This morning, LSL announced a 42% plunge in pre-tax profits last year, together with a write-down in LSL’s £20m investment in online firm Yopa, by £12.2m to £7.8m.
This, said LSL, reflects its board’s assessment of Yopa’s “fair value” as at the end of last year. LSL has a minority 14.7% stake in Yopa and in this morning’s report expressed confidence in the high street.
The group, whose main brands Your Move and Reeds Rains have undergone a radical restructure in recent weeks, announced pre-tax profits of £23.1m for the 12 months to the end of December. This was down from £40.1m the year before.
Group revenue lifted 4% to £324.6m, up from £311.5m, but an exceptional gain of £9.3m in 2017 was reversed by an exceptional loss of £3m last year.
Overall underlying profit was £35.9m, down from £37.5m.
In its estate agency division, income was up 3% year on year, but operating profit down 24%. Residential sales income was down 9% at £69.9m, but lettings income rose 4% to £76.6m. At flagship brand Marsh & Parsons, total revenue was down 2% and operating profit fell from £3.9m to £2.3m.
Group net bank debt rose slightly, and was £32.1m at the end of last year, against £30m.
Group chairman Simon Embley said that the group had delivered a “highly resilient revenue and underlying operating profit performance in 2018 despite challenging residential property market conditions.”
He went on: “Market conditions in 2019 have been notably softer than the equivalent period in 2018 while LSL’s financial performance so far in 2019 has been marginally behind the board’s expectations.”
However, he said that while LSL was cautious on the residential property market outlook, the board remained confident of the opportunities for further positive progress in the group.
LSL reported that “re-shaping” of the Your Move and Reeds Rains networks started in February, but the business emphasised its belief in the traditional estate agency model.
It said: “We continue to believe that traditional estate agents will represent the substantial majority of the residential sales and lettings markets for the foreseeable future and that estate agency branches will continue to remain core to providing the service our customers expect.”
CEO Ian Crabb set out estate agency strategy including an ambition to achieve £80,000 to £100,000 profit per branch, and to expand the number of Marsh & Parsons branches. The strategy does not mention Yopa.
Estate agency operating profit per owned branch in 2018 was £18,300, down from £32,000 in 2017.
As at the end of last year, LSL had a total of 491 branches (down from 505 the year before). Of these, 404 were Your Move and Reeds Rains branches. There are now 279, LSL reported this morning, following the re-structure. There are 59 LSLi branches (down from 64 last year) and 28 Marsh & Parsons branches (up from 27).
Comments (8)
Ewemove is looking like a good investment! We bought it for £9m in September 2016 and its made rising amounts of cash in both years since we have owned it, and is the 4th biggest online/hybrid agent judged by listings in the UK. Of course we have a different model – its 100% franchised and works “no sale, no fee”.
Could well be ‘last man standing’ in your sector at this rate!
The startling thing is that LSL still values Yopeless at £53m
HOW???!?!?!
Presumably on the basis that PB is “worth” £400m?
Will LSL stump up the readies when Yopa run out of cash in the next 3 months?
It’sall about the software innit? Got to be worth millions. That’s how the other doomed-to-fail b*llsh*tters propped up their balance sheets – with some pipe-dream valuation of something that was, or is, worth the thin end of nothing.
How can I company tell it’s staff to provide a genuine service for a good fee on 1 hand while devaluing it and ripping off punters with the yopa other hand.
Deserve to go bust with those core values.
We won’t offer pay any way simply because it’s unethical.
That’s it.
In hindsight, maybe not the best move putting £20m into YOPA, how long before it’s all written down?
£18,000 per branch before or after applied central overhead costs?
Its the CO that’s cripling regional and national agents.
No profit in that model at the moment!