Preliminary Results

RNS Number : 9754H

LSL Property Services

03 March 2010

 



.For Immediate Release

3 March 2010

LSL Property Services plc

("LSL" or "the Group")

PRELIMINARY RESULTS

LSL Property Services plc, a leading provider of residential property services, incorporating both estate agency and surveying businesses, announces preliminary results for the year ended 31 December 2009.

Group

-       Group Revenue down 2.5% to £157.7m (2008: £161.8m)

-       Underlying Group Operating Profit up 55% to £28.3m (2008: £18.2m)

-       Increase in Underlying Operating Margin⁵  from 11.3% to 17.9%

-       Operating costs reduced by 10% to £129.9m (2008: £144.3m)

-       Profit Before Tax increased  to £16.6m (2008: Loss of £6.2m^-*)

-       Adjusted Basic earnings per share up 93% to 18.1p (2008: 9.4p per share*)

Basic earnings per share of 11.4p (2008: Basic loss of 4.6p*)

-       Return to dividends: Interim dividend declared of 5.4p per share (2008: nil)

-       Significant cash generation during the year

                 -  Net cash inflow from operations of £24.6m (2008: £3.2m)

                 -  Net debt reduced by £23.5m to £25.7m (2008: £49.2m)

 Surveying Performance

-       Significantly outperformed the market, turnover down 12%, against a 34%³ decline in total mortgage approvals.

-       Underlying Operating Profit¹ of £23.5m (2008: £28.6m)

-       Barclays contract extended and a new five year contract with Santander

 Estate Agency and Financial Services Performance

-       Delivered a significant turnaround in Profitability

Underlying Operating Profit¹ of £6.7m (2008: Loss of £8.4m*)

-       All our high street Estate Agency brands have been profitable in 2009, despite market volumes being half historic norms.

-       Significantly lower operating costs and excellent growth in asset management  

business - market share of 17% in Q4,2009.⁴

  Acquisition of Halifax Estate Agencies Limited

-       Establishes LSL as second largest Estate Agency business in UK.

-       Acquisition completed on 15 January 2010.  Integration completed on schedule and targeted run-rate cost savings achieved.

*Please note that the Income Statement for 2008 was restated due to the adoption of the amendment to IFRS 2 Share-based payments, details of the restatement are given at note 1. All relevant figures in this report reflect the restatement

¹Underlying Operating Profit is before exceptional costs, amortisation of intangible assets and share based payments

² The calculation of the Adjusted Basic Earnings per Share is given in note 4.

³ Bank of England Total Mortgage Approval for 2009

⁴ Council of Mortgage Lenders data on repossession 2009.

⁵ Underlying Operating Margin is Group Operating Profit before exceptional costs, amortisation and share based payments shown as a percentage of turnover

Commenting on today's announcement, Roger Matthews, Chairman said:

"The Group has made substantial progress in 2009, and ends the year in a much stronger position in both the surveying and estate agency divisions. The increase in underlying operating profits of 55% to £28.3m is an excellent result given the continuing challenging market conditions.

Whilst the short term outlook for the market remains uncertain, the business is significantly more robust through the cycle with a lower cost base, a larger lettings portfolio, a growing asset management business and a surveying business which has extended a number of key contracts and grown its market share.  As a result , the Group is well positioned to deliver further increases in profitability when the market recovers.

Longer term, the underlying macroeconomic conditions in the housing market remain positive.  The Group has a strong balance sheet with net debt of £25.7m against an available facility of £75m. This, together with the cash generative nature of the business, means that the Group is well placed to respond to further acquisition opportunities which may arise as a result of market conditions."

For further information please contact:

Simon Embley, Group Chief Executive Officer
Dean Fielding, Group Finance Director
LSL Property Services plc	01904 715 324
Richard Darby, Nicola Cronk, Catherine Breen
Buchanan Communications	020 7466 5000

Notes to Editors:

LSL Property Services plc is one of the leading residential property services companies in the UK and provides a broad range of services to its clients who are principally mortgage lenders, as well as buyers and sellers of residential properties. For further information, please visit our website: www.lslps.co.uk.

Chairman's Statement

Introduction

We are delighted to report a strong increase in underlying operating profits of 55% to £28.3m in the year. Both our Surveying and Estate Agency divisions have further enhanced their market positions and are well placed for longer term growth. Surveying has extended a number of contracts with key clients and Estate Agency has benefited from significant cost reductions and from the rapid growth of its counter-cyclical income streams, in particular lettings and asset management.

The above results demonstrate the Group's resilience despite transaction volumes continuing to be at a relatively low point in the cycle.  Transaction volumes did improve in the second half of 2009 leading to a growth in mortgage approvals for house purchase of 16% to 597,000 for the full year, against an historic norm of in excess of 1.2m per annum. Total mortgage approvals declined by 34% in 2009, reflecting a significant reduction in re-mortgages.

The acquisition of the Halifax Estate Agencies Limited ("HEAL") which completed on 15 January 2010, adds 206 branches to the agency network, and presents further scale opportunities for the Group. This acquisition establishes LSL as the second largest Estate Agency business in the United Kingdom.  

Financial results

Group revenue declined by 2.5% to £157.7m (2008: £161.8m).  However, the Underlying Operating Profit has increased by 55% from £18.2m to £28.3m, reflecting an increase in the Underlying Operating Profit margin from 11.3% to 17.9%.  Operating costs were down by 10% from £144.3m to £129.9m.

The Estate Agency business delivered a significant turnaround moving from an Underlying Operating loss of £8.4m to a profit of £6.7m.  This is an excellent performance against a back drop of a market which still remains at 50% of the historic norms in housing transaction volumes and demonstrates the benefits of a lower cost base and significant growth in counter cyclical income streams.

The Surveying business has significantly outperformed the market, with turnover down by only 12% against an overall 34% decline in mortgage approvals. However, the result has been impacted by the materially lower levels of re-mortgage activity and the lower volumes in our Barnwoods operation, resulting in Underlying Operating Profit reducing from £28.6m to £23.5m. 

The Group generated significant cash from operations in 2009 and as a result net debt was reduced from £49.2m to £25.7m.  This resulted in a reduction in net finance costs from £4.0m to £2.2m. Exceptional costs were minimal in 2009 at £0.4m (2008: £8.2m), resulting in an overall profit before tax and amortisation of £25.2m (2008: £5.0m).  Amortisation during the year was £8.6m (2008: £10.1m), giving a profit before tax of £16.6m (2008: loss of £5.1m).  The profit after tax was £11.7m (2008: loss of £4.8m).

The adjusted earnings per share was 18.1p (2008: 9.4p)

 

Dividend

On the basis of the strong operating performance during the year, the reduction in net debt and the prospects for continued growth longer term, the Board has decided to resume dividend payments in line with our previously stated dividend policy. The policy, which stipulates dividends of between 30% to 40% of profit after tax, reflects the cash generative nature of the business, the long term earnings potential of the Group and the opportunities to invest in organic growth and growth through selective acquisitions.

As a consequence, the Board has declared an interim dividend payable for 2009 of 5.4 pence per share, effectively replacing any final dividend payable. The dividend will be paid on 31 March 2010 to shareholders on the register at 10 March 2010, with a Record Date of 12 March 2010.

Developments

Our Surveying division has made strong progress during the year and strengthened its market position. It has continued its excellent track record of extending contracts with its key clients. This includes extending the contract with Barclays for a further two years and the recently announced five year expanded contract with Santander, which commenced on 1 December 2009. This contract significantly expands the volume of surveying services to be provided to the Santander Group and includes the transfer of the remaining Santander operational surveyors into e.surv.  The contract is expected to make a significant contribution to profitability in 2010, providing an excellent opportunity to drive further operational efficiencies across the Surveying division.

Barnwoods' exclusive panel management contract with C&G continues to be a material contract for the Surveying division.  Turnover in 2009 declined in line with the market, however there continues to be some uncertainty over the mortgage branding strategy of Lloyds Banking Group, which may impact Barnwoods' volumes.

Our Estate Agency division has continued to focus on growing counter-cyclical income streams.  Lettings income from our core brands has increased by 24% to £19.6m. Our Corporate Client Department ("LSL CCD"), which provides repossession asset management and corporate lettings services has had an excellent year, securing a number of new contracts and has contributed significantly to profits. These services were launched at the start of 2008, and in favourable market conditions have generated income of £9.3m in 2009 (2008: £1.8m).  LSL CCD is an example of the Group developing new counter-cyclical earning streams, as evidenced by asset management which has grown from a standing start in 2008 to a 17% market share in Q4 2009.  This will be strengthened further in 2010 by St Trinity, our asset management business, set up following the acquisition of HEAL.

The Group's acquisition of HEAL, which completed on 15 January 2010, is a transformational deal for our Estate Agency division: acquiring 206 high quality branches, an established asset management business and a pipeline of sales on favourable commercial terms at a low point in the economic cycle. The re-branding of the 206 branches to Your Move, Reeds Rains and Inter-County brands will strengthen LSL's Estate Agency position in local markets.  LSL acquired HEAL for £1, which had proforma net assets at 31 December 2008 of £38.4m, and at completion had cash of £25.9m to cover restructuring and rebranding costs. The acquisition is expected to be cash positive in 2010 and make a significant contribution when more normal market conditions resume.

We are pleased to report that all significant project milestones relating to the integration of HEAL have been achieved. This includes the re-branding of all branches, the implementation of our systems, the back-office service integration and restructuring of the entire HEAL operation. A significant level of targeted run-rate cost savings have been achieved and the focus in 2010 is on growing market share and maximising income opportunities such as lettings.

 

Main Board

The Board was strengthened by the appointment of Mark Pain on 1 July 2009 as a Non-Executive Director and as Chairman of the Remuneration Committee. Mark has considerable experience in the residential property market and financial services industry, having held senior public company Board positions at Barratt Development plc and Abbey National. Mark is currently a Non-Executive Director of Johnston Press plc, Punch Taverns plc and Northern Rock plc and is a welcome addition to the Board. He will add a valuable contribution to the growth and development of the business. Mark Warburton resigned on 1^st July 2009 to concentrate on other business interests and we wish Mark well for the future.

Paul Latham has announced his retirement from the Board as Executive Director, Surveying division with effect from 31^st May 2010. However, Paul has agreed to stay on as a Non- Executive Director so we can continue to benefit from his expertise and industry knowledge. In addition, it is our intention to appoint a further independent non-executive director during the course of the year.   Alison Traversoni, will replace Paul as Executive Director, Surveying division and will be appointed to the Board on 31 May 2010. In addition, David Newnes, currently Managing Director of Your Move, will also be appointed to the Board on 31 May 2010 as Managing Director of the Estate Agency division. Alison and David have significant industry experience and both have been part of the senior management team since the MBO in 2004 and have contributed to the success of the Group.

People

I would like to welcome all new employees to the Group in a period where there have been significant additions to the Group through both the Santander contract and the HEAL acquisition.

LSL is a people business and as such we are reliant on the commitment and enthusiasm of our employees on whom we depend to provide the high level of service that we strive to achieve for our customers.

LSL operates two employee share schemes, a Save As You Earn and a Buy As You Earn, offering employees the opportunity to share in the future success of LSL. The 2007 SAYE scheme matured in January 2010 at an option price of £1.74 per share. 

A number of senior management employees, including the Executive Directors, currently own approximately 32 % of LSL (2008: 31%). The interests of these senior managers and directors are closely aligned with the interests of other shareholders.

I would also like to thank everyone in the business for making the year a great success in market conditions which remain challenging, and in particular thank everyone involved in the acquisition and integration of HEAL, which has been a huge effort and a great success to date as well as an important transformational acquisition for the Group.

Current Trading & Outlook

The Group has made substantial progress in 2009 and ends the year in a much stronger position in both the surveying and estate agency divisions. The increase in underlying operating profits of 55% to £28.3m is an excellent result given the continuing challenging market conditions.

Despite the increase in house purchase transaction volumes in the second half of 2009, overall volumes remained at half of historic norms. The longer term underlying macroeconomic conditions in the housing market remain positive and the Group is extremely well placed to deliver growth.

The short term outlook for the market remains uncertain. The continued shortage of available mortgage finance and the impact of fiscal tightening on consumer spending may impact the timing of any recovery.  However, the business is significantly more robust through the cycle with a lower cost base, a larger lettings portfolio, a growing asset management business and a surveying business which has extended a number of key contracts and grown its market share.  As a result, the Group is well positioned to deliver further increases in profitability when the market recovers further.

Activity to the end of February is in line with our expectations and reflects a continuation of run-rates in the second half of 2009.

The Group has a strong balance sheet with net debt of £25.7m against an available facility of £75m.  This, together with the cash generative nature of the business, means that the Group is well placed to respond to further acquisition opportunities which may arise as a result of market conditions.

Roger Matthews

3 March 2010

Business Review & Directors' Report

Introduction

LSL provides a broad range of services to its two key customer groups, who are mortgage lenders and private consumers.  The Group provides various property services to consumers including estate agency, lettings, valuation, surveying, and advice on mortgages and non-investment insurance products.  The Group also provides mortgage lenders with surveys and panel management services, asset management and property management services and also refers mortgage business from its private customers to mortgage lenders.

Key Strengths

LSL has the following key strengths:

·     It is one of the leading residential property services groups in the UK

·     LSL has demonstrated some resilience against the cycles of the housing market, largely due to the performance of its surveying division and the level of counter-cyclical business in estate agency.

·    Since the 15 January 2010 the estate agency division has a network of 575 branches, making it the second largest estate agency business in the UK

·    The Group is strongly cash generative with low capital expenditure of £0.7m  (2008: £1.0m) and in spite of the unprecedented market conditions has generated net cash inflow from operating activities of £24.6m  (2008: £3.2m)

·    The current Executive Directors have been with the Group since 2001 and have a track record of improving profitability as a result of organic growth and a number of successful acquisitions since 2004.

Strategy

The Group's strategy is to grow long term profitability in the provision of residential property services in the United Kingdom and to continue to develop counter-cyclical income streams that will strengthen its ability to trade successfully through market downturns.

Profit growth will be achieved through surveying by continuing the development of strong relationships with lenders and maintaining service excellence in order to continue to drive market share.  Profitable growth will be achieved in the Estate Agency division by continuing to provide a service proposition that recognises the customers' needs and maximises income across the value chain.

In addition, LSL continues to review opportunities for organic growth and will continue to assess value creating acquisition opportunities in residential property services throughout 2010.

The market backdrop provides significant opportunities for market share growth for well capitalised and managed businesses across the estate agency and surveying segments.  Overall, LSL continues to be well placed to benefit from a recovery in the UK housing market.

LSL's Corporate Asset Management business comprising its Corporate Client Department and St Trinity will look to continue growing market share through innovative solutions and strong service delivery.

Principal Risks & Uncertainties

The Board continues to identify, evaluate and manage material risks and uncertainties which could adversely affect the business, operating results and financial condition of LSL. These risks are recorded and managed through a risk register, and the principal risks and uncertainties identified are:

§ The continued volatility and uncertainty of the UK housing market. In particular, transaction volumes (both house purchase and remortgage), house prices and the availability of credit which will adversely affect the profitability and cash flow of all our key brands and businesses.

§ Loss of any licences or permissions necessary for the performance of the Group business.

§ Liability for inaccurate professional services advice to clients (e.g. inaccurate valuations). This risk and the level of Professional Indemnity claims has increased significantly as a result of an increased level of repossessions. Associated with this risk is LSL's ability to maintain appropriate risk management arrangements

§ Loss of key surveying or asset management clients or contracts at their renewal date or significant reduction in volumes, either as a result of adverse market conditions, market consolidation, competition or inadequate service delivery.

§ The reputation and profitability of LSL could be adversely affected by the actions of one or a limited number of employees or franchisees.

§ Failure or interruptions of information technology services on which the Group is reliant for operational performance and financial information.

§ The development of alternative products and services in competition with traditional estate agency and surveying services, such as supermarket property websites and Automated Valuation Models.

§ Changes in legislation or regulation (for example HIPs) may impact on business results or the UK housing market in general.

§ The significant increase in the size of the estate agency branch network changes the operational gearing of the Group.

§ Our ability to renew banking facilities as they fall due as a result of constraints in the banking market.

Further information relating to the management of these risks and uncertainties is set out in the Corporate Governance Review (Internal Controls) of the Annual Report.

Business Review & Directors' Report - Surveying Division

Financial	2009	2008	% change
	£m	£m
Turnover	70.0	80.0	-13%
Expenditure	-46.5	-51.4	-10%
Underlying Operating Profit	23.5	28.6	-18%
KPIs
Profit margin %	34%	36%	-2%
Jobs performed 000s	439	461	-5%
Income per job £	159	174	-9%
Professional Indemnity Insurance provision £m	7.5	5.6

Surveying Division Performance

The Surveying division has significantly outperformed the market delivering profits of £23.5m (2008: £28.6m) and a profit margin of 34% in 2009   (2008: 36%)

Reflecting the strength of its market position total job numbers of all types fell by only 5% to 439,000 (2008: 461,000) in the face of a 34% decline in mortgage approvals to 1.34m (2008: 1.98m).

As a result of significant focus on productivity and cost saving initiatives commenced in 2008 but continued throughout 2009 the cost base has been reduced by 10% from £51.4m to £46.5m. These cost savings were achieved despite an overall increase in Professional Indemnity Insurance provisioning of £1.9m, reflecting the rise in the number of repossessions.

 

Surveying Developments

During the year, the residential surveying division extended its contract to supply exclusive UK panel residential survey management services to Abbey National plc and Alliance & Leicester plc, who are both members of the Santander group of companies ("Santander") through an arrangement which saw the transfer of the remaining operational surveying staff into e.surv. This 5 year contract effective from 1 December 2009 consolidates the current outsourced service supply arrangement already partly administered by e.surv for the provision of surveying services to Santander. The contract is expected to enhance earnings significantly as it provides an excellent opportunity to further leverage the surveying assets across the Group. 

The C&G contract in Barnwoods' remains a material contract for the division.  Turnover has reduced from £21.7m in 2008 to £15.5m in 2009 due to lower remortgage activity generally and also due to the new mortgage strategy implemented since Lloyds Banking Group's acquisition of HBOS.

In line with market conditions and the level of repossessions, Professional Indemnity Insurance remains a key risk for the Surveying division. As a result the Group has increased its Professional Indemnity Provision from £5.6m to £7.5m.                           

Lender Relationships & Service Quality

LSL's surveying division has panel management arrangements with a significant number of lenders. A number of these arrangements are exclusive and they will involve the servicing and distribution of valuation instructions to these lenders' own teams of employed surveyors and/or other valuation providers.  LSL has strong relationships with these lenders.

Service and quality is a significant factor in maintaining relationships with these lenders and in seeking to win new panel management contracts. An example of this was e.surv winning the Mortgage Strategy Awards 2010 Best Surveyor/Valuer category.It also differentiates LSL's surveying division from its competitors.  One of the key factors that lenders use in assessing service is turnaround time for valuation instructions.  LSL's turnaround time is consistently better than many of its competitors, largely as a result of the flexibility of the panel management model and its use of sophisticated technology. 

Competition

LSL's major competitors in the surveying market are principally other national estate agency chains which provide panel management services, such as Countrywide and Connells. While Automated Valuation Models (AVMs) are a competitor to traditional valuation methods, their use in the current market is under careful review by lenders.

Business Review & Directors' Report - Estate Agency Division

The Estate Agency business delivered a significant turnaround moving from an Underlying Operating loss of £8.4m to a profit of £6.7m.

	2009	2008
	£m	£m	% change
Total income	87.7	81.7	7%
Expenditure	-81.0	-90.1	-10%
Underlying Operating Profit	6.7	-8.4	180%
KPIs
Exchange units	14815	13682	8%
	£m	£m
Exchange fees*	28.1	28.6	-2%
Financial Services Income*	11.0	14.7	-25%
Lettings income*	19.6	15.8	24%
Asset Management  income	9.3	1.8	417%
Other income	19.7	20.8	-5%

*these figures reflect Your Move and Reeds Rains only

Estate Agency - Competitive Strengths & Growth Opportunities

·    Strong established high street brands and, with 575 branches, LSL is ranked second largest in the UK by Estate Agency News (January 2010)

·    Strong and growing counter-cyclical income streams, such as the generation of lettings and asset management income.

·    Growing repossessions asset management business with a strong service ethos

·    Highly profitable business in normal market conditions

·    Technically advanced proprietary browser based IT systems (including Preview and Quicklet) with one IT solution across all brands, providing a customer relationship management ability to sell income streams on an automated basis

·    Successful franchise model

·    www.your-move.co.uk-the number 1 UK estate agency branded website by Hitwise (February 2010)

 

Estate Agency Performance

The Estate Agency business delivered a significant turnaround in 2009.  This was supported by a stronger than anticipated level of housing transactions in the second half of 2009, but still reflected housing transactions at a relative low (597,000 mortgage approvals as opposed to a normal annualised level of 1.2m approvals).  The cost actions taken in 2008 resulted in a 10% reduction in expenditure from £90.1m to £81.0m.  Estate Agency exchange income was maintained at its 2009 levels, but counter cyclical income from lettings and asset management continued to grow significantly.  The decline in FS income reflected the overall decline in mortgage approvals - and the company's focus on reducing the cost base.  The numbers of mortgage advisers and the quantum of financial services income are expected to increase in 2010. Overall we are delighted with the turnaround achieved by the Estate Agency segment.

Estate Agency Revenue

The main drivers of estate agency revenue are:

§  Exchange fee income, which is linked to housing transaction volumes, house prices and commission rates

§  Franchising income, which is generated from initial deposits on new openings, a monthly service fee of 8% of turnover, plus charges for the provision of IT services

§  Lettings income, which is generated from providing a range of services to landlords and tenants.

§  Additional commission income generated through the sale of general insurance, conveyancing services, HIPS, Home Reports, utilities and other products and services to clients of the branch network

§  Financial services income

§  Repossession Asset Management income

LSLi

This business was launched in early 2007 and is the primary vehicle through which LSL has pursued its strategy to acquire small to medium independent Estate Agency businesses. At 31 December 2009 it operated a network of 18 branches (2008: 15 branches) based in the Home Counties under the following strong local brands:

§  ICIEA Limited, trading as "Intercounty" (11  branches 2008: 8 branches)

§  David Frost Estate Agents Limited, trading as "Frosts" with (3 branches 2008: 3 branches)

§  JNP (Estate Agents) Limited, trading as "The JNP Partnership" with 4 branches (2008: 4 branches)

Service Quality

LSL's Estate Agency businesses place strong emphasis on the quality of service they provide to customers and are founder members of the Property Ombudsman Scheme.  As such our businesses undertake to follow the Code of Practice for Residential Estate Agents, which has been approved by the Office of Fair Trading and exceeds the legal requirements of the Consumers, Estate Agents and Redress Act 2007 (CEARA). All branch based employees of the Estate Agency business complete a specially designed training programme and the quality of service is monitored on a monthly basis.

Awards

During the year both Your Move and Reeds Rains won several major industry service awards. Your Move won the Gold Award for the Best Large Estate Agency of the Year, the Gold Award for the Best Large Lettings Agency of the Year, a Silver Award for the Best Financial Services and the Gold Award for the Best Technology and Web, in the Sunday Times, Estate Agency of the Year Awards 2009.

Reeds Rains won the Gold award for Innovation and a Bronze award for Best Financial Services in the Sunday Times, Estate Agency of the Year Awards 2009, a particularly impressive achievement as it was the first time they had entered the awards. Reeds Rains also won the Openwork network award for Best Large Practice - General Insurance.

Regulation

Your Move and First Complete are directly authorised by the FSA in relation to the sale of mortgage, pure protection and general insurance products, while all of the other estate agency businesses and Linear are appointed representatives of Openwork. Reeds Rains is also an appointed representative of Letsure for the sale of rent indemnity insurance. LSL's financial services business places strong emphasis on the quality of service it provides to customers and all advisers complete a specially designed comprehensive training programme which is supplemented by effective supervision, regular monitoring and regular refresher training sessions. As a result of Reeds Rains' and Linear's appointments by Openwork, LSL through those companies has a small indirect shareholding of Openwork.

Competition

LSL's major competitors in the estate agency market vary from national estate agency chains such as Countrywide and Connells to local independent estate agents. It is estimated that the top five estate agency chains, including LSL, account for circa 20% of all estate agency branches in the UK, regional chains account for a further 10%, and independents make up the rest.

First Complete 

As previously reported, we set up LSL Corporate Client Department (a trading name of First Complete), our repossessions asset manager at the start of 2008. The Corporate Client Department, which provides repossessions asset management and corporate lettings services has had an excellent year securing a number of new contracts and has contributed significantly to profits.

In addition LSL CCD has invested in a corporate residential property management team focused on major landlords and aspiring multiple property landlords across the UK, and which has successfully secured a number of key contracts during the year. As a result, it is expected to support the continued growth of lettings income across the estate agency brands in 2010. This is another example of the Group investing and growing its counter-cyclical income streams.

St Trinity

The repossession asset management business established as part of the acquisition of HEAL will provide the Group with additional counter-cyclical income streams.

 

Business Review & Directors' Report

Business Review & Directors' Report - Financial Review

The key drivers of the financial performance of LSL are summarised below.

Income statement

Revenue

Revenue fell by 2.5% in the year ended 31 December 2009 from £161.8m to £157.7m reflecting the ongoing market conditions.

Operating Expenses excluding exceptional costs, amortisation and share based payment.

Operating Expenses were reduced by £14.4m, or approximately 10%, from £144.3m to £129.9m.  The principle saving, which amounted to £8.8m, were emoluments.

Underlying Operating Profit

Underlying Operating Profit was £28.3m (2008: £18.2m) with the Underlying Operating Profit margin up 11.3% to 17.9%.                                               

Exceptional Costs

Exceptional costs in the year ended 31 December 2009 amounted to £0.4m (2008: £8.2m)

Net Financial Costs

Net financial costs amounted to £2.2m (2008: £4.0m)

 

Taxation

The effective rate of corporation tax after excluding the effect of the deferred tax adjustment to goodwill for the year is  29.3% (2008: 11.7%)

 

Adjusted Basic Earnings Per Share

The Adjusted Basic Earnings Per Share (as calculated in note 4) is 18.1p (2008: 9.4p).  The directors consider this provides a better and more consistent indicator of the Group's underlying performance.

Balance Sheet

Capital Expenditure

Total capital expenditure in the year amounted to £0.7m (2008: £1.0m). The capital expenditure predominantly comprised fixtures, fittings and computer equipment.

Financial Structure

As at 31 December 2009 net debt was £25.7m (2008: £49.2m).  LSL has a £75m revolving credit facility in place (2008: £75m).

Cash Flow

The business is cash generative and has low capital expenditure requirements.

The Group generated net cash from operations of £24.6m (2008: £3.2m). The improved cash generation is due principally to an increase in profitability, the lower level of exceptional costs incurred and a positive movement in working capital of £1.1m.

Net Assets

The net assets as at 31 December 2009 were £45.9m (2008: £33.7m).

 

Treasury & Risk Management

LSL has an active debt management policy and had purchased an interest rate cap, which expired in August 2009 and restricted LIBOR to 6% on £30.0m of debt. In addition, LSL entered into three interest rate swap agreements in April and May 2009 to protect itself against an increase in interest rates in the future for £25m of the Group's bank borrowings based on the forecast utilisation of the borrowing facilities over the period of the hedge.  The interest rate swap agreements restrict the LIBOR to 2.93% until April and May 2014. LSL does not hold or issue derivatives or other financial instruments for trading purposes.

International Financial Reporting Standards (IFRS)

The Financial Statements have been prepared under IFRS as adopted by the European Union. LSL commenced reporting under IFRS from 1 January 2005.

Group Income Statement

For the year ended 31 December 2009

		2009	2008
			restated*
	Note	£'000	£'000
Revenue	2	157,703	161,773
Operating expenses:
Employee and subcontractor costs		80,100	88,912
Establishment costs		10,991	12,485
Depreciation on property, plant  and equipment		1,407	2,299
Other		37,374	40,638
		(129,872)	(144,334)
Rental income		488	765
Group operating profit before exceptional costs, amortisation and share-based payments	2	28,319	18,204
Share-based payments		(532)	(1,551)
Amortisation of intangible assets		(8,635)	(10,111)
Exceptional costs	3	(400)	(7,735)
Group operating profit/(loss)		18,752	(1,193)
Dividend income		24	334
Finance income		54	190
Finance costs		(2,221)	(4,035)
Exceptional finance costs	3	-	(432)
Net financial costs		(2,143)	(3,943)
Profit/(loss) before tax before adjustment to goodwill		16,609	(5,136)
Adjustment to goodwill in respect of subsequent recognition of deferred tax asset		-	(1,048)
Profit/(loss)before tax		16,609	(6,184)
Taxation
- related to exceptional costs		112	2,022
- others		(4,974)	(600)
		(4,862)	1,422
Profit/(loss) for the year *		11,747	(4,762)
Earnings/(loss) per share expressed in pence per share:
Basic	4	11.4	(4.6)
Diluted	4	11.4	(4.6)

* Restatement of 2008 figures is due to the adoption of IFRS 2 (Amendment) which increased the share-based payment charge and the loss for the year by £1,413,000.  See note 1 for details.

Group Statement of Comprehensive Income

For the year ended 31 December 2009

		2009	2008 restated*
	Note	£'000	£'000
Profit/(loss) for the year		11,747	(4,762)
Valuation losses on available-for-sale investments		-	(1,600)
Net loss on cash flow hedge		(87)	-
Income tax effect		24	-
		(63)	-
Other comprehensive loss for the year, net of tax		(63)	(1,600)
Total comprehensive income/(loss) for the year, net of tax**		11,684	(6,362)
**all attributable to equity holders of the parent

*  the details of the restatement of the 2008 figures are given in note 1.

Group balance sheet

As at 31 December 2009

		2009	2008 restated*
	Note	£'000	£'000
Non-current assets
Goodwill		66,472	66,422
Other intangible assets		22,895	31,413
Property, plant and equipment		2,077	2,841
Financial assets		4,052	4,052
Deferred tax assets		621	-
Total non-current assets		96,117	104,728
Current assets
Trade and other receivables		20,052	13,924
Current tax assets		-	255
Cash and cash equivalents		858	647
Total current assets		20,910	14,826
Total assets		117,027	119,554
Current liabilities
Financial liabilities		993	1,273
Trade and other payables		33,209	27,564
Current tax liabilities		2,183	-
Provisions for liabilities and charges		748	1,195
Total current liabilities		37,133	30,032
Non-current liabilities
Financial liabilities	7	25,573	48,611
Trade and other payables		27	39
Deferred tax liability		-	557
Provisions for liabilities and charges		8,437	6,586
Total non-current liabilities		34,037	55,793
Net assets		45,857	33,729
Equity
Share capital		208	208
Share premium account		5,629	5,629
Share-based payment reserve		2,259	1,944
Treasury shares		(2,805)	(2,934)
Unrealised gain reserve		3,900	3,900
Hedging loss		(63)	-
Retained earnings		36,729	24,982
Total equity		45,857	33,729

* Restatement of 2008 figures is due to the adoption of IFRS 2 (Amendment) which reduced the retained earnings by £1,413,000.  See note 1 for details.

Group cash flow statement

For year ended 31 December 2009 

			31 Dec 2009			31 Dec 2008           restated*
	Note		£'000	£'000		£'000	£'000
Cash generated from operating activities
Profit/(loss) before tax				16,609			(6,184)
Adjustments to reconcile  profit/(loss) before tax to net cash inflows from operating activities
Amortisation of intangible assets			8,635			10,111
Dividend income			(24)			(334)
Finance income			(54)			(190)
Finance costs			2,221			4,035
Share-based payments			574			1,551
Adjustment in relation to deferred tax asset			-			1,048
				11,352			16,221
Group operating profit before amortisation and share-based payments				27,961			10,037
Depreciation			1,407			2,299
Impairment of goodwill			126			1,036
Impairment of intangible assets			-			38
Gain on sale of property, plant and equipment			6			419
			1,539			3,792
(Increase)/decrease in trade and other receivables			(6,128)			7,663
Increase/(decrease)in trade and other payables and provisions			7,233			(9,152)
				2,644			2,303
Cash generated from operations				30,605			12,340
Interest paid			(2,397)			(3,993)
Tax paid			(3,578)			(5,126)
				(5,975)			(9,119)
Net cash generated from operating activities				24,630			3,221
Cash flows from investing activities
Purchase of subsidiary undertakings, minority interest and commercial business			(150)			(276)
Interest received			54			190
Dividends received			24			334
Purchase of property, plant and equipment			(662)			(1,043)
Proceeds from sale of property, plant and equipment			13			84
Purchase of available for sale financial assets			-			(2)
Net cash expended on investing activities				(721)			(713)
				23,909			2,508

Group cash flow statement

For year ended 31 December 2009

			31 Dec 2009		31 Dec 2008 restated*
	Note		£'000	£'000		£'000	£'000
Net cash from operating activities less cash expended on investing activities				23,909			2,508
Cash flows from financing activities
Repayment of loans			(23,698)			-
Proceeds from loans			-			44
Purchase of treasury shares			-			(265)
Dividends paid			-			(3,966)
Net cash used in financing activities				(23,698)			(4,187)
Net increase/(decrease) in cash and cash  equivalents				211			(1,679)
Cash and cash equivalents at the beginning of the year				647			2,326
Cash and cash equivalents at the end of the year				858			647

*  the details of the restatement of the 2008 figures are given in note 1.

Group statement of changes in equity

Year ended 31 December 2009

	Share capital	Share premium account	Share- based payment  reserve	Treasury shares	Unrealised gains reserve	Hedging loss	Retained earnings	Total equity	Minority interest	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2009	208	5,629	531	(2,934)	3,900	-	26,395	33,729	-	33,729
Change in accounting policy (note 1)	-	-	1,413	-	-	-	(1,413)	-	-	-
Restated balance	208	5,629	1,944	(2,934)	3,900	-	24,982	33,729	-	33,729
Profit for the year	-	-	-	-	-	-	11,747	11,747	-	11,747
Other  comprehensive loss	-	-	-	-	-	(63)	-	(63)	-	(63)
Total comprehensive income	208	5,629	1,944	(2,934)	3,900	(63)	36,729	45,413	-	45,413
Reissuance of treasury shares	-	-	(109)	129	-	-	-	20	-	20
Share-based payments	-	-	424	-	-	-	-	424	-	424
At 31 December 2009	208	5,629	2,259	(2,805)	3,900	(63)	36,729	45,857	-	45,857

Group statement of changes in equity

Year ended 31 December 2008 (restated)

	Share capital	Share premium account	Share- based payment reserve	Treasury shares	Unrealised gains reserve	Retained earnings	Total equity	Minority interest	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2008	208	5,629	560	(2,669)	5,500	33,710	42,938	-	42,938
Loss for the period (restated*)	-	-	-	-	-	(4,762)	(4,762)	-	(4,762)
Other  comprehensive loss	-	-	-	-	(1,600)	-	(1,600)	-	(1,600)
Total comprehensive income	208	5,629	560	(2,669)	3,900	28,948	36,576	-	36,576
Purchase of treasury shares	-	-	-	(265)	-	-	(265)	-	(265)
Dividends paid	-	-	-	-	-	(3,966)	(3,966)	-	(3,966)
Share-based payments (restated*)	-	-	1,384	-	-	-	1,384	-	1,384
At 31 December 2008 (restated*)	208	5,629	1,944	(2,934)	3,900	24,982	33,729	-	33,729

*  the details of the restatement of the 2008 figures is given in note 1.

Notes to the Preliminary Results

As at 31 December 2009

1.         The financial information in this preliminary announcement does not constitute LSL's statutory financial statements for the year ended 31 December 2009 but has been extracted from the financial statements, and as such, does not contain all information required to be disclosed in the financial statements prepared in accordance with IFRS.

Statutory financial statements for this year will be filed following the Annual General Meeting.  The auditors have reported on these financial statements.  Their report was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Basis of preparation

The accounting policies adopted are consistent with those of the previous financial year except for the adoption of new Standards and Interpretations as of 1 January 2009 which are applicable to the Group, as noted below:

IFRS 2 Share-based Payment - Vesting Conditions and Cancellations

The amendment to IFRS 2 restricts the definition of vesting conditions to include only service conditions (requiring a specified period of service to be completed) and performance conditions (requiring the other party to achieve a personal goal or contribute to achieving a corporate target).  All other features are not vesting conditions and, whereas a failure to achieve such a condition was previously regarded as a forfeiture (giving rise to a reversal of amounts previously charged to profit), it must be reflected in the grant date fair value of the award and treated as a cancellation, which results in either an acceleration of the expected charge, or a continuation over the remaining vesting period, depending on whether the condition is under the control of the entity or counterparty. 

The group treated the employees' withdrawal from the SAYE schemes as cancellation, which resulted in acceleration of the charge because the withdrawal is under the control of the employees. The adoption of this amendment had the effect of increasing the loss by £1,413,000 for the year ended 31 December 2008, with the corresponding impact on equity. There is no impact on the financial statements as of 1 January 2008.

IFRS 8 Operating Segments

This Standard requires disclosure of information about the Group's operating segments based on information presented to the Board and replaces the requirement to determine primary (business) and secondary (geographical) reporting segments of the Group. Adoption of the Standard did not have any effect on the financial position or performance of the Group. The Group determined that the operating segments were slightly different to the business segments previously identified under IAS 14 Segment Reporting. The financial services business is considered by the Group to be part of the estate agency business and as such has now been included within the "Estate agency and related activities" segment. Additional disclosures about each of these segments are shown in Note 2, including revised comparative information.

IAS 1 Revised Presentation of Financial Statements

The Standard introduces the statement of comprehensive income: it presents all items of recognised income and expense, either in one single statement, or in two linked statements. The Group has elected to present two statements.

Improvements to IFRSs

In May 2008 the IASB issued its first omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. There are separate transitional provisions for each standard. The adoption of the following amendments resulted in changes to accounting policies but did not have any impact on the financial position or performance of the Group.

·      lAS 1 Presentation of Financial Statements: Assets and liabilities classified as held for trading in accordance with lAS 39 Financial Instruments: Recognition and Measurement are not automatically classified as current in the statement of financial position. The Group amended its accounting policy accordingly and analysed whether Management's expectation of the period of realisation of financial assets and liabilities differed from the classification of the instrument. This did not result in any re-classification of financial instruments between current and non-current in the statement of financial position.

·      lAS 16 Property, Plant and Equipment: Replace the term "net selling price" with "fair value less costs to sell". The Group amended its accounting policy accordingly, which did not result in any change in the financial position.

·      lAS 38 Intangible Assets: Expenditure on advertising and promotional activities is recognised as an expense when the Group either has the right to access the goods or has received the service. This amendment has no impact on the Group because it does not enter into such promotional activities.

The reference to there being rarely, if ever, persuasive evidence to support an amortisation method of intangible assets other than a straight-line method has been removed. The Group reassessed the useful lives of its intangible assets and concluded that the straight-line method was still appropriate.

The amendments to the following standards below did not have any impact on the accounting policies, financial position or performance of the Group:

·      IFRS 5         Non-current Assets Held for Sale and Discontinued Operations

·      IFRS 7         Financial Instruments: Disclosures

·      lAS 8           Accounting Policies, Change in Accounting Estimates and Error

·      lAS 10         Events after the Reporting Period

·      lAS 16         Property, Plant and Equipment

·      lAS l8           Revenue

·      lAS 19         Employee Benefits

·      IAS 20         Accounting for Government Grants and Disclosures of Government Assistance

·      IAS 23         Borrowing Costs

·      lAS 27         Consolidated and Separate Financial Statements

·      lAS 28         Investment in Associates

·      lAS 31         Interest in Joint ventures

·      lAS 34         Interim Financial Reporting

·      lAS 36         Impairment of Assets

·      lAS 39         Financial Instruments: Recognition and Measurement

The applied IFRS accounting policies were selected by management considering all applicable International Financial Reporting Standards issued by the International Accounting Standards Boards (IASB) as adopted by the European Union as they apply to the financial statements of the Group for the year ended 31 December 2009 as applied in accordance with the provisions of the Companies Act 2006.

2.         Segment reporting

For management purposes, the group is organised into business units based on their products and services and has two reportable operating segments as follows:

·      The estate agency and related activities provides services related to the sale and letting of housing via a network of high street branches.  In addition, it provides repossession asset management services to a range of lenders.  It also sells mortgages for a number of lenders and sells life assurance and critical illness policies, etc for a number of insurance companies via the estate agency branch and Linear network.

·      The surveying and valuation segment provides a professional survey service of domestic properties to various lending corporations.

No operating segments have been aggregated to form the above reported operating segments.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.  Segment performance is evaluated based on operating profit or loss which in certain respects, as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements.  Head office costs, group financing (including finance costs and finance incomes) and income taxes are managed on a group basis and are not allocated to operating segments.

The geographic segment has not been reported separately as all the revenue and expense arises in the United Kingdom and all assets are situated in the United Kingdom.

Operating segments

The following table presents revenue and profit/(loss) information regarding the group's operating segments for the financial year ended 31 December 2009 and financial year ended 31 December 2008 respectively.

Year ended 31 December 2009

	Estate agency and related  activities £'000	Surveying and valuation services £'000	Unallocated  £'000	Total  £'000
Income statement  information
Segmental revenue	87,655	70,048	-	157,703
Segmental result:
- before exceptional costs,        amortisation and share-based           payments	6,705	23,554	(1,940)	28,319
- after exceptional costs,
amortisation and share-based      payments	4,910	15,782	(1,940)	18,752
Dividend income				24
Finance income				54
Finance costs				(2,221)
Profit before tax				16,609
Taxation				(4,862)
Profit for the year				11,747

In 2008, the revenue from one customer that accounts to 10% or more of the Group's total revenue amounted to £20,017,000.  The revenue from this customer was included within both the above mentioned segments. In 2009, there is no revenue from one customer that accounts to 10% or more of the Group's total revenue.

Notes to the Preliminary Results

As at 31 December 2009

2.         Segmented reporting (continued)

Year ended 31 December 2008 (restated)

	Estate agency and related  activities £'000	Surveying and valuation services £'000	Unallocated £'000	Total £'000
Income statement  information
Segmental revenue	81,700	80,073	-	161,773
Segmental result:
- before exceptional costs,
amortisation and share-based           payments	(8,435)	28,590	(1,951)	18,204
- after exceptional costs,
amortisation and share-based     payments	(15,834)	16,621	(1,980)	(1,193)
Dividend income				334
Finance income				190
Finance costs				(4,035)
Exceptional finance costs				(432)
Loss before tax before adjustment       to goodwill				(5,136)
Adjustment to goodwill in respect of subsequent recognition of deferred tax asset				(1,048)#
Loss before tax				(6,184)
Taxation				1,422
Loss for the year				(4,762)

# this relates to the estate agency and related activities segment.

*  the details of the restatement of the 2008 figures are given in note 1.

Notes to the Preliminary Results

As at 31 December 2009

3.         Exceptional costs

	2009	2008
	£'000	£'000
Establishment costs
Onerous leases provision due to branch closures	-	1,709
Employee costs
Redundancy costs due to branch closures and business reorganisation	232	2,410
Accelerated share-based payments	42	-
Other
Impairment of brand	-	38
Impairment of goodwill	126	1,036
Costs of aborted acquisition of businesses and financing project	-	242
Accelerated depreciation due to branch closures	-	269
Provision for professional indemnity claims	-	2,031
Total Operating Exceptional Costs Finance Costs	400	7,735
Banking fees incurred for renegotiation of facility	-	432
	400	8,167

During the year, property-careers.com Limited ceased trading and an impairment review was conducted in accordance with the accounting policy.  As a result of this impairment review, the entire value of goodwill in intangible assets of £126,000 was impaired. In addition, some employee costs were incurred due to the cessation of trading of this operation.

In 2008, exceptional costs were incurred as shown above, reflecting the unprecedented market conditions and the need to restructure the business in line with lower activity levels.

In 2008 given the deterioration in the UK housing market the Board has decided that it was appropriate to make a one-off increase in its professional indemnity claims provision of £2,031,000 to take account of the increase in numbers of recovery claims made and likely to be made for inaccurate valuations.

In 2008, Linear Financial Services Limited and Linear Mortgage Network Limited continued to incur operating losses and an impairment review was conducted in accordance with the accounting policy. As a result of this impairment review the entire value of the brand in intangible assets of £38,000 and carrying value of goodwill relating to both companies of £1,036,000 were impaired.  

Notes to the Preliminary Results

As at 31 December 2009

4.         Earnings/(loss) per share

Basic earnings/(loss) per share amounts are calculated by dividing net profit/(loss) for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings/(loss) per share amounts are calculated by dividing the net profit/(loss) attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

	Profit after tax £'000	Weighted average number of shares	2009 Per share amount Pence	Loss after tax restated* £'000	Weighted average number of shares	2008 Per share amount restated* Pence
Basic EPS	11,747	102,818,875	11.4	(4,762)	102,845,156	(4.6)
Effect of dilutive share options	-	360,830	-	-	195,615	-
Diluted EPS	11,747	103,179,705	11.4	(4,762)	103,040,771	(4.6)

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements.

The Directors consider that the adjusted earnings shown below give a better and more consistent indication of the Group's underlying performance:

	2009 £'000	2008 restated* £'000
Profit/(loss) after tax	11,747	(4,762)
Adjusted after tax for:
Exceptional costs	288	6,145
Amortisation	6,217	7,229
Share-based payment	383	1,109
Adjusted profit after tax	18,635	9,721

Adjusted basic and diluted EPS

	Adjusted profit after tax1 £'000	Weighted average number of shares	2009 Per share amount Pence	Adjusted profit after tax1 restated* £'000	Weighted average number of shares	2008 Per share amount restated* Pence
Adjusted Basic EPS	18,635	102,818,875	18.1	9,721	102,845,156	9.5
Effect of dilutive share options	-	360,830	-	-	195,615	-
Adjusted Diluted EPS	18,635	103,179,705	18.1	9,721	103,040,771	9.4

¹ This represents adjusted profit after tax attributable to equity holders of the parent.

*  the details of the restatement of the 2008 figures are given in note 1.

Notes to the Preliminary Results

As at 31 December 2009

5.         Dividends paid and proposed

	2009	2008
	£'000	£'000
Declared and paid during the year:
Equity dividends on ordinary shares:
Final dividend for 2007: 3.86 pence	-	3,966
Dividends on ordinary shares proposed (not recognised as a liability as at 31 December):
Equity dividends on ordinary shares:
Dividend : 5.40  pence per share (2008: nil pence)	5,555	-

6.         Taxation

Tax on profit/(loss)

The major components of income tax charge/(credit) in the group income statements are:

		2009	2008
		£'000	£'000
UK corporation tax	- current year	5,615	755
	- tax underprovided/(overprovided) in prior year	401	(42)
	- utilisation of tax losses	-	(800)
		6,016	(87)
Deferred tax:
Origination and reversal of temporary differences		(603)	(1,271)
Adjustment in respect of prior year		(551)	(64)
Total deferred tax		(1,154)	(1,335)
Total tax charge/(credit) in the income statement		4,862	(1,422)

Income tax credited directly to equity is £24,000 (2008: nil) which relates to deferred tax on the net loss on the cash flow hedge.

The tax assessed in the profit and loss account is higher (2008: higher) than the standard UK corporation tax rate, because of the following factors:

	2009	2008 restated
	£'000	£'000
Profit/(loss) on ordinary activities before tax	16,609	(6,184)
Profit/(loss) on ordinary activities multiplied by rate of corporation tax rate in the UK of 28%  (2008: 28%)	4,651	(1,732)
Non taxable income	(26)	(164)
Disallowable expenses	387	1,350
Change in current tax rate in period	-	17
Other	-	13
	5,012	(516)
Utilisation of tax losses on which deferred tax asset was not recognised previously	-	(800)
Prior period adjustments - current tax	401	(42)
Prior period adjustment - deferred tax	(551)	(64)
Total taxation (credit)/charge	4,862	(1,422)

Notes to the Preliminary Results

As at 31 December 2009

7.         Financial liabilities

Included in the non-current financial liabilities are the secured bank loans totalling £25.1 m (2008: £47.8m).  They are secured by a debenture over the Group's assets excluding certain subsidiaries.

The secured bank loans relate to the revolving credit facility.  The utilisation of this revolving credit facility may vary each month as long as this does not exceed the maximum £75m facility (2008: £75m). The banking facility expires in July 2010 but can be extended until July 2011 only at the option of the company. As at the year end, the intention of the company is to extend the facility until July 2011 and hence the bank loans have been classified under non-current liabilities.

8.         Net Debt Summary

	2009	2008
	£'000	£'000
Interest bearing loans and borrowings	26,566	49,884
Less: Cash and short term deposit	(858)	(647)
Net debt	25,708	49,237

9.         Post balance sheet events

On 15 January 2010, the Group acquired the entire share capital of Halifax Estate Agents Limited for the consideration of £1.  The details of the effect of the acquisition on the Group's assets and liabilities have not been disclosed as the Group is currently in the process of determining the fair value of the net assets acquired.

On 9 February 2010, the Group acquired the entire share capital of Templeton LPA Limited for the initial consideration of £462,000 and an element of contingent consideration, which is dependent on the future performance of the company. The details of the effect of the acquisition on the Group's assets and liabilities have not been disclosed as the Group is currently in the process of determining the fair value of the net assets acquired.

10.       Annual General Meeting

The Annual General Meeting will be held on 21 April 2010.

 

 

END

 

 

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