LSL Property Services, the UK’s second largest chain of estate agents with brands including Your Move, Reeds Rains, Marsh & Parsons and Davis Tate, made record profits of £42m last year, reporting “excellent progress” in its estate agency division.

Residential sales income rose by 15%, financial services income by 22%, and lettings by 12%. Profit per owned branch – excluding Marsh & Parsons – rose by 44% to £46,000, up from £32,000 in 2013. The average fee earned per sale was £3,101, and excluding Marsh & Parsons was £2,654.

The firm has now set a new target for branch profitability of £100,000.

Group revenue stood at £287.5m, with estate agency contributing revenue of £76.8m and profit of £33.9m, LSL reported in its preliminary results for the year to December 31. Lettings income was £43.3m.

Marsh & Parsons increased its revenue by 9% to £32.5m, with an operating profit of £6.5m.

LSL ended the year with a total of 539 branches, of which 416 are owned by the group and 123 are franchised. The overall figure also includes four “virtual branches”.

However, like others, LSL reports that last year was a year of two halves, starting strongly but with a 16% contraction in the final quarter. Towards the end of the year, headcount reduced “in light of the softening in the market”. In total, the number of group employees fell from 5,299 to 5,222.

Today’s results also say that “excellent value” was created from its investment in Zoopla, worth a total of £42.2m at Zoopla’s flotation. LSL has retained 51% of its original shareholding, valued at £21.3m at the end of last year.

LSL acquired Hawes & Co and ten lettings portfolios last year, and so far this year has gone on to acquire Thomas Morris and six more lettings books.

However, as Countrywide has also reported, LSL has needed to increase its Professional Indemnity provisions against claims of over-valuing during the high-risk lending period of 2004 to 2008. LSL has set aside an additional reserve of £24.6m.

LSL said: “Whilst the cause is a historic market issue relating to historic periods, it remains disappointing.

“The additional provision reflects a number of factors. Although we have seen the reduction in the rate of notification that we had expected during the year, and assumed in setting the previous level of provision, a greater proportion of the notifications are deteriorating into claims.

“Claims are also hardening with the more difficult and complex claims now being progressed. This is resulting in an increase in the average cost per claim, particularly in respect of legal costs reflecting the complexity of the arguments.”