Trading Update - 2019 Expectations Unchanged

LSL Property Services plc ("LSL")

Trading Update - 2019 Expectations Unchanged

LSL Property Services plc, a leading provider of residential property services incorporating estate agency, financial services and surveying businesses, issues a trading update for the period up to 31^st October 2019.

Group Performance and Outlook

The Board remains confident that the Group will deliver a full year 2019 Group Underlying Operating Profit⁽¹⁾ in line with its prior expectations.

Group revenues for the ten months ended 31^st October 2019 decreased by 3% to £262.8m (2018: £270.5m) including the impact of the reshaping of the Your Move and Reeds Rains branch networks announced on 5^th February 2019. Excluding the impact of the planned closure of the Your Move and Reeds Rains branches during Q1 2019, Group revenues for the ten months ended 31^st October 2019 increased by 5%.

The percentage change in revenue for the three months ended 30^th September 2019, the four months ended 31^st October 2019 and for the ten months ended 31^st October 2019 compared to the same time periods in 2018 is set out below:

Market backdrop

Market activity levels have remained subdued in 2019. The RICS October 2019 Residential Market Survey results stated that there continues to be a relatively subdued sales market backdrop, evidenced by negative readings for indicators covering new buyer enquiries, agreed sales and new instructions.

Estate Agency

For the four-month period ended 31^st October 2019, Estate Agency revenue was down by 19%, materially impacted by the planned reduction in the size of the Your Move and Reeds Rains branch networks during Q1 2019. Excluding the impact of the closure of the Your Move and Reeds Rains branches, Estate Agency revenue² for the four-month period was down 5%. 

Whilst London market conditions continued to be challenging during the four-month period, Marsh & Parsons delivered a resilient revenue performance with total revenue down 4%. Residential exchange income was flat and Lettings income declined by 1%.

Financial Services

For the four-month period ended 31^st October 2019, the Financial Services Division organic revenue growth excluding Estate Agency was 2%. Total Financial Services Division revenue including Estate Agency for the four- month period was down by 4%, reflecting the impact of the planned closure of the Your Move and Reeds Rains branches.

The value of LSL's mortgage completions in the ten months to 31^st October 2019 was £26.0bn, a 7% increase year on year, with total appointed representative firms of 869 (31^st October 2018: 856) and financial advisers of 2,339 (31^st October 2018: 2,300).

Surveying

For the four-month period ended 31^st October 2019, the Surveying Division delivered a strong performance with revenue up by 18%, which included a material contribution from the successful commencement of the Lloyds Bank plc surveying and valuation services relationship awarded in May 2018 and commenced in the second half of September 2018.

Balance Sheet Update

Net Bank Debt at 31^st October 2019 was £54.8m (2018: £47.4m). The increase in Net Bank Debt of £7.4m year on year includes the final payment for PTFS, the acquisition of six Lettings Books and contingent consideration payments.

Commenting on today's announcement, Ian Crabb, Group CEO, said:

"LSL has delivered a creditable performance in the 10 months to 31^st October 2019. This performance has been delivered during a period when market activity levels have remained subdued given the continued uncertainty over the UK and global political and economic environment. LSL's performance illustrates the benefits of the Group's diversified strategy and the self-help initiatives being taken to respond to current market conditions.

Until we have greater clarity on the political backdrop, we remain cautious on the market outlook for 2020 and we will continue to monitor market conditions closely. The Group's diversified strategy combined with its robust balance sheet gives the Board confidence of the opportunities for further positive progress for the Group."

Notes to trading update

1.     Group Underlying Operating Profit is before exceptional gains and exceptional costs, contingent consideration, amortisation of intangible assets and share‐based payments.

2.     Revenues have been restated on a like for like basis to exclude the impact of the closure of the Your Move and Reeds Rains branches during Q1 2019.

3.     Following the change to LSL's segment reporting effective from 1^st January 2019, the Estate Agency Division receives a commercially agreed commission payment from the Financial Services segment. This arrangement reflects Financial Services income generated from the Estate Agency segment. The 2018 revenue has been restated on this basis to assist comparison.

4.     Estate Agency Division revenue metrics presented in this statement include Marsh & Parsons Revenue.

Notes on LSL:

LSL is a leading provider of residential property services to its key customer groups. Services to consumers include: residential sales, lettings, surveying, conveyancing support, and mortgage, pure protection and general insurance brokerage services. Services to mortgage lenders include: valuations and panel management services, and asset management and property management services. For further information, please visit LSL's website: lslps.co.uk