Profits drop at LSL as it battles tough property sales market

Estate agency revenues at LSL were down 5% on 2021 as the group battled with housing market cycles and the impact of the Stamp Duty holiday.

While the second half of 2022 was demonstrably better due to a strong pipeline lettings revenue also held up and increased by 4%, on a like for like basis, over the prior year.

Announcing results to the City this morning the Group said it had continued to trade well despite adverse impacts from economic and political uncertainty in the mortgage and housing markets.

David Stewart, Group Chief Executive, says: “I am pleased to report that LSL is in good shape.

“In 2022, the Group traded well in challenging market conditions, whilst making substantial progress in the execution of our strategy to grow and to become a B2B financial services provider.

“As a result, we remain well-placed to deliver on our strategy and capitalise on the significant opportunities we see available.”

Group Revenue was broadly in line with 2021 at £321.7 million, including record revenue of £81.7 million in Financial Services, and a strong H1 2022 performance in Surveying & Valuation, which was subsequently impacted by significant market disruption resulting from economic and political uncertainty in Q4 2022.

UNDERLYING

Group Underlying Operating Profit was down 25% compared to 2021 at £36.9 million, mostly due to reduced volumes in Surveying & Valuation during Q4 2022 and the impact of a slowdown in the residential sales market in Estate Agency.

The Financial Services Division secured an 11% increase in overall lending, resulting in a substantial market share improvement to 10.4% from 9.6% in 2021.

Underlying Operating Profit for the Financial Services Division as a whole reduced by £1.5 million.

As The Neg reported, earlier this week LSL sold its direct-to-consumer financial services businesses to its joint venture with Pollen Street Capital, Pivotal Growth, in line with its strategy to focus on B2B services.

PROFIT

Surveying & Valuation Division still reported Underlying Operating Profit of £20.4 million, down £3.2 million on 2021 but still 25% higher than the pre-COVID-19 performance of £16.3 million reported in 2019. The Underlying Operating Profit margin remained resilient at 22%.

Estate Agency retained the residential sales market share gains made in its core catchment areas in 2021, and as a result slightly increased its national market share to 1.30% (2021: 1.28%).

Conversion of its exchange pipeline remained slow throughout the year, impacting H1 performance in particular. H2 2022 saw fewer new properties coming to market and fewer sales agreed but the strong pipeline built in H1 secured an operating profit double the size of H2 2021.