“The Surveying Division continues to provide
industry leading service levels to clients which
together with excellent growth in revenue from the
provision of Surveying Services to private buyers,
provides a sound platform for growth.”
Business Review
Directors’ Report and Business Review
INCREASE IN REVENUE FROM PRIVATE SURVEYS Since making the additional PI provision of 2009 (£25.8m) and despite market volumes
46
£17.3m at the 2012 half year, PI costs have being 12% lower in 2012 compared to 2009, LSL
tracked in line with expectations for the period operating profit has increased by 24% over the
since 1st July 2012. The run rates of new claims
+ %
same period.
and costs per claim have been consistent with Net assets increased to £76.1m at 31st
the assumptions made in setting the ‘Incurred December 2012 (2011: £72.4m) including a
2012 £4m But Not Reported’ (IBNR) element of the total £10.7m valuation uplift following a review of
provision which relates to costs estimated to the fair value of the investment in Zoopla.
2011 £2.8m
be received in the future relating to valuations
undertaken during the 2004 to 2008 high risk Dividend
LETTINGS INCOME GROWTH lending period. Setting the correct level of IBNR As a result of the improved operating
(excluding Marsh & Parsons) provision is highly subjective as it is extremely performance of the Group, the reduction
23
sensitive to small changes in assumptions in Net Bank Debt and the Board’s positive
relating to run rates of new claims and costs view of future prospects for the business, an
per claim. increased final dividend of 6.4p per share (2011:
+ % Profit before tax, amortisation and exceptional
costs increased by 13% to £35.1m (2011:
5.9p) will be proposed to Shareholders at the
forthcoming AGM, increasing the total dividend
2012 £35.8m £31.1m). Total exceptional costs of £17.7m for 2012 by 9% to 9.5p per share (2011: 8.7p
(2011: £2.0m) included PI costs of £17.3m. In per share). The ex-dividend date for the final
2011 £29.1m
addition, a non cash charge of £4.2m (2011: dividend is 10th April 2013 with a record date
£0.2m) was made relating to employment of 12th April 2013 and a payment date of 10th
FINANCIAL SERVICES INCOME GROWTH related contingent consideration in May 2013. Shareholders have the opportunity
15
acquisitions. Amortisation of intangible assets to elect to reinvest their cash dividend and
during the year reduced to £3.5m (2011: £8.5m) purchase existing shares in LSL through a
following the ending of the C&G contract for dividend reinvestment plan.
+ % valuations and associated panel management
services. Profit before tax was £6.7m (2011: Developments
£17.6m) and profit after tax was £7.0m (2011: The Estate Agency Division performed
2012 £31.8m
£13.2m). On an adjusted basis, earnings per exceptionally well with all key income lines
2011 £27.6m share increased by 14% to 23.8p (2011: 21.0p). advancing strongly on a like-for-like basis
against a broadly flat market backdrop. The
Cash generated from operations increased
business is making very good progress towards
by 28% to £26.9m (2011: £21.1m) after capital
the medium term profit per owned branch
expenditure of £5.7m (2011: £3.2m). Operating
target of £30,000 to £50,000 which we set
cash flows included PI payments made in the
in 2011. In 2012, profit per owned branch,
year of £7.7m (2011: £2.9m). The increase in
excluding Marsh & Parsons, increased to
PI cash costs was partly driven by the overall
increase in PI claims during 2012 and also £21,000 from £6,000 in 2011.
by an acceleration in the rate of negotiated We have made significant investment in our
settlements with some lender claimants. Lettings business over the last two years,
Net Bank Debt at 31st December 2012 reduced adding a total of 101 new colleagues, and this
by 25% to £26.6m compared to £35.7m at helped to deliver a revenue increase in the year
31st December 2011 having invested £3.9m in of 23% to £35.8m (2011: £29.1m) excluding
acquisitions and making a further investment Marsh & Parsons. Residential Sales income,
in Zoopla. Offsetting these investments excluding Marsh & Parsons, increased by 6%
were proceeds of £6.3m from the successful to £58.1m (2011: £54.7m) mainly due to an
freehold disposal programme which generated increase in the average fee.
an exceptional profit of £1.4m. The current level Total Financial Services income delivered
of debt is almost identical to that in December through our Estate Agency Division branches
11