A 19 per cent decline in underlying operating profits tells you what a tough year 2016 was for LSL (LSL). But despite a post-EU referendum drop in volumes and confidence, the residential property group used full-year results to double down on bullish branch expansion and profitability targets.
Considering LSL had previously warned its operating profits would be significantly below expectations, the surge in earnings in the table below needs explaining. Between July and October, and at an average price of 319p per share, the company booked £36.1m from the disposal of its entire holding of shares in Zoopla (ZPG), helping to halve net debt to £20.3m.
The sale might make broader strategic sense too, given LSL is preparing to take a bigger bite out of the online market. Chief executive Ian Crabb also used full-year results to launch a review to evaluate LSL's "digital opportunities", following a period of "extensive consumer and market research" in 2016.
Broker Jefferies expects full-year pre-tax profits of £29.7m and EPS of 23.1p in 2017, rising to £34m and 26.5p the year after.
LSL PROPERTY SERVICES (LSL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 217p | MARKET VALUE: | £222m | |
| TOUCH: | 216-219p | 12-MONTH HIGH: | 336p | LOW: 180p |
| DIVIDEND YIELD: | 4.8% | PE RATIO: | 4 | |
| NET ASSET VALUE: | 125p* | NET DEBT: | 16% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 244 | 6.7 | 6.8 | 9.5 |
| 2013 | 259 | 17.1 | 13.6 | 10.5 |
| 2014 | 288 | 31.9 | 24.5 | 12.3^ |
| 2015 | 301 | 38.6 | 29.7 | 12.6 |
| 2016 | 308 | 63.5 | 49.2 | 10.3 |
| % change | +2 | +65 | +66 | -18 |
Ex-div: 30 Mar Payment: 2 May *Includes intangible assets of £185m, or 181p a share. ^Excludes special dividend of 16.5p per share. | ||||
