LSL's agency brands reveal growth in past year despite market woe

LSL Property Services - parent company to 12 brands including Your Move, Reeds Rains and London’s Marsh & Parsons - has reported on what it calls its “robust performance” in 2017 with two per cent revenue growth for its estate agency division. 

Its report to the City today says that:

- its £20m investment in online agency Yopa, announced last year, gave it a 17.3 per cent shareholding in the company, which also has backing from Savills. This allows LSL the opportunity to have a toe in the digital marketing sector, the group says;

- it believes online agencies accounted for around seven per cent of the sales market in the second half of 2017;

- overall group headcount has grown slightly from 4,990 to 5,084;

- recurring income from lettings up four per cent, financial services up 16 per cent in 2017;

- Marsh & Parsons revenue was up two per cent in the year despite a five per cent drop in sales volumes, although LSL Group says this was against a 15 per cent drop in London-wide sales and 9.5 per cent drop in prime London house prices;

- underlying operating profit per owned branch across LSL in 2017 increased eight per cent to £32,000 from £30,500 in 2016, reflecting the growth in financial services income and lettings income “offset by the impact of the challenging residential sales market conditions on residential sales”;

- Group revenue was up one per cent in 2017 at £311.5m while the critical EBITDA measure was also up, by seven per cent to £42.7m;

- other digital investments include an undisclosed sum in alternative deposits start-up Zero Deposit and £65,000 invested in an online mortgage brokerage Property Master. 

LSL also used this morning’s report to reiterate the group’s strategic ambitions which include:

- a goal to drive operating profit per branch to between £80,000 and £100,000 in the medium term;

- to expand the number of Marsh & Parsons branches to a total of 36 in the medium term, particularly outside prime Central London;

- “grow recurring and where market conditions permit counter-cyclical income streams”;

- complete selective acquisitions of both residential sales businesses and lettings books;

- use technology to target further improvements in customer satisfaction and performance.

Commenting on today's announcement, Simon Embley, chairman, said: "The Group delivered a robust financial performance given the subdued market conditions. I am pleased that the business delivered underlying operating profit growth in both the Estate Agency and Surveying Divisions."

He continued: "The Group has a strong balance sheet with relatively low levels of gearing and is very cash generative at an operational level. The business is well placed to capitalise on market conditions to increase Shareholder value. 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."