LSL Property Services says the Coronavirus crisis has led to a softening of "lead sales indicators" - and it warns of possible “headwinds” for the business this year.
In a statement to shareholders today it says: “Whilst we have been encouraged by the residential property market conditions to date in 2020, the situation regarding the COVID-19 virus is rapidly evolving and we have in recent days, seen some slight softening of our lead sales indicators in Estate Agency.
“We are monitoring the situation very closely as it may create headwinds for our business in 2020 if changes in consumer behaviour impact residential property market conditions. As and when any potential impact on the Group becomes clearer, we will provide updates as necessary.”
LSL is in the middle of takeover talks with Countrywide; under City rules the firms have until March 23 to make merger or takeover plans public - or to walk away from a deal.
Little mention of this is made in today’s statement except for a standard comment from LSL chairman Simon Embley that: “On 24th February 2020, the Board of LSL confirmed that it is in discussions with Countrywide regarding a possible all-share combination. Discussions between Countrywide and LSL are ongoing. At this stage, there can be no certainty that any offer will ultimately be made for Countrywide. LSL reserves the right to introduce other forms of consideration and/or vary the mix or composition of consideration of any offer. Further announcements will be made in due course as appropriate.”
Unsurprisingly, given the state of the talks with Countrywide, LSL makes much of its estate agency division’s relatively strong performance in this morning’s figures for the company in 2019.
The agency division’s underlying profit was up 30 per cent to £14.5m, “benefiting materially from the reshaping of the Your Move and Reeds Rains branch networks” - company-speak for a branch closure programme.
“It was during Q1 2019, that the Your Move and Reeds Rains Estate Agency branch network was reshaped from 308 owned branches to 144 keystone branches following the closure and merging of 81 neighbouring branches into the keystone branch network, the franchising of 39 branches and the closure of 44 branches” details the firm.
It says residential net sales for the Your Move and Reeds Rains ‘keystone branches’ increased slightly in 2019 “and all LSL estate agency brands have seen growth in market share as measured by new instructions during 2019.”
However, residential sales income was down by 17 per cent - the firm’s brands exchanged on 16,707 homes last year, a 27 per cent drop on the 22,747 in 2018. Lettings income was down by 12 per cent.
The surveying and financial services divisions performed well but the LSL group overall saw a 31 per cent fall in pre-tax profits for last year, largely because of the costs of the agency closure programme.
Meanwhile one month on from the public claim that Countrywide’s sale of its commercial division was “imminent” there remains complete silence from the firm on what is happening.
The troubled agency group issued a statement to shareholders on February 7 saying the sale of Lambert Smith Hampton - originally scheduled to be completed before the end of 2019 - was the subject of an unspecified delay.
At the end of 2019 Countrywide announced the cash sale of LSH for £38m to a Monaco-based Danish property entrepreneur, John Bengt Moeller.
At the time the firm said the cash would “significantly improve Countrywide's capital structure following receipt of gross cash proceeds of £38m and allow Countrywide Group to materially reduce its net debt.”
The company insisted the sale go through rapidly, before December 31, even holding an unusual meeting of shareholders to approve the deal between Christmas and New Year.
Then came the news of the delay on February 7; and four days later Countrywide again told Estate Agent Today that completion of the deal was “imminent.”