TIDMLSL
RNS Number : 4605X
LSL Property Services
30 April 2019
For immediate release 30(th) April 2019
LSL Property Services plc ("LSL" or "Group")
AGM Statement
LSL Property Services plc, a leading provider of residential
property services incorporating estate agency, financial services
and surveying businesses, will hold its Annual General Meeting
(AGM) today in London at 3:30pm where the following comments will
be made regarding current trading, financial performance and
outlook for the current financial year.
Overview:
Group revenue for the three months ended 31(st) March 2019 has
increased by 5.7% year on year as the business continues to benefit
from the range of LSL's ongoing self-help measures including a
significant revenue impact from the new Lloyds Bank plc surveying
contract awarded in May 2018. The Board's current expectation is
that the Group will deliver a full year Underlying Operating Profit
in line with its prior expectation.
Market Backdrop:
Market conditions in Quarter 1 ("Q1") 2019 have been notably
softer than the equivalent period in 2018. The RICS March 2019
Residential Market Survey(1) reported that agreed sales and new
instructions continued to decline in the residential market amid an
uncertain political backdrop and that the RICS new buyer enquiries
tracker has been negative for the eighth successive month.
Group Performance:
The revenue for Q1 2018 and Q1 2019 and the percentage year on
year changes in revenue are set out below:
Q1 2018(2) Q1 2019 % Change
-------------- ------------ ---------- ---------
Group GBP72.9m GBP77.1m +5.7%
Estate
Agency(2) GBP42.8m GBP39.2m -8.5%
Financial
Services(2) GBP15.3m GBP17.1m +11.7%
Surveying GBP14.8m GBP20.8m +40.7%
-------------- ------------ ---------- ---------
Estate Agency:
LSL announced the reshaping of its Your Move and Reeds Rains
branch networks on 5(th) February 2019. We are pleased that the
implementation of this programme is progressing in-line with our
expectations despite the scale and complexity of the project. As a
result, the revenue in the keystone branch network in Q1 was
slightly ahead of the LSL business plan. During Q1, the Your Move
and Reeds Rains estate agency branch network was reshaped from 308
owned branches to 144 keystone branches following the closure and
merging of 81 neighbouring branches into the keystone branch
network, the franchising of 39 branches and the closure of 44
branches. This reshaping was in-line with LSL's intentions
announced on 5(th) February 2019. We continue to expect these
changes to deliver a material improvement to underlying operating
profit in Your Move and Reeds Rains, assuming no material change in
market conditions.
Total Estate Agency financial performance in Q1 was as
follows:
-- Total Estate Agency revenue decreased by 8.5% year on year
impacted by the soft market conditions and the reduction in the
size of the Your Move and Reeds Rains branch networks during Q1
2019. Your Move and Reeds Rains total revenue declined by 9.3% in
Q1 versus prior year(2)
-- Total Residential Sales exchange revenue was down by 13.7%
year on year. On a like for like basis, adjusting for the closure
of the Your Move and Reeds Rains branches during Q1, total
residential income decreased by 9.4%
-- Total Lettings income was down by 4.4% year on year. On a
like for like basis, adjusting for the closure of the Your Move and
Reeds Rains branches during Q1, total Lettings income increased by
1.0%
-- Two lettings books have been acquired during 2019, in line
with LSL's stated strategy, for a total consideration of
GBP1.0m
-- The London market conditions continued to be challenging in
Q1 as anticipated. Marsh & Parsons Q1 total revenue declined
10.0% year on year
-- In line with our stated strategy, Marsh & Parsons opened
two new branches in April 2019 in Willesden and Streatham Hill
Financial Services:
As communicated in the LSL Preliminary Announcement on 5(th)
March 2019, to reflect the growth and increased importance of LSL's
Financial Services businesses, effective from 1(st) January 2019,
this business is now reported separately.
-- Total Financial Services revenue is ahead of the same period in 2018 by 11.7%(2)
-- Financial Services organic growth, excluding Estate Agency, in Q1 was 2.4%
-- Mortgage completions in the period were GBP7.3bn, an 18% increase year on year
-- Number of appointed representatives as at 31(st) March 2019
were 866 (31(st) March 2018: 859)
-- The roll out of the new Financial Services technology system
is progressing in line with expectations
Q1
2019
----------------------- -------
Total Financial
Services segment
revenue(2) +11.7%
Financial Services(3) +21.1%
Your Move &
Reeds Rains(2) -6.4%
Other Estate
Agency(2) -3.2%
-- Financial Services(3) revenue growth of 21.1% reflected the
acquisitions of PTFS and RSC in Q1 2018, on an organic basis
Financial Services(3) revenue increased by 2.4%
-- Your Move and Reeds Rains financial services revenue was down
by 6.4%(2) reflecting the reduction in size of the Your Move and
Reeds Rains branch networks during Q1 2019
-- Other Estate Agency financial services income was down by
3.2%(2) reflecting the soft market conditions
Surveying:
Revenue in the Surveying Division for the first three months of
2019 was significantly ahead of the same period in 2018 due to the
new contract with Lloyds Bank plc which was awarded in May 2018.
This has offset the softer market conditions and lender mix during
the period.
-- Surveying income increased by +40.7% year on year
-- The initial performance of the Lloyds Bank plc contract has
been in line with expectations and the integration of the existing
Lloyds bank plc surveyors transferred to e.surv as part of the
contract has progressed positively
-- Technology enhancements continue to be implemented during
2019 with further functionality releases designed to drive quality
and efficiency improvements
-- Continued progress has been made to address historic Professional indemnity claims
Outlook:
Market conditions remain notably softer than the equivalent
period in 2018, whilst LSL's financial performance in 2019 is
slightly behind the Board's expectations. LSL continues to benefit
from its range of proactive self-help measures across the business
and the Board's current expectation is that the Group will deliver
a full year Underlying Operating Profit in line with its prior
expectation.
We continue to remain cautious on the residential property
market outlook for 2019 given the current uncertainty over the UK
and global political and economic environment and the potential
impact on UK consumer confidence. Although Brexit and the current
political environment continues to create uncertainty, it is too
early to judge if the Brexit outcome will further impact consumer
sentiment. The final arrangements for the planned exit from the
European Union are uncertain. In the eventuality that the outcome
leads to a changed impact on consumer confidence and our business,
we will update our Shareholders.
Legislation banning tenant fees will come into effect on 1(st)
June 2019. LSL has made the necessary plans to implement the
required changes across LSL's Estate Agency brands. LSL continues
to implement self-help measures in lettings e.g. the acquisition of
lettings books, with the aim of optimising lettings income.
LSL continues to execute on its stated strategy and the Board is
confident that the Group, with its market leading brands, broad
portfolio of residential property services and the benefits from
the proactive self-help measures, remains well positioned to
perform well given a range of potential market conditions, in order
to maximise Shareholder value. The Board remains confident of the
opportunities for further positive progress for the Group.
Notes
1. Source: RICS March 2019 Residential Market Survey
2. Following the change to LSL's segment reporting effective
from 1(st) January 2019, the Estate Agency Division receives a
commercially agreed commission payment from the Financial Services
segment. This arrangement reflects Financial Services income
generated from the Estate Agency segment. The 2018 revenue has been
restated on this basis to assist comparison
3. Includes revenue from Primis, Group First and RSC
For further information, please contact:
Ian Crabb, Group Chief Executive Officer
Adam Castleton, Group Chief Financial Officer
LSL Property Services plc 0207 382 0360
Helen Tarbet
Sophie Wills
Buchanan 0207 466 5000
Notes on LSL:
LSL is a leading provider of residential property services to
its key customer groups. Services to consumers include: residential
sales, lettings, surveying, conveyancing support, and mortgage,
pure protection and general insurance brokerage services. Services
to mortgage lenders include: valuations and panel management
services, and asset management and property management services.
For further information, please visit LSL's website:
lslps.co.uk
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END
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