Lsl Property Services Plc · LSE:LSL
Lsl Property Services — H1 2018 Earnings Presentation
36 slides from Lsl Property Services's earnings presentation, Jun 30, 2018
Slide 1: LSL Property Services plc Interim Results
LSL Property Services plc Interim Results Half year ended 30th June 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 INTERIM RESULTS PRESENTATION 1
Slide 3: Group Highlights: H1 2018
Group Highlights: H1 2018 Revenue growth delivered in challenging market Strong Balance Sheet Focus on our stated strategy conditions • Group Revenue up 1% • Net Bank Debt of £46.0m (2017: £31.7m) • Estate Agency Division • Group Underlying Operating Profit1 down 25% incorporating the £20m strategic
Slide 4: Group Operating Performance
Group Operating Performance £152.9m ▲ 1% ▼ Group Revenue Exceptional gain1 £1.2m 9% Group Underlying Adjusted Earnings ▲ Operating Profit £11.6m ▼ 25% per Share 8.6p 25% Group Adjusted Interim Dividend EBITDA £14.4m ▼ 21% per Share 4.0p Unchanged Net Bank Debt / Profit Before Tax £6.4m ▼ 51% Gearing
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 sale2 30% 100% 100% 100% 100% 100% 100% 100% 20% 10% Traditional Agents 0% 97% 96% 95% 94% 93% 93% 92% -10% Online / Hybrid -20% Agents 3% 4% 5% 6% 7% 7% 8% -30%
Slide 6: LSL Strategy
LSL Strategy LSL continues to invest for the future, positioning the Group for success across a range of market conditions 2018 progress Mid-term strategy Self-help measures with organic Lettings Medium term ambition to achieve £80k to £100k Drive operating profit per branch growth, Lettings book ac
Slide 7: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 2018 INTERIM RESULTS PRESENTATION 6
Slide 8: Group Financials: Summary
Group Financials: Summary 2018 2017 Change Financial Summary P&L (£m) • Total revenues up 1% and organic revenue down 2% Revenue 152.9 151.5 1% • Estate Agency revenue growth of 3% as continued self-help Group Underlying Operating Profit 11.6 15.5 -25% measures delivered growth in Lettings and Finan
Slide 9: Estate Agency Revenues
Estate Agency Revenues Successfully diversifying revenue streams over the last 5 years1 H1 Exchange Income H1 Lettings Income H1 Financial Services Income (£m) CAGR (£m) CAGR CAGR (£m) -7% 8% 20% % of EA Revenue 41% 39% 36% 31% 27% 26% 28% 29% 30% 31% 18% 21% 25% 29% 33% 44.4 42.5 42.0 40.8 37.0 35.
Slide 10: Average LSL Estate Agency Residential Sales H1 exchange fee
Average LSL Estate Agency Residential Sales H1 exchange fee1 (£) LSL has been disciplined in its Residential Sales exchange fee strategy CAGR -1% 3,149 3,145 3,072 3,035 3,017 2014 2015 2016 2017 2018 1 CAGR measured over period 2014-2018 2018 INTERIM RESULTS PRESENTATION 9
Slide 11: Financial Performance: Estate Agency
Financial Performance: Estate Agency Positive growth in Lettings and Financial Services • Residential Sales exchange income impacted by a 2018 2017 Change number of factors including: P&L (£m) − subdued market conditions Residential Sales exchange Income 32.9 37.0 -11% Lettings Income 37.3 35.7 4% −
Slide 12: 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 c.20% in the first half of 20182 Total Revenue 15.9 16.4 -3% Marsh & Par
Slide 13: Financial Performance: Surveying
Financial Performance: Surveying Strong Operating Margins • Revenue was down by 6% impacted by 2018 2017 Change market conditions and lender mix P&L (£m) • Strong cost control with expenditure down 5% Total Revenue 31.1 33.1 -6% • Continued to deliver strong operating margins Expenditure (22.5) (23.
Slide 14: Financial Performance: Exceptionals
Financial Performance: Exceptionals 2018 2017 Exceptionals Items (£m) Exceptional gains: • Continued positive progress in addressing historic Professional Indemnity (PI) claims with a Historic PI Costs provision release 1.2 1.1 £1.2m exceptional provision release as claims Net exceptional gains 1.2
Slide 15: Group Financials: Cashflow
Group Financials: Cashflow Acquisitions and Letting Books acquisitions programme recommenced in line with Group strategy 2018 2017 • Cash from operations (pre PI and exceptionals): Operating Cashflows (£m) Impacted by lower operating profits and seasonal movement in working capital Operating profit
Slide 16: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 2018 INTERIM 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 INTERIM RESULTS PRESENTATION 16
Slide 18: Market Overview: Volume Trends
1 Market Overview: Volume Trends A challenging market in H1 2018 BoE: 5 Year Average H1 Approvals Volume1 House building: permanent dwellings completed2 No. (000’s) 1,831 per Quarter 50 1,165 40 717 30 316 667 20 400 5 Yr Ave 5 Yr Ave 10 2003-2007 2014-2018 0 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q1 House purchas
Slide 19: Market Overview: House Price Trends
1 Market Overview: House Price Trends England & Wales regions saw the rate of house price growth slow significantly in 2018 England and Wales – House Price Changes 1 • Average house prices in England and Wales (% YoY) increased by 2.1% to £304k • Excluding London and the South East, the rest of 8.6
Slide 20: 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 LSL plans to drive future branch profitability through: • Lettings Income growth from both organic growth and Letting
Slide 21: 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 H1 Operating Profit per Branch (rolling 12 months) Underlying
Slide 22: 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 99.4 tough trading conditions
Slide 23: 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) Counter-cyclical Revenue (Asset Management) (£m) CAGR (£m) 8% Market (24)% (53%) (27)% (8)% -%1 g
Slide 24: Financial Services Strategy (1 of 2)
2 Financial Services Strategy (1 of 2) H1 Financial Services Income H1 Organic Financial • Organic growth has been achieved through Services Income advisor number growth and productivity gains (£m) CAGR (£m) CAGR • Selective acquisition of Financial Services 20% 16% businesses during the last 2 year
Slide 25: 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 in H1 • Strong growth in the value of LSL’s mortgage completions with the second largest network measured by combined numbers of appointed representative f
Slide 26: 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 to date January 2018: Acquired the entire issued share capital of Personal Touch Financial Services Limited (PTFS) and its subsidiary compan
Slide 27: Surveying Strategy (1 of 2)
2 Surveying Strategy (1 of 2) Strategy New technology • Focus on the B2B market where the economics are • Following the implementation in 2016 of the market leading IT most favourable system there has been continued focus on optimising efficiency and operational performance through further enhanceme
Slide 28: 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 • Continuing to improve P
Slide 29: Outlook
3 Outlook • Market conditions in the first half of 2018 were softer than the Board’s expectations and the equivalent period in 2017, but despite this LSL’s first half financial performance was in line with the Board’s expectations • As reported in the LSL AGM statement on 26th April 2018, the Board
Slide 30: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 2018 INTERIM RESULTS PRESENTATION 29
Slide 31: Appendices
Appendices
Slide 32: LSL Property Services plc: Business Overview
LSL Property Services plc: Business Overview H1 2018 Revenue H1 2018 Operating Profit H1 2018 Average FTE 2 £152.9m 20% £11.6m 4,668 13% 26% 1 1 1 Agency Agency Agency 80% 74% 87% Surveying Surveying Surveying 1 Includes Estate Agency branches, Financial Services, Asset Management 2 FTE (Full Time E
Slide 33: Financial Performance: Operating Profit per Branch
Financial Performance: Operating Profit per Branch Break-down of Operating Profit per Branch 2017-18 2016-17 Rolling 12 Rolling 12 Operating Operating months Branch months Branch Profit Per Profit Per Operating Numbers Operating Numbers Branch Branch Profit Profit £m No. £k £m No. £k Estate Agency B
Slide 34: 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 to date S
Slide 35: 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 36: Slide 36
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