March 2007
Preliminary Results PresentationYear Ended 31 December 2006
Simon Embley, Group Chief Executive OfficerDean Fielding, Group Finance Director
2
Key messages
Growing profitability of estate agency
division
Growing profitability of estate agency
division
1. Overview
Substantial experience of
acquisitions and corporate reform
Substantial experience of
acquisitions and corporate reform
Diversified business model with some
resilience to property cycle
Diversified business model with some
resilience to property cycle
Attractive margins and strong cash
generation
Attractive margins and strong cash
generation
Growing and highly profitable surveying
division
Growing and highly profitable surveying
division
3
Strong maiden results Turnover up 46% to £197.5m Underlying operating profit¹ up 73% to £32.3m
Organic growth from Your Move and e.surv of 48% Underlying operating profit margin¹ up from 13.9% to 16.4% Adjusted proforma earnings per share² up 83% to 19.8p
Strong underlying operating results from all divisions Surveying profits up 21% to £21.0m Estate Agency and Financial Services profits up from £1.7m to £12.6m (incl. first full year’s contribution from Reeds
Rains)
Mortgage lending up circa 50% to £3.0bn supported by investment in Linear
Excellent cash flow generation with cash generated from operating activities after capital expenditure £28.2m (2005: £15.2m)
Net debt³ reduced to £34.2m
Well positioned for further growth both organically and from acquisitions
Highlights
¹ Before exceptional costs and amortisation² Adjusted to reflect underlying operating profit and the shares in issue post IPO
³ Financial liabilities less cash and cash equivalents
4
Financials at a glance
1.2
13.418.7
32.3
0.9%
10.1%
13.9%
16.4%
0
5
10
15
20
25
30
35
2003 UK GAAP 2004 IFRS 2005 IFRS 2006 IFRS
EB
ITA
(£m
)
0%2%
4%6%
8%10%12%
14%16%
18%20%
EB
ITA
mar
gin
EBITA Margin
EBITA
1. Overview
2006 Group Revenue Split
* before exceptional costs and amortisation of intangible assets
Revenue 2006 2005 % changeEstate Agency 102.6 63.8 61FS 20.9 14.0 48EA & FS 123.5 77.8 58Surveying 74.0 57.0 30Total 197.5 134.9 46Underlying operating profit*Estate Agency 13.4 3.7 262FS -0.8 -2.0EA & FS 12.6 1.7 641Surveying 21.0 17.4 21Unallocated -1.3 -0.4Total 32.3 18.7 73
Group Financial Overview2006 Group EBITA Split
(excluding unallocated costs)
A track record of growing profitability across all business segments
Source: Company Accounts
5
Strong Cash Flow Strong cash generation with minimal capex requirement……
…….solid financial platform to make acquisitions and pay dividends
Business significantly cash generative
Low capex requirement: £2.1m (2005: £1.8m)
Net cash from operating activities to EBITDA ratio: 80% (2005: 70%)
Business has significant debt flexibility
Net debt at 31 December £34.2m
Group credit facility of £79.5m
Net debt to operating profit ratio of 1.06 to 1.0
Business well placed for future dividends
Long term earnings growth potential
Interim maiden dividend for 2007
Dividend payout ratio of 30%-40%
IFRS
Cash Flow Statement Year ended Year ended
£m 31-Dec-06 31-Dec-05
EBITDA 35.0 21.7
Other Movements 0.4 -
Movement in working capital 5.2 1.0
Interest paid (4.5) (3.3)
Tax paid (5.8) (2.5)
Capex (2.1) (1.8)
Net Cash from operating activities 28.2 15.2
IFRS
*
*Includes £1.3m of B share dividend
6
Operational Performance: Surveying
e.surv 2006 2005 Change
Turnover (£m) 68.3 56.4 21%
Underlying Op. profit (£m) 20.4 17.6 16%
Margin (%) 29.9 31.2
Other brands*
Turnover (£m) 5.7 0.6
Underlying Op. profit (£m) 0.6 (0.2)
Margin (%) 10.5 Nil
Total
Turnover (£m) 74.0 57.0 30%
Underlying Op. profit (£m) 21.1 17.4 21%
Margin (%) 28.5 30.5
e.surv KPI’s
Market share growth of circa 32% (by jobs managed)
Supported by new contract wins
Employed surveyors increased to 316 (2005: 262)
Productivity per surveyor (e.surv) maintained @ 6 jobs/day
* Other brands include Reeds Rains surveying division from 1.10.05 to 30.9.06, and Chancellors Associates from 1.7.06
2006 2005 Change
Mortgage approvals (millions)
3.5 3.4 5%
Jobs managed 935,256 674,730 38%
Market share (approx) 27% 20% 32%
Jobs performed 433,870 378,328 15%
7
Future Growth: Surveying
Lender (workforce management) Acquisition of independents Organic growth from
Market share gains and increases in jobs performed Investment in new product development, such as
Energy Performance Certificates (EPC’s)
9 Months 2006
12 Months 2005
% change
No. of surveyors 27 28
Turnover (£m) 2.4 2.6
Annualised turnover (£m)
3.2 2.6 23
Income per surveyor (£’000)
118 93 27
Market shares (based on number of surveyors)
35%30%
30% 5%
Source: Company estimates
Reeds Rains Surveying Performance
3. Surveying
Chancellors Associates
Growth opportunities across the sector
Reed Rains (RR) surveying division was achieved as part of the RR acquisition in Oct 2005
The division was absorbed into e.surv at the end of Sept 2006
Chancellors Associates was acquired with effect from 1 July 2006
The company utilises self employment surveyors
12 Months 2006
12 Months 2005
% change
Turnover (£m) 6.2 4.6 35
8
Operational Performance: Estate Agency & Financial Services
Reeds Rains
Excellent results, profit margin at c.20%
Increased fees (1.22% to 1.31%) Conveyancing and financial services income
Strong brand and management team
Your move
Improving profit and margin
Fees fell marginally
Scope to improve margin
Other businesses
Investment in developing businesses:-
Homefast , Linear, Home Inspectors,
First Complete
Contributed to lending growth from £2bn to £3bn
Future profit stream and value
2006 2005
Turnover (£m)
Your Move
EA 63.8 54.5
FS 13.0 12.3
Total 76.8 66.8
Reeds Rains
EA 34.6 6.8
FS 6.1 1.7
Total 40.7 8.5
Other 5.8 2.5
Total Turnover EA & FS 123.3 77.8
Underlying Op. profit (£m)
Your Move 6.3 0.4
Reeds Rains 8.0 2.2
Other (1.7) (0.9)
Total 12.6 1.7
Margin (%)
Your Move 8.2 0.5
Reeds Rains 19.7 2.8
Total 10.2 2.2
* RR profit excludes surveying
9
Estate Agency Organic GrowthLSL growing presence and proven track recordLSL growing presence and proven track record
Expansion through franchising
0
10
20
30
40
50
60
70
80
90
100
2003 2004 2005 2006
No. branches
Franchise – existing Franchise – new
Source: Company data
54
67
8
92
4. Estate Agency & Financial Services
Opportunities for organic growth
Franchise footprint growing
Opportunity to extend estate agency revenues via: New Homes Part exchange Auctions Lettings
Kent & Sussex YM: 46YMF: 16
Hampshire & South WestYM: 32YMF: 12
Scotland & North EastYM: 35YMF: 20RR: 26
CentralYM: 37YMF: 29RR: 12
MidlandsYM: 26YMF: 5RR: 88RRF: 3
LondonYM: 21YMF: 7
WalesRR: 5
Combined branch network (December 2006)
YM – Your Move, RR – Reeds Rains, YMF – Your Move franchise, RRF – Reeds Rains franchise
10
Acquisition Strategy
Strong management team
Strong brand
Under leveraged other services
To be a sector consolidator
Large fragmented market (branch market share)
Source: Company Data
20%
10%
70%
Value added (Reeds Rains performance)
Net Acquisition Price(1) £20m
FY 2005 Operating Profit £3.8m
FY 2006 Operating Profit £8.4m
Source: Company reports
(1) Reeds Rains acquired for effective gross value of £26m including £3m of cash and £3m sale and lease back. Minorities bought out between July and September 2006
Acquisition criteria
Limited number of large targets
Smaller brands also being considered
Recently acquired a majority stake in a 5 branch chain at a valuation of £3m
Strong management and local brand
Acquisition pipeline
Reeds Rains excellent financial payback
11
Diversified Business Model
Panel manager in surveying Providing operational flexibility
Surveying a bigger percentage of profits than competitors Surveying profits less cyclical
Potential to grow margins and profits in estate agency Some downside protection by reducing cost and growing new income streams
Franchising Growing franchise footprint giving income growth with low fixed costs
Investment in Hometrack Providing an insight into the AVM market and a hedge
Opportunity from EPCs Investment in new product development New value creation beyond 2007
Some resilience to property cycle
12
Market Outlook and Current Trading
Market remains robust despite interest rate rises
Activity in Q4 strong with EA having a strong pipeline
Encouraging activity levels in Q1 to date
Optimistic about 2007 subject to:
future interest rate changes
introduction of Home Information Packs planned for June 2007
Source Bank of England, No of secured lending approvals (not seasonally adjusted)
Mortgage approvals 1998 - 2006
1,6
49 1
,99
2
2,0
97
2,8
08
3,5
66
4,1
06
3,6
50
3,3
81
3,5
34
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
To
tal
nu
mb
er
(00
0)
0
50
100
150
200
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Ho
usi
ng
Tra
nsa
ctio
ns
(000
)
0
2
4
6
8
10
12
14
16
UK
Inte
rest
Rat
e
Monthly Housing Transactions UK Interest Rate
Source: National Statistics, Bloomberg
UK housing transactions and interest rate
13
Summary
Strong maiden results
Strong cash generation – net cash from operating activities of £28.2m
Net debt down to £34.2m
Activity levels in 2007 to date are encouraging
Interest rates and Home Information Packs could impact the market
LSL well positioned to respond to the housing cycle
92 franchise branches operational at year end
Additional growth in lending targeted via Linear
Increasing market share in surveying
EA margin and profit growth
Energy Performance Certificate investment opportunity
One small EA acquisition completed
Consolidation opportunities across all segments
Growth ambitions supported by strong balance sheet
Financial Results
Organic Growth Acquisition Growth
Market Outlook and Current Trading