LSL Property Services : Annual Report & Accounts 2022

Annual Report and Accounts 2022

Annual Report and Accounts 2022

Contents

Overview, Strategic Report and Directors' Report

Overview

1. 2022 Highlights
2. 2023 Outlook
3. About LSL and Our Markets

1. Chair's Statement

1. Group Chief Executive Officer's Review

Strategic Report

1. Purpose, Strategy, Culture, Values and Business Model
2. Financial and Divisional Reviews:

13 - Financial Review

15 - Financial Services Division

1. - Surveying & Valuation Division
2. - Estate Agency Division

1. - Balance Sheet Review
2. Our Stakeholder Engagement Arrangements - including s172

Companies Act 2006 Statement

25 Principal Risks and Uncertainties

1. Environment, Social and Governance (ESG) Report

1. The Board

1. The Executive Committee

Directors' Report (including Corporate Governance Reports and Committee Reports)

1. Statement of Directors' Responsibilities in Relation to the Financial Statements
2. Report of the Directors

54 Corporate Governance Report including Nominations Committee Report

67 Audit & Risk Committee Report

73 Directors' Remuneration Report including Remuneration Committee Report

Financial Statements

102 Independent Auditor's Report to the Members of LSL Property Services plc

1. Group Income Statement
2. Group Statement of Comprehensive Income
3. Group Balance Sheet
4. Group Statement of Cash Flows
5. Group Statement of Changes in Equity
6. Notes to the Group Financial Statements

1. Parent Company Balance Sheet
2. Parent Company Statement of Cash Flows
3. Parent Company Statement of Changes in Equity
4. Notes to the Parent Company Financial Statements

Other Information

178 Definitions

183 Shareholder Information (including forward looking statements information)

Directors' Report and Financial Review (including Business Review)

We are one of the largest providers of services to mortgage intermediaries and valuation services to the UK's biggest mortgage lenders. We also operate a network of owned and franchised estate agency branches.

For further information about our Group, please visit our website: lslps.co.uk.

Forward looking statements

This Report may contain forward looking statements with respect to certain plans and current goals and expectations relating to the future financial condition, business performance and results of LSL. Further information about forward looking statements can be found in the Shareholder Information section on page 183.

2022 Highlights

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

	Group Underlying		Divisional Underlying Operating Profit
	Operating Profit		Before central costs
	£36.9m		Estate	Financial
					Agency
	(2021: £49.3m)				Services
				£10.5m
	(25%)				£13.3m
					24%	30%
Net Cash		Group Revenue	Surveying &
£40.1m		£321.7m	Valuaon
	46%
					£20.4m
(2021: £48.5m)		(2021: £326.8m)
(17%)			(2%)

	2022	2021	Var
Group Revenue (£m)	321.7	326.8	(2)%
Group Underlying Operating Profit1 (£m)	36.9	49.3	(25)%
Group Underlying Operating margin (%)	11%	15%	(370)bps
Exceptional gains (£m)	0.7	31.1	(98)%
Exceptional costs (£m)	(88.9)	(2.0)	nm
Group operating (loss)/profit (£m)	(56.7)	72.6	(178)%
(Loss)/Profit before tax (£m)	(59.1)	69.9	(185)%
Basic Earnings per Share2 (pence)	(62.3)	59.6	(205)%
Adjusted Basic Earnings per Share2 (pence)	28.4	37.7	(25)%
Net Cash3 at 31 December (£m)	40.1	48.5	(17)%
Final proposed dividend (pence)	7.4	7.4	-
Full year dividend (pence)	11.4	11.4	-

nm: not meaningful

Notes:

1. Group Underlying Operating Profit is before exceptional items, contingent consideration, amortisation of intangible assets and share-based payments (as set out in note 5 to the Financial Statements).
2. Refer to note 11 to the Financial Statements for the calculation.
3. Refer to note 35 to the Financial Statements for the calculation.

Overview

Strategic Report

Directors' Report (including CorporateFinancial Statements

Governance Reports and Committee Reports)

Other Information

01

2023 Outlook

• We expect market conditions to remain challenging during H1 but to improve in H2 and thereafter, supported by a strong remortgage market, and further improvements in consumer confidence and transaction levels assisted by recent reductions in mortgage rates.
• Trading in our Financial Services Network and Estate Agency businesses is in line with expectations, with signs of increasing momentum.
• In Surveying & Valuation, valuations in more specialist areas such as equity release and buy-to-let have recovered less quickly after the rise in interest rates and market disruption which followed the 2022 mini-budget, with these sectors still trending significantly below 2022.
• We will manage costs pro-actively as market conditions evolve.
• Planned investment for the longer term will continue, underpinning confidence for the future.
• LSL remains very well-placed to benefit as market conditions improve.

02

About LSL and Our Markets

About LSL

Unless stated otherwise, information in this section of the Report is as at 31 December 2022.

We are one of the largest providers of services to mortgage intermediaries and valuation services to the UK's biggest mortgage lenders. We also operate a network of owned and franchised estate agency branches.

We have three Divisions:

• Financial Services.
• Surveying & Valuation.
• Estate Agency.

Overview

Strategic Report

Financial

Services

One of the UK's

largest mortgage and insurance networks

Surveying &

Valuation

One of the UK's

largest surveying and valuation businesses

Estate

Agency

Some of the UK's

largest estate agency brands

Directors' Report (including Corporate

Governance Reports and Committee Reports)

Financial Services

One of the UK's largest mortgage and insurance networks

Together, the PRIMIS Network and The Mortgage Alliance (TMA) made up one of the UK's largest mortgage and insurance networks. PRIMIS, with 993 firms and 2,867 financial advisers, is a multi-award winner, winning Best Network, 300+ Appointed Representatives at the 2022 Mortgage Strategy Awards. Furthermore over 700 firms used TMA in 2022.

Pivotal Growth

Following the 2022 year end, we have sold our D2C broker businesses to Pivotal Growth, our buy and build joint venture with Pollen Street Capital. Since its creation in 2021, Pivotal Growth has acquired eight businesses, comprising of around 330 advisers including the Group First, RSC, Embrace Financial Services and F2P businesses sold by us to Pivotal Growth in 2023.

Surveying & Valuation

Our Surveying & Valuation Division includes e.surv, one of the UK's largest surveying and valuation businesses, and Walker Fraser Steele Chartered Surveyors, which services the Scottish market. e.surv is one of the UK's biggest employers of Royal Institution of Chartered Surveyors (RICS) registered surveyors, with 512 (FTE) surveyors, and counts seven of the UK's ten largest lenders amongst its clients. It was named Best Surveying Firm at the 2022 Mortgage Finance Gazette Awards and Best Surveyor at the 2022 Equity Release Awards with Mortgage Solutions.

Since 1 April 2023, the Division also includes our asset management business, LSL Corporate Client Department and Templeton LPA, which were previously included in the Estate Agency Division.

Estate Agency

We own two of the UK's largest estate agency brands, Your Move and Reeds Rains, as well as a network of smaller brands operating under the LSLi umbrella in the South East. Together, as at 12 April 2023, we own 182 estate agency branches and we have 127 franchised branches. During 2022, the Division also included Marsh & Parsons, a London estate agency business which was sold in January 2023.

We also have other specialist businesses within our Estate Agency Division:

• LSL Land & New Homes provides a complete range of services for house builders and residential property investors.
• Homefast Property Services provides conveyancing panel management and support services to customers of our Estate Agency branches.

Financial Statements

Other Information

03