Lsl Property Services Plc · LSE:LSL
Lsl Property Services — H1 2019 Earnings Presentation
41 slides from Lsl Property Services's earnings presentation, August 2019
Slide 1: LSL Property Services plc Interim Results
LSL Property Services plc Interim Results Half year ended 30th June 2019
Slide 2: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 6. Disclaimer 2019 INTERIM RESULTS PRESENTATION 1
Slide 3: Group Financial Highlights: H1 2019
Group Financial Highlights: H1 2019 Net Exceptional 2018: Exceptional Group Revenue £154.1m ▲ 1% (costs)/gain (£12.8m) Gain £1.2m Group Underlying ▼ Adjusted Earnings Operating Profit1 £12.2m 5% Per Share 9.0p ▲ 5% Group Adjusted ▼ Interim Dividend EBITDA1 £19.7m 37% per Share 4.0p Unchanged (Loss)/
Slide 4: Group Operational Highlights: H1 2019
Group Operational Highlights: H1 2019 Effective execution of major projects and delivery on stated strategy Estate Agency Reshaping of the Your Move and Reeds Rains branch networks, announced on 5 th February 2019 delivering material financial benefits Lettings book acquisition programme continu
Slide 5: Market Dynamics – Estate Agency
Market Dynamics – Estate Agency Approvals for House Purchases1 Share of housing stock available for sale2 YoY Change 10% 5% 0% -5% -10% Traditional -15% Agents 96% 95% 94% 93% 93% 92% 92% 92% -20% 97% Jan Feb Mar Apr May Jun 2018 v 2017 2019 v 2018 Online / • The UK residential property sales market
Slide 6: Market Dynamics – Financial Services
Market Dynamics – Financial Services Percentage of intermediary market share for Gross new mortgage lending1 residential property excluding BTL and product transfers2 £bn YoY 25.0 4% 5% 73% 71% 20.0 22.1 22.3 3% 68% 20.9 67% 19.4 19.5 15.0 1% 66% 2% 1% 1% 10.0 -1% 5.0 -3% -3% 0.0 -5% 2015 2016 2017
Slide 7: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 2019 INTERIM RESULTS PRESENTATION 6
Slide 8: Group Financials: Summary
Group Financials: Summary 2019 2018 Change Financial Summary P&L (£m) • Total Revenue up 1%, Total Revenue up 7% year on year Revenue 154.1 152.9 1% after adjusting for the reshaping of the Your Move and Reeds Rains branch networks and acquisitions during 2018 Group Underlying Operating Profit 12.2
Slide 9: LSL Change to Segmental Reporting
LSL Change to Segmental Reporting Group reporting changed to reflect the increased importance of LSL’s Financial Services businesses over the last 5 years • To reflect the increased importance of LSL’s Financial Services businesses, LSL updated the Group segmental reporting effective from 1st Januar
Slide 10: Prior Year Financial Comparative Restatement
LSL Change to Segmental Reporting: Prior Year Financial Comparative Restatement Restate 2018 Restate 2018 2019 2018 Adjustment 2019 2018 Adjustment Restated Total Financial Restated Previous Current Services H1 Previous Current H1 Revenue (£m) segments segments Revenue (£m) segments segments Estate
Slide 11: Estate Agency: Financial Performance
Estate Agency: Financial Performance Strong Underlying Operating Profit performance 2018 • Strong Operating Profit growth and margin improvement 2019 Change benefiting materially from the Your Move and Reeds Rains Restated branch networks P&L (£m) • Residential Sales exchange income reduced by 16% (
Slide 12: Estate Agency: Marsh & Parsons Financial Performance
Estate Agency: Marsh & Parsons Financial Performance1 Resilient performance despite a challenging London market London market conditions 2019 2018 Change • LSL estimates that the overall London market for sales transactions was down by approximately 15% P&L (£m) during H1 20192 Total Revenue 15.0 15
Slide 13: Financial Services: Financial Performance
Financial Services: Financial Performance Strong Underlying Operating Profit performance 2018 • Delivered a strong performance with 2019 Change Underlying Operating Profit up 20% Restated P&L (£m) • Financial Services organic revenue growth, excluding Estate Agency, in H1 2019 was 3% Total Revenue 3
Slide 14: Surveying: Financial Performance
Surveying: Financial Performance Underlying Operating Profit impacted by market conditions and business mix 2019 2018 Change • The Surveying Division delivered Underlying Operating Profit of £6.3m (2018: £8.6m) P&L (£m) impacted by market conditions and business mix Total Revenue 42.7 31.1 37% • Tot
Slide 15: Financial Performance: Exceptionals
Financial Performance: Exceptionals 2019 2018 Exceptionals Items (£m) • Total net exceptional costs in H1 2019 were Exceptional gains: £12.8m (H1 2018: gain of £1.2m) comprising Historic PI Costs provision release 0.6 1.2 £0.6m of exceptional gain relating to the historic PI Costs provision and exce
Slide 16: Financial Performance: IFRS16 impact (Leases)
Financial Performance: IFRS16 impact (Leases) 2019 IFRS16 2019 Pre - IFRS 16 impact Post - IFRS 16 No impact on cash or business operations Income Statement (£m) Revenue 154.1 154.1 Operating costs (139.8) 5.4 (134.4) Lease rental costs removed, other than short-term and/or low value leases Deprecia
Slide 17: Group Financials: Cash-flow
Group Financials: Cash-flow 2019 2018 Operating Cash-flows (£m) • Ca sh from operations converting 49% of Group Group Underlying Operating profit 12.2 11.6 Underlying Operating Profit to cash-flow from Depreciation (PPE only), working capital etc. (6.2) (9.2) operations (pre PI and exceptionals and
Slide 18: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 2019 INTERIM RESULTS PRESENTATION 17
Slide 19: Strategy and Outlook
Strategy and Outlook 1 Market overview - volume & house price trends 2 Delivering on LSL’s strategy 3 Outlook 2019 INTERIM RESULTS PRESENTATION 18
Slide 20: Market Overview: Volume Trends
1 Market Overview: Volume Trends Subdued residential market conditions during H1 2019 BoE: 5 Year Average H1 Approvals Volume1 Housing Stock: Dwelling stock by tenure2 Units (m) No. 000’s 1,831 30 25 1,165 20 737 15 338 10 667 399 5 5 Yr Ave 5 Yr Ave - 2003-2007 2015-2019 1998 2001 2004 2007 2010 20
Slide 21: Market Overview: House Price Trends
1 Market Overview: House Price Trends Annual change in house price growth remains modest England and Wales – House Price Changes1 • Average house prices in England and Wales increased by 0.1% to £300k (% YoY) 6.9 6.2 3.8 0.4 0.1 2015 2016 2017 2018 2019 House Price Movements by Region during H1 2019
Slide 22: LSL 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 focus Drive operating profit per branch Medium term ambition to achieve £80k to £100k profit per branch Ambition to expand the number of branches to
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 Estate Agency H1 Operating Profit per Branch (rolling 12 months) (£k) 48.4 38.0 35.2 34.9 24.9 2015 2016 2017 2018 20
Slide 24: 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 25: Estate Agency Strategy: Fees
2 Estate Agency Strategy: Fees Average Residential Sales H1 exchange fee1 (£) LSL has been highly disciplined in its Residential Sales exchange fee strategy CAGR 1% 3,247 3,072 3,145 3,017 3,035 Reduction in exchanges at lower average exchange fee +7% YoY from Your Move and Reeds Rains results in LF
Slide 26: 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 Profit per branch* Willesden Green opened in March 2019 (£k) M&P delivers higher branch profitability 305.1 • Prime Central London is currently facing tough trading conditio
Slide 27: Estate Agency Strategy: Recurring Income Streams
2 Estate Agency Strategy: Recurring Income Streams H1 2019 Reported Lettings income decreased by 9%, whilst Lettings Income adjusted for the Your Move and Reeds Rains branch network reshaping, i.e. on a LFL basis, was flat year on year Recurring Revenue (Lettings) (£m) • LSL has acquired 3 lettings
Slide 28: Financial Services Strategy: Distribution Channels
2 Financial Services Strategy: Distribution Channels Direct to Consumer Specialist Channel Intermediary Network Channel New Build No. of Advisers: 1,859 No. of Advisers: 338 No. of Advisers: 80 (independent advisers) (all directly employed) (all directly employed) Embrace Financial Services - employ
Slide 29: Financial Services Strategy
2 Financial Services Strategy Financial Services Revenue1 LSL Financial Services mortgage completions (£bn)2 (£m) CAGR CAGR 20% 25% 14.7 33.0 34.3 13.2 26.4 22.4 9.1 8.3 16.5 6.0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Adviser Numbers • Organic growth has been achieved through adviser numb
Slide 30: Financial Services Strategy
2 Financial Services Strategy Strategy • Enhance LSL’s position as a leading distributor of Brand mortgage and non-investment insurance products • It was announced on the 31st January 2019 that PRIMIS • Consistent delivery of appropriate outcomes for consumers Mortgage Network and PTFS would be join
Slide 31: Surveying Strategy
2 Surveying Strategy Strategy • Focus on the B2B market where the economics are most favourable • Optimise contract performance and revenue generation from B2B customers • During H1 2019, the Surveying Division was awarded an extension to its contract to supply UK residential survey and valuation se
Slide 32: Surveying Strategy
2 Surveying Strategy 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 underpinn
Slide 33: Outlook
3 Outlook The Board remains confident that the Group will deliver a full year Underlying Operating Profit in line with its prior expectations, as the business is expected to continue to benefit from the range of LSL’s ongoing self-help measures. Whilst we continue to remain cautious on the residenti
Slide 34: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 2019 INTERIM RESULTS PRESENTATION 33
Slide 35: Appendices
Appendices
Slide 36: LSL Property Services plc: Business Overview
LSL Property Services plc: Business Overview H1 2019 Revenue H1 2019 Operating Profit H1 2019 Average FTE 2 £154.1m £12.2m 4,308 28% 21% 27% Agency 1 50% 1 43% 1 Agency Agency 57% FS FS FS 22% 22% Surveying Surveying 30% Surveying 1 Includes Estate Agency branches and Asset Management 2 FTE (Full Ti
Slide 37: Financial Performance: Operating Profit per Branch
Financial Performance: Operating Profit per Branch Break-down of Operating Profit per Branch 2018-19 2017-18 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 38: Segmental Operating Profit Performance
Segmental Operating Profit Performance 5 Year Operating Profit History demonstrates the growth of Financial Services H1 Revenue (£m) 2015 2016 2017 2018 2019 5 Year Segmental Operating Profit History Estate Agency 92.6 96.5 92.0 88.8 77.1 Financial Services 16.5 22.4 26.4 33.0 34.3 £m Surveying 31.1
Slide 39: Estate Agency Strategy: Marsh & Parsons Branch Rollout
2 Estate Agency Strategy: Marsh & Parsons Branch Rollout Branch Openings since 2013 2013 2014 2015 South Kensington Bishop’s Park Marylebone 2013Shepherd’s Bush East Sheen Richmond Camden Shoreditch Queen’s Park January 2013 June 2013 June 2013 March 2014 September 2014 September 2014 October 2014 F
Slide 40: 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 41: Slide 41
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