Property and financial services group LSL has seen a big fall in revenues and profits in the worsening housing market but insists it is making “significant” progress towards a stronger business.
The Newcastle-based firm best known for the YourMove and Reed Rains estate agencie has been going through a period of transition that has seen it franchise its estate agency networks and strengthen its financial services division.
The company hopes the strategy will create a “a higher margin, higher cash converting business that will perform more consistently through market cycles”. But six-month results released today show the group had a 34% fall in revenues to £72.5m in the first half of 2023, while underlying operating profits decreased by 76% to £3.3m.
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LSL said that the transformation of the group meant direct comparisons to the same period in 2022 were less meaningful than usual and a big fall in mortgage approvals had impacted on a number of areas of its business. It said the housing market remained “challenging”, with high inflation and interest rate increases hitting consumer confidence.
Chief executive David Stewart 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.
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“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.”
The period covered by the announcement saw LSL dispose of London estate agency Marsh & Parsons, as well as four financial services businesses. Those deals helped the company increase its net cash position to £36.3m.
LSL welcomed last week’s decision by the Bank of England to keep interest rates unchanged, and said it expected the housing market to steady. It said the housing market would remain challenging but that it was well placed to benefit when market conditions improve.