REG - LSL Property Svcs. - AGM Update

LSL Property ServicesAnnouncement

27/05/2022 07:00

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RNS Number : 0537N  LSL Property Services PLC  27 May 2022

 
27 May 2022

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

AGM Update

Ahead of its Annual General Meeting at 12:15pm today, LSL issues the following
trading update.

Group Revenue over the first four months of 2022 was £104.5m, which is in
line with that achieved in buoyant markets in the same period in 2021. The
Board is particularly pleased with the strong performance of our Surveying
Division where revenue was up 11% year on year.

 

We can also report 5% revenue growth in the Financial Services Network
business, which was a solid performance in a smaller market. Over the first
four months of the year, purchase and re-mortgage lending totalled £10bn, an
increase of 9% over 2021. We would expect this to represent a market share of
around 10%. We were very pleased that earlier this week, our Financial
Services Network business, PRIMIS, was recognised as the "Best Network, 300+
appointed representatives" at the 2022 Mortgage Strategy Awards.

 

The Estate Agency Division consolidated the market share gains made during
2021, maintaining our share of instructions in the locations we trade, and
growing our market share of housing transactions on a national level.

 

Our Estate Agency and our Direct-to-Consumer Financial Services businesses
were naturally affected by residential pipeline conversion rates which
remained extremely slow across the market principally due to the continuing
industry-wide capacity issues in conveyancing. This resulted in a 9% reduction
in Estate Agency Division revenue largely driven by a fall of 16% in
residential exchange income. Fall-through rates remain at normal levels,
meaning that the residential sales exchange pipeline now stands at nearly
record levels, having increased by over £4m since the beginning of the year.

 

Geopolitical uncertainties remain which have added to inflationary cost
pressures, particularly in relation to energy and employee costs. We continue
to focus on proactive management of our cost base, to limit the impact of
these pressures, and consequently expect these pressures to have only a modest
impact on profitability.

 

Following investment in 2021, we have continued to invest in capability and
technology, in particular, across the Financial Services Division. We plan to
continue to do so during the second half of the year.

 

Our Net Cash balance on 30 April 2022 was £30.4m, compared to Net Debt of
£7.8m at the same date last year.

 

We were pleased to recently announce the third acquisition by Pivotal Growth.
Whilst there is a good pipeline of deals, and we remain confident of the
medium-term prospects for value creation, completion of acquisitions has been
slower than expected, and as a result Pivotal Growth has remained in an
investment phase for longer than previously anticipated.

 

At the start of the year, we expected to deliver full year profits at broadly
the same level as our record results in 2021, in markets with reduced levels
of activity. Recent market estimates indicate that residential pipeline
conversion rates should improve resulting in full year 2022 house purchases
not being materially behind previous expectations. Assuming activity is in
line with these estimates, overall profit is expected to be slightly behind
the record profits posted in 2021, principally reflecting slower than
anticipated deal flow in Pivotal Growth, and the limited impact of cost
inflation noted above.

 

We have yet to see clear evidence of a sustained improvement in residential
pipeline conversion and should the current slow conversion rates across the
market persist or fall throughs increase, then more significant pressure would
be placed on profits in our Estate Agency Division and to a lesser extent in
our Financial Services businesses.

 

Whilst uncertainty over the pace of housing transactions may impact the second
half of the year, we are encouraged by continued progress we are making in the
execution of our strategy. This year's performance demonstrates the benefits
of both our growth strategy in Financial Services and the significant progress
made in our Surveying Division, and we expect that the impact of housing
market cycles will continue to have a reducing impact on the Group's results.

As previously reported, the split of H1:H2 profit in 2022 is expected to
revert to a more typical profile with a skew to H2, after record housing
transactions in H1 2021.

The Board places a high priority on LSL's Living Responsibly strategy to make
sure that LSL is a responsible business and one that has a positive impact on
the communities in which we operate. We have established colleague forums
which variously focus on the environment, inclusion and diversity, and
communities and these have been instrumental in taking forward our activities
in these areas. Further information can be found in our Living Responsibly
Report 2022 which we published on 29 April 2022.

 

For further information, please contact:

 

 David Stewart, Group CEO

 Adam Castleton, Group CFO
 LSL Property Services plc   investorrelations@lslps.co.uk (mailto:investorrelations@lslps.co.uk)
 Helen Tarbet

 Sophie Wills
 Buchanan                    0207 466 5000 / LSL@buchanan.uk.com (mailto:LSL@buchanan.uk.com)

Notes on LSL

LSL is one of the largest providers of services to mortgage intermediaries and
mortgage and protection advice to estate agency customers,
completing around £41bn of mortgages in 2021. It represents around 10% of
the total purchase and re-mortgage market with around 2,900 financial
advisers. PRIMIS was named Best Network by Money Marketing in their 2021
awards and Best Network, 300+ appointed representatives at the 2022 Mortgage
Strategy Awards.

 

LSL is one of the UK's largest providers of surveying and valuation
services, supplying seven out of the ten largest lenders in the UK,
employing around 500 operational surveyors, and performing over 500,000
valuations and surveys per annum for key lender clients. It was named
Mortgage Surveyor of the Year at the 2021 Mortgage Awards with Money Age.

 

LSL also operates a network of 225 owned and 128 franchised estate agency
branches.

 

For further information please visit LSL's website: lslps.co.uk
(http://www.lslps.co.uk/)

 

 

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