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LSL’s financial services division sees profit rise to £5m in 2023

  • 25/04/2024
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LSL’s financial services division sees profit rise to £5m in 2023
The financial services arm of LSL, comprising Primis, TMA Club and Linear Financial Solutions, reported a statutory profit of £5m for 2023.

This was up from a loss of £7.2m in the year before, its full-year results stated. 

LSL said the protection performance of its financial services division was also “robust”, with a 2% growth in revenue to £11.6m. 

Consequently, it reported a 5.2% contraction in overall revenue within the financial services division from £41.6m in 2022 to £39.5m in 2023. 

The financial services division expanded its share of the purchase and remortgage market to a record 10.7%, up from 10.5%, while its market share of the product transfer market increased from 6.4% to 7.4%. 

The value of product transfer cases rose by 41% in 2023, the group said. 

Its total mortgage lending fell from £45.6bn to £41.7bn. 

LSL said the first half of last year saw the group take the “last steps” to focus financial services activity “exclusively on business-to-business [B2B] services” through Primis and TMA.

This included the sales of its mortgage, protection and general insurance brokerage firms Embrace and First2Protect to Pivotal Growth.

It said these transactions simplified its financial services division, reduced costs by around £30m annualised and lessened its earnings volatility. 

LSL will capitalise on its business-to-customer (B2C) proposition through its equity share in Pivotal Growth. 

It said the consideration payable for its acquisition of TenetLime was expected to be up to £11.6m, including an initial payment of £5.7m and a further payment of £4.6m. The additional payment is based on the turnover of appointed representative firms 12 months after completion and an expected payment of £1.4m for TenetLime’s assets. 

The number of network firms was flat at 1,000 as of 31 December 2023, compared to 1,005 in 2022. LSL said network firms “remained cautious on adviser levels due to challenging market conditions”, resulting in a reduction in adviser numbers from 2,867 in 2022 to 2,661 in 2023. 

The TenetLime deal saw 250 advisers join LSL. 

Its financial services other division reported a loss of £3m, compared to a loss of £2.6m in 2022.

LSL said this was in line with expectations as it refocused its Mortgage Gym and DLPS technology businesses on its core network business.


Simon Embley steps down from LSL board 

LSL announced that Simon Embley would not be seeking re-election to its board at the group’s next annual general meeting on 1 May. 

Going forward, he will focus on “executing Pivotal’s growth plans”. 

Pivotal Growth now has more than 400 advisers, which LSL said made it one of the largest mortgage and protection brokers in the UK. The group said this gave Pivotal Growth the ability to leverage its scale to attract deals and drive revenue synergies. 

It acquired four businesses in 2023 from LSL for an initial consideration of £9.3m. 

The acquisitions in 2024 were funded by Pivotal Growth’s cash reserves. LSL said the business’ financial performance had “steadily improved” and was expected to be profitable this year. 


Other divisions 

LSL’s estate agency division reported an underlying operating profit of £4.7m, down from £9.9m in 2022. The group said this was delivered amid a market-wide 19% reduction in house sales, the lowest level in 11 years. 

Its surveying and valuation division was hit by a fall in instructions in 2023, resulting in its underlying operating profit declining from £20.4m to £5.4m. 

However, LSL said the surveying and valuation division had seen a recovery in 2024, and the profit generated in Q1 was “greater than the whole of 2023”. 

David Stewart (pictured), group chief executive of LSL, 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.”

He added: “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.” 

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