Lsl Prop Regulatory News (LSL)

? 1 February 2024

LSL Property Services plc ("LSL" or "Group")

Full Year Trading Update

 2023 results in line with expectations

LSL issues a pre-close trading update for the 12-month period ending 31 December 20231.

Highlights

Following a positive final quarter, full year results for 2023 are in line with the Board's expectations, and at this early stage we remain comfortable with delivering profits in 2024 materially ahead of 2023.

We also report the extension of our Surveying and Valuation Division's contract with Lloyds Banking Group plc and confirm that the acquisition of TenetLime announced in August is expected to complete imminently.

Trading

Group Underlying Operating Profit2 in the second half of the year showed a material improvement on H1.

As expected, subdued activity levels across the valuations market continued to impact our Surveying Division. However, there were some signs of improvement in the final months of the year which will support our expectation of improved Surveying earnings in 2024.

Performance of LSL's Financial Services Network business remained resilient with profitability slightly ahead of plan. Our overall share of the UK Purchase and Remortgage market3 increased to 10.7% (2022: 10.5%).

Following the conversion of our Estate Agency network to a wholly franchise model during H1, the Division continues to perform ahead of plan for both revenue and profits, with second half operating margin of c.30%.

Surveying & Valuation Division

We are pleased to confirm that in January we extended our contract to supply surveying and valuation services to Lloyds Banking Group, underpinning our leading market position. The contract was originally awarded in May 2018 and has been extended to September 2028.

Financial Services Division

On 21 August 2023 we announced the acquisition of the TenetLime mortgage network subject to FCA approval. This approval has been received with completion now imminent. Plans for the integration are in place and we are on track to deliver the planned business benefits.

Pivotal Growth, our joint venture with Pollen Street Capital has made two further acquisitions since our last update. 

Financial performance

Group Revenue from continuing operations4 was £144m (2022: £217m). After adjusting for disposals, like-for-like revenue was 10% below prior year in a housing market 19% lower and in a smaller lending market.

Strong balance sheet with Net Cash of £34.9m at 31 December 2023 (31 December 2022: £40.1m), providing flexibility for future deployment of capital.

Outlook

The Group's trading in January was in line with management expectations and ahead of 2023. At this early stage of the year, we remain on track to deliver a material increase in profit for 2024 compared to 2023 due mainly to the benefits of improved performance in Surveying, as well as a full year of operating the franchising model. A further update on current trading and outlook will be shared with the release of our preliminary results.

Notes to trading update:

1. This trading update is based on preliminary unaudited financial information.

2. Group Underlying Operating Profit is including discontinued operations, before exceptional costs, contingent consideration assets & liabilities, amortisation of intangible assets and share-based payments.

3. Mortgage lending excluding product transfers. New mortgage lending by purpose of loan, UK (BOE) - Table MM23 released January 2024

4. Following the conversion of the entire owned Estate Agency network to franchisees in H1 2023, this was classified as a discontinued operation.

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Notes on LSL

LSL is one of the largest providers of services to mortgage intermediaries and estate agent franchisees.

Its c.2,700 advisers represent around 11% of the total purchase and remortgage market.

Its 61 estate agency franchisees operate in 306 territories making it one of the leading providers of estate agency franchise services in the UK with leading local brands.

LSL is also one of the UK's largest providers of surveying and valuation services, supplying seven out of the ten largest lenders in the UK.

For further information please visit LSL's website: lslps.co.uk