TIDMLSL
RNS Number : 9573H
LSL Property Services PLC
30 March 2020
For Immediate Release 30(th) March 2020
LSL Property Services plc ("LSL" or "The Group")
COVID-19 UPDATE
LSL Property Services plc, a leading provider of residential
property services incorporating estate agency, financial services
and surveying and valuation businesses, issues a COVID-19 update,
in light of rapidly changing market conditions.
Trading and financial position
The Group made a positive start to 2020, with Group Underlying
Operating Profit(1) for the first two months of the year GBP2.2m
ahead of the same period in the prior year, in line with our
expectations. Trading conditions in the Estate Agency Division were
positive across the UK in January and February, with strong year on
year growth in net sales.
We last updated the market on 10(th) March 2020 in our 2019
Preliminary Results Announcement, when we communicated that we had
seen some slight softening of our lead sales indicators in Estate
Agency. Since then, we have seen a further material slow-down of
our lead sales indicators in Estate Agency, and following the Prime
Minister's address to the UK, announcing a national lock-down with
effect from the evening of 23(rd) March 2020, activity levels have
dropped very sharply.
Our Customers and People
Since the start of the COVID-19 outbreak, we have focused on the
welfare of the Group's employees, and customers, and the Group
continues to apply the advice of the Government and public health
authorities throughout our businesses. This will be a period of
great uncertainty for our colleagues, customers and business
partners, and we will continue to communicate regularly with them
as the situation evolves.
LSL response
In response to the sharp drop in transaction volumes, we are
taking a wide range of immediate and proactive measures to reduce
operational costs, optimise the balance sheet, provide operational
flexibility and protect our employees, customers and business
partners. Key actions include the following:
Group wide
-- Implemented business continuity plans across all our
businesses, switching to remote working
-- Proactive measures across our Estate Agency, Financial
Services and Surveying businesses, further details below
-- Rightsizing of team activity levels to market conditions,
reflecting the drop in transaction volumes by business stream
-- Recruitment freeze and annual pay review suspended for the Board and all staff
-- Deferred all non-critical capex
-- All discretionary expenditure halted, with all non-essential marketing activities cancelled
-- All Group wide acquisition activity halted for the foreseeable future
-- Working closely with our business partners, with the
intention of finding solutions to meet their needs in this rapidly
changing environment
Estate Agency
-- To protect our employees, customers and suppliers, closure of
all Estate Agency branches, in line with Government advice, with
customer support provided remotely, and with Estate Agency branch
staff working from home where required
-- Cross-functional training to enhance workforce flexibility
Financial Services
-- Continue to provide consistent delivery of appropriate outcomes for consumers
-- Meet anticipated increased consumer demand for remortgage and protection products
Surveying
-- To protect customers and staff, cessation of all physical
valuations in line with Government advice
-- Actively working with lender clients to move a higher
proportion of valuations to non-physical (remote) valuations
Liquidity and Covenants
We have entered this period of market uncertainty in a strong
financial position. The Group has a Revolving Credit Facility (RCF)
in place of GBP100m, which is committed to May 2022. As at 29(th)
February 2020, the Group had Net Banking Debt of GBP52.1m, and
gearing(2) of 1.2 times twelve-month rolling Group Adjusted
EBITDA(3) against a banking covenant of 3.25 times. The Group
currently has immediately available liquidity of circa GBP55m,
through committed facilities and cash balances.
As the situation has continued to develop, we have modelled a
range of scenarios to stress test the Group's liquidity position
through to the end of 2020. These show that in very significant
stress scenarios, with appropriate mitigating actions, the Board is
comfortable that the business has adequate banking facilities in
place for the foreseeable future. We also welcome the Government's
support packages for workers and businesses impacted by the current
situation, which we will utilise where appropriate.
Dividend
The Group delivered a positive Group financial performance in
the year ended 31(st) December 2019. The Group delivered 2019
Underlying Operating Profit ahead of the Board's prior expectations
in 2019. Net Bank Debt at 31(st) December 2019 was GBP41.9m with a
modest level of gearing(2) at 1.0x Group Adjusted EBITDA(3) . Given
this positive performance, prior to the COVID-19 outbreak, the LSL
Board was previously of the view it would be appropriate to
recommend a final dividend at the upper end of the range of LSL's
stated dividend policy.
However, given the uncertainty of how deep and how long the
impact of COVID-19 will be, alongside the other measures we are
taking to preserve the Group's cash position, the LSL Board has
decided not to recommend a final dividend for the year ended 31(st)
December 2019 to Shareholders for approval at the 2020 AGM. This
represents a cash saving of GBP7.4m in H1 2020. The LSL Board
believes that this is an appropriate measure to take at this point
as the Group seeks to preserve its liquidity, cash flow and
financial position during this period of uncertainty.
Outlook
The rapidly developing COVID-19 situation means that we are no
longer able to provide financial guidance for the year ending
31(st) December 2020 and beyond. Guidance will be resumed when a
higher level of normality returns.
The Group enters this period of uncertainty caused by COVID-19,
confident in its ability to manage through the current challenging
market conditions through a combination of self-help measures, and
Government support measures. The Group has remained resilient
during challenging market conditions and expects this to remain the
case during the current market disruption. We have a strong
track-record of effective execution and a number of longstanding
management team colleagues with experience of navigating through
periods of challenging market conditions.
Significant management actions have already been implemented
across the Group. We will continue to take all necessary actions to
reduce costs and optimise the balance sheet through this period of
substantial uncertainty caused by COVID-19. The Group is well
capitalised, with committed bank facilities until May 2022 and
supportive lenders.
We expect our Estate Agency and Surveying businesses to be the
most impacted through the reduction of purchase transaction
volumes, whilst our Financial Service business should be more
robust. The Group identified Financial Services as a major
opportunity some time ago, since which time LSL's position has
strengthened consistently, and we now have a strong and resilient
Financial Services business.
AGM
LSL intends to hold the 2020 AGM at its offices at 1-3 Sun
Street, London, EC2A 2EP. LSL normally holds its AGM at the end of
April, however due to the outbreak of COVID-19 the AGM arrangements
are under review with a date to be determined. Once a date for the
AGM has been set, the Notice of Meeting will be sent to
Shareholders, and it will include details of all proposed
resolutions.
Commenting on today's announcement, Simon Embley, Chairman,
said:
"We are facing unprecedented market conditions caused by
COVID-19. We are taking prompt decisive self-help actions across
the Group to preserve liquidity, reduce costs and optimise the
business for the short and medium term. We are well positioned to
deal with the disruption caused by COVID-19, with a strong balance
sheet and a capable and experienced management team across the
Group.
The welfare of our colleagues is an ongoing priority for us and
the LSL Board would like to take this opportunity to thank all of
our colleagues for their ongoing professionalism during this
challenging time.
The LSL Board believes that in taking prompt, decisive and
appropriate action to respond to market conditions in combination
with its strong balance sheet, the business is well positioned to
emerge strongly when market conditions improve. "
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, Simon Compton
Buchanan 0207 466 5000
Notes:
1. Group Underlying Operating Profit is before exceptional
costs, contingent consideration, amortisation of intangible assets
and share-based payments
2. Gearing is defined as Net Bank Debt divided by Group Adjusted
EBITDA(3) (excluding the impact of IFRS 16)
3. Group Adjusted EBITDA is Group Underlying Operating Profit
plus depreciation on property, plant and equipment (on a pre-IFRS
16 basis)
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
Forward Looking Statement
This document contains certain statements that are
forward-looking statements. They appear in a number of places
throughout this document and include statements regarding our
intentions, beliefs or current expectations and those of our
officers, directors and employees concerning, amongst other things,
our results of operations, financial condition, liquidity,
prospects, growth, strategies and the business we operate. By their
nature, these statements involve uncertainty since future events
and circumstances can cause results and developments to differ
materially from those anticipated. The forward-looking statements
reflect knowledge and information available at the date of
preparation of this document and, unless otherwise required by
applicable law, LSL undertakes no obligation to update or revise
these forward-looking statements. Nothing in this document should
be construed as a profit forecast. LSL and its Directors accept no
liability to third parties in respect of this document save as
would arise under English law. This presentation contains brands
that are trademarks and are registered and/or otherwise protected
in accordance with applicable law.
Any forward-looking statements in this document speak only at
the date of this document and LSL undertakes no obligation to
update publicly or review any forward-looking statement to reflect
new information or events, circumstances or developments after the
date of this document.
This information is provided by RNS, the news service of the
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END
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