LSL, parent company of Your Move, Reeds Rains, Marsh & Parsons and Davis Tate in the Thames Valley, this morning reported an 80% drop in pre-tax profits.
They went from £31.4m last year to £6.2m, despite little change in group revenue – £140.2m in the first half of this year, up very slightly from £139.8m in the same period last year.
However, this year’s first-half figures are in part a reflection of a one-off windfall of £18m in the first half of last year, when LSL sold part of its holding in Zoopla, when the latter floated as a public company. There was also an extra £2m in contingent acquisition costs in the first half of this year.
Nevertheless, LSL said that revenue from house sales had been hit by “weak first half market conditions”. Its estate agency division brought in £109.1m, little changed from last year’s £108.6m, but the division’s operating profit margin sank to just 5.8%, down from 11.3%, with exchanges down 6%. The firm reported that it had maintained its average fees.
Residential sales income fell 5% to £42m, down from £44.4m. By contrast, lettings revenue rose 11% to stand at £30.6m.
In London, flagship brand Marsh & Parsons saw revenue fall by 5% to £15.4m. Sales were down by 13%, offset by a 6% rise in lettings income growth. Lettings income now accounts for 50% of Marsh & Parsons’ revenue.
Just as Foxtons also reported last week, LSL said its board is confident of a better half to 2015, with robust pipelines, positive market sentiment and increasing activity. It said it has seen stronger trading in June and July.
The firm, which acquired Thomas Morris estate agents in February, spent £3.9m on buying 13 businesses in the fist six months of this year.
LSL chairman Simon Embley said: “The group has delivered a resilient first half performance in an evolving market. Key economic growth indicators, the political landscape and consumer confidence all remain positive although the market is seeing lower levels of estate agency instructions and availability of stock outside of London and the south east.
“With increasing levels of activity seen in recent months, robust pipelines and a broad coverage of the whole UK residential property sector, LSL is well placed to capitalise on the underlying market fundamentals.
“The outlook from lenders remains positive with historically low mortgage rates and increased distribution of products through intermediary channels.
“As a result, we expect the market to return to year on year growth in the second half of the year and the Board remains confident in delivering year on year operating profit growth in the second half of 2015 and a full year result in line with expectations.”