REG - LSL Property Svcs. - Sale of remaining D2C brokerages to Pivotal

LSL Property ServicesAnnouncement

11/04/2023 07:00

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RNS Number : 7181V  LSL Property Services PLC  11 April 2023

 
11 April 2023

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

Sale of remaining D2C brokerages to further simplify the Group and build scale
in Pivotal Growth

LSL announces the sale of its mortgage, protection, and general insurance
brokerage firms Embrace Financial Services Limited ("Embrace") and
First2Protect Limited ("First2Protect") to Pivotal Growth Limited ("Pivotal
Growth"), its joint venture with Pollen Street Capital, established in 2021 to
"buy and build" a leading national mortgage broker.

Embrace specialises in the delivery of mortgage and protection advice to
estate agency introduced customers, including LSL's franchised and owned
estate agency branches. First2Protect arranges household insurance for
customers of LSL's estate agency division as well as third party introducers
and via brokers that are members of LSL's PRIMIS mortgage network.

The consideration payable for Embrace will be 7x the EBITDA in calendar year
2024, subject to agreed working capital adjustments, capped at a maximum of
£10m. The consideration payable for First2Protect is £7.8m, which is 7x
adjusted 2022 EBITDA. The initial proceeds of the consideration payable plus
First2Protect net cash will augment existing Group cash balances which will be
used to support LSL's growth strategy, with the future consideration payable
in cash to LSL during H1 2025, at which time LSL will consider the most
effective use of the funds.

The sale of these businesses to Pivotal Growth continues the steps taken to
simplify the Group in line with our strategy to focus financial services
activity on business-to-business services, through LSL's PRIMIS network
through which it distributes around 10% of all new mortgages in the UK.

We also believe that Pivotal Growth is better placed to increase the value of
Embrace and First2Protect. The acquisition of Embrace and First2Protect will
significantly increase the number of advisers Pivotal Growth employs, expand
its distribution into the estate agency market and provide additional
capability in the general insurance market. LSL will retain the ability to
capitalise on opportunities in direct-to-consumer financial services through
its 47.8% equity share in the Pivotal Growth joint venture with Pollen Street
Capital.

The value of Embrace's gross assets at 31 December 2021 was £3.8m and loss
for that year was £3.2m. The value of First2Protect's gross assets at 31
December 2021 was £2.3m and profit for that year was £1.2m. The combined
loss for the 2022 financial year is expected to be £1.3m, and the impact of
the disposals will, therefore, not be material to the Group.

David Stewart, Chief Executive, commented:

"I am pleased to confirm the transfer of Embrace and First2Protect to Pivotal
Growth. This marks another significant step in our work to simplify the Group,
whilst we focus on taking advantage of the exciting opportunities available to
us across each of our divisions, including our financial services network
business."

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

 Simon Compton

 George Beale
 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 remortgage market with around 2,900 financial advisers.
PRIMIS was named 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. e.surv was named
Best Surveying Firm at the 2022 Mortgage Finance Gazette Awards and Best
Surveyor at the 2022 Equity Release Awards with Mortgage Solutions.

 

LSL also operates a network of 182 owned and 127 franchised estate agency
branches.

 

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

 

 

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