LSL, parent company of Your Move and Reeds Rains, and currently in talks to take over Countrywide, reported this morning a 4% fall in revenue last year, and a 31% fall in pre-tax profits for last year.
Despite the drop, it said underlying profits in its re-shaped estate agency division rose, and is proposing a final dividend for shareholders at 7.2p, resulting in a full-year dividend of 11.2p – a “pay-out at the upper end” of LSL’s dividend policy and reflecting its confidence.
Pre-tax profits stood at £16m, down from £23.1m, but the group said that this had been expected and was due to costs association with the branch restructuring in Your Move and Reeds Rains last year.
LSL reported that its estate agency division had been helped “materially” by the restructuring, with “underlying operating profit” up 30% to £37m.
However, residential sales income was down by 17% last year, to £57.7m. It said it had been “extremely disciplined” on fees throughout 2019, with an average of £3,452, up from £3,071 in 2018.
It exchanged on 16,707 homes last year, a 27% drop on the 22,747 units in 2018.
Lettings income was down by 12%, to £67.3m, and revenue at Marsh & Parsons down by 3%.
Offsetting declines in its sales and lettings, LSL reported strong performances in other divisions, particularly surveying where revenue shot up 24%, to £86.4m.
LSL also reported an encouraging start to this year, with a sales pipeline at the end of February £3.6m ahead of expectations.
However, the group warned that in recent days it has seen some “slight softening” of lead indicators amid coronavirus fears, and intends to keep this pay-out under review.
LSL said that the situation is rapidly evolving and it is “monitoring the situation very closely as it may create headwinds for our business in 2020 if changes in consumer behaviour impact residential property market conditions”.
It cites coronavirus among the possible risks to its business, saying that it could replicate a severe downturn in the UK housing market close to that of 2008.
CEO Ian Crabb said: “As and when any potential impact on the group becomes clearer, we will provide updates as necessary.”
LSL’s report today says that it continues to hold market leading positions in its core estate agency business, consisting of 12 brands, with its LSLi group having nine brands. There are 144 branches of Your Move and Reeds Rains. It said that its ambition is to achieve between £80,000 and £100,000 profits per branch, and to expand Marsh & Parsons to a total of 36 branches.
The report does not mention Countrywide, where the clock is ticking, and where the possibility of an acquisition arose last month, after the 2019 reporting period.
LSL has until March 23 to make an offer for Countrywide, which could be an all-shares deal or include cash.
Respectable results from LSL this morning . Group revenue down by just 4% .Net debt just over £41m . Some hefty restructuring costs which will only increase if the merger with CWD goes ahead.
How are they going to sell the proposed merger with CWD to shareholders?
They certainly won’t want group debt to be much over £100m .Neither will the banks .CWD debt being over £90m .The merger is going to have to be heavily skewed in favour of LSL
Maybe our Dane is still on the premises to purchase LSH from CWD but at a vastly reduced figure ? So maybe CWD are looking to wrap all the bad news in one annoucement?
1 LSH sold for a distressed £25m to the Dane or A. N .Other reducing overall debt to £75m
2 CWD shareholders get stung again with a share swap at say 180p a share .
Long and Creffield disappear off into the sunset clutching their golden goodbyes for a job well done- almost complete destruction of shareholder value Thank you and goodbye
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Just like any other listed company, I say bbugger the shareholders, if they want to armchair the job up to them, hope they got in on the spike in kleenexe or fairy whatever, for the rest of us it’s business as usual and it’s not easy, never has been never will be.
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I think this not only shows a tough market – especially in the second half of the year; it shows that people are moving their house sale away from corporate and regional agencies to local agencies, local realtors, local people………….
Long may that continue….
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80k profit a branch.. after paying a manager?
Where are these magic towns with no competition?
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You think 80k per office is a lot? Oh dear.
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Oh dear indeed no ‘magic towns’ required just good agency practise and 80k is the tip of the iceberg.
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Don’t forget many loyal hardworking and fee earning CWD and that includes LSL employees are shareholders some of which not only might be losing their jobs but approaching retirement
Those at CWD having what they thought created a nest egg to see themselves through to a comfortable retirement . Now left counting the cost not for the hard work they and their colleagues have undertaken but by the actions of “armchair ” Directors incurring debt unecessarily chasing revenue
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