38 1GM Thursday August 6 2020 | the times
Business
The temporary shutdown of its house-
building operation and a flood of coro-
navirus-related life assurance claims
could not prevent Legal & General
from reporting a “resilient” first half
yesterday.
The insurer announced half-year
Estate agent’s glass is half
full after instructions rise
Louisa Clarence-SmithAn estate agency group has reported
“extremely encouraging” trading in
July after a sharp drop in revenue
during the first half of the year.
LSL Property Services, the listed
group behind brands including Marsh
& Parsons, Your Move and Reeds Rains,
said that instructions and mortgage
applications last month were about
20 per cent higher than they had been
in the same period last year. Net sales
and instructions in July were the
highest they had been in 2020.
LSL was formed in 2004, after the
management buyout of Your Move and
Esurv Chartered Surveyors from Aviva.
It was listed in 2006 and has a market
capitalisation of £217 million. The New-
castle-based company employs about
4,300 people.
Simon Embley, group chairman, said:
“Although we remain alert, I am in-creasingly optimistic about market
conditions. Our focus is turning to
investing for growth, as well as optimis-
ing performance.”
Revenue tumbled by 25 per cent to
£114.9 million in the first half of the year,
with activity significantly affected by
the lockdown. LSL reported a 3 per cent
rise in underlying operating profit to
£12.5 million, which excludes the
recognition of £7.2 million of Covid-19-
related costs and exceptional charges.
Around 3,300 employees were
placed on furlough and that number
has now fallen to approximately 500.
LSL claimed £13.8 million from the
coronavirus job retention scheme for
the period until the end of June.
Peel Hunt analysts said that the com-
pany had delivered an “impressive per-
formance”, given the circumstances.
Shares in LSL, which are down 24 per
cent since the start of the year, closed
up 8½p, or 4.2 per cent, at 212½p.Times are
a-changing:
print revenue
is over taken
by digital
Legal & General stands by
promise to pay a dividend
Patrick Hosking Financial Editor operating profits down only 6 per cent
to £946 million after being hit by
£129 million of Covid-19-related ex-
penses and losses. It also declared an
unchanged interim dividend of 4.93p,
promising to pay about £300 million to
shareholders next month.
Nigel Wilson, 63, chief executive,
said that the profits were resilient and
that the company’s balance sheet was
robust. “We kept all our employees on
full pay, executed significant commer-
cial and investment projects and con-
tinued to provide a reliable service to
our customers without any govern-
ment financial support,” he said.
Founded in 1836, Legal & General is
one of Britain’s biggest pensions andsavings companies and is a member of
the FTSE 100, with a market value of
more than £13 billion. It manages
£1.2 trillion of people’s savings. It is also
an infrastructure investor and house-
builder, including the Cala Homes
brand and a modular housing business.
The company came under fire when
it decided to press ahead with a
£754 million dividend payment in June,
despite the uncertainty in stock
markets that had buffetted its
investment portfolio. Yesterday it con-
tinued to express full confidence in its
ability to maintain dividends, although
Jeff Davies, 50, chief financial officer,
said that under its normal formula the
interim payment would have been
raised by 7 per cent after underlying op-
erating profits rose by that amount. “It’s
not really appropriate to be increasing
by 7 per cent at this point,” he said.
Only 0.6 per cent of its traded credit
portfolio, worth less than £300 million,
had been downgraded to sub-invest-
ment grade, or “junk”, in the period.
That compared with a market average
of 1.5 per cent. No bonds had defaulted.
The solvency coverage ratio, a key
measure of balance sheet strength, rose
from 171 per cent to 173 per cent.
Assets under management at LGIM,
the fund management division, rose by
4 per cent to £1.24 trillion.
Coronavirus-related life assurance
claims in the six-month period
amounted to £80 million. The hit to
housebuilding profits was put at
£60 million, while Legal & General
spent an additional £21 million on staff
health and safety measures and IT ad-
justments for remote working.
The company also warned that it
could not be certain about the valua-
tion of certain assets in its commercial
property portfolio: £1.8 billion of assets
were subject to “material valuation un-
certainty”, it said.
However, it added: “Our confidence
and our dividend-paying capacity are
underpinned by the group’s strong bal-
ance sheet, with £7.3 billion in surplus
regulatory capital, a £3.5 billion...
credit default reserve and significant
buffers to absorb a market downturn.”
Legal & General shares rose 2¾p, or
1.3 per cent, to 223p.