Profits in fall at parent company of Your Move, Reeds Rains and Marsh & Parsons

Pre-tax profits have fallen sharply at LSL Property Services, whose brands include Your Move, Reeds Rains and Marsh & Parsons, the firm announced this morning – but there was a reason.

Its 2017 full-year results show pre-tax profits at £40.1m, down from £65.4m the year before. However, this was when the company boosted its performance by disposing of £32.9m worth of shares in Zoopla.

Its exceptional gains last year were nowhere near on the same scale, but included £5.6m relating to the sale of shares in GPEA – parent company of the Guild of Property Professionals and of Fine & Country, and which now also owns easyProperty.

Group revenue was up 1% last year, at £311.5m, compared with £307.8m in 2016, and the company said both underlying profit and EBITDA were also up – the former, by 8%, to £37.5m, and the latter by 7%, to £42.7m.

However, with no sell-off of ZPG shares, as well as a fall in pre-tax profits, there was also a 36% slide in group operating profits, down from £65.4m to £42.1m.

Income from residential sales was down 9% last year, and LSL said consumer confidence was hit by rising inflation, subdued wage growth and changes to buy-to-let regulation.

The company closed eight branches and three franchises, but does not expect further rationalisation. It does expect to see a further reduction in house sales this year, but said the medium to longer terms fundamentals of the UK housing market “remain solid”.

Altogether last year, it sold 25,176 homes, down from 27,195, at an average fee of £3,042.

In central London, where LSL’s flagship business Marsh & Parsons operates, sales fell over 15% and house prices fell 9.5%. However, Marsh & Parson delivered revenues of £34.3m, up 2% from £33.5m in 2016.

LSL – which has grown staff headcount  slightly from 4,990 to 5,084 – also said it is monitoring the likely effects of the fees ban, which it expects to be introduced next year.

Lettings income grew, by 4%, to £73.9m, and financial services income bounced up 16%, to £74.4m.

LSL chairman Simon Embley said: “The group delivered a robust financial performance given the subdued market conditions.”

He said that LSL’s financial performance this year is close to the board’s expectations.

Last September LSL announced it  had invested £20m in a 17.3% stake in online agent Yopa, in which Savills is also an investor.

This morning LSL said that the proportion of new sales placed with online agents continued to grow last year, to 7% in the second half of last year.

LSL also last year invested in Zero Deposit, via a £0.75m convertible loan note.

The business also re-stated its ambition of raising operating profit per branch to between £80,000 and £100,000 “in the medium term”.

LSL this morning said it was raising its final proposed dividend per share from 6.3p to 7.3p.

 

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3 Comments

  1. Shaun77

    Interesting their ave fee is around £3k which isn’t a million miles away from Yopa’s NSNF option.

    Makes you wonder what it is that the onliners are disrupting. Essentially you’re paying around the same but without the benefits of a tradiional office with real local people working for you.

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  2. cyberduck46

    Shaun77,

     

    I don’t know anything about YOPA’s service but based on a quick look on their front page it suggests the NSNF cost is £1495 inclusive of VAT.

     

    Does the LSL £3K average fee include VAT? If not, its’ £3600.

     

    Quite a difference at what is presumably the average property price. So for a property at double the average price the difference would be as much as £1495 compared to £7200. Of course in London, the average property price is double the national average price more or less (but it looks like YOPA charge more in London)

     

    So without getting into actual details I’d say there looks like a good saving to be made by the owner with an average priced property outside London and very good savings for those with average priced London properties and above average priced properties outside London.

     

     

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    1. Shaun77

      I’ll be honest and say I didn’t check their website so was basing my comment on having read somewhere their NSNF price was  £2600, but maybe that was just London and yes, it probably included VAT.

      However, the “saving” you refer to is a huge assumption as you’re suggesting a sellers outcome is fixed (both in terms of price achieved and whether it actually exchanges) regardless of which agent they choose to act for them.

      This simply isn’t the case and the fact that it’s presented as such is thoroughly misleading an unsuspecting public.

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