Lsl Property Services Plc · LSE:LSL
Lsl Property Services — FY2018 Earnings Presentation
39 slides from Lsl Property Services's earnings presentation, March 2019
Slide 1: LSL Property Services plc Full Year Results
LSL Property Services plc Full Year Results Year ended 31st December 2018
Slide 2: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 6. Disclaimer 2018 YEAR END RESULTS PRESENTATION 1
Slide 3: Group Highlights: 2018
Group Highlights: 2018 Highly resilient revenue and Underlying Operating Profit performance in the Executing on our stated context of challenging residential Strong Balance Sheet strategy market conditions • Group Revenue up 4% • Net Bank Debt of £32.1m (2017: £30.0m) • Estate Agency • Group Underly
Slide 4: Group Operating Performance
Group Operating Performance Net Exceptional Group Revenue £324.6m ▲ 4% (costs)/gain (£3.0m) 2017: Exceptional Gain £9.3m Group Underlying Adjusted Earnings ▲ Operating Profit £35.9m ▼ 4% Per Share 27.2p 4% Group Adjusted Proposed Dividend ▲ EBITDA £41.6m ▼ 3% per share 10.9p 4% Net Bank Debt / Profi
Slide 5: 2018 Market Dynamics
2018 Market Dynamics Market impacted in 2018 by challenging conditions Approvals for House Purchases1 Share of housing stock available for sale3 20% 100% 100% 100% 100% 100% 100% 100% 100% 10% Traditional Agents 0% 97% 96% 95% 94% 93% 93% 92% 92% Online / -10% Hybrid Agents 3% 4% 5% 6% 7% 7% 8% 8% -
Slide 6: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 2018 YEAR END RESULTS PRESENTATION 5
Slide 7: Group Financials: Summary
Group Financials: Summary 2018 2017 Change Financial Summary P&L (£m) • Total revenues up 4% (organic +0.3%) Revenue 324.6 311.5 4% • Overall Estate Agency Division income up 3% year on year Group Underlying Operating Profit 35.9 37.5 -4% Group Underlying Operating Margin 11.1% 12.0% • Revenue up 9%
Slide 8: Estate Agency Revenues
Estate Agency Revenues Successfully diversifying revenue streams over the last 5 years1 Exchange Income Lettings Income Financial Services Income (£m) CAGR (£m) CAGR (£m) CAGR -7% 7% 19% % of EA Revenue 41% 39% 34% 31% 27% 26% 28% 29% 30% 30% 19% 21% 26% 30% 34% 92.1 92.9 83.8 87.4 76.6 73.9 76.6 74
Slide 9: Average LSL Estate Agency Residential Sales exchange fee
Average LSL Estate Agency Residential Sales exchange fee1 (£) LSL has been highly disciplined in its Residential Sales exchange fee strategy CAGR 0% 3,100 3,155 3,083 3,071 3,042 +1% YoY 2014 2015 2016 2017 2018 1 CAGR measured over period 2014-2018 for all brands (Your Move, Reeds Rains, LSLi and M
Slide 10: Financial Performance: Estate Agency
Financial Performance: Estate Agency Positive growth in Lettings and Financial Services 2018 2017 Change • Residential Sales exchange income impacted by a number of factors including: P&L (£m) Residential Sales exchange Income 69.9 76.6 -9% − Q4 2017 market conditions impacting opening 2018 pipeline
Slide 11: Financial Performance: Marsh & Parsons
Financial Performance: Marsh & Parsons1 Resilient performance despite a challenging London market London market conditions 2018 2017 Change • LSL estimates that the overall London market for P&L (£m) sales transactions was down by 15%-20% during 20182 Total Revenue 33.5 34.3 -2% Marsh & Parsons perf
Slide 12: Financial Performance: Surveying
Financial Performance: Surveying Strong Revenue and Operating Profit Performance • Revenue was up by 9% including a material 2018 2017 Change contribution in the second half of 2018 from the P&L (£m) successful commencement of the Lloyds Bank plc relationship Total Revenue 69.8 64.1 9% • Strong grow
Slide 13: Financial Performance: Exceptionals
Financial Performance: Exceptionals 2018 2017 • Total net exceptional costs in 2018 were £3.0m (2017: gain of £9.3m) comprising £2.2m of Exceptionals Items (£m) exceptional gain relating to the historic PI Costs provision and exceptional costs of £5.2m Exceptional gains: Gain on sale of GPEA shares
Slide 14: Financial Performance: Balance Sheet
Financial Performance: Balance Sheet Reshaping the Your Move and Reeds Rains branch networks – Exceptionals • Planned changes to the structure of the Your Move and Reeds Rains estate agency branch networks and operations were announced on 5th February 2019, following completion of LSL’s ways of work
Slide 15: Group Financials: Cash-flow
Group Financials: Cash-flow Business is extremely cash generative at the operational level 2018 2017 Operating Cash-flows (£m) • Strong cash from operations converting 103% of Group Underlying Operating profit 35.9 37.5 Group Underlying Operating Profit to cash-flow Depreciation, working capital etc
Slide 16: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 2018 YEAR END RESULTS PRESENTATION 15
Slide 17: Market Overview, Strategy and Outlook
Market Overview, Strategy and Outlook Market overview - volume & house price trends 1 Delivering on LSL’s strategy 2 Outlook 3 2018 YEAR END RESULTS PRESENTATION 16
Slide 18: Market Overview: Volume Trends
1 Market Overview: Volume Trends Challenging residential market conditions during 2018 BoE: 5 Year Average Approvals Volume1 Housing Stock: Dwelling stock by tenure2 No. (000’s) 3,592 25,000 20,000 2,291 1,451 15,000 655 1,301 10,000 796 5,000 5 Yr Ave 5 Yr Ave 2003-2007 2014-2018 - 1998 2001 2004 2
Slide 19: Market Overview: House Price Trends
1 Market Overview: House Price Trends Annual change in house price growth lowest for seven years England and Wales – House Price Changes1 • Average house prices in England and Wales (% YoY) increased by 0.1% to £305k • Excluding London and the South East, the rest of 8.6 UK and Wales showed house pr
Slide 20: LSL Strategy: continue to execute on its stated strategy
2 LSL Strategy: LSL plans to continue to execute on its stated strategy, positioning the Group for success across a range of market conditions Mid-term strategy Drive operating profit per branch Medium term ambition to achieve £80k to £100k profit per branch Ambition to expand the number of branches
Slide 21: LSL Group Strategy: Change to Segmental Reporting
2 LSL Group Strategy: Change to Segmental Reporting Group reporting changed to reflect the increased importance of LSL’s Financial Services businesses • LSL’s Financial Services Revenue CAGR over the 5-year period 2014 to 2018 has been 19%, representing approximately 27% of total Group revenue in 20
Slide 22: Estate Agency Strategy: Ways of Working Programme
2 Estate Agency Strategy: Ways of Working Programme Reshaping the Your Move and Reeds Rains branch networks • The changes to the structure of the Your Move and Reeds Rains estate agency branch network and operations announced by LSL on 5th February 2019 are proceeding in line with expectations • The
Slide 23: Estate Agency Strategy: Drive Operating Profit per Branch
2 Estate Agency Strategy: Drive Operating Profit per Branch The ambition is to achieve £80k to £100k profit per branch in the medium term for Reeds Rains, Your Move and LSLi branches Breakdown of Total Estate Agency Division Estate Agency Operating Profit per Branch Underlying Operating Profit (£k)
Slide 24: Estate Agency Strategy: Marsh & Parsons Branch Rollout
2 Estate Agency Strategy: Marsh & Parsons Branch Rollout Marsh & Parsons is an award winning estate agency operating in London 2018 Profit per branch* Chiswick opened in April 2018 (£k) M&P delivers higher branch profitability • Prime Central London is currently facing tough trading conditions 83.8
Slide 25: Estate Agency Strategy: Recurring Income Streams
2 Estate Agency Strategy: Recurring Income Streams One of our key objectives is to grow recurring income and where market conditions permit, counter-cyclical revenue streams Recurring Revenue (Lettings) (£m) CAGR 7% • LSL continues to evaluate Lettings book acquisitions • The legislation to ban tena
Slide 26: Financial Services Strategy: LSL FS Business Overview
2 Financial Services (FS) Strategy: LSL FS Business Overview PRIMIS (657 firms - 1844 advisers) is the trading style of three Mortgage & Protection Networks that are regulated by the FCA, formerly trading as First Complete, Pink Home Loans and PTFS Personal Touch Financial Services (199 firms – 467
Slide 27: Financial Services Strategy (1 of 2)
2 Financial Services Strategy (1 of 2) Financial Services Income Organic Financial Services • Organic growth has been achieved through Income advisor number growth and productivity gains (£m) CAGR (£m) CAGR • Selective acquisition of Financial Services 19% 14% businesses during the last 2 years has
Slide 28: Financial Services Strategy (2 of 2)
2 Financial Services Strategy (2 of 2) Growth in value of LSL’s mortgage completions Value of LSL Financial Services mortgage completions (£bn)1 • Strong growth in the value of LSL’s mortgage completions with the second largest network measured by combined numbers of appointed representative firms2
Slide 29: Acquisitions and Investments
2 Acquisitions and Investments LSL has made the following acquisitions and investments with an increasing focus on Financial Services1: 2014 2015 2016 2017 2018 January 2018: Acquired the entire issued share capital of Personal Touch Financial Services Limited (PTFS) and its subsidiary company, Pers
Slide 30: Surveying Strategy (1 of 2)
2 Surveying Strategy (1 of 2) Strategy New technology • Focus on the B2B market where the economics are most favourable • Following the successful roll out in 2016 of the market leading IT system there has been continued focus on optimising efficiency and operational performance through further enha
Slide 31: Surveying Strategy (2 of 2)
2 Surveying Strategy (2 of 2) Surveying is focused on delivering against the following principles: • Creating the best customer service experience • Providing and consistently delivering a compelling innovation roadmap • Ensuring excellent property risk management expertise These strategic aims are
Slide 32: Outlook
3 Outlook Market conditions in 2019 have been notably softer than the equivalent period in 2018, whilst LSL’s financial performance so far in 2019 has been marginally behind the Board’s expectations. Nevertheless, at this early stage in the year, the Board’s current expectation is that the Group wil
Slide 33: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 2018 YEAR END RESULTS PRESENTATION 32
Slide 34: Appendices
Appendices
Slide 35: LSL Property Services plc: Business Overview
LSL Property Services plc: Business Overview 2018 Revenue 2018 Operating Profit 2018 Average FTE 2 £324.6m £35.9m 4,763 15% 22% Agency 1 Agency 1 50% 50% Agency 1 Surveying 78% 85% Surveying Surveying 1 Includes Estate Agency branches, Financial Services, Asset Management 2 FTE (Full Time Equivalent
Slide 36: Financial Performance: Operating Profit per Branch
Financial Performance: Operating Profit per Branch Break-down of Operating Profit per Branch 2018 2017 Operating Operating Operating Branch Operating Branch Profit Per Profit Per Profit Numbers Profit Numbers Branch Branch £m No. £k £m No. £k Estate Agency Branches (excluding Marsh & Parsons) Operat
Slide 37: Estate Agency Strategy: Marsh & Parsons Branch Rollout
2 Estate Agency Strategy: Marsh & Parsons Branch Rollout Branch Openings since 2013 2013 2014 South Kensington Bishop’s Park 2013 Marylebone Shepherd’s Bush East Sheen Richmond Camden January 2013 June 2013 June 2013 March 2014 September 2014 September 2014 October 2014 2015 2016 2017 2018 Shoreditc
Slide 38: Disclaimer
Disclaimer This document contains certain statements that are forward-looking statements. They appear in a number of places throughout this document and include statements regarding our intentions, beliefs or current expectations and those of our officers, directors and employees concerning, amongst
Slide 39: Slide 39