LSL's scope for more acquisitions

York-based LSL, which paid 1 for the loss-making estate agency arm of Halifax Bank of Scotland last year, said good progress on cutting debt and bedding in the Halifax branches means it has scope to expand further.

LSL also announced it is resuming dividend payments, which chief executive Simon Embley said demonstrates the group's confidence amid a battered property market.

Analysts estimate the group's cash generation could leave it with no net debt by the end of the year, leaving 75m facilities for expansion. By the end of 2009, debt was almost halved to 25.7m.

"We've never had no net debt as a business ever since we did the management buyout in 2004," said Mr Embley. "We're pretty well placed."

The group reported pre-tax profits of 16.6m for 2009, compared to a 6.2m loss a year earlier. Revenue fell 2.5 per cent to 157.7m, but LSL said this was a resilient performance set against a housing market which saw a 34 per cent fall in total mortgage approvals in 2009.

LSL says it can trade profitably on a rate of 500,000 house purchases annually, and the market saw 597,000 in 2009. That compared to a peak of about 1.5 million and a normalised level of about 1.2 million.

"People say be cautious and a double dip and so forth, but when you have gone from 500,000 transactions at the bottom to 600,000 it's hardly a bounce," said Mr Embley.

"If we return to the sort of events we had in 2008 we are in a good place if that happens because we find that competitors start going bust again."

LSL's acquisition of 218 Halifax estate agencies late last year gave the group a network of 575 branches, including 40 in Yorkshire, making it the second-biggest estate agency group in the country. The branches lost 51m in 2008 and their restructure is expected to take two to three years, only boosting profits in 2011.

Mr Embley said he believes LSL can integrate another acquisition in tandem. He said the Halifax business was inherited with 100m of costs, but so far has cut these by 36m on an annualised rate. Once complete, he expects costs to be slashed by 50m. Branches have been rebranded and back office functions and computer systems integrated.

"I believe we can (make another acquisition) if the right sort of thing comes up," he said. "But it has to be earnings enhancing. As a big shareholder myself I behave absolutely and totally aligned to shareholders' interests."

LSL's surveying arm delivered profits of 23.5m, which it said "significantly outperformed the market".

It has also developed a counter-cyclical asset management arm, managing repossessed properties for mortgage lenders. Set up from scratch in 2007, it delivered 9.3m revenue in 2009 and LSL believes it will benefit from a surge in repossessions when interest rates rise.

LSL said it will pay an interim dividend of 5.4p for 2009.