LSL hails 'successful shift' to agency franchise model

LSL has described the transfer of its estate agency business to a franchise model as a success and said it expects the division to turn a profit in the second half of the year.

An interim updated from the listed property brand yesterday revealed that estate agency performance reflects the market-wide reduction of 18% in house sales and the conversion of the 183 owned branches to franchisees.

Underlying operating profit for the division was £0.6m, compared with a £0.4m loss a year before.

Operating margins following the strategic change have been above 25%, with the transformation and cost programme ahead of schedule, LSL said.

LSL said: “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.”

The brand’s financial services business reported underlying operating profit of £5.5m, down from £7.5m a year before.

Meanwhile, its surveying and valuation division performance was “impacted by significant reductions in valuation instructions across the market.”

This saw profits drop from £13.1m in the first half of 2022 to £3.4m in the first half of 2023.
 

Overall, group revenue was down 34% annually to £72.5m and underlying profit from continuing operations fell 71% to £4.3m.

David Stewart, LSL group chief executive, said: "It has been a period of significant strategic progress to simplify the group and create a more focused business that will perform more consistently through market cycles. I'm proud of how the team has worked tirelessly to reshape LSL while navigating significant macroeconomic headwinds and thank them for their focus and dedication - it is a significant achievement.

"During the period we have successfully executed the transition of estate agency to a franchise business. We have similarly focused our financial services division to become an exclusively business-to-business service provider, completing the transfer of each of our direct-to-consumer businesses to Pivotal Growth. In August, we also announced the acquisition of TenetLime, which adds up to 278 advisers to our network, subject to FCA approval.
 
"Our strong balance sheet continues to provide opportunities to consider value-enhancing M&A and invest in organic growth initiatives in our core segments, whilst maintaining our interim dividend at 4p per share."

https://www.investegate.co.uk/announcement/rns/lsl-property-services--lsl/half-year-results-/7779939