Slide 1: LSL Property Services plc Preliminary Results
LSL Property Services plc Preliminary Results Year ended 31st December 2017
Slide 2: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 6. Disclaimer 2017 YEAR END RESULTS PRESENTATION 1
Slide 3: Group Highlights: 2017
Group Highlights: 2017 Robust performance in Strong operational cash Delivering on our stated subdued market flow and modest net strategy conditions banking debt • Group Revenue up 1% • Strong operational cash generation • Estate Agency Division • Group Underlying Operating Profit1 converting 111% o
Slide 4: Group Operating Performance
Group Operating Performance Group Revenue £311.5m ▲ 1% Exceptional gain1 £9.3m ▼ 73% Group Underlying Adjusted Earnings Operating Profit £37.5m ▲ 8% per Share 28.3p ▲ 9% Group Adjusted Proposed Dividend EBITDA £42.7m ▲ 7% per Share 11.3p ▲ 10% Net Bank Debt / Profit Before Tax1 £40.1m ▼ 37% Gearing
Slide 5: 2017 Market Dynamics
2017 Market Dynamics Market impacted in 2017 by subdued conditions and strong Q1 2016 comparatives Approvals for House Purchases1 Share of new sales instructions2 30% 100% 100% 100% 100% 100% 100% 20% 10% Traditional Agents 0% 98% 97% 96% 94% 93% 93% -10% Online / Hybrid -20% Agents 2% 3% 4% 6% 7% 7
Slide 6: LSL Strategy
LSL Strategy LSL is delivering on its stated strategy and continues to invest for the future, positioning the Group for success across a range of market conditions 2017 highlights Mid-term strategy Some progress in 2017 with 5% YoY Medium term ambition to achieve £80k Drive operating profit per bran
Slide 7: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 2017 YEAR END RESULTS PRESENTATION 6
Slide 8: Group Financials: Summary
Group Financials: Summary 2017 2016 Change Financial Summary P&L (£m) • Total revenues up 1% with growth of 2% in Estate Revenue 311.5 307.8 1% Agency and 1% down in Surveying Group Underlying Operating Profit 37.5 34.6 8% • Group Underlying Operating Profit up 8% with Margin 12.0% 11.3% increases i
Slide 9: Estate Agency Revenues
Estate Agency Revenues Successfully diversifying revenue streams over the last 5 years1 Residential Exchange Income Lettings Income Financial Services Income (£m) CAGR (£m) CAGR CAGR (£m) -1% 9% 20% % of EA Revenue 92.1 92.9 83.8 80.0 76.6 71.4 73.9 74.4 65.4 64.1 58.5 52.2 50.5 43.7 35.8 2013 2014
Slide 10: Average LSL Estate Agency Residential Sales exchange fee
Average LSL Estate Agency Residential Sales exchange fee1 (£) LSL has been disciplined in its Residential Sales exchange fee strategy CAGR 1% 3,155 3,100 3,083 3,042 2,908 2013 2014 2015 2016 2017 1 CAGR’ measured over period 2013-2017 2017 YEAR END RESULTS PRESENTATION 9
Slide 11: Financial Performance: Estate Agency
Financial Performance: Estate Agency Positive Operating Profit growth 2017 2016 Change • Underlying Operating Profit growth of 10% P&L (£m) Residential Sales exchange Income 76.6 83.8 -9% • Residential Sales exchange income impacted by market conditions and selective branch closures in Lettings Inco
Slide 12: Financial Performance: Marsh & Parsons
Financial Performance: Marsh & Parsons1 Creditable performance despite a challenging London market London market conditions 2017 2016 Change • LSL estimates that the Residential Sales volumes in the P&L (£m) London market fell by c15% in 20172 • Overall residential property values in Greater London
Slide 13: Financial Performance: Surveying
Financial Performance: Surveying Positive Operating Profit growth 2017 2016 Change • Overall management of the mix of jobs across lenders maximised results P&L (£m) • Profit growth was supported by the Total Revenue 64.1 64.7 -1% successful ongoing investment in the Expenditure (45.2) (47.2) 4% Surv
Slide 14: Financial Performance: Exceptionals
Financial Performance: Exceptionals 2017 2016 Exceptionals Items (£m) Exceptional gains: • Exceptional gain on sale of GPEA of £5.6m (for cash (£3m) and a 5.7% shareholding in eProp Gain on sale of GPEA shares 5.6 - Services plc) Historic PI Costs 3.7 1.6 Gain on disposal of ZPG plc shares - 32.9 •
Slide 15: Group Financials: Cashflow
Group Financials: Cashflow Business is extremely cash generative at the operational level 2017 2016 • Strong operational cash generation converting Operating Cashflows (£m) 111% of operating profit to cashflow from operations (post PI and exceptionals) (2016: Operating profit 37.5 34.6 95%) Deprecia
Slide 16: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 2017 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 2017 YEAR END RESULTS PRESENTATION 16
Slide 18: Market Overview: Volume Trends
1 Market Overview: Volume Trends A subdued market in 2017 BoE: YoY House Purchase and Total Approvals 1 BoE: 5 Year Average Approvals Volume 1 (% YoY) 3,592 15% 2,291 10% 1,401 615 1,301 5% 786 5 Yr Ave 5 Yr Ave 2003-2007 2013-2017 0% House purchase Remortgage and other -5% Mortgage and House Purcha
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 2017 England and Wales – House Price Changes 1 • Average house prices in England and Wales (% YoY) increased by 0.2% to £301k • Significant regional variations: 8.8 5.9 7.0 – Greate
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 Estate Agency Operating Profit per Branch LSL plans to drive future branch profitability through: (£k) • Lettings Inc
Slide 21: 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 2017 Profit per branch Brixton opened in January 2017 (£k) M&P delivers strong branch profitability 142.8 • Prime Central London is currently facing tough trading conditions
Slide 22: 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) 9% Market (15)% (28%) (51)% (25)% (4)%
Slide 23: Estate Agency Strategy: Financial Services
2 Estate Agency Strategy: Financial Services Value of LSL Financial Services Growth in value of LSL’s mortgage completions mortgage completions (£bn)1 • Strong growth in the value of LSL’s mortgage completions with the second largest network (measured by combined numbers of advisors across First Com
Slide 24: Estate Agency Strategy: Acquisitions and Investments
2 Estate Agency Strategy: Acquisitions and Investments LSL has made the following acquisitions and investments1 2013 2014 2015 2016 2017 2018 September 2017: acquisition of strategic shareholding (17.3%) in Yopa for consideration of £20m January 2018: Acquired the entire issued share capital of Pers
Slide 25: Estate Agency Strategy: Yopa investment
2 Estate Agency Strategy: Yopa investment In September 2017, LSL acquired a 17.3% strategic equity stake in Yopa Property Limited for total consideration of £20m • During 2017 LSL completed the exploration and evaluation • Yopa is a UK based hybrid estate agent offering a full of options to capitali
Slide 26: 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 during 2017 on optimising • Optimise contract performance and revenue efficien
Slide 27: 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 28: Outlook
3 Outlook • Market conditions in 2018 have been slightly softer than the equivalent period in 2017. LSL’s financial performance in 2018 has tracked closely to the Board’s expectations and the Group is well placed to deliver a solid performance during the year. LSL continues to execute on its stated
Slide 29: Agenda
Agenda 1. Group Highlights 2. Financial Performance 3. Market Overview, Strategy and Outlook 4. Q&A 5. Appendices 2017 YEAR END RESULTS PRESENTATION 28
Slide 30: Appendices
Appendices
Slide 31: LSL Property Services plc: Business Overview
LSL Property Services plc: Business Overview 2017 Revenue 2017 Operating Profit 2017 Average FTE 2 £311.5m 21% £37.5m 4,515 13% 41% 1 Agency Agency 1 59% 1 Agency 79% 87% Surveying Surveying Surveying 1 Includes Estate Agency branches, Financial Services, Asset Management 2 FTE (Full Time Equivalent
Slide 32: Financial Performance: Operating Profit per Branch
Financial Performance: Operating Profit per Branch Break-down of Operating Profit per Branch 2017 2016 Operating Operating Operating Branch Operating Branch Profit Per Profit Per Profit £M Numbers Profit £M Numbers Branch £k Branch £k Estate Agency Branches (excluding Marsh & Parsons) Operating prof
Slide 33: 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 Shoreditch Que
Slide 34: 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
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