LSL to hit acquisition trail after 31% rise in turnover

LSL, parent company to estate agency chains Your Move, Reeds Rains and Intercounty, and to a large mortgage business, increased its turnover by 31% last year to £206.6m.

This was despite the weak housing market where transaction volumes worsened again last year, along with mortgage approvals.

LSL is now set to employ more people in its branches, build market share and go on the acquisition trail.

Its underlying profits rose 13% from £28.3m to £31.9m, whilst pre-tax profits before exceptional items soared by 52%.

The main ‘exceptional’ items were last year’s purchase and integration of the 206 branches of Halifax Estate Agents, and mortgage firms Home of Choice (now First Complete) and Pink Home Loans. The latter acquisitions have turned LSL into one of the largest UK mortgage intermediaries.

Halifax Estate Agents lost £3.6m in the first half of last year, but returned a profit of £0.4m in the second half despite what LSL termed a challenging market. The costs of running Halifax Estate Agents have been ‘right-sized’ to just under £28m to help the business to “dramatically improved performance”, says LSL’s report to shareholders.

The acquisition – for a token £1 and dubbed the deal of 2010 – has meant that LSL’s share of the estate agency market is now 4.5% compared with 2.7%. Last year, LSL also acquired Goodfellows, a seven-branch agency in south London, for £1m.

With house sales low, the group’s lettings business became more important and grew 14% over 2010.

Overall, in its estate agency business, underlying like-for-like operating profits were £10.4m compared with £6.7m in 2009 – a rise of 56%.

LSL’s surveying business also grew its revenue and profits – the latter up by 16% to £27.3m – despite a fall in mortgage approvals.

LSL chairman Roger Matthews said: “The group made excellent progress in a market where transaction levels are circa 50% of historic normal levels.
 
“LSL still has a cautious view of the market for 2011 in view of the ongoing shortage of available mortgage finance and broader well documented economic challenges.

“However, we are confident that the Group can build on the market share gains made in 2010 and grow the business even in these market conditions.

“With a very strong balance sheet, we are well placed to grow both organically and through further acquisitions in the current market and deliver further substantial growth when transactions volumes recover.”