 266
Provided in the period (including exceptional
costs) 2,505 2 2,507
Balance at 31 December 9,641 417 10,058
-------------------- ------------ -----------
Current 512 194 706
Non-current 9,129 223 9,352
9,641 417 10,058
-------------------- ------------ -----------
The PI claim provision relates to ongoing and expected future
legal claims relating to valuation services and is the Directors'
best estimate of the likely outcome of such claims, taking account
of the incidence of claims and the size of the loss that may be
borne by the claimant after taking account of actions that can be
taken to mitigate losses. The provision will be utilised as
individual claims are settled and the settlement amount may vary
from the amount provided depending on the outcome of each claim.
Also see explanation in note 5.
The provision for lease obligations relates to obligations under
leases on vacant properties. The provision is expected to be fully
utilised by June 2020. The final outcome depends upon the ability
of the Group to sublet or assign the lease over the related
properties.
11. Acquisitions during the period
In January 2012 the Group acquired 51% of Davis Tate, a 11
branch estate agency chain operating in 14 locations within the
Thames valley for a cash consideration GBP1.6m. Further, in July
2012, the Group also acquired 85% of Lauristons, a 5 branch estate
agency chain in South West London for a cash consideration of
GBP1.8m. The Group has options to acquire the remaining stake in
both these companies. The provisional goodwill arising on the
acquisition of Davis Tate is GBP2.0m. The remaining 49% is subject
to put and call options which are exercisable in two tranches in
2013 and 2016 dependant on profit performance and in part continued
employment of the vendors.
INDEPENDENT REVIEW REPORT LSL PROPERTY SERVICES PLC
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2012 which comprises the Interim Group
Income Statement, the Interim Group Statement of Comprehensive
Income, the Interim Group Balance Sheet, the Interim Group
Statement of Cash Flows, the Interim Group Statement of Changes in
Equity and the related notes 1 to 11. We have read the other
information contained in the half yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2012 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
Ernst & Young LLP
Leeds
31 July 2012
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR RMMLTMBJJBJT
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