LSL Property Services (LSL) was canny to invest in Zoopla four years ago. The £1.9m investment had grown to £44m by the time the property portal listed on the stock market earlier this year. LSL realised part of that investment, generating £18m, which explains the massive increase in reported pre-tax profit. It now intends to return that to shareholders, after tax, through a special dividend of 16.5p. That tops the yield up to an eye-catching 7.5 per cent.
The news came as LSL reported decent half-year numbers. Revenues from the surveying division grew 10 per cent to £31.3m, while sales in the estate agency rose a fifth to £109m. The latter was driven by a 27 per cent increase in residential sales, accompanied by a 12 per cent rise in lettings income. Operational gearing kicked in, too, pushing the divisional operating profit up 46 per cent to £12.2m.
Chief executive Ian Crabb cautioned that the property market had moderated in the second quarter, given the threat of interest rate hikes and the implementation of stricter mortgage lending criteria. But he stressed the balance nature of LSL's business: when the sales market calms down, the lettings segment offers a recurring revenue stream, and as interest rates rise, the repossesions business should pick up.
Brokerage Numis expects underlying pre-tax profit of £42.4m for the full year, giving EPS of 32p.
| LSL PROPERTY SERVICES (LSL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 368p | MARKET VALUE: | £383m | |
| TOUCH: | 366p-370p | 12-MONTH HIGH: | 491p | LOW: 356p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 109p* | NET DEBT: | 17% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 119 | 8.4 | 6.3 | 3.3 |
| 2014 | 140 | 31.4 | 24.2 | 4 |
| % change | +18 | +275 | +284 | +21 |
Ex-div: 13 Aug Payment: 15 Sep *Includes intangible assets of £150m or 144p a share | ||||
