Lsl Property Services Plc · LSE:LSL
Lsl Property Services — H1 2015 Earnings Presentation
29 slides from Lsl Property Services's earnings presentation, August 2015
Slide 1: Interim Results
Interim Results Half year ended 30 June 2015
Slide 2: Agenda
Agenda 1. Executive Summary 2. Financial Performance 3. Strategy 4. Market and Outlook 5. Q&A 1 HALF YEAR RESULTS PRESENTATION AUGUST 2015
Slide 3: Resilient performance in an evolving market
Resilient performance in an evolving market Market – Improving UK residential housing market expected in the second half of 2015 following slow start to the year – Challenging YOY comparatives now easing – House price inflation across the UK of 4.1%1 – Market adversely impacted by stamp duty changes
Slide 4: Agenda
Agenda 1. Executive Summary 2. Financial Performance 3. Strategy 4. Market and Outlook 5. Q&A 3 HALF YEAR RESULTS PRESENTATION AUGUST 2015
Slide 5: Group Financials
Group Financials Interim Dividend maintained at 4.0 pence per share reflecting the Board’s confidence in the outlook for the second half of the year £m Actual First Half Operating Profit (£m) 2015 2014 % growth P&L 14.5 15.1 11.8 11.5 10.3 Revenue 140.2 139.8 0% Group Operating Profit1 10.3 15.1 (32
Slide 6: Group Financials
Group Financials 6 months to 30 June Group revenue (£m) Group Operating Profit (£m) – Cost base held in Estate Agency in the expectations of a stronger second half 15.1 – Selective investments in financial 14.5 services and lettings 139.8 140.2 – Continued investment in branch openings in Marsh and
Slide 7: Financials – Cash flow and Debt
Financials – Cash flow and Debt Increased investment in acquisitions and lettings books in line with Group Strategy H1 2015 H1 2014 – Cash from operations: Operating Cashflows • PI payments in line with expectations Operating Profit 10.3 15.1 – Investments: • Acquisitions – Thomas Morris and Depreci
Slide 8: Financial Performance – by Quarter
Financial Performance – by Quarter Improving market in Q2. YOY comparatives easing % Growth 2015 vs 2014 Q1 Q2 H1 – The Group strategy is to maintain fees (% and £) rather than chase volume. Agency House Purchase approvals(1) (12)% 4% (3)% Residential Sales exchange Income (13)% (1)% (5)% Surveying
Slide 9: Financial Performance – Estate Agency
Financial Performance – Estate Agency H1 2015 H1 2014 Inc/ (Dec) – Continued strong lettings & FS (financial services) performance – Agency £ fees holding up in competitive Exchange volume (units) 13,441 14,297 (6)% market for instructions – Asset management performance in line P&L (£m) with a chall
Slide 10: Financial Performance – Marsh & Parsons
Financial Performance – Marsh & Parsons1 H1 2015 H1 2014 Inc/ (Dec) – Stamp duty increase and election uncertainty adversely impacting Prime Central London market in H1 P&L (£m) – Residential sales income down 13% year on year. Total Revenue 15.4 16.1 (5)% – Lettings income up 6% year on year Expend
Slide 11: Financial Performance – Surveying
Financial Performance – Surveying H1 2015 H1 2014 Inc/ (Dec) – Benefits from contract renewals and wins delivering improved profitability – Payback from 2014 restructuring Number of jobs (000’s) 165 196 (19%) in line with expectations reducing costs – Operational efficiency improving P&L (£m) – PI p
Slide 12: Agenda
Agenda 1. Executive Summary 2. Financial Performance 3. Strategy 4. Market and Outlook 5. Q&A 11 HALF YEAR RESULTS PRESENTATION AUGUST 2015
Slide 13: Diversified exposure to the UK residential property market
Diversified exposure to the UK residential property market Agency Revenue Split Business Channel Geography Consumer Marsh & Parsons 16% Central London brands LSLi 18% London / SE Estate Agency B2C UK 12 Your Move 44% National coverage Surveying B2B UK N/A Reeds Rains 22% Predominantly North H1 15 Re
Slide 14: Group Strategy
Group Strategy LSL Strategy – Focus on optimising profitable organic growth through strategies that are not wholly linked to market volumes – Utilise strong operational cash flow and balance sheet for selective acquisitions – Explore new revenue streams Agency – Drive operating profit per branch Str
Slide 15: Estate Agency Strategy – Your Move, Reeds Rains, LSLi
Estate Agency Strategy – Your Move, Reeds Rains, LSLi Strategy is to drive operating profit per branch in the medium term Operating profit per branch (£k) – (Full Year) Initiatives to drive branch profitability include: – Focus on exchange volumes and 45.6 exchange fee growth – Further investment in
Slide 16: Estate Agency Strategy – Marsh & Parsons
Estate Agency Strategy – Marsh & Parsons Marsh & Parsons Awards new branch openings – Marsh & Parsons branch Estate Agency of the Year profitability is strong Awards 2014, sponsored 4 – Ambition is to expand market of branches to 36 by the Sunday Times 3 by 2019, COO appointed – Best London Estate A
Slide 17: Estate Agency Strategy
Estate Agency Strategy Strategy is to drive incremental revenue and gross margin across all business streams Exchange fees (£m) Lettings fees (£m) Financial Services Income (£m) 44.4 22.8 30.6 42.0 27.7 19.9 34.1 34.9 24.7 22.6 15.7 14.4 25.1 12.3 13.6 2011 2012 2013 2014 2015 2011 2012 2013 2014 20
Slide 18: Estate Agency Strategy
Estate Agency Strategy Strategy is to grow recurring and, where market conditions permit, the counter-cyclical revenue streams Recurring revenue (lettings) £m Total Agency Revenue 30.6 27.7 24.7 32% 36% 35% 31% 32% 22.6 13.6 68% 69% 68% 64% 65% 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Count
Slide 19: Estate Agency Strategy – Financial Services
Estate Agency Strategy – Financial Services Value of LSL Financial Services mortgage completions Strategy – Consistent delivery of appropriate (£bn) outcomes for consumers – Capitalise on mortgage market shift towards intermediary distribution 6.0 – Investment in additional mortgage advisors in esta
Slide 20: Estate Agency Strategy – Acquisitions – Lettings Books
Estate Agency Strategy – Acquisitions – Lettings Books The economics of lettings books acquisitions are very accretive. The ambition in 2015 is to grow the rate of lettings book acquisitions (number and investment) versus 2014 Number of lettings book acquisitions 2013 2014 2015 Investment 2013 2014
Slide 21: Estate Agency Strategy – Acquisitions – LSLi
Estate Agency Strategy – Acquisitions – LSLi LSLi has been a significant growth vehicle Business Year acquired and we continue to consider new acquisition opportunities 2007 2007 Revenue (£m) 2007 17.0 2010 15.8 2012 10.2 2012 7.5 5.6 2013 2014 2011 2012 2013 2014 2015 2015 CAGR 32% 9 completed Note
Slide 22: Estate Agency Strategy – joint ventures, other investments and portals
Estate Agency Strategy – joint ventures, other investments and portals Joint Ventures and other investments Current investments Status Zoopla Opportunity to participate in the Zoopla Anniversary offer. Additional shares purchased at £1.76 per share TM, LMS Performing in-line with expectations Portal
Slide 23: Surveying Strategy – Capacity management
Surveying Strategy – Capacity management Total Approvals1 - % growth – Total approval volumes increased significantly in Q2 2013 to Q1 2014 and again in Q2 2015 – To meet customer demand and 25% expand capacity, a graduate 24% 23% recruitment programme was implemented to expand capacity. 43 graduate
Slide 24: Agenda
Agenda 1. Executive Summary 2. Financial Performance 3. Strategy 4. Market and Outlook 5. Q&A 23 HALF YEAR RESULTS PRESENTATION AUGUST 2015
Slide 25: Market overview – trends
Market overview – trends H1 Mortgage and House Purchase Approvals1 House Purchase Approvals 1,800 – 384,000(1) H1 2015 down 3% on H1 2014. 1,200 • Q1 2015 down 12% on prior year. 600 • Q2 2015 up 4% on prior year. 0 Total Mortgage Approvals 5 yr Avg 2011 2012 2013 2014 2015 – 650,000(1) H1 2015, dow
Slide 26: Market overview – house price trends
Market overview – house price trends England and Wales annual house changes1 – In year ended June 2015 average house 15.00% prices in England and Wales increased by 9.6% 4.1% to £279k. 10.00% 4.8% – Significant regional variations 4.1% 5.00% 2.6% – Positive economic outlook 0.00% -5.00% -2.2% 2011 2
Slide 27: Outlook
Outlook Current trading Key economic growth indicators and consumer confidence remain positive and the outcome from and outlook the General Election has removed political uncertainty from the market. The recent announcements by the Governor of the Bank of England regarding longer term trends for int
Slide 28: Agenda
Agenda 1. Executive Summary 2. Financial Performance 3. Market 4. Operational Review 5. Q&A 27 HALF YEAR RESULTS PRESENTATION AUGUST 2015
Slide 29: Disclaimer
Disclaimer This Presentation and the Reports referred to therein, may contain forward-looking statements with respect to certain plans and current goals and expectations relating to the future financial condition, business performance and results of LSL. By their nature, all forward-looking statemen
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