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August 2009

LSL in profit recovery

City Correspondent

LSL Property Services,   owners of YourMove and Reeds Rains, staged a profit recovery during the first half of this year, and the estate agency business is also back in the black.

Group underlying profits rose 17 per cent to £10.9 million  compared with £9.3 million for the same period of 2008, while pre tax profits were £4.3 million against a £1.8 million loss in 2008.

However, LSL group chief executive Simon Embley remains cautious about the market in general.

” I am more optimistic about the short term than I was in March this year when we announced our 2008 results,” he said.

“ I predicted then about 500,000 transactions this year for the market overall. Currently we are running at about 520,000 but if the current trend continues, we could reach 600,000.

“However, the increase in volume is driven by cash buyers and their number is finite. I’m not denying the market has bottomed out but we remain cautious about the outlook for 2010.”

During the first half of this year the estate agency completed 5,500 sales,  compared with about 5,200 a year earlier , and 13,700 for the full year 2008.

Pipeline sales were “extremely low” early this year, reflecting the poor final quarter of 2008, but are now “well ahead “ of summer 2008 levels, according to Embley. HE added,”Estate agency still made a loss during the first quarter of this year, broke even during the second quarter and now makes a profit.”

Overall ,estate agency made a £900,000 loss during the first half of this year, compared with a £5.2 million loss a year earlier.

Lettings income rose 35 per cent to £9.4 million while “corporate activities” such as corporate letting and repossession management made £4 million against only £0.3 million a year earlier when the business was still at an early stage of development.

Surveying showed a 17 per cent profit fall from £15.4 million to £12.7 million as mortgage approvals fell nearly   50 per  cent.

Group revenue fell from £93.1million to £74.1 million, so much of the profit improvement was due to cost cutting during 2008. Net borrowings also fell by £18.5 million to £43 million.

Adjusted earnings per share were 2.6p, against a 1.5p loss a year ealrier. The unadjusted EPS figure was 6.5 p representing a 27 per cent rise.

Shareholders will still miss a dividend but the group might resume one next year, if  profits improve further.

Immediate City reaction was to mark the shares slightly higher at 180p , near their 12 month high.