Slimmed down property services group LSL has pointed to improved performance despite falling revenues and turmoil in the housing market.
Full year results for the owner of brands such as Your Move and Reeds Rains show group revenue fell 34% to £144.4m last year, though group operating losses from total operations narrowed from £56m to £41.6m. Bosses at the Newcastle company said the numbers were slightly ahead of expectations following a stronger final quarter of the year - momentum they say has continued into 2024.
The performance comes amid a major shake-up of LSL's model, which saw it franchise its entire network of 183 estate agency branches and sell its direct-to-consumer financial advice businesses to a joint venture with investors Pollen Street Capital. Chief executive David Stewart said that process was now completed and made for a simpler, lower cost base group with higher margin potential that was better equipped to trade consistently through housing market cycles.
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Mr Stewart said the restructuring of the business had taken place in a "difficult" market with rising interest rates and higher mortgages for buyers. Those pressures led to a 19% fall in house sales which was said to have impacted all three of LSL's divisions, including financial services, surveying and valuation and franchised estate agency.
But this year was said to have brought improved sentiment along with an increase in mortgage approvals as well as sales. Investors were told Q1 2024 group underlying operating profit was materially ahead of the same period in last year, reflecting better conditions as well as the benefits of its slimmed down franchise model.
The company said it remained cautious but took inflation data to suggest that interest rates will reduce this year. With further strong performance in the past few weeks, LSL said it expects underlying operating profit to increase further. A share buyback scheme with an initial £7m tranche was also announced on the back of a £35m net cash position.
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Mr Stewart said: "2023 marked a period of significant progress in our transformation to a higher margin, less capital-intensive business that will perform more consistently through market cycles. Against the backdrop of very challenging market conditions, we have simplified and restructured our financial services and estate agency businesses. Both are now focused on business-to-business services with a significantly lower cost base and the potential for higher free cash flow generation.
"Following this significant restructuring, LSL is now a more streamlined, agile group comprising three market leading businesses with high return and organic growth opportunities that are well positioned to capitalise from the recent recovery in the housing and mortgage markets. Our focus is on maximising the performance of these businesses to deliver value to shareholders.
"I would also like to take the opportunity to give both my personal thanks and those of the rest of my colleagues to Simon Embley, who has decided to step down from the board on 1 May. Simon's contribution to LSL has been extraordinary, from its beginning in 2004 to the present day. I am delighted that we will continue to work closely with him as he focuses on the growth plans of our joint venture, Pivotal Growth, which has made substantial progress over the past year."