LSL underlying operating profit falls 19% in 2016

LSL Property Services has posted a 19% fall in underlying operating profits in its annual results.

Underlying operating profit dropped from £42.9m to £34.6m for the year to the end of December, but revenues were up 2% at £307.8m. Underlying operating margin fell to 11.3% from 14.3% in 2015.

Pre-tax profits rose to £63.5m from £38.6m last time, but the annual dividend per share fell 18% form 12.6p in 2015, to 10.3p in 2016.

Simon Embley, chairman of LSL said: “Following a strong first half performance, the group delivered a resilient second half performance given the changing market conditions. I am pleased that we maintained revenue growth in both the estate agency and surveying divisions.

“The group reacted decisively to the changing market conditions in the second half by taking selective cost measures and strengthening the balance sheet. The group has relatively low levels of gearing and is very cash generative at an operational level.

“The business is well positioned to capitalise on market conditions to increase shareholder value.”

Chris Millington, an analyst at Numis Securities, welcomed the results, despite the falls on the previous year’s figures.

“Overall we think this is a creditable performance in the face of variable market conditions,” said Millington in a BUY note issued this morning. “Whilst the outlook for 2017 is uncertain, and we forecast a 4% reduction in market volumes (predominantly due to the tough Q1 comparative), we expect LSL to remain cash generative and lettings and financial services should continue to grow.”

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