Your Move and Reeds Rain parent firm still waiting for profits

LSL, which also owns mortgage network Primis, is now more focused on financial services, says profits will begin to appear later this year, it tells investors.

LSL Property Services

LSL’s decision to sell off Marsh & Parsons to Dexters and franchise its house selling arm will see the estate agency giant start to see a profit in the division towards the end of the year.

But its most recent half year results still paint a glum picture.

The group, which owns estate agents Your Move and Reeds Rains as well as mortgage adviser network Primis, completed its Marsh & Parsons sale for £29 million in January as it moved to focus more on retail financial services.


The Neg reported earlier this year that the remaining estate agency network of 183 branches was converting to a franchise structure adding to its existing network of 120 and making LSL one of the largest providers of property franchise services in the UK.

David Stewart, LSL

David Stewart, LSL Group Chief Executive, says: “This programme allowed us to realise significant cost reductions immediately with further savings to be made over time, although the net impact on 2023 Underlying Operating Profit from total operations was expected to be neutral.

“The recent deterioration in market conditions will increase the advantage of the franchise model in H2.

“We expect the change will be accretive to Group profits through housing market cycles from the beginning of 2024 onwards. Average operating profit margins from estate agency franchises since the conversion have been over 25%.”

And he adds: “Franchising the owned branches allows us to rationalise central functions. These changes will continue during 2023 and 2024, delivering incremental phased benefits.

“We estimate that this change in business model, combined with the sale of Marsh & Parsons, eliminates over £110m of a cost base of £125 million that supported the estate agency division, with the largest reduction taking place immediately.”


LSL blamed rising interest rates during the first half of the year for its financial woes. Overall Group Statutory Operating Profit was down to £7.2 million compared to £9.9 million this time last year with Group Underlying Operating Profit from continuing operations down to £4.3m from £14.7 million in the first half of 2022.

As reported in the Group’s pre-close trading update in August Group Underlying Operating Profit from total operations was £3.3m, down from £14.2 million.

Elsewhere, Stewart says Primis, its mortgage network business, ‘traded resiliently’, reporting underlying operating profit of £5.5 million, but still down on the £7.5 million reported in the first half of 2022.

LSL’s surveying and valuation division was also impacted by significant reductions in valuation instructions across the market due to higher interest rates hitting both the buy-to-let and equity release markets.

Underlying Operating Profit fell to £3.4 million from £13.1 million in the first half of 2022.


Stewart says: “As we noted in our Trading Update issued on 7 August, changes in the supply and demand of mortgage products have had a significant impact on parts of our business, most notably in surveying but also financial services. Since then, trading has stabilised, and the recent decision to hold base rates unchanged is expected to provide further stability and the steadying of market sentiment.

“The Board currently expects Underlying Operating Profit for FY 2023 to be in line with its expectations as revised at the time of the Trading Update on 7 August.

“The independent mortgage broker business model continues to demonstrate resilience and agility, with LSL members increasing their share in each of the sub-segments of the mortgage market during H1, as well as performing strongly in protection advice.

“Our Estate Agency Franchise business is performing well and is expected to contribute a profit in the second half of the year, which represents an improvement under current market conditions when compared to our expectations for the previous, predominantly wholly-owned model.”

Read the full hall year results statement HERE.

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