LSL Property Services, parent company to Reeds Rains and Your move, has reported a slide in pre-tax profits to £17.6m for 2011, down from £36m in 2010.
It is the second estate agency chain to report a big cut in profits for last year, following Connells’ results earlier this week.
However, both companies have been at pains to stress that they invested in their businesses during 2011, with LSL saying it invested £6.1m into its estate agency division. It said the investment was in ‘people and call centre’.
There was also the £50m purchase last November of London agent Marsh & Parsons. LSL’s pre-tax figures also include a net exceptional cost of £2.4m, which it says arose mainly from this acquisition.
LSL’s group revenue increased by 6% to £218.4m from £206.6m in 2010. Revenue within the estate agency division increased by 13% to £141.8m, up from £125.7m the year before. Revenue from lettings was up 20%.
In its financial services division, income increased by 49% in 2011 to £27.6m compared with £18.6m in 2010, the revenue benefiting from the first full year since the acquisitions of the Home of Choice network and Pink Home Loans.
Total gross mortgage lending arranged through its financial services network more than doubled in 2011 to £6.8bn, compared with £2.6bn in 2010.
However, LSL’s valuation and surveying business continues to take a hit from Professional Indemnity claims relating particularly to valuations between 2005 and 2007. It said there are continuing ‘high levels of claims’.
The LSL accounts show a provision for £9.6m, down from £10.9m in 2010, with the settlement of a number of existing claims being offset by new and possible expected claims.
Roger Matthews, chairman of LSL, said: “In a market where transaction levels remained exceptionally low, 2011 was a year of investment for the future and one of strong progress for the group.
“We will continue to focus on growing market share and profitability in estate agency and on the retention of key lender clients for surveying and valuation services.
“There are also significant opportunities to build on the strong start made in providing surveying services to private buyers and to expand our presence in the prime central London market through Marsh & Parsons.”
Marsh & Parsons will open two new branches this year, and there may be further ‘bolt on’ acquisitions.
However, LSL warned that this year will continue to provide a ‘difficult backdrop’ with housing transaction levels remaining at ‘less than half normal historic levels’. It also said the housing market has entered a fourth consecutive year of shortage of mortgage finance.
Comments
A "Slide" confers a nice gentle decline - I think a fall of more than 50% would more appropriately be described with the adjective "Plunge"
And saying it was because "we made investments in people" is a pathetic attempt to justify it.
Did they lose some major asset management business?