The division reported revenue of £22.9m, a 3% year-on-year fall, while its underlying profit declined 20% to £3.4m.
LSL said this reflected investment in its new CRM and a fall in adviser numbers, including the departure of protection-only firms last year.
However, LSL said it had made a “small regional acquisition” at the end of the period, which would add 50 advisers to the Primis network.
This decline in revenue impacted its 8% growth in mortgage revenue, which was primarily supported by remortgage activity.
It said there were “high levels of demand” in the remortgage market in H1, and this business now represented around a third of the group’s total revenue. This also presented a “significant and sustained opportunity” across its financial services and surveying and valuation businesses.
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LSL reported stable or higher market shares across its principal mortgage channels and a 12% increase in revenue per adviser.
The division had a 12.7% market share in the purchase market at the end of H1, slightly up from 12.6%. Its remortgage market share expanded from 8.7% to 8.9%, while its product transfer widened market share from 5.8% to 6.7%.
At the end of the period, the division reported an operating profit of £3.9m, a 74% surge on the year before.
LSL said it had refreshed its management and restructured its governance and would focus on adviser productivity, product penetration and firm recruitment.
The group said it had the genuine scale and reach to deliver stronger growth and returns.
Pivotal Growth delivers higher revenue
LSL reported its joint venture Pivotal Growth’s figures separately for the first time, showing a year-on-year rise in revenue from £1.3m to £1.5m.
It said the firm “grew profitably and grew further” in H1 and had already completed three acquisitions this year, bringing the total number of advisers to over 600 and making it one of the largest mortgage and protection brokers in the UK.
Pivotal Group will continue its buy-and-build strategy and LSL said it had the “potential to represent a significant source of value for us”.
Other divisions perform well
LSL’s surveying and valuation division delivered a 6% uplift in revenue to £56.2m, while its underlying operating profit rose by 11% to £13.1m.
It also said this division would benefit from higher remortgage activity.
Its estate agency division reported a “very strong performance”, with a 24% rise in underlying operating profit to £3.9m and a record margin of 30%. Its revenue increased 2% to £13.2m.
LSL said lettings had remained “resilient” following the first phase of the Renters’ Rights Act and underlying landlord activity had stayed stable. It witnessed “no evidence” of a material withdrawal of landlords as predicted by some industry commentators.
Higher profit and revenue across the group
LSL’s group underlying operating profit rose from £14.4m to £15.9m, and it reported a 15-year high margin of 17%. Its operating profit increased from £10.9m to £12.5m, and its revenue rose 3% to £92.3m.
Adam Castleton, group chief executive of LSL, said: “LSL performed well in the first half, delivering further profit and margin growth and strong cash generation. Our markets developed broadly as expected despite prevailing negative sentiment.
“We launched a group-wide transformation programme expected to improve our structural cost-effectiveness and leverage our scale. The programme will simplify how we operate, strengthen our capabilities and support further structural improvement in margins.”
