Annual Report and Accounts 2023
Directors’ Report and Financial Review (including Business Review)
Overview, Strategic Report and Directors’ Report
Overview
01 Financial Highlights
02 2024 Outlook
03 About LSL and Our Markets
06 Chair’s Statement
07 Group Chief Executive Officer’s Review
Strategic Report
11 Purpose, Strategy, Culture, Values and Business Model
14 Financial and Divisional Reviews:
14 – Financial Review
16 – Financial Services Division
18 – Surveying & Valuation Division
19 – Estate Agency Franchising Division
21 – Balance Sheet Review
23 Our Stakeholder Engagement Arrangements including
s172 Companies Act 2006 Statement
29 Principal Risks and Uncertainties
34 Non-Financial and Sustainability Information Statement
including TCFD and CFD reporting
50 Environmental, Social and Governance (ESG) Report
56 The Board and The Executive Committee
Directors’ Report (including Corporate Governance Reports
and Committee Reports)
60 Statement of Directors’ Responsibilities in Relation to the
Financial Statements
61 Report of the Directors
65 Corporate Governance Report including Nominations
Committee Report
85 Audit & Risk Committee Report
92 Directors’ Remuneration Report including Remuneration
Committee Report
Financial Statements
114 Independent Auditor’s Report to the Members of LSL
Property Services plc
123 Group Income Statement
124 Group Statement of Comprehensive Income
125 Group Balance Sheet
126 Group Statement of Cash Flows
127 Group Statement of Changes in Equity
128 Notes to the Group Financial Statements
181 Parent Company Balance Sheet
182 Parent Company Statement of Cash Flows
183 Parent Company Statement of Changes in Equity
184 Notes to the Parent Company Financial Statements
Other Information
198 Definitions
203 Shareholder Information (including forward-looking
statements information)
We are one of the largest providers of services to mortgage
intermediaries and estate agency franchisees. We also provide
surveying and valuation services to seven out of the eight
largest lenders in the UK.
For further information about our Group, please visit our
website: lslps.co.uk.
Forward‑looking statements
This Report may contain forward-looking statements with
respect to certain plans and current goals and expectations
relating to the future financial condition, business performance
and results of LSL. Further information about forward-looking
statements can be found in the Shareholder Information section
on page 203.
Annual Report and Accounts 2023
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
01
Full year financial metrics
1
2023
Restated
2
2022 Var
Group Revenue (£m) 144.4 217.5 (34)%
Group Underlying Operating Profit from total
operations
3
(£m) 9.3 35.8 (74)%
Group Underlying Operating margin (%) 5% 11% (600)bps
Group Underlying Operating Profit from
continuing operations
4
(£m) 10.3 29.9 (66)%
Exceptional gains (£m) 9.3 0.7 nm
Exceptional costs (£m) (13.8) (48.3) 71%
Group operating profit/(loss) (£m) 3.7 (21.7) 117%
Profit/(loss) before tax (£m) 4.9 (23.8) 121%
Loss from discontinued operations
4
(£m) (46.1) (36.5) (26)%
Basic Earnings per Share
5
(pence) 7.9 (26.0) 130%
Adjusted Basic Earnings per Share
5
(pence) 7.6 27.6 (72)%
Net Cash
6
at 31 December (£m) 35.0 40.1 (13)%
Final dividend per share (pence) 7.4 7.4 –
Full year dividend per share (pence) 11.4 11.4 –
Notes:
1
Stated on basis of continuing operations unless otherwise stated. Refer to notes 2 and 6 to the Financial Statements.
2
See note 36 to the Financial Statements for details regarding the restatement.
3
Group (and Divisional) Underlying Operating Profit is before exceptional items, contingent consideration assets and liabilities,
amortisation of intangible assets and share-based payments. Refer to note 5 to the Financial Statements for reconciliation of Group
and Divisional Underlying Operating Profit to statutory operating profit/(loss) for continuing, discontinued and total operations.
4
Following the conversion of the entire owned estate agency network to franchises in H1 2023, this was classified as a discontinued
operation and is now presented as such in the Financial Statements. Refer to notes 2 and 6 to the Financial Statements.
5
Refer to note 12 to the Financial Statements for the calculation.
6
Refer to note 35 to the Financial Statements for the calculation.
Financial Highlights
Group Underlying
Operating Profit
(Continuing operations only)
£10.3m
(2022: £29.9m)
Group Revenue
(Continuing operations only)
£144.4m
(2022: £217.5m)
Group exceptional costs
(Continuing operations only)
£(13.8)m
(2022: £(48.3)m)
Net Cash
£35.0m
(2022: £40.1m)
The Group’s strategic transformation means our 2023 financial results are less directly comparable to 2022.
Our key financial highlights are:
02
2024 Outlook
• 2024 has started strongly with improving sentiment and lower mortgage rates driving more activity across our core markets. We have seen
an increase in mortgage approvals as well as housing transactions and the start of a normalisation in product mix in our mortgage business.
These conditions have particularly benefited our Surveying & Valuation business, where there has been a very substantial increase in activity
and profits.
• It was against this background of improving activity and Group trading that we issued a trading update on 6 March, since which time trading
has remained ahead of expectations. At the end of Q1 2024, Group Underlying Operating Profit was materially ahead of the same period in
2023. This improved trading reflects better market conditions as well as the benefits of the new Estate Agency franchise model, improved
lender contracts, and our decision to retain surplus capacity throughout the second half of 2023 in our Surveying & Valuation business.
• Although we retain a degree of caution, inflation data still suggests that interest rates will reduce in 2024, which would help support our
markets. This, together with the strong performance since our recent trading update on 6 March, reinforces the Board’s confidence, and our
expectations for full year Underlying Operating Profit have increased further.
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
03
About LSL and Our Markets
About LSL
Unless stated otherwise, information in this section of the Report is as at 31 December 2023.
We are one of the largest providers of B2B services to the UK’s property and mortgage market. We provide services to mortgage intermediaries
and estate agency franchisees, and valuations to many of the UK’s largest lenders. Details of our business model are included in the Purpose,
Strategy, Culture, Values and Business Model section of this Report.
We have three Divisions:
• Financial Services
• Surveying & Valuation
• Estate Agency Franchising
Financial
Services
Surveying &
Valuation
Estate Agency
Franchising
One of the UK’s
largest mortgage and
insurance networks
One of the UK’s
largest surveying and
valuation businesses
One of the UK’s
largest providers of
estate agency
franchise services
Financial Services
One of the UK’s largest mortgage and insurance networks
We provide compliance and other services to members of our Financial Services Network. Together, the PRIMIS Mortgage Network and The
Mortgage Alliance (TMA) make up one of the UK’s largest mortgage and insurance networks. Following our acquisition of TenetLime Limited
in February 2024, PRIMIS increased its number of advisers to 2,913 and 1,153 firms, with a mortgage market share of more than one in ten UK
purchases and remortgages.
Pivotal Growth
Pivotal Growth is a joint venture established in 2021 with Pollen Street Capital to execute a ‘buy and build’ strategy of mortgage brokers. Pivotal
Growth has made a number of acquisitions and now has more than 400 mortgage advisers.
Surveying & Valuation
Our Surveying & Valuation Division includes e.surv, one of the UK’s largest surveying and valuation businesses, and Walker Fraser Steele
Chartered Surveyors, which services the Scottish market. e.surv is one of the UK’s biggest employers of Royal Institution of Chartered Surveyors
(RICS) registered surveyors, with 472 (FTE) surveyors, and counts seven of the UK’s eight largest lenders amongst its clients. e.surv is rated
Excellent on the review platform Trustpilot, with a score of 4.8 stars from over 5,000 verified reviews.
Since 1 April 2023, the Division also includes our asset management businesses, LSL Corporate Client Department and Templeton LPA, which
were previously included in the Estate Agency Division (now the Estate Agency Franchising Division). They specialise in managing the sale of
residential properties on behalf of corporate clients and property investors.
Estate Agency Franchising
We provide estate agency franchising services, such as brand marketing and commercial and IT support, to a network of over 300 territories
across the UK. These territories are independently managed and operated by Estate Agency franchisees under various brands, including Your
Move and Reeds Rains, as well as several local brands. All franchisees operating our brands won either Excellent or Exceptional status in Sales
and/or Lettings at the EA Masters Awards, for inclusion in the Best Estate Agency Guide 2024.
We also own other specialist businesses which support franchisees with related product services:
– LSL Land & New Homes provides a complete range of services for house builders, developers and investors of all sizes, which can be used by
all franchisees.
– Homefast provides conveyancing panel management and support services to our franchisees and their customers.
04
About LSL and Our Markets
Our customers’ end markets
Demand for our products and services is driven primarily by the UK mortgage market in the Financial Services and Surveying & Valuation
Divisions, and by the UK housing and lettings market in the Estate Agency Franchising Division. In addition, our Financial Services businesses
distribute significant numbers of protection assurance policies. There is some correlation between the UK housing and mortgage markets,
although remortgages, product transfers and assurance products are significant parts of the mortgage market and are often not correlated with
the housing market.
Mortgage market
Demand for mortgages reduced against a market backdrop of rising interest rates and higher mortgage costs in 2023, whilst the intermediary
share increased slightly
2
:
• Total gross mortgage lending
1
in 2023 was £224bn, 29% lower than the prior year (2022: £314bn) with a continued shift towards refinancing.
Purchase mortgages accounted for only 59% of total lending (2022: 61%).
• The proportion of mortgage lending placed through financial advisers
2
increased to 84% in 2023 (2022: 81%).
• Total mortgage approvals for house purchases
3
were down 23% to 580,000 in 2023, with demand soft throughout the year due to affordability
issues.
• Remortgage (and other)
3
approvals were down 34% on 2022, while remortgage and other lending was 25% behind as consumers faced
uncertainty in a volatile market throughout much of the year.
Housing market – residential sales and lettings
2023 saw a reduced housing market, with transactions at their lowest level for 11 years:
• UK housing transactions
4
in 2023 were 1,019,000, down 19% (2022: 1,258,000).
• Transactions were down 18% in H1 2023 and 20% down year-on-year in H2 2023.
• At the end of 2023, average house prices in England and Wales
5
were 3.9% lower than a year earlier.
• Private rental prices paid by tenants in the UK rose by 6.2% in the 12 months to December 2023, and increased by 5.8% excluding London
6
.
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
05
Sources:
1
New mortgage lending by purpose of loan, UK (Bank of England) – Table MM23 (30 January 2024).
2
New residential lending sold direct and via intermediaries (excluding product transfers), UK Finance – Table RL8 (16 February 2024).
3
Approvals for lending secured on dwellings, Bank of England – Table A5.4 (30 January 2024).
4
Number of residential property transaction completions with value £40,000 or above, HMRC (31 January 2024).
5
House price index, England and Wales, LSL Acadata (January 2024).
6
Index of Private Housing Rental Prices, UK, ONS (January 2024).
20232022202120202019
580
789
801
934
755
20232022202120202019
224
269
246
308
314
20232022202120202019
445
761
588
627
701
20232022202120202019
1,456
1,025
1,549
1,389
1,562
Total Mortgage Approvals for House Purchase
’000s
Total Gross Mortgage Lending
£bn
Remortgage (and other) Volumes
’000s
Total Mortgage Approvals
’000s
06
Chair's Statement
I’m pleased to present the Annual Report
and Accounts for the financial year 2023.
I was appointed as Interim Non Executive
Chair of the Board with effect from 26
February 2024 following the departure of
David Barral. I have been on the Board as
an independent Non Executive Director
since February 2019. In this Report, you
will find an in-depth review of the Group’s
financial performance together with details
of the significant strategic progress made to
reshape the business. While much has been
achieved to structurally improve the Group,
the market backdrop has been very difficult,
and this has had a material negative impact
on our financial performance which is very
disappointing and in no way reflects the
potential of LSL. Our performance showed
stability in the second half of 2023 and has
improved significantly in 2024 as the Group
captures the benefits of our transformation
as well as the recovery in the housing market
boosting demand.
Major strategy progress against very
challenging market conditions
The Executive and Senior Leadership Team
has delivered major strategic progress during
the year, with the radical restructure of both
the Financial Services Division and the Estate
Agency Division, with the previously owned
and managed Estate Agency Division partially
sold and the remainder fully converted into
a franchise operation. These businesses are
now business-to-business platforms with
strong market positions, with significantly
reduced costs, low capital requirements and
potential for high cash generation.
The intense amount of work to deliver this
transformation should not be underestimated
and has been achieved against a very
challenging market, where housing
transactions were almost a fifth lower than
prior years and new mortgage lending was
down 29% versus 2022. I want to thank the
entire team for their dedication, hard work
and commitment. I have no doubt that the
Group will see the financial and operational
benefits over the coming years.
Balance sheet strength and dividend
The financial strength of the Group has been
significantly improved during the year, with
cash disposal proceeds, new credit facilities
put in place and lower future organic capital
requirements following our restructuring.
The combination of these factors alongside
our regular review of our capital allocation
structure, mean the Board has concluded
the Group has excess capital and announce
the implementation of a share buy-back
programme of up to £7m. Furthermore with
an expected material increase in profitability
in 2024, and our improved financial strength,
the Board is proposing to maintain the final
dividend at 7.4 pence per share with total
dividend of 11.4 pence per share for the year.
Board changes
After nine years of fantastic service, Bill
Shannon retired from the Board on 25 May
2023. I would like to thank him for his hard
work and dedication during this time and the
rest of the Board appreciate his generosity
during his handover.
After year end, David Barral, who was
appointed as Chair to replace Bill Shannon on
25 May 2023 left the Board on 26 February
2024. I was appointed Interim Chair on
26 February 2024 with the search for a new
Chair underway.
Simon Embley, whose term expires at the
2024 AGM, will step down from the Board
on 1 May 2024 as he wants to focus his
time on the expansion of Pivotal Growth.
Simon has been a driving force behind the
Group for many years and has made a huge
contribution to its success. On behalf of the
Board, I would like to sincerely thank Simon
for his contribution and we wish him well.
Looking forward
Market volumes remain below historic levels
and consumer confidence is fragile. The
recent downward move in mortgage rates is
helpful and we have seen some early signs of
improvement in our end markets. Profitability
should improve materially for 2024
compared to 2023, reflecting the significant
restructuring of the Group’s cost base, a full
year benefit of the new operating model
for Estate Agency and a market recovery in
Surveying & Valuation.
Our strong balance sheet provides the ability
and confidence to seize organic and inorganic
growth opportunities for the Group. Each
Division has exciting future plans and the
Board remains confident in LSL’s long-term
prospects.
Darrell Evans
Chair of the Board and the Nominations
Committee
24 April 2024
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
07
Group Chief Executive Officer's Review
2023 was a year of significant progress
with the Group’s transformation to a
structurally higher margin, lower capital
intensity business now complete. We have
restructured both our Financial Services
Network and our Estate Agency Franchising
Division which are now exclusively focused
on business-to-business services, with a
materially lower cost base and the potential
for higher free cash flow generation. As a
result of the work we have done, LSL is now
well-positioned to driver greater shareholder
value and to perform more consistently
through market cycles, supported by a strong
balance sheet.
With the benefit of the restructuring and
transformation programmes complete, the
Board and management are focused now
on maximising the operational potential
in the business and ensuring that this
potential is appropriately reflected in the
wider perceptions of LSL. To that end, the
Board also remains actively engaged with
its shareholders with the common aim to
drive shareholder value, including return on
investment and capital management.
Our strategic progress has been delivered
against a difficult market backdrop. Rising
interest rates and higher mortgage costs
significantly impacted the size and product
mix in the mortgage market whilst reducing
housing transactions by 19%, impacting
the financial performance in each of our
Divisions. We ended the year with some
early signs of green shoots in the mortgage
and housing market as mortgage rates
started to come down. Our full year results
are slightly ahead of the Board’s previous
expectations, and I am pleased to report that
2024 has started strongly, with performance
significantly ahead of prior year.
Our transformation programme has delivered
material cost savings and reduced our
cost base by 50% on an annualised basis.
Combined with a new bank facility, disposal
proceeds and enhanced financial flexibility
due to the Group’s strategic progress, we
have strengthened our balance sheet further.
We ended the year with £35.0m of Net Cash
1
.
Following the completion of our restructuring
programme, the Board has reviewed
the Group’s capital structure and capital
allocation policies. Going forward the Board
expects the Group’s strong profit to cash
conversion dynamics it has historically
displayed to continue, and the Group to have
only small working capital requirements.
With a clear prioritisation of organic growth
in our existing three Divisions, the Group only
needs to hold a small net cash position, of up
to £10m. Cash above this level after dividends
and capex requirements, expected to be £3-
5m per annum, will be considered excess and
returned to shareholders.
Capital allocation will prioritise organic
growth measured against a risk adjusted
return above the Group’s cost of capital.
While not a priority, the Board will continue
to assess inorganic growth, using the same
criteria of risk adjusted returns above the
Group’s cost of capital.
Given this framework, the Board has
concluded that LSL currently has £7m
of excess capital at this time, reflecting
cash requirements for Pivotal, contingent
consideration for TenetLime, and Estate
Agency franchise restructuring costs as
previously disclosed. The Group plans
to return this through a share buy-back
programme which it intends to commence
imminently.
I would like to thank all my colleagues for
their continued hard work and exceptional
support in the transformation of the Group.
Group results
The Group’s performance was naturally
affected by the headwinds that impacted the
mortgage and housing markets whilst the
significant transformation activity completed
in the year does means that our 2023
financial results are less directly comparable
to 2022.
Group Revenue from continuing operations
2
was £144.4m (2022: £217.5m). After adjusting
for disposals and discontinued operations
in Estate Agency
2
, revenue was 10%
3
below
prior year in a new lending market that was
29% lower by value and a housing market
down 19%.
Group Underlying Operating Profit from
continuing operations
2,4
was £10.3m
(2022: £29.9m) and Group Underlying
Operating Profit from total operations
2,4
was
£9.3m (2022: £35.8m). These figures include
costs carried in Surveying & Valuation above
demand, losses in businesses disposed of
in the period and one-off cost-of-living
payments for lower-paid staff.
Strategic priorities and development
The Group has made substantial progress
implementing its strategy to simplify the
business, reduce earnings volatility, and focus
investment in high growth areas.
Following this restructuring the Group now
has a strong platform across all three of
its Divisions to further develop strategic
priorities for each business and leverage
our market-leading positions as lending and
housing activity recovers from a difficult
market in 2023.
Estate Agency franchising model
Perhaps the most significant development
came in May 2023 when we confirmed our
plans to convert our entire owned Estate
Agency network to a franchising model and
in doing so LSL has become one of the largest
providers of estate agency franchise services
in the UK. The execution of the change has
gone well, and we are ahead of the plans we
set for reducing costs and increasing margin.
With the completion of the conversion of our
Estate Agency business to a franchise model
during 2023, we are now focused on further
enhancing our franchising expertise to bring
on new partners and develop our services for
our franchisees.
Prior to the announcement of our
franchising programme, in January 2023, we
announced the sale of our London estate
agency business, Marsh & Parsons, for total
consideration of £26.1m
5
at an attractive
multiple. We did not consider Marsh &
Parsons was suitable for our franchising
operation.
Focus on B2B in Financial Services
The first half of 2023 also saw us take the
last steps to focus financial services activity
exclusively on business-to-business services,
through our PRIMIS Network and TMA
mortgage club. The disposals announced in
April 2023 of our mortgage, protection, and
general insurance brokerage firms, Embrace
and First2Protect, to Pivotal Growth, followed
on from transactions in January 2023 when
we similarly sold our new build focused
brokerage businesses, RSC and Group First, to
Pivotal Growth. These transactions simplify
our Financial Services Division, reducing
costs and reducing earnings volatility, whilst
08
Group Chief Executive Officer's Review
retaining LSL’s capability to capitalise on B2C
opportunities through our equity share in
Pivotal Growth.
Increasing scale in the Financial Services
Network
In August, we took the opportunity to add
further scale to our PRIMIS Network business,
announcing the acquisition of the TenetLime
mortgage and protection network. This deal,
which adds more than 250 advisers across
over 150 firms, completed on 2 February
2024, building on our share of over 10% of
the UK house purchase and remortgage
markets. The transaction will be earnings
enhancing in 2024.
We have already successfully carried out
the migration and onboarding of the firms,
and the current financial performance is in
line with our plan. We remain on track to
achieve our investment hurdle target for this
acquisition.
The consideration payable is expected to be
up to £11.6m consisting of an initial payment
of £5.7m, a further payment of up to £4.6m,
calculated by reference to the number and
turnover of appointed representative firms
12 months following completion and an
expected payment of £1.4m for assets which
form part of TenetLime’s regulatory capital.
Investment in management
Our Financial Services Division has welcomed
a new managing director bringing significant
experience in the mortgage network
market as well as a number of other senior
executives. These appointments follow the
retirement of long-standing colleagues,
and I would like to thank them for their
contribution to LSL.
Surveying & Valuation contract renewals
I am delighted to report that our Surveying
& Valuation Division extended its contract
to supply surveying and valuation services
to Lloyds Banking Group to September 2028,
underpinning our leading market position.
We also secured an improvement in terms
and allocation with another major lender
as well as contracts with a number of other
smaller players. We continue to explore new
business opportunities in data and direct-to-
consumer services.
Pivotal Growth joint venture
It is now three years since we launched
Pivotal Growth, our joint venture with Pollen
Street Capital (PSC), established to execute a
buy and build strategy in the mortgage and
protection intermediary markets. Working
with Pollen Street Capital allows the Group to
cap its maximum investment whilst benefiting
from Pollen Street’s considerable experience
of executing similar strategies in related
markets. Our joint aim is to build the business
together with a view to an exit event over
a three-to-six-year period after launch. All
major strategic decisions require agreement
by both LSL and PSC.
The advantages of a buy and build strategy
include economies of scale, synergies
between acquired companies, deployment of
integrated technology and the potential for a
larger and scalable business to benefit from
enhanced multiples on exit.
Following a slower than expected start, as
Pivotal maintained a disciplined approach
to deal price, it has acquired 12 businesses
and currently has over 400 advisers, making
it one of the largest mortgage brokers in the
UK. This includes three acquisitions made in
2024, including that of John Charcol, a firm
with 150 advisers. Pivotal’s scale improves its
ability to win new distribution agreements,
drive synergies and make it a more
compelling proposition for future acquisition
partners. The acquisitions made to date have
integrated and synergies are being delivered.
We have invested £11m in Pivotal since 2021
and we estimate that we could make further
investment of up to £15m over the next three
years by way of equity and loan notes, subject
to the timing and size of deal flows and the
introduction of any external debt.
We continue to closely monitor Pivotal’s
performance to maximise returns for
shareholders and it remains on track to
deliver returns comfortably ahead of the
Group’s WACC.
In addition, Pivotal offers further potential
opportunities for our PRIMIS mortgage
network, including developing services for
larger brokers and assisting other PRIMIS
members to capitalise on additional new
business opportunities, for example in some
specialist mortgage sectors.
Pivotal’s financial performance has steadily
improved as it has increased in scale and
moved out of its establishment phase. Pivotal
is expected to be profitable in 2024.
Capital structure and capital allocation
An Investment Committee is in place to
review investment proposals and the
performance of previous investments against
the original businesses cases and Group
hurdle rate and to identify any learnings for
future capital allocation decisions. The work
of the Investment Committee allows the
Board to assess the Group’s projected near
and medium-term capital requirements. This
facilitates an appropriate capital structure
and capital allocation policy, taking into
account economic conditions, the Group’s
improved resilience to market cycles and
organic and inorganic opportunities.
Following the completion of the major
strategic programmes by the business
in 2023, the Investment Committee has
reviewed the Group’s capital structure and
capital allocation policies.
The Board has held a cash balance for some
time given recent uncertain markets and to
provide financial flexibility to take advantage
of any material inorganic opportunities. After
reviewing its cash flow requirements and the
high cash generating nature of our business
model, the Board has concluded the Group
requires up to £10m of net cash.
The Board prioritises organic growth
investments that deliver risk adjusted returns
above the Group cost of capital and paying
an attractive dividend to shareholders.
Our end markets are large, and the Board
sees significant attractive organic growth
opportunities over the medium term. While
not a priority today, inorganic investments
are assessed against the same criteria. The
Group’s WACC is 12% (post tax). Today, the
Board’s focus is on optimising returns in our
core businesses and driving organic growth
in our large addressable markets. This will
require modest capital expenditure that
will be funded by free cash flow generation.
Other cash requirements such as contingent
consideration for TenetLime, Estate Agency
restructuring costs, and further investment
in Pivotal Growth, will also be funded by free
cash flow generation. Any excess capital will
be distributed to shareholders.
Capital expenditure and investments
We remain committed to investing in
the business to support growth. During
the year, we deployed capital in the
Divisional restructuring and transformation
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
09
programmes, capital expenditure which
was focused on capability and technology
to support future organic growth and the
settlement of contingent consideration in RSC
ahead of its disposal and further investment
in Pivotal Growth. Following the year end we
invested an initial consideration of £5.7m for
the acquisition of TenetLime.
The new Group operating model is less
capital intensive, which is reflected in lower
capital expenditure requirements, typically
expected to be in the region of £3-5m per
annum. The Group also expects to invest
up to £15m in Pivotal Growth over the next
three years. In addition, the Group expects
one-off cash investments of up to £6m
for further contingent consideration on
TenetLime and up to £7m for restructuring
costs relating to Estate Agency franchising, as
previously disclosed.
Dividend
The Board has reviewed the final dividend,
considering the Group’s policy to pay out
30% of Group Underlying Operating Profit
after finance and normalised tax charges, so
that dividend cover is held at approximately
three times earnings over the business
cycle. This policy was designed to provide
clarity to shareholders and ensure the Group
retained a strong balance sheet for all market
conditions.
The strategic progress made by the Group in
2023 has underpinned the Board’s confidence
in the future. We have secured material cost
savings and now operate a higher margin and
lower capital-intensive business following the
restructuring in Financial Services and Estate
Agency. The Group balance sheet is robust
with Net Cash
1
of £35.0m at 31 December
2023, boosted by disposal proceeds.
This strong cash position, the anticipated
significant increase in profit in 2024 and the
Board’s confidence in the Group’s prospects,
allows the Board to declare a final dividend
of 7.4 pence per share, unchanged on last
year, making a total dividend of 11.4 pence
per share.
The ex-dividend date for the final dividend
is 9 May 2024, with a record date of 10 May
2024 and a payment date of 28 June 2024.
Shareholders can elect to reinvest their cash
dividend and purchase additional shares in
LSL through a dividend reinvestment plan.
The election date is 24 May 2024.
Living Responsibly and ESG
‘Living Responsibly’ is at the heart of our
business and is how we deliver our ESG
programme. I am clear that LSL’s success
needs to be measured not only in the profits
we generate, but the impact we have on the
communities in which we operate.
In our ESG and our Living Responsibly
reports published in April 2023, we set out
some of the steps we have taken to reduce
our environmental impact, help ensure LSL
is a supportive and inclusive workplace,
and provide support to good causes. A
further updated report will be published
shortly. In this update, we will describe the
very significant progress made to embed
Living Responsibly throughout the Group.
In the past year, this included establishing
LSL Voices, a colleague-driven initiative
to provide help and support to staff from
diverse backgrounds. I am also pleased to
report that all colleagues receive at least the
Real Living Wage. We have continued to focus
on volunteering and fund-raising for good
causes via our Communities Forum, whilst
progress against our environmental targets
will also be set out in this Report.
I am very grateful for the incredible support
provided by colleagues, not only to our Living
Responsibly work but also in delivering such
significant transformation during what has
been a highly challenging period. Their hard
work and commitment have put LSL in a
much stronger position to take advantage of
future opportunities.
Current trading and outlook
2024 has started strongly with improving
sentiment and lower mortgage rates driving
more activity across our core markets. We
have seen an increase in mortgage approvals
as well as housing transactions and the
start of a normalisation in product mix in
our mortgage business. These conditions
have particularly benefited our Surveying &
Valuation business, where there has been
a very substantial increase in activity and
profits.
It was against this background of improving
activity and Group trading that we issued a
trading update on 6 March, since which time
trading has remained ahead of expectations.
At the end of Q1 2024, Group Underlying
Operating Profit was materially ahead of the
same period in 2023. This improved trading
reflects better market conditions as well
as the benefits of the new Estate Agency
franchise model, improved lender contracts,
and our decision to retain surplus capacity
throughout the second half of 2023 in our
Surveying & Valuation business.
Although we retain a degree of caution,
inflation data still suggests that interest
rates will reduce in 2024, which would help
support our markets. This, together with the
strong performance since our recent trading
update on 6 March, reinforces the Board’s
confidence, and our expectations for full year
Underlying Operating Profit have increased
further.
David Stewart
Group Chief Executive Officer
24 April 2024
Notes:
1
Refer to note 35 to the Financial Statements for the calculation.
2
Following the conversion of the entire owned estate agency network to franchises in H1 2023, this was classified as a discontinued operation and is now
presented as such in the Financial Statements. Refer to notes 2 and 6 to the Financial Statements.
3
Revenue: £138.1m in 2023 with statutory revenue of £144.4m less £6.2m revenue from businesses disposed in 2023, as compared to £154.1m in 2022 with
statutory revenue of £217.5m less £63.4m revenue from businesses disposed in 2023.
4
Group (and Divisional) Underlying Operating Profit is before exceptional items, contingent consideration assets and liabilities, amortisation of intangible assets
and share-based payments. Refer to note 5 to the Financial Statements for reconciliation of Group and Divisional Underlying Operating Profit to statutory
operating (loss)/profit for continuing, discontinued and total operations.
5
Refer to note 9 to the Financial Statements.
10
Strategic Report
In this section:
11 Purpose, Strategy, Culture, Values and Business
Model
14 Financial and Divisional Reviews:
14 – Financial Review
16 – Financial Services Division
18 – Surveying & Valuation Division
19 – Estate Agency Franchising Division
21 – Balance Sheet Review
23 Stakeholder Engagement Arrangements including
s172 Companies Act 2006 Statement
29 Principal Risks and Uncertainties
34 Non-Financial and Sustainability Information
Statement including TCFD and CFD reporting
50 Environmental, Social and Governance (ESG) Report
56 The Board and The Executive Committee
11
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Other Information
Financial Statements
Strategic Report
Overview
Strategic Report
Overview
Purpose, Strategy, Culture, Values and
Business Model
All information in this section of the
Report is, unless stated otherwise, as at
31 December 2023.
The Board has established our Group
purpose, culture, values and strategy. Our
strategy is aligned to our purpose, culture
and values, which together provide an anchor
point for risk management and articulate
what joins our three Divisions and our Group
companies together.
Our purpose
To provide first class services to mortgage and
insurance advisers, Estate Agency franchisees,
lenders and their customers, to create long
term benefits for external stakeholders and
our people.
Set out below is what our purpose means to our key stakeholders.
Our customers Mortgage and insurance advisers Technology, compliance, marketing and business development services to help
them safely grow their businesses through delivering excellent customer service
ensuring good customer outcomes.
Lenders Access to a national network of highly-skilled Chartered Surveyors, plus our market-
leading knowledge of property risk, to help them make safe lending decisions and
deliver excellent customer service.
Estate Agency franchisees Technology and business development services to help them safely grow their
businesses through delivering good customer service.
Our people Delivering an improving colleague experience through an increasingly diverse,
inclusive culture which puts colleague feedback at its heart.
Our shareholders Providing access to market-leading, growth-orientated assets in the UK mortgage
and property market with a focus on a lower fixed cost, leading business-to-
business services.
Our communities and the environment A commitment to doing the right thing and being responsible with the communities
and environment in which we work.
Our strategy
Our strategy aims to deliver sustainable,
resilient and profitable growth through
business-to-business services to businesses
which operate in the UK housing and
mortgage markets.
Our strategic objectives are to:
• Enhance our market-leading positions in
each of our three core businesses.
• Reduce earnings volatility and manage our
exposure to mortgage and housing market
cycles.
• Generate new and more non-cyclical
revenue streams.
• Create scalable platforms.
• Increase operating process efficiency.
• Enhance the productivity of our mortgage
intermediary and estate agency partners.
• Focus on our Living Responsibly ESG
programme.
• Retain, develop and attract talented
people.
For details of the steps we have taken to
deliver our strategy during 2023, see the
Group Chief Executive Officer’s Report
(page 07) and the Business Reviews (page 14).
Our culture
Our desired culture for our colleagues is:
a. Having the right people: who accept
accountability for their actions.
b. Doing the right things: which deliver
customer expectations.
c. In the right way: being open, challenging
of themselves and supporting others.
We believe that this culture aligns with our
purpose and supports our strategy, including
Living Responsibly.
Our values
Our values, which underpin our culture, are:
• People focused.
• Market leaders.
• Honesty.
• Delivering on promises.
• Teamwork.
• Innovation.
12
Purpose, Strategy, Culture, Values and Business Model
Our business model (as at the date of this Report)
Through a number
of key resources...
...we provide a range
of first class products
and services...
...to our customers...
Key
Financial Services
Group
Estate Agency Franchising
Surveying & Valuation
Talented and
committed
people
Leading
technology
Group
infrastructure
Group
capital
Division
Proposition Source of income
Financial Services
Network Business
UK’s largest mortgage and
insurance network with 2,700+
advisers and further growth from
TenetLime acquisition
Broker fees and procuration and
commissions shares from
product providers
Surveying &
Valuation
Market-leading Surveying &
Valuation business, serving seven
of the ten largest lenders, including all
of Lloyds Banking Group
Payments from lenders and
consumers for services
Estate Agency
Franchising
One of UK’s largest franchise estate
agency groups with 300+ territories,
including Your Move/Reeds Rains
Franchisee fees for services
Growth drivers
Adviser growth
Productivity growth
New products and services
Consider network acquisitions
Surveyor capacity and
optimisation
New products and services
Development of D2C
New products and services
Territory growth
Lettings market share growth
Services
to mortgage
intermediaries
Valuation
and surveys
Estate agency
franchising services
Mortgage and
insurance
intermediaries
Lenders
Retail customers
Shareholders Colleagues Customers Suppliers
...for the benefit of
all our stakeholders...
Franchisees
Our three Divisions are complementary but different. Each is operated by a Divisional Management Team, in accordance with Group policies and procedures. Our Divisions'
scale, reputations, brands and people are important sources of competitive strength.
Through a number
of key resources...
...we provide a range
of first class products
and services...
...to our customers...
Key
Financial Services
Group
Estate Agency Franchising
Surveying & Valuation
Talented and
committed
people
Leading
technology
Group
infrastructure
Group
capital
Division
Proposition Source of income
Financial Services
Network Business
UK’s largest mortgage and
insurance network with 2,700+
advisers and further growth from
TenetLime acquisition
Broker fees and procuration and
commissions shares from
product providers
Surveying &
Valuation
Market-leading Surveying &
Valuation business, serving seven
of the ten largest lenders, including all
of Lloyds Banking Group
Payments from lenders and
consumers for services
Estate Agency
Franchising
One of UK’s largest franchise estate
agency groups with 300+ territories,
including Your Move/Reeds Rains
Franchisee fees for services
Growth drivers
Adviser growth
Productivity growth
New products and services
Consider network acquisitions
Surveyor capacity and
optimisation
New products and services
Development of D2C
New products and services
Territory growth
Lettings market share growth
Services
to mortgage
intermediaries
Valuation
and surveys
Estate agency
franchising services
Mortgage and
insurance
intermediaries
Lenders
Retail customers
Shareholders Colleagues Customers Suppliers
...for the benefit of
all our stakeholders...
Franchisees
Our three Divisions are complementary but different. Each is operated by a Divisional Management Team, in accordance with Group policies and procedures. Our Divisions'
scale, reputations, brands and people are important sources of competitive strength.
Each Division is operated by its own management team, which is tasked to develop and implement plans to support the delivery of the Group’s
strategy. Each Division is a leading player in the markets in which they operate and this scale, strong reputation, people and brands represent
important sources of competitive strength.
13
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Other Information
Financial Statements
Strategic Report
Overview
Strategic Report
Overview
Business model resilience
We believe our business model is sustainable
in the long term, especially in light of the
progress made in recent years to materially
reduce the fixed cost base, reduce exposure
to housing market cycles in our Financial
Services and Estate Agency Franchising
Divisions.
Financial Services
Our Financial Services businesses provide
services to mortgage intermediaries which
distribute over 80% of regulated mortgages in
the UK, offering a large and stable market for
Group services. Our business model provides
platform services to these brokers with
limited financial risk due to its relatively small
cost base. With the majority of distribution
costs incurred within the mortgage broker
firms that are customers of LSL, our business
model is resilient to market downturns and
has remained profitable in all market cycles.
Surveying & Valuation
In Surveying & Valuation, physical and
remote valuations remain an integral
part of many mortgage transactions, and
focus on prudential risk by lenders and
regulators mean that they are likely to remain
integral in the long term. We continue to
develop adjacent propositions, for example
offering surveys directly to consumers, to
complement this business line.
LSL has in place contracts with most of the
UK’s major lenders, typically of a three-year
duration. This provides security of income
stream over the planning cycle. The business
has remained profitable in all market cycles.
Estate Agency Franchising
In 2023, we converted our entire owned
Estate Agency branch network to a franchise
model. In doing so reducing its cost base
materially and its exposure to housing market
cycles. Similar to our Financial Services
Network business, the majority of costs are
now incurred by the independent franchisees
reducing financial risk and improving
performance in adverse market conditions.
14
Financial and Divisional Reviews
Financial Review
Group Income Statement
Group revenue from continuing operations
1
was £144.4m (2022: £217.5m). After adjusting
for disposals and discontinued operations
in Estate Agency, revenue was 10%
2
below
prior year in a housing market 19% lower
and in a smaller lending market. Including
discontinued operations in Estate Agency,
revenue from total operations was £176.8m
(2022: £321.7m), reflecting the previously
owned network revenues.
Group Underlying Operating Profit from
total operations
1,3
of £9.3m (2022: £35.8m)
includes excess capacity costs carried in
Surveying & Valuation, £1m from losses in
businesses disposed of in the period and
a one-off cost-of-living payment totalling
£0.9m for lower-paid staff. Group Underlying
Operating Profit from continuing operations
was £10.3m (2022: £29.9m).
Group Operating Profit was £3.7m (2022:
loss of £21.7m), a material improvement
compared to the prior year which included an
exceptional impairment charge for goodwill
and other intangibles of £47.2m.
Adjusted operating expenditure
4
comprises
Employee costs, Other operating costs, and
Depreciation and totalled £133.5m in 2023,
29% lower than prior year (2022: £188.4m),
with the movement comprising the net effect
of the following factors:
– Disposal of businesses during the period
– Reduction in depreciation due to the
disposal of businesses during the period
which led to the reclassification of IFRS 16
depreciation into other operating expenses
because of the franchising of the Estate
Agency branch network
– Reduced costs in Surveying & Valuation
through self-help measures and reduced
variable costs
– Increased costs in Financial Services
including those arising from emerging
regulatory requirements, inflationary salary
increases targeted at lower-paid employees
and executive team restructuring
– The amounts included for Estate Agency
represent those for the expanded continuing
franchising business
– Central (unallocated) costs of £7.7m
(2022: £7.3m) included staff restructure
costs and increased audit fees
The Group exited 2022 with costs over 50%
lower than 2022, reflecting an annualised total
operations cost reduction of c£140m.
Other (losses)/gains
Total other operating losses were £0.2m
(2022: gains of £1.3m). This primarily reflected
the movement in the fair value of units held in
The Openwork Partnership LLP (loss of £0.3m,
2022: gain £0.7m), having been reassessed at
31 December 2023 as £0.4m (31 December
2022: £0.7m). The prior year also included
external rental income of £0.7m, no longer
applicable following the wholesale franchising
of the Estate Agency branch network.
Share of losses from joint venture
Losses from our equity share of Pivotal
Growth reduced to £0.4m (2022: £0.5m loss).
Share‑based payments
The share-based payment credit of £0.2m in
2023 (2022: charge of £1.9m) comprises, a
charge in the period of £3.0m for LTIP, SAYE
and BAYE schemes granted in 2020 to 2023,
offset by a credit of £3.2m reflecting lapses
and adjustments for leavers, largely as a
result of the significant restructuring across
the Group. The prior year included a higher
charge of £1.9m, offset by lower lapse and
leaver adjustments.
Amortisation of intangible assets
5
The amortisation charge for 2023 was
£2.3m (2022: £2.8m
6
), being amortisation of
intangible software investment and franchise
agreements. The year-on-year movement
comprises a reduction in both lettings books
and certain software intangibles as they
have been fully amortised, partly offset
by amortisation for the newly established
franchise intangibles.
Exceptional items
7
The exceptional gain of £9.3m (2022: £0.7m)
relates primarily to the gain on disposal
during the period of the Embrace and
First2Protect businesses to Pivotal Growth
of £9.0m. Consideration of £9.3m was
received on completion of First2Protect,
with contingent consideration to be received
in 2025 estimated at £2.0m (undiscounted)
for Embrace based upon 7x 2024 EBITDA
performance. In addition, there was a £0.3m
release in relation to the historic exceptional
Surveying & Valuation IBNR PI Costs provision
(2022: £0.7m).
Exceptional costs of £13.8m (2022: £48.3m),
primarily related to restructuring activity
and corporate transaction costs of £5.8m,
a reduction in contingent consideration
assets of £4.1m for businesses sold to Pivotal
Growth, reflecting changes to estimates, the
net loss on disposals of Group First, RSC and
Marsh & Parsons of £1.7m and impairment
of Financial Services intangible software
assets of £2.2m. Prior year exceptional costs
related principally to the outcome of the
annual impairment review and prior year
restatements, which led to non-cash goodwill
and other intangibles impairment of £47.2m
6
.
Contingent consideration payable
There was £0.03m contingent consideration
charge recognised in the period (2022: £0.7m),
reflecting a small increase in DLPS liability
based on revisions to forecasts, subsequently
paid in February 2024. The credit to the
income statement in 2022 of £0.7m related to
the reduction of the contingent consideration
liability for RSC and DLPS, based on revisions
to profit forecasts.
Finance income increased to £2.8m (2022:
£0.1m) resulting mainly from increased
interest received on funds held on deposit
of £1.5m in 2023 (2022: £0.1m), reflecting
proactive management of funds across the
Group to optimise in the higher interest rate
environment, and the unwind of discounting
on contingent consideration receivable
balances as the differential in time to payment
date reduces, with income of £1.0m (2022:
£nil).
Finance costs amounted to £1.7m (2022:
£2.1m) and related principally to the
unwinding of discount on lease liabilities
of £0.5m (2022: £1.0m) which reduced
because of the disposal of Marsh & Parsons,
commitment and non-utilisation fees on the
revolving credit facility of £0.7m (2022: £1.0m)
and £0.5m for the unwinding of discount
on dilapidations provisions and a fair value
adjustment to loans receivable (2022: £nil).
Profit before tax
Profit before tax was £4.9m (2022: loss before
tax of £23.8m). The year-on-year movement
is primarily due to the materially higher net
exceptional cost in the prior period, and lower
Group Underlying Operating Profit during
2023.
15
Other Information
Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
Taxation
The tax credit of £3.2m (2022: charge of
£3.0m) represents an effective tax rate of
65.2% (2022: 12.7%), which is lower than
the headline UK tax rate of 23.5% as a result
of deferred tax balances written back on
the disposal of investments in subsidiary
undertakings, and non-taxable gains arising
from those disposals. Deferred tax assets
and liabilities are measured at 25.0%
(2022: 25.0%), the tax rate that came into
effect from 1 April 2023.
Discontinued operations
1
loss of £46.1m
(net of tax) in relation to the previously owned
Estate Agency branch network (2022: loss
of £36.5m). The discontinued operations in
Estate Agency Franchising contributed an
Underlying Operating Loss of £1.0m during
the period (2022: profit £6.0m) before
incurring exceptional restructuring costs
in relation to the conversion of the Estate
Agency network to a franchise operation
(£16.5m) and associated disposed goodwill
(£38.1m), offset in part by the exceptional
gain on recognition of intangible franchise
agreements of £10.7m.
Notes:
1
Following the conversion of the entire owned Estate Agency network to franchisees in H1 2023, this was classified as a discontinued operation and is now
presented as such in the Financial Statements. Refer to notes 2 and 6 to the Financial Statements.
2
Revenue: £138.1m in 2023 with statutory revenue of £144.4m less £6.2m revenue from businesses disposed in 2023, as compared to £154.1m in 2022 with
statutory revenue of £217.5m less £63.4m revenue from businesses disposed in 2023.
3
Refer to note 5 to the Financial Statements for reconciliation of Group and Divisional Underlying Operating Profit to statutory operating (loss)/profit for
continuing, discontinued and total operations.
4
Refer to note 35 to the Financial Statements.
5
Refer to note 17 to the Financial Statements.
6
Refer to note 36 to the Financial Statements.
7
Refer to note 9 to the Financial Statements.
8
Refer to note 12 to the Financial Statements.
Earnings per Share
8
2023 2022
Earnings per Share (pence) Basic Diluted
Adjusted
basic
Adjusted
basic
diluted Basic Diluted
Adjusted
basic
Adjusted
basic
diluted
Continuing 7.9 7.8 (26.0) (26.0)
Discontinued (44.7) (44.7) (35.6) (35.6)
Total operations 7.6 7.5 27.6 27.2
16
Financial and Divisional Reviews
Financial Services Division
FY
Financial Summary 2023
Restated
1
2022 Var
P&L2 (£m)
Financial Services Network gross revenue 284.6 316.6 (10)%
Financial Services Network 39.5 41.6 (5)%
Financial Services Other 12.2 40.1 (69)%
Total Net Revenue 51.7 81.7 (37)%
Financial Services Network 10.0 15.5 (35)%
Financial Services Other (3.0) (2.6) (13)%
Underlying Operating Profit
3
7.0 12.8 (45)%
Financial Services Network margin 25.3% 37.2% (1190)bps
Underlying Operating Margin
3
13.6% 15.7% (210)bps
Operating profit/(loss) 5.0 (7.2) 170%
KPIs
LSL mortgage completion lending
4
(£bn) 41.7 45.6 (8)%
Total AR firms 1,000 1,005 (0)%
Total advisers 2,661 2,867 (7)%
Notes:
1
See note 36 to the Financial Statements for details regarding the restatement.
2
Financial Services is managed as one segment and for presentational purposes its results have been split between Network and Other.
3
Divisional Underlying Operating Profit and Divisional Underlying Operating Margin are stated on the same basis as Group (as set out in note 5 to the Financial
Statements).
4
LSL mortgage completion lending quoted includes product transfers.
5
Gross revenue per adviser is calculated as Financial Services Network gross revenue (excluding TMA mortgage club) per active adviser.
17
Other Information
Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
Highlights
• Financial Services division transformed
to focus exclusively on business‑to‑
business services with the disposal of four
businesses to Pivotal Growth, reducing
divisional costs by around £30m annualised
• Financial Services Network business
traded resiliently in difficult market
conditions, reporting Underlying Operating
Profit
1
of £10.0m (2022: £15.5m)
• Increased market share of the UK purchase
and remortgage market
2
of 10.7% (2022:
10.5%)
• LSL advisers responded effectively to
changes in mortgage market increasing
product transfer mortgage completions
by 41% resulting in a substantially increased
share of the product transfer market of
7.4% (2022: 6.4%)
• Resilient protection sales – Network
protection revenue increased by 2% to
£11.6m (2022: £11.3m)
• The number of Network firms remained
broadly flat at 1,000 on 31 December
2023 (31 December 2022: 1,005). Network
firms remained cautious on adviser levels
due to challenging market conditions and
adviser numbers reduced to 2,661 as at
31 December 2023 (31 December 2022:
2,867).
Overview
Our PRIMIS Network has maintained its
leading position in the provision of services
to independent mortgage brokers. It is in
more challenging market conditions that
the advantages of the small, independent,
client-focused broker business model is best
demonstrated, and in 2023 this was reflected
in our advisers’ strong market share.
The rise in mortgage rates has resulted in a
market-wide increase in lower margin product
transfer cases, as lenders remain conservative
with respect to new borrowers, and this has
naturally had some impact on revenue and
profits. Our members responded positively
to these market developments, with the
value of product transfer cases increasing by
41%. Total LSL mortgage lending reduced to
£41.7bn (2022: £45.6bn).
We increased our share of the purchase
and remortgage and of the product transfer
markets, with a record share of the purchase
and remortgage (10.7%
2
up from 10.5%)
and the product transfer markets (7.4%
up from 6.4%). Protection performance
was also robust, with Network protection
revenue increasing by 2%. This performance
is reflected in Financial Services Network
revenue which fell by just 5.2% to £39.5m
(2022: £41.6m).
Network Underlying Operating Profit was
£10.0m (2022: £15.5m) reflecting the impact
on revenue of market dynamics as well
as increased costs including those arising
from emerging regulatory requirements,
inflationary salary increases targeted at
lower paid employees and executive team
restructuring.
Financial Services Other reported a loss
of £3.0m (2022: loss of £2.6m) which
was in line with our expectations, as we
continued to refocus our Mortgage Gym
and DLPS technology businesses towards
our core Network business, absorbing their
operations and commercial focus into the
Network business. To reflect this dynamic,
from 1 January 2024 we will report results
in our Financial Services Division in just two
business lines: our core Financial Services
Network business comprising PRIMIS and TMA
mortgage club, and our share of profit after
tax of Pivotal Growth.
Total Financial Services Division Underlying
Operating Profit
1
was £7.0m (2022: £12.8m).
On a statutory basis, operating profit was
£5.0m (2022: loss of £7.2m).
Our PRIMIS Network retains a leading market
position which at the start of 2024 was
boosted by the completion of the TenetLime
acquisition. Our new senior management
team is focused on leveraging this strong
member base to deliver organic growth
whilst taking advantage of improving market
conditions in 2024.
Notes:
1
Divisional Underlying Operating Profit and Divisional Underlying Operating Margin are stated on the same basis as Group (as set out in note 5 to the Financial
Statements).
2
Mortgage lending excluding product transfers - New mortgage lending by purpose of loan, UK (BoE) – Table MM23 (Jan 2024).
18
Financial and Divisional Reviews
FY
Financial Summary 2023 2022 Var
P&L (£m)
Total revenue 67.8 93.2 (27)%
Underlying Operating Profit
1
5.4 20.4 (74)%
Underlying Operating Margin
1
8.0% 21.9% (1390)bps
Operating profit 2.0 20.8 (90)%
KPIs
Jobs performed (000’s) 389 532 (27)%
Jobs per average surveyor 782 1,066 (27)%
Revenue from private surveys and data services (£m) 3.8 3.8 (2)%
Income per job (£) 174 175 (1)%
Operational surveyors employed (FTE
2
) 472 512 (8)%
Notes:
1
Divisional Underlying Operating Profit and Divisional Underlying Operating Margin are stated on the same basis as Group (as set out in note 5 to the Financial
Statements).
2
Full-time equivalent (FTE).
Highlights
• Surveying & Valuation performance was
impacted by significant reductions in
valuation instructions across the market
and as a result Underlying Operating Profit
1
fell to £5.4m (2022: £20.4m)
• Market share of valuation instructions
2
increased slightly to 38% (2022: 37%)
• Early signs of market recovery in quarter
four of 2023, with significant further
improvement in 2024
• Contract with Lloyds Banking Group
extended to September 2028,
underpinning the Group’s leading market
position. Furthermore we also secured an
improvement in terms and allocation with
another major lender
• Retained contracts with all lending
customers with no loss in allocations
• Self‑help cost measures were taken in
2023, including a reduction in the number
of employed surveyors, achieved through
voluntary redundancy. Our principal focus
was to retain sufficient capacity to meet
the requirements of more normal market
conditions, and the business carried
material excess costs in 2023, over the
level of demand. All capacity is now fully
deployed in quarter one 2024, as the
market recovered earlier than expected
• Surveying profit in quarter one 2024
was greater than the whole of 2023 as
we benefited from recovering markets,
improved contract terms and renewals,
as well as the decision to retain excess
capacity during 2023
Overview
Our Surveying & Valuation business has
performed very strongly in recent years,
increasing market share, and in 2021 and 2022
it returned to operating margins above 20%.
We believe it to be the leading business in its
sector and we were pleased to confirm recently
that we have extended our contract with Lloyds
Banking Group until September 2028, further
enhancing our leading market position.
The mortgage market in 2023 was extremely
challenging for all valuation businesses. The
significant increase in product transfer cases,
where no valuation is needed, created a
major headwind as did reduced activity in the
purchase market as well as specialist equity
release and buy-to-let sectors, where both
supply and demand were reduced by the rapid
rise in interest rates. This resulted in surplus
capacity and a very competitive market for
new instructions, and it is testament to the
quality of service provided by our team that
we increased further our share of valuations
instructions.
Underlying Operating Profit
1
was £5.4m
(2022: £20.4m) reflecting reduced activity
in our markets and our decision to retain
capacity to support a more normal level of
activity. Self-help cost measures were taken
in 2023, including a reduction in the number
of employed surveyors, achieved through
voluntary redundancy.
However, our principal focus was to retain
sufficient capacity to meet the requirements
of more normal market conditions, and the
business carried material excess costs in 2023,
over the level of demand. We have been
pleased to fully deploy the excess capacity in
quarter one 2024, with the market recovering
earlier than expected.
Surveying profit in quarter one 2024 was
greater than for the whole of 2023 as
we benefited from recovering markets,
contract renewals, and the decision to retain
excess capacity during 2023, with strong
performance continuing in April.
The much smaller overall market resulted in a
reduction in Surveying & Valuation revenue to
£67.8m (2022: £93.2m). On a statutory basis,
operating profit was £2.0m (2022: £20.8m).
We have identified medium-term
opportunities to increase our diversification
and reduce reliance on lender valuations and
our exposure to mortgage market cycles, with
the development of new revenue streams
providing data services to lenders and other
clients and by growing revenue from direct-
to-consumer (D2C) surveys. We have seen
good growth in D2C in recent years, with
revenues from this source having doubled
between 2019 and 2022. Despite the more
challenging conditions, 2023 revenue of
£3.6m was unchanged from 2022 (£3.8m).
Notes:
1
Divisional Underlying Operating Profit and Divisional Underlying Operating Margin are stated on the same basis as Group (as set out in note 5 to the Financial
Statements).
2
Approvals for lending secured on dwellings, Bank of England – Table A5.4 (30 January 2024).
Surveying & Valuation Division
19
Financial and Divisional Reviews
Other Information
Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
FY
Financial Summary 2023
Restated
1
2022 Var
P&L
2
(£m)
Continued operations 24.9 42.6 (42)%
Discontinued operations 32.3 104.3 (69)%
Total revenue 57.2 146.8 (61)%
Continued operations 5.6 3.9 43%
Discontinued operations (1.0) 6.0 (117)%
Underlying Operating Profit
3
4.7 9.9 (53)%
Continued operations 22.6% 9.3% 1330bps
Discontinued operations (3.0)% 5.7% (870)bps
Underlying Operating Margin
3
8.1% 6.7% 140bps
Operating profit/(loss) from continuing operations 4.4 (26.8) 116%
Discontinued operations (45.3) (34.3) (32)%
Operating loss from total operations (41.0) (61.2) 33%
Franchise KPIs
Exchange units
4
18,603 23,969 (22)%
Managed properties 37,502 37,177 1%
Territories
5
308 308 –
Notes:
1
See note 36 to the Financial Statements for details regarding the restatement.
2
Following the conversion of the entire owned estate agency network to franchises in H1 2023, this was classified as a discontinued operation and is now
presented as such in the Financial Statements. Refer to notes 2 and 6 to the Financial Statements.
3
Divisional Underlying Operating Profit and Divisional Underlying Operating Margin are stated on the same basis as Group (as set out in note 5 to the Financial
Statements).
4
Excludes Marsh & Parsons disposed in January 2023.
5
Territories quoted for 2022 is from the commencement of the wholly owned franchised Estate Agency business in May 2023.
Highlights
• Estate Agency Franchising Division
transformation following the conversion
of owned branch network to franchisees
and disposal of Marsh & Parsons leading
to divisional annualised cost reductions
of c£110m and thereby reducing earnings
volatility
• Benefits of new business model were
reflected in an Underlying Operating Profit
2
of around £5m in the eight-month period
since the franchising change in May 2023,
with operating margins of around 30%. This
compared to a loss of around £0.3m for the
first four months of the year under the old
business model. Total Underlying Operating
Profit
2
for 2023 of £4.7m was delivered
during a period when there was a market-
wide reduction of 19% in house sales, to
the lowest level for 11 years
• In the first month of 2024, the Estate
Agency Division reported a profit for only
the second time in its history, reflecting the
more consistent earnings of the franchise
model
• The number of properties under
management increased by 1% to 37,502
(2022: 37,177) demonstrating the resilience
of lettings through market cycles
Overview
Before this year, most of the Group’s cost
base was incurred in operating a large
network of owned estate agency branches.
This meant that the Group was significantly
exposed to changes in the number of housing
transactions, whilst the capital required to
increase the number of branches represented
a barrier to growth. Furthermore, any
expansion in the branch network would have
increased our fixed cost base and consequent
exposure to housing market cycles further.
After an extensive strategic review, the Board
decided to transform our estate agency
operations, moving from a predominantly
owned model to one entirely focused on
the provision of franchise services. After an
extensive programme of work, we announced
on 4 May the conversion of our owned
network of 183 branches to franchisees.
This announcement followed the disposal in
January of our London estate agency business,
Marsh & Parsons, for total consideration of
£26.1m
1
which did not form part of our overall
franchise strategy.
We are pleased to report that this
transformation programme was executed
smoothly, with the financial performance
since the change being ahead of our
expectations. We are also clear that it was a
significantly more profitable business model
under the market conditions that emerged in
2023 than the previous owned model.
Estate Agency Franchising Division
20
Financial and Divisional Reviews
On a reported continuing basis, Estate
Agency Franchising business revenue was
£24.9m (2022: £42.6m), primarily reflecting
the disposal of Marsh & Parsons, and the
conversion of owned branches to franchises.
The benefits of the new business model were
reflected in an Underlying Operating Profit
2
of around £5m in the eight-month period
since the franchising change in May 2023,
with operating margins in H2 above 25%. This
compares to a loss of around £0.3m for the
first four months of the year under the old
business model. Total Underlying Operating
Profit
2
for 2023 of £4.7m was delivered during
a period when there was a market-wide
reduction of 19% in house sales, to the lowest
level for 11 years. The greater consistency
of the franchising model was demonstrated
further at the start of 2024 when the Division
reported a profit in January for only the
second time in its history.
Estate Agency and Franchising business
revenue including discontinued operations
was £57.2m (2022: £146.8m) and Underlying
Operating Profit from total Estate Agency
operations was £4.7m (2022: £9.9m profit). On
a statutory basis, Operating Loss from total
operations was £41.0m (2022: loss of £61.2m).
To reflect the change in the structure of
the Group, from 1 January 2024, our asset
management business which provides
repossession services to corporate clients and
is currently reported within the Estate Agency
Division, will be reported within the Surveying
& Valuation Division, as the key commercial
relationships for this business are with major
lenders. The profit generated by this business
was £1.3m in 2023.
Notes:
1
Refer to note 9 to the Financial Statements.
2
Divisional Underlying Operating Profit and Divisional Underlying Operating Margin are stated on the same basis as Group (as set out in note 5 to the Financial
Statements).
21
Financial and Divisional Reviews
Other Information
Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
Goodwill
1
The carrying value of goodwill is £16.9m
(31 December 2022: £55.0m
2
). Following the
conversion of the entire owned Estate Agency
network to franchises during the period, the
goodwill associated with Your Move, Reeds
Rains and LSLi owned branches (£38.1m) has
been disposed and reduced to £nil. Goodwill
previously included within held for sale assets
of £15.3m was disposed as part of the sales
of Marsh & Parsons (£10.6m), Group First
(£3.6m) and RSC (£1.1m), which completed in
January 2023.
Other intangible assets
1
Other intangible assets of £21.5m at 31
December 2023 (31 December 2022: £14.7m
2
).
New intangible franchise agreements of
£10.7m were recognised during the period
following the conversion of the entire owned
Estate Agency network to franchises. The
carrying value of all franchise agreements was
£11.7m at 31 December 2023 (31 December
2022: £1.5m
2
). Total amortisation including
discontinued operations of £2.7m was charged
in the year, with £2.1m of new intangible
software investment.
Intangibles disposed during the period as part
of the restructuring across the Group came to
£1.3m. During the period there has been an
impairment to other intangible assets of £2.2m
(2022: £0.1m). The charge relates to software
assets within the Financial Services division
where there has been a strategic shift to focus
development on the Group’s PRIMIS Connect
platform and a declining number of third party
software users. Please refer to note 17 for
further information. The Group has reviewed
its Software as a Service (SaaS) arrangements
and current policy during 2023 prompted by
the significant restructuring during the year.
The Group has concluded that the policy to
capitalise SaaS customisation costs, which was
considered appropriate at the time, should be
revised, and has determined that restatement
of the prior year financial information is
appropriate. The cumulative impact of the
historic adjustment on retained earnings on
1 January 2022 was a reduction of £1.8m
2
and
was not cash adjusting.
Property, plant and equipment
Total capital expenditure in the year amounted
to £0.7m (2022: £2.0m), primarily reflecting
ongoing investment in Financial Services and
Surveying & Valuation, and a reduction in
Estate Agency Franchising with the operating
model transformation during the period.
Financial assets
Financial assets of £5.5m at 31 December
2023 (31 December 2022: £1.0m) comprise
contingent consideration assets and
investments in equity instruments in unlisted
companies.
During the period, the Group disposed
of the Group First, RSC and Embrace B2C
brokerage businesses to Pivotal Growth, with
contingent consideration receivable in the
first half of 2025 based upon 7x 2024 EBITDA
performance. As at 31 December 2023, this
asset is recorded at £4.8m (31 December
2022: £nil).
The fair value of units held in The Openwork
Partnership LLP was reassessed at
31 December 2023 as £0.4m (31 December
2022: £0.7m).
In January 2023, the Group agreed to sell
its shares in Yopa for £nil consideration,
which was in line with its carrying value as at
31 December 2022.
In March 2023, the Group agreed to sell
its shares in VEM for £0.2m consideration,
received on completion, which was in line with
its carrying value as at 31 December 2022.
Investment in joint venture
In April 2021 the Group established the
Pivotal Growth joint venture and holds a
47.8% interest at 31 December 2023. The
joint venture is accounted for using the equity
method and is held on the balance sheet at
£9.4m as at 31 December 2023 (31 December
2022: £5.1m), reflecting the Group’s equity
investment in Pivotal Growth during the
period (£4.7m), less our share of losses after
tax for the period.
Investment in sublease
Total current and non-current investment
in subleases were £3.3m as at 31 December
2023 (31 December 2022: £nil). This reflects
the situation whereby the Group is an
intermediate lessor, following the Estate
Agency conversion to a wholly franchised
model. As part of the franchising transition
the leases held by the Group in respect of the
previously owned network will be transferred
to the franchisees, and the investment in
sublease balance will reduce accordingly.
Loans to franchisees and appointed
representatives
Loans provided as at 31 December 2023 were
£2.1m (31 December 2022: £nil). As part
of the initial support provided to the new
franchisees of the previously owned Estate
Agency branches, working capital loan facility
agreements were put in place, of which £0.8m
had been drawn down as at 31 December
2023 (31 December 2022: £nil). Loans to
appointed representatives, which are granted
in certain circumstances to support brokers
during an onboarding period were £1.3m as at
31 December 2023 (31 December 2022: £nil,
having previously been included in trade and
other receivables).
Financial liabilities
Contingent consideration liabilities
Contingent consideration liabilities
at 31 December 2023 were £0.07m
(31 December 2022: £2.3m). Contingent
consideration liabilities relate solely to the
cost of acquiring the remaining shares in
Direct Life Quote Holdings Limited, which
was subsequently paid in February 2024.
The year-on-year reduction reflects the full
settlement of the contingent consideration
liability of £2.3m in RSC ahead of its disposal in
January 2023.
Prior year restatements
2
Franchising of previously owned branches
During the current period, the Group
franchised its entire owned estate agency
network (183 branches). In accounting for this
significant transaction, the Group
re-examined the accounting treatment applied
to a much smaller transaction in the first
half of 2019, when 39 owned estate agency
branches were franchised. The impact of
this was to restate the goodwill associated
with these owned branches, de-recognising
£5.2m of goodwill, recognising a franchise
intangible net of amortisation of £1.7m and an
associated deferred tax liability of £0.4m, with
a cumulative non-cash impact on retained
earnings at 1 January 2022 of £4.0m.
Adjustments to assets held for sale
At 31 December 2022 the Group reported
Marsh & Parsons as held for sale. Marsh &
Parsons was written down to its fair value less
cost to sell, which was calculated as the initial
consideration received less transaction costs
(£28.9m). The Group has re-examined the
Balance Sheet Review
22
Financial and Divisional Reviews
judgements made and has determined that
an adjustment to consideration for debt-
like items of £2.0m could have been reliably
estimated at 31 December 2022. Rather than
recognising this adjustment as an increase in
the loss on disposal in 2023, the prior year
financial information has been restated, in
accordance with IAS 8.
Customisation costs in computing
arrangements
During the year, the Group revisited its
accounting policy in relation to customisation
costs incurred in implementing Software as
a Service (SaaS) arrangements. The Group
has reviewed its SaaS arrangements and
current policy during 2023 prompted by the
significant restructuring during the year.
The Group has concluded that the policy to
capitalise SaaS customisation costs, which was
considered appropriate at the time, should be
revised, and has determined that restatement
of the prior year financial information is
appropriate. The cumulative impact of the
historic adjustment on retained earnings on
1 January 2022 was a reduction of £1.8m and
was not cash adjusting.
Cash offsetting
The Group has a bank offset arrangement that
was previously recorded as part of cash and
cash equivalents. The Group has reviewed its
current arrangements and has concluded that
while the Group has a legally enforceable right
to offset, the Group did not intent to settle
the year-end balance net. As a result, the
overdraft balances included within the offset
arrangement should be separately presented
in the Group Balance Sheet. Consequently, a
restatement has been made to increase cash
and cash equivalents and bank overdrafts
as at 31 December 2022 by £23.1m (2021:
£24.4m). The restatement has no impact on
net assets, income statement or statement of
cash flows.
Group Statement of Cash Flows
Operating cash flows before movements in
working capital were £14.9m (2022: £47.6m)
reflecting lower profits generated in 2023.
Movements in working capital were an
outflow of £11.0m (2022: £14.5m). The
outflow in 2023 reflected higher Surveying
billing in the last months of 2023 compared
to the prior year, and amounts paid on behalf
of franchisees ahead of rebilling. We expect
working capital outflows to be more modest
going forwards as the operating cycle of
working capital continues to settle following
the completion of significant restructuring
and transformation programmes during 2023.
The transformation has also resulted in a
less capital-intensive business, with capital
expenditure expected to be lower than in
previous years, reflecting the franchise model
in Estate Agency. The business is highly cash
generative and ordinarily achieves a cash flow
conversion rate
3
of 75% to 100%. The ratio
in 2023 was (2.2)% reflecting the materially
lower Underlying Operating Profit, with a ratio
of 77% achieved in 2022.
At 31 December 2023, Net Cash
3
was
£35.0m (31 December 2022: Net Cash
£40.1m). Movements in the year included
£4.7m further investment in Pivotal Growth
(2022: £4.0m), capital expenditure of £2.9m
(2022: £3.9m), exceptional costs in relation
to divisional restructure and transformation
programmes of £10.4m, payment of the
2022 final and 2023 interim dividends of
£11.7m (2022: £11.8m) and the settlement
of contingent consideration in RSC of £2.3m
ahead of its disposal to Pivotal Growth. With
the loss before tax of £40.6m (2022: £58.4m),
including discontinued operations, there was
no corporation tax paid.
Marsh & Parsons and First2Protect businesses
were sold for net consideration received
during the period of £26.1m and £9.3m
respectively, with contingent consideration for
the disposals of Group First, RSC and Embrace
receivable in 2025 based upon 7x 2024
EBITDA performance. Total cash balances in
the disposed businesses at the point of sale
were £8.3m.
Bank facilities/liquidity
In February 2023, we agreed an amendment
and restatement of our banking facility, with a
£60m committed revolving credit facility, and
a maturity date of May 2026, which replaced
the previous £90m facility due to mature in
May 2024. The terms of the facility, including
covenants, have remained materially the same
as the previous facility. The facility is provided
by the same syndicate members as before,
namely Barclays Bank plc, NatWest Bank plc
and Santander UK plc.
In arranging the banking facility, the Board
took the opportunity to review the Group’s
borrowing requirements, considering our
strong cash position and the Group’s aim
of reducing its reliance on the housing
market. We therefore reduced the size of the
committed facility and the costs associated
with it. To provide further flexibility to support
growth, the facility retains a £30m accordion,
to be requested by LSL at any time, subject to
bank approval.
Under the terms of the facility the Group
can operate bank accounts in surplus and
overdraft positions provided that the net
position under the arrangement is within the
facility limits. Overdraft balances included
within the bank offset arrangement are
presented separately from cash surplus
balances in the Group Balance Sheet, but
are considered to form part of cash and cash
equivalents in the Group statement of cash
flows as they are repayable on demand and
form an integral part of the Group’s cash
management.
The Financial Services Network business
has a regulatory capital requirement which
represents 2.5% of its regulated revenues.
The regulatory capital requirement was
£6.1m at 31 December 2023 (31 December
2022: £5.9m), with a surplus of £24.7m
(31 December 2022: £24.9m).
Treasury and risk management
LSL has an active debt management policy.
The Group does not hold or issue derivatives
or other financial instruments for trading
purposes. Further details on the Group’s
financial commitments, as well as the Group’s
treasury and risk management policies, are set
out in this Report.
International Accounting Standards (IAS)
The Financial Statements for the period
ended 31 December 2023 have been
prepared in accordance with international
accounting standards in conformity with the
requirements of the Companies Act 2006 and
UK-adopted IAS.
Notes:
1
Refer to note 17 to the Financial Statements.
2
Refer to note 36 to the Financial Statements.
3
Refer to note 35 to the Financial Statements.
23
Our Stakeholder Engagement Arrangements
Other Information
Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
This section of the Report describes how we engage with our stakeholders and how the Board and its Committees consider stakeholder views in
their decision making, in accordance with their duty under section 172 of the Companies Act 2006.
We regularly review our arrangements with our stakeholders to ensure we are operating in line with best practice. This includes identifying any
stakeholder impacts when presenting proposals to the Board for approval. In this section we have included examples of how our stakeholders have
been engaged with or taken into consideration during the Board’s decision making in 2023.
Each year the Board also reviews the Group’s stakeholder engagement arrangements. As part of this review, the Board considers GC100 guidance
on directors’ duties under section 172 of the Companies Act 2006.
Our key stakeholders
The Purpose, Strategy, Culture, Values and Business Model section of this Report (page 11) includes a description of our business model. The
following are the key stakeholders on which our business model depends:
Group Financial Services Surveying & Valuation Estate Agency Franchising
Shareholders
Colleagues Colleagues Colleagues Colleagues
Mortgage and protection
brokers and their customers
(consumers)
Lenders and consumers
Franchise partners and their
customers (consumers)
Suppliers Suppliers Suppliers Suppliers
UKLA, HMRC, FRC FCA RICS TPO and NTSEAT
While we regularly consider other stakeholders such as other regulators, professional bodies, landlords of our leased premises and our banking
facility providers, this section of the Report focuses on our arrangements with the key stakeholders listed below.
1. Shareholders.
2. Colleagues.
3. Customers.
4. Suppliers.
5. Regulators.
Additional information on our stakeholder engagement is included in the Environmental, Social and Governance Report (page 50), the Corporate
Governance Report (page 65) and the Living Responsibly Report 2024.
Stakeholder engagement arrangements and 2023 activities
Shareholders
Institutional shareholders
Members of the Board regularly meet institutional shareholders, for example the Executive Directors will meet with shareholders usually after the
release of our full year or interim results or when we announce a significant project. Further, during 2023, the Chair engaged with shareholders as
part of our annual strategic review process and shared the feedback with the Board at its annual strategy meeting.
Meetings with shareholders following the announcement of our results typically include a review of Group strategy, performance and governance
matters, and obtain investor feedback. In addition, we arrange presentations for shareholders and analysts, including after the publication of the full
year and interim results.
The UK Corporate Governance Code requires company chairs to regularly engage with major shareholders, to understand their views on
governance and performance against strategy. We therefore offer our major shareholders the opportunity to attend meetings with all the Non
Executive Directors, including the Chair and the Senior Independent Director, as they require. From time to time, the Chair of the Board or of a
Committee will meet shareholders to discuss specific issues, such as Remuneration Policy or Board appointments.
We also ensure that shareholder meetings are factored into Director inductions as appropriate, especially for anyone appointed into one of the
senior Board roles (Chair, SID, Group CEO or Group CFO).
24
Our Stakeholder Engagement Arrangements
Following Darrell Evans’ appointment as Interim Chair on 26 February 2024, we wrote to our top 20 shareholders, including institutional and
individual shareholders and offered meetings with him. Many shareholders took up this offer and these meetings took place in the days following
the appointment. Some shareholders also met with the Executive Directors and the Non Executive Directors. Feedback from these meetings was
shared with the Board.
Throughout each year, we ensure that all Directors understand the views of significant shareholders, by sharing feedback received from the
corporate advisers or other members of the Board and by distributing analysts’ reports to the Board.
If any shareholder, shareholder representative groups or proxy advisers wish to discuss any issues or concerns with any Non Executive Directors,
they can be contacted through the Company Secretary’s office (see page 203 for contact details).
Individual shareholders
In addition to the above engagement processes, typically covering major institutional and target investors, questions from individual shareholders
are dealt with directly by the Executive Directors. Our AGM also provides an opportunity to interact with the Board. At our 2024 AGM our Directors
will be available to meet shareholders as usual.
In addition, we engage with our shareholders by:
• Publishing information on our website (lslps.co.uk). This includes all regulatory news announcements as well as copies of presentations, financial
reports, shareholder notices and our corporate sustainability reporting, which is set out in our Living Responsibly Report 2024.
• Holding a general meeting when required.
• Responding to email enquiries.
• Feedback received via our corporate brokers, Deutsche Numis and Zeus.
This reflects our aim to give shareholders fair and appropriate access. For example, while the Chair and Executive Directors have met with
significant shareholders as part of their induction, smaller shareholders can email us or attend the AGM to meet with them and other members of
the Board. Contact details can be found in the Shareholder Information section of this Report.
Colleagues
Colleague surveys are a key tool for engaging with our people. In 2023, we engaged a new survey provider to help us understand changes to our
workforce, following the reduction in colleague numbers due to the Group’s strategic projects. The 2023 survey received a 77% response rate
(2022: 60%) with an engagement score of 73%. The use of a new colleague survey process in 2023 means we do not have a comparable 2022
engagement score. The survey results are shared in detail with the Executive Committee, Divisional management teams, our Colleague Forums and
the Board. See the Environmental, Social and Governance Report (page 50) for further details.
Our Colleague Engagement, Inclusion and Diversity, and Communities forums (together the Colleague Forums) all revised their memberships
following the Group simplification. The chairs of each Colleague Forum report regularly to the Group CEO and the Living Responsibly Steering
Committee (SteerCo) on their discussions and activities, with onward reporting to the Board and its Committees. We also have Divisional colleague
forums, which report into Divisional management teams.
During 2023 Darrell Evans was our designated Non Executive Director for workforce engagement. During the year he met with the Colleague
Engagement Forum and contributed to Board discussions on colleague views, ensuring the Board can effectively consider colleagues in its
decision making. Following the Board changes in February 2024, Gaby Appleton took over as our designated Non Executive Director for workforce
engagement and she will meet with the Colleague Engagement Forum in 2024.
The Inclusion and Diversity, and Communities forums meet regularly online and in person and at least twice a year, one of those will be held as a
joint conference attended by the Group CEO and Executive Committee Sponsors. During 2023, the Inclusion and Diversity Forum launched three
Group-wide colleague affinity groups, covering cultural, LGBT+ and gender matters. We call the groups LSL Voices and hope to launch additional
Voices during 2024. For further details on the Inclusion and Diversity, and Communities forums, see the Environmental, Social and Governance
Report (page 50) and the Living Responsibly Report 2024.
Throughout 2023 we experimented with Group-wide webinars to provide updates on Group news to colleagues, including Q&A sessions with the
Group CEO and Group CFO. These were well received by colleagues and we plan to schedule more for 2024. We also keep colleagues informed
through emails from the Group CEO and Divisional managing directors, on matters such as business performance, supplemented by Divisional
communications and events, including updates on intranet sites and message boards. We publish a regular Group email newsletter (LSL Focus),
which includes a round-up of news, interviews, celebrations and updates from across the Group. In 2023 we rebranded the publication and moved
from quarterly to bi-monthly editions. All colleagues are invited to contribute.
In November 2023 we held our first Group-wide Senior Management conference since the Group simplification. The day included updates from the
Group CEO, Group CFO and the Divisional managing directors. The Chairs of our Inclusion and Diversity, and Communities forums were also invited
to present and challenge the attendees to think about how they can support the Forums.
We operate all-employee share schemes, such as the BAYE/SIP and SAYE, to provide a way for colleagues to acquire shares in LSL. The BAYE/
SIP scheme allows colleagues to save up to £150 per month and buy shares in LSL in a tax efficient manner. For every five shares bought through
the plan, we also award one matching share. Colleagues who participate in this plan also benefit from dividends which are reinvested in the plan,
25
Other Information
Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
aligning their interests with shareholders. The SAYE scheme enables colleagues to save monthly, with the opportunity to buy LSL shares at the end
of the saving period. During 2023, following the Group simplification, we launched our first SAYE since 2021 and 20% of our colleagues took up the
offer to start saving (2021: 16%).
In 2020, we awarded £500 of free shares to all colleagues, to recognise their contributions during the pandemic. These shares vested in 2023.
The awards we made in 2021 will vest in 2024. These free share awards also align colleague interests with our shareholders and help us to retain
colleagues within the Group.
LSL has whistleblowing arrangements to enable colleagues to raise concerns. Each year Group HR hosts a ‘Speak Up’ week, during which colleagues
are encouraged to raise serious concerns in confidence. With support from Internal Audit, any issues notified are investigated and addressed.
Customers
All Group businesses seek regular feedback from customers, which informs our decision making and the improvement and development of our
products and services.
The Group’s key customers are:
a. Financial Services Network: mortgage and protection brokers (appointed representatives and FCA authorised firms) and their customers.
b. Surveying & Valuation Services: lenders for valuations and data services; and consumers for private surveys.
c. Estate Agency Franchising: franchisees.
Each Division has arrangements to manage customer relations, which include obtaining customer feedback through relationship management
meetings, formal questionnaires, mystery shopping exercises and focus groups. e.surv also used Trustpilot to gather feedback from its B2C
customers.
Each Division monitors KPIs and management information relating to its customer service, including complaints information and adherence to
agreed service levels for corporate clients. We also have client relationship management arrangements. Additionally, e.surv monitors its Trustpilot
scores in relation to B2C customers.
Delivering high-quality services is important for customer satisfaction and retention, especially in the Financial Services Network and Surveying &
Valuation businesses, as customers can switch to an alternative supplier. In the franchise business, franchise partners enter into longer-term
contracts, which include post-termination restrictions to protect the franchisor’s interest.
Our predominately business-to-business service model means that, by delivering good-quality services to our customers, we also support the
delivery of their services to their customers which in turn generates revenue for the Group.
Division LSL customer receives LSL customers deliver LSL financial impact
Financial Services Network
Compliance, technology, business
development and other business
support services
Mortgage, pure protection and
general insurance advice and sales
to their customers (consumers)
Receive payments directly from
brokers, plus procuration fees and
commission shares from product
providers
Surveying & Valuation
Valuation and data services which
support lenders’ origination and
management of mortgage assets
Mortgages to consumers and
businesses
Payment for valuation and data
services
Consumers receive surveying and
home report services
– Payment for services
Estate Agency Franchising
Technology, brand and other
business support services
Estate agency and associated
services to consumers
Receive a franchise fee which is a
percentage of franchisee revenue
As part of regular and special business presentations from each Division during the year, the Board receives reports on customer feedback,
including consumer surveys and feedback from our key lender clients.
Below are some examples of how we engaged with our customers in 2023 and our plans for 2024:
Financial Services Network
• Feedback from brokers on product provider performance, as part of an annual awards structure and via an annual broker survey exercise.
• Informal feedback obtained through small group engagement meetings and on specific topics.
• Interactions with brokers via meetings with the Regional Sales Directors and via attendance at regional and national events, including the annual
PRIMIS Live Conference, which in 2024 was held at Wembley Stadium and in 2023 was held at the conference centre in Telford.
• During 2024, PRIMIS is setting up a Broker Council to further enhance the broker engagement arrangements.
26
Our Stakeholder Engagement Arrangements
Surveying & Valuation
• Relationship Managers support each lender relationship, with regular meetings to discuss service performance and any other issues relating to
services, including matters detailed in our agreement with the lender.
• Trustpilot scores are monitored for B2C customers. In 2023, e.surv significantly increased both the response rates and overall volume of Trustpilot
reviews for completed surveys, with 92% of reviews rated as 5 stars and an overall average TrustScore of 4.8 (excellent).
Estate Agency Franchising
• In 2023 we established a Franchise Advisory Council, made up of franchisees selected to represent all franchisees. Its purpose is to discuss topics
raised by the franchise partners or LSL and provide a feedback mechanism between Estate Agency Franchising and its franchise partners.
• We interact and seek regular franchisee feedback as part of our events programme, including the Annual National Conference which in 2023 was
held at the Belfry Hotel. We also held regional in person and a series of online events during the year.
Suppliers
Across the Group, we manage our key suppliers through supplier management protocols, which include reviews of contractual performance and
other KPIs. As part of Management’s reporting, including special business presentations, the Board also receives information on key supplier
engagements. As part of our Living Responsibly ESG programme, we had planned to develop a Group-wide supplier code of conduct which is based
on e.surv’s model (described below). This project was placed on hold while Group restructuring projects were progressed. During 2024, we intend
to progress towards establishing a Group-wide supplier code, as part of a supplier management framework, and taking into account best practices
already established within the Divisions.
Within e.surv, suppliers are managed via procurement and supplier policies which include commitments to ensure that our purchasing and
contracting activities are aligned with our values. We also risk rate our suppliers by reference to their levels of access to our data and systems.
Suppliers are also continually monitored to identify changes in service to monitor risk and evaluate the supplier’s security posture.
e.surv also appoints relationship managers which meet regularly with each supplier to manage its performance.
Details relating to our payment practices are included in the Environmental, Social and Governance Report (page 54).
See also below our Directors’ Duties Statement for examples of how shareholders, colleagues and customers were considered in the Board’s
decision making during 2023.
The Environmental, Social and Governance Report (page 50) also describes how our businesses communicate with customers and suppliers.
Directors’ Duties Statement (s172 Companies Act 2006 Statement and Provision 5 of the Code)
Section 172 of the Companies Act 2006 sets out certain matters company directors must consider when performing their duty to promote the
success of the company. These matters include the interests of stakeholders and the impact of decisions in the long term.
To support the Board, Management is required to identify the stakeholder groups impacted by any proposals submitted for approval and explain
those potential impacts. During 2023, as part of the review of the Remuneration Committee’s arrangements, we put the same protocol in place.
The following examples demonstrate how the Directors have considered stakeholders in their principal decisions during the year.
27
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Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
s172 examples
During the year we have significantly restructured both our Financial Services and our Estate Agency Divisions. Both are now focused on business-
to-business services and as a result our Financial Services and Estate Agency Franchising Divisions are less exposed to the housing market cycle. Set
out in the table below are three examples of how the Directors discharged their duties under s172 of the Companies Act 2006.
s172 Duty to promote the success
of the company for the benefit of its
members as a whole, and in doing so
have regard (amongst other matters)
to:
Example 1 – Disposal of D2C broker
businesses
Example 2 – Franchise of the Estate
Agency Networks
Example 3 – Acquisition of
TenetLime
We disposed of our D2C broker
businesses: RSC, Group First, Embrace
Financial Services and First2Protect.
We franchised our entire owned
estate agency network of 183
branches. This included entering into
long-term franchise agreements.
Following completion, we became
one of the largest providers of estate
agency franchise services in the UK.
We exchanged contracts to acquire
TenetLime, to add to the PRIMIS
Network. Completion was subject
to FCA approval, which we received
in November 2023, resulting in
the transaction completing in
February 2024.
a. Likely consequence of any
decision in the long term.
The four D2C broker businesses have
been sold to Pivotal Growth, which is
our joint venture with Pollen Street
Capital. Pivotal Growth’s strategy is to
buy and build a D2C broker business,
and we believe that it is better placed
to grow these businesses for the
benefit of shareholders.
The owned branches were franchised
to existing franchisees and
experienced former members of the
Estate Agency management team.
The enlarged franchise network of
over 300 territories is operated by 62
franchisees.
Franchising the network resulted in
significant cost reductions and the
Estate Agency Franchising Division is
less capital intensive.
The addition of TenetLime significantly
expanded the PRIMIS Network, adding
over 250 mortgage and protection
advisers and 153 firms.
The acquisition enables us to leverage
our existing network infrastructure,
to deliver synergies and enhance the
Group’s margin.
b. The interests of our colleagues. Colleagues employed in these
businesses are no longer part of the
Group and, where they received
Group benefits (such as options under
employee share schemes), we have
put in place arrangements to protect
their benefits.
Colleagues employed in these
businesses are no longer part of the
Group and, where they received
Group benefits (such as options under
employee share schemes), we have
put in place arrangements to protect
their benefits.
A small number of colleagues have
joined PRIMIS as a result of the
acquisition and they now benefit from
our employee arrangements. We also
ensured that we considered their
existing terms of employment as part
of their transfer into the Group.
c. The need to foster the company’s
business relationships with
customers.
Following the disposal of the D2C
broker businesses their customers
continue to be served by these
businesses under their new
ownership.
In developing our franchise business
our franchisees are now our
customers and we are fostering our
relationships with the franchisees.
Our previous customers (people
buying/selling or renting homes) are
now customers of our franchisees
and continue to benefit from Group
services as they form part of the
services that our franchisees provide
to their customers.
In developing our Financial Services
growth strategy, we have sought to
ensure that our now enlarged network
members and their customers benefit
from the services we provide.
d. The need to foster the company’s
business relationships with
suppliers.
We also sought to ensure there is
no adverse impact on our suppliers
arising from any disposals and, where
possible, we have sought to engage
with our suppliers where we have
identified an impact.
We also sought to ensure there is
no adverse impact on our suppliers
arising from the franchising of the
network and have engaged with our
suppliers, many of whom continue to
supply services to the network.
As part of the migration into the
PRIMIS Network we have sought a
smooth transition into the network
and this involved engaging with our
suppliers to ensure this is achieved.
e. The impact of the company’s
operations on the community and
environment.
As a result of the disposals, we no
longer provide services from locations
where the disposed businesses
operate. However, the impact on
local communities is mitigated as the
businesses are expected to continue
to operate from those locations.
As a result of the franchising, we no
longer directly provide services from
the locations where the businesses
operate. However, we are still
supporting those communities by
appointing franchisees to operate
their business in the territory. Further,
the impact on local communities was
mitigated as the franchised businesses
continue to operate from those
locations.
The acquisition has had no impact
on the locations where PRIMIS
operations are based.
28
Our Stakeholder Engagement Arrangements
f. The desirability of the company
maintaining a high standard of
business conduct.
The disposed D2C broker businesses
remain customers of the PRIMIS
Network, which provides services that
support the business continuing with
its high standards of conduct.
The territories have been franchised
to existing franchisees and to previous
colleagues who had experience
and a track record of operating
estate agency businesses while
demonstrating high standards of
business conduct.
Further, as members of the LSL
franchise networks, they will continue
to operate in accordance with our
franchise standards.
The TenetLime firms will be subject to
PRIMIS’s high standards of compliance
and business conduct standards.
g. The need to act fairly between
members of the company.
The disposals deliver value to
shareholders, especially as it
reduces our exposure to market
cycles and focuses our investment
on high-growth areas, notably our
Financial Services Networks, while we
benefit from further growth by our
shareholding in Pivotal Growth.
The franchising of the networks
delivers value to all shareholders,
especially as it reduces our cost base
and our exposure to housing market
cycles. It also focuses our investment
on the delivery of business-to-
business services.
The acquisition delivers value to all
shareholders as part of our growth
strategy.
The increase in membership will help
us to further invest in our service
offering to member firms, as well as
delivering scale economies to support
further growth.
The acquisition also underpins our
leading position in the mortgage and
protection network market.
29
Principal Risks and Uncertainties
Other Information
Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
Our risk framework
Effective risk management is critical to delivering our purpose. We adopt a prudent approach to risk management, taking only those risks which
support our strategy and managing them rigorously through effective governance.
Our risk management processes have been in place throughout 2023 and have continued to operate through to the date of this Report. Our risk
management processes ensure we appropriately manage the risks that arise from our activities by:
a. A rigorous assessment of our principal risks and uncertainties, including those that would threaten our business model or future performance, or
increase the potential for customer harm.
b. Robust decision making, ensuring we take the right risks in a considered way that supports the strategy and maintains our reputation for high
standards of business conduct.
c. Ensuring the risks we take are understood, controlled and managed appropriately.
We have adopted a ‘three lines of defence’ approach to risk management:
a. First line – line management are accountable for day-to-day operations and have responsibility for the management and ownership of risks and
controls within their business units.
b. Second line – risk and compliance teams are responsible for the oversight and challenge of the first line in its day-to-day management, control,
monitoring, and reporting of risks. Our risk and compliance teams are independent of the management personnel responsible for originating risk
exposures.
c. Third line – Internal Audit provides independent assurance to the Board, Audit & Risk Committee and senior management over the effectiveness
of our risk management control and governance processes.
Each of our Divisions has risk management arrangements, systems and controls which feed into the Group’s overall arrangements. Divisional Chief
Risk Officers (CROs), Heads of Risk, and governance forums oversee Divisional risk management frameworks, which involve the use of risk metrics,
policies, risk and control assessments, risk treatment plans and tracking of emerging risks.
The Group’s Audit & Risk Committee oversees Divisional risk management arrangements, including their top and emerging risks. The Committee
also regularly reviews the Group’s principal risks and uncertainties, including an annual review to confirm the effectiveness of risk management and
internal control systems, which involves considering emerging risks and the outputs of our stress testing routines.
For example, consideration has been given to recent FCA regulatory themes including vulnerable customers, diversity and inclusion and later life
lending in the Financial Services Division, as well as the embedding of the FCA’s new Appointed Representative Regime and the new Consumer
Duty requirements. In the other Divisions, the Management have monitored the progression of the Renters Reform Bill through Parliament and
monitored the management of capacity measures within e.surv following improvements in instruction levels.
The Group scrutinises and challenges Divisional risk management activities through a regular Internal Audit cycle and through risk-based governance
forums, attended by senior Group and Divisional representatives.
2023 risk framework and control environment developments
We continued to invest in and enhance our risk management arrangements across the Group. For example, outlined below are key risk management
developments completed during 2023 within our Financial Services Network:
a. To support new FCA consumer duty requirements, we introduced enhanced processes to assess and oversee the delivery of good outcomes.
b. We made changes to the Division’s people resourcing and governance arrangements, including appointing a new experienced managing director
and appointing an independent non executive chair together with introducing three further Divisional non executive director roles including the
movement of the previous managing director into a new non executive role with responsibilities for a Members Council.
c. We invested further in the Division’s risk and compliance capabilities, including enhancing the Enterprise Risk Management framework.
2024 risk framework and control environment development plan
Our risk plans for 2024 include:
a. An independent review of Group risk management framework initiated in the first quarter of 2024.
b. Further strengthening the Financial Services Network’s governance structure, with the rollout completed in January 2024 of new PRIMIS
combined board committees chaired by independent non executive directors (Audit & Compliance, and Risk & Customer Outcomes).
c. Enhancing Group governance routines which oversee the effectiveness of activities to manage information security, data protection and business
resilience risks.
d. Continued progression of our Living Responsibly ESG programmes, which includes managing ESG-related risks, promoting diversity and
inclusivity, and encouraging community and environmental initiatives.
e. Maintaining our horizon-scanning routines, reassessing our risk management resourcing and continuing to evaluate the effectiveness of linkages
between Group and Divisional risk frameworks.
30
Principal Risks and Uncertainties
Our risk profile
The Board has assessed our principal risks, including emergent areas. The Board performs this exercise twice yearly as part of its agenda,
incorporating insights obtained from the Audit & Risk Committee and routines involving the Executive Committee, Divisional CROs and Internal
Audit.
Our principal risks and uncertainties are outlined below. These are the most significant risks that may adversely affect our business strategy,
financial position or future performance. There have been no changes to our individual principal risks and uncertainties categories. We consider our
overall risk exposure to be stable. Increased risks have arisen from influences such as poor economic conditions, heightened IT security threats and
new regulatory requirements, whilst the execution of strategy initiatives and change programmes have resulted in less exposure to market cycles
in our Financial Services and Estate Agency Franchising Divisions, a lower cost base and focus on business-to-business services delivering good
customer outcomes.
Nature of principal risk and uncertainty Mitigating actions
Gross trend
(pre-mitigating actions)
EXTERNAL:
1. UK housing market
The cyclicality of the UK housing market exposes the
Group to volatility in housing transaction volumes.
The UK economic environment remains challenging
with fewer housing transactions, lower house-
price inflation, cost of living pressures and reduced
mortgage lending. Reduced product transfer volumes
also impact adversely on valuation volumes. The
effects of ongoing geopolitical tensions and future
elections further increase the levels of uncertainty in
the markets.
• Maintained strong capital and liquidity levels.
• Sale and franchising of estate agency services has resulted in a lower
fixed cost base, less exposure to housing market volatility and a revised
platform from which to grow a more resilient B2B client portfolio.
• Divestment of selected Financial Services units has lowered our cost
and capital base.
• Proactive management of the Surveying & Valuation Division’s cost
base, while maintaining capacity to meet lender long-term demand
with emphasis on expanding D2C channels and exploring new service
offerings.
• Ongoing focus on business efficiency and cost management.
Stable
2. Market disruption
We may be exposed to competitive pressures from
market participants, including new entrants, disruptor
business models (including direct sales mediums),
artificial intelligence platforms and disintermediation
threats.
• Ongoing monitoring of market disruptor activity, with consideration of
response plans for related threats and opportunities.
• Established governance arrangements to support new technology,
service and product initiatives.
Stable
INTERNAL:
3. Execution of strategy
We might not effectively execute our strategic
initiatives and associated capital allocations, and
therefore fail to deliver the required levels of Group
growth.
Successful steps taken along these pathways in 2023
have restructured the Group, reduced our cost base
and simplified our activities. This has reduced levels of
gross risk for this category since last year.
• Regular assessment of strategy driven by Executive Committee
members, with oversight from the Group CEO, Group CFO and the
Board.
• Simplification of the Group makes the associated risks easier to
manage.
• Continuing to build on the Group’s new business model, post-
simplification.
• Financial Services Network has grown through acquisition (TenetLime).
Decreasing
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Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
4. Professional services
We may receive claims arising from systemic lapses in
the delivery of professional services across the Group.
Relevant risk factors include lending practices,
mortgage product types/mix, economic conditions
and the adequacy and availability of insurance to cover
potential claims.
• Governance routines ensure we monitor relevant claims trends and put
in place appropriate insurance arrangements.
• Limited exposure to products with higher risk features and
complexities. For example, our Financial Services Network businesses
do not supervise investment advice and the mortgage valuation
activities in the Surveying & Valuation Division are linked to
mainstream lending, rather than sub-prime.
• Following the franchising of our Estate Agency services, customer
claims exposure now principally lies with franchisees.
Stable
5. Client contracts
Significant falls in business volume could arise from the
loss or withdrawal of key B2B clients, brokers and/or
franchisees.
We must maintain service delivery levels and
relationships with key profitable B2B clients, brokers
and/or franchisees.
• Ongoing monitoring and renewal of key contracts, to reduce the risk of
volume shortfalls.
• Product and market diversification initiatives reduce any over-
dependencies.
• Benchmarking of product and service propositions, to ensure we are
delivering value versus market-leading standards.
• Ongoing rigorous oversight and delivery of service levels via dedicated
relationship managers.
• Ongoing monitoring of financial health of PRIMIS Network member
firms and Estate Agency franchisees.
Stable
6. Business infrastructure (including technology)
We may fail to maintain robust systems and
technology to promote our competitiveness and client
servicing.
The environment involves multiple change
management initiatives, integration of IT platforms and
maintenance of resilient ‘business as usual’ IT systems
for employees, appointed representatives, franchisees
and clients. Our customers rely upon our systems and
services being available when they need them.
• Prioritised strategic investment in our systems and technology
capability to promote efficiency and meet customers’ current and
future needs.
• Continue to strengthen our internal control environment to improve
resilience and proactively monitor service provision.
Stable
7. Information security (including data protection and cyber threats)
The threat of cyber-attacks continues to increase with
ongoing geopolitical tensions, advancement of threat
vectors (including artificial intelligence) and supplier
dependencies, all posing a threat to the Group, our
colleagues and our customers.
A cyber-attack could have a range of negative
consequences, including making our systems
unavailable, the loss of critical data or leaks of
confidential information about our business,
colleagues or customers. This in turn could lead to
loss of business, damage to our reputation and/or
regulatory fines.
• Continuous monitoring of the cyber threat level and investment in our
cyber defences, to ensure we are able to respond appropriately.
• The Data and Information Security Committee (DISC), along with
dedicated Divisional information security specialists and Data
Protection Officers, oversee adherence to Group defined information
security minimum standards.
• System security is supported by penetration testing, intrusion
scanning, secure back-up routines, encryption of key data and a robust
access control framework.
• Ongoing investment in training and education ensures our colleagues
remain vigilant in everything they do.
Increasing
32
Principal Risks and Uncertainties
8. Regulatory compliance
Our regulatory landscape includes FCA rules and
consumer protection laws. We embed a steady flow
of recent and emerging requirements, including
environmental standards, consumer duty, the
appointed representative regime and tenancy reforms.
Regulators have also focused recently on specific
product areas, such as general insurance and later-life
lending.
Changes to regulations can increase our compliance
costs. Failure to comply with regulations can lead to
fines, damage to our reputation and loss of business.
• Executive and non executive risk management committees in place
supported by compliance and risk teams.
• Structured initiatives in place to identify and deliver relevant
regulatory changes promptly and proportionately.
• Engagement with all our regulators, to identify and appropriately
respond to regulatory requirements.
• Successful delivery of recent Consumer Duty and AR Regime
requirements.
• Reduced regulatory risk exposure in estate agency activities through
implementation of franchise model, with the franchisee retaining the
core compliance obligations.
Stable
9. Environmental, social and governance (ESG)
Failure to identify and effectively manage sustainability
risks critical to our business could affect our
productivity, reputation, colleague engagement and
retention, and/or market value.
Climate-related risks are an emerging area. Refer to
the TCFD and CFD reporting on pages 34 for further
details.
• Living Responsibly ESG programme promotes our business as a great
place to work, encouraging diversity and inclusion, ensuring effective
arrangements for colleague dialogue and feedback, minimising our
impact on the environment and promoting excellent governance.
• The Group CEO sponsors our Living Responsibly ESG programme and
Chairs the Steering Committee, with Executive support.
• Standalone sustainability report (Living Responsibly) published
annually to ensure transparency of progress against targets and to
promote engagement with relevant stakeholders.
• Group Head of ESG appointed in 2023, following an internal promotion,
provides support to Group and Divisional arrangements.
• Engagement with colleagues via the Group’s colleague forums,
Divisional working groups, colleague surveys and training initiatives.
Stable
10. Colleague resources, talent and expertise
Failure to attract, develop and retain talented
colleagues may affect our ability to deliver our
strategic priorities.
The risks are influenced by the size of our colleague
population and external economic factors such as
labour supply shortages.
• Group governance routines, policies and initiatives, overseen by the
Remuneration and Nominations Committees, to recruit and retain
talent in key strategic roles.
• Simplification of the Group’s activities have reduced the scale and
associated risk of the employee cost base.
• Focused on strengthening senior governance and risk-related roles
within our Financial Services Network, including the appointment of a
new managing director and independent non executive appointments
supporting Divisional board and new committee structures.
• Colleague surveys, our Colleague Forums and welfare initiatives enable
us to identify and address colleague pressures and to promote an open
culture.
Decreasing
Our viability
The Directors have assessed the Group’s prospects and financial viability, taking into account its current and expected financial position, existing
banking facilities, actions available to Management and the potential impact of its principal risks and uncertainties.
Assessment of prospects
This section of the Report describes how the Directors have considered and reported on the Group’s prospects. Our purpose, business model and
strategy are central to understanding our prospects and are detailed earlier in this Report (page 11).
The Board assesses the Group’s prospects throughout the year and particularly during the strategic, three-year planning and budget processes. This
includes an annual review of our plans, which is led by the Group CEO and Group CFO, with input from Executive Committee members who run our
Divisions and Group functions.
The Directors participate in the annual planning processes. Part of the Board’s role is to consider whether our plans take appropriate account of the
changing environment, including macroeconomic, political and geopolitical, regulatory, technological and climate-related matters.
33
Other Information
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Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
This process results in the Board adopting strategic objectives and detailed financial forecasts over a three-year period, which we refer to as the
three-year plan. The Board reviewed the latest updates to the three-year plan in November 2023 and, in assessing the Group’s viability, considered
our current position and our prospects of operating over the three-year period ending 31 December 2026.
Assessment of viability
The strategic plan reflects the Directors’ best estimate of the Group’s prospects in accordance with provision 31 of the Code. We have assessed
LSL’s viability over a longer period than the 12 months required by the going concern provision of the Code.
For the purposes of assessing the Group’s viability, we determined that a three-year period ending on 31 December 2026 was appropriate, as it was
consistent with the Board’s strategic planning cycle. Our assessment took into account the Group’s current position and prospects, the Board’s risk
management arrangements and the Group’s principal risks and uncertainties.
To make this assessment, we considered several severe but plausible scenarios that stress test our business performance. The scenarios modelled
are based on input from a functional group of senior managers, including representatives from the Divisional finance teams. The Group’s base
forecast and scenarios assume all three Divisions continue to operate.
The viability scenario modelled reflected the following risks:
• A severe downturn in our markets, in which housing market transactions decrease by an average of 30% versus 2023, 16% below the level seen
during the last recession in 2008, caused by economic conditions (such as high inflation and interest rates and reduced availability of debt
funding), or political or other uncertainties, or a combination of these issues.
• The loss of a major contract (top five lender, which has not occurred for over five years) and a PI risk event in the Surveying & Valuation Division,
reflecting a significant increase in valuation claims.
• A material one-off regulatory fine over £1m following a data breach, assuming any insurance recovery would not occur within the planning
window.
We modelled detailed assumptions by month across the three-year period. The models included both the individual and the aggregate impact of
the risks above, and measured the downside impact on revenue and the actions we would take to retain cash reserves and maintain our operations,
such as suspending capital expenditure. We have also considered climate-related impacts but our current assessment is that this would not be
material enough to impact our viability during the planning window.
We also made assumptions about the stability and potential growth of the Group’s recurring income and counter-cyclical businesses, notably
mortgage and insurance renewals, lettings (via our Estate Agency franchisees) and asset management, which account for c30% of Group Revenue,
and the extent to which we could quickly ramp up some activities, such as remote valuations, in extreme market conditions. The modelling and
assumptions took account of our broad range of services across the UK, which gives us some protection from the impact of stress scenarios.
The stress testing indicated that the Group would be able to withstand the financial and operational impact of each scenario and therefore continue
to operate and meet its liabilities, as they fall due, over the three-year period ending 31 December 2026. Under all the modelled scenarios, the
Group had sufficient liquidity throughout the going concern period and to the end of the planning period in December 2026. Funding for the
Group has been further strengthened with the restatement and amendment of the Group’s banking facility of £60m, which was completed in
February 2023 for a period up to May 2026, replacing the previous £90m facility. This includes the assumption that a successful renewal of the
£60m facility is achieved before the expiry of the current facility.
We also modelled a reverse stress scenario, to assess the level to which market conditions would have to deteriorate before we would breach our
banking covenant ratio of 2.75x Net Debt: adjusted EBITDA (with a ratio of 3.00x allowable for two consecutive test periods within the terms of
the current banking facility). Excluding any action we would take to retain cash reserves and maintain our operations, the modelling indicated that
UK housing market transaction activity would have to fall to a level 16% below the financial crisis of 2008 in the first year of assessment with no
material recovery, which is equivalent to a 30% fall in comparison to 2023. We consider the likelihood of this to be remote.
Directors’ viability statement
Based on their assessment of the Group’s prospects and viability, the Directors confirm that they have a reasonable expectation that the Group will
continue to operate and meet its liabilities, as they fall due, for the next three years, and that the likelihood of extreme scenarios which would lead
to a breach of banking covenants is remote.
The Directors also confirm that in making this statement they carried out an assessment of the principal and emerging risks and uncertainties facing
the Group, including those that would threaten its business model, future performance, solvency or liquidity.
The Board also considered it appropriate to prepare the Financial Statements on the going concern basis, as explained in the Basis of Accounting
paragraph in the Principal Accounting Policies section, within the Financial Statements of this Report.
During 2023, the Audit & Risk Committee oversaw the process by which the Directors reviewed and discussed Management’s assessment in
proposing this viability statement.
34
Non-Financial and Sustainability Information Statement
including TCFD and CFD reporting
Non-Financial and Sustainability Information Statement
The table below includes information required by section 414CB of the Companies Act 2006:
Reporting requirement Cross reference/location of reporting Page
Climate-related financial disclosures TCFD and CFD reporting below
• Environmental matters (including the impact of
our businesses on the environment)
• Our colleagues
• Social matters
• Respect of human rights
• Anti-bribery and corruption matters
Corporate Governance Report
Environmental, Social and Governance Report
Stakeholder Engagement Report
Living Responsibly Report 2024
65
50
23
See separate
report
Business Model Purpose, Strategy, Culture, Values and Business Model 11
Non-financial policies The Environmental, Social and Governance (ESG) Report includes overviews of our
policies relating to:
• Human rights and modern slavery
• Anti-corruption and bribery
• Whistleblowing and speak-up arrangements
• Health and safety
• Colleague employment policies
50
Principal risks relating to the non-financial matters and
how these are managed
Principal Risks and Uncertainties 29
Non-financial KPIs Environmental, Social and Governance Report Report
Corporate Governance Report
Living Responsibly Report 2024
50
65
See separate
report
Climate-related financial disclosures
The disclosures contained in this section of the Report have been prepared in accordance with the following reporting requirements:
1. The Companies Act (section 414CB(2A)).
2. Listing Rules (chapter 9).
3. Task Force on Climate-related Financial Disclosures (TCFD).
4. Companies (Climate-related Financial Disclosure) Regulations 2022 (CFD).
5. Streamlined Energy and Carbon Reporting (SECR) (specifically the requirements to disclose greenhouse gas emissions, energy consumption,
energy efficiency action are set out in Schedule 7 of SI2008/410).
TCFD and CFD
This section of the Report includes our disclosures against the TCFD recommendations, as well as the requirements of the CFD and the Listing Rules.
35
Other Information
Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
In the table below, we provide disclosures which are consistent with all 11 TCFD recommendations and we confirm our compliance with the CFD
disclosure requirements. The table also explains the steps we are taking during 2024 to improve our climate-related arrangements. During 2024,
the EWG will lead our climate-related risk and opportunity assessment approaches across our Group. Whilst we are compliant with all of the TCFD
disclosure requirements, we intend to focus and improve our reporting on strategy (2a) and risk management (3a).
TCFD required disclosure Reporting and compliance
Further information/cross-
references to sections within
this Report
1. Governance
Disclose the organisation’s governance around climate-related risks and opportunities
a. Describe the Board’s oversight
of climate-related risks and
opportunities
Board oversight:
• Our governance arrangements for assessing and managing climate-related risks
and opportunities are described in the Climate-related Governance section
below.
• Reporting to the Board and to the Audit & Risk Committee includes reporting
on climate-related risks and opportunities. In 2023, the Board reporting was
submitted via the Living Responsibly ESG reporting, and the Audit & Risk
Committee also reviewed our TCFD and CFD reporting (including climate-related
risks) as part of the review of this Report. ESG risks are also included in our
Principal Risks and Uncertainties.
• In 2023 the Board received an update on the changing regulation and what this
meant for them within the Living Responsibly ESG update.
• Our arrangements reflect the Group’s operating model and describe how the
Board and the Audit & Risk Committee provide oversight of our climate-related
arrangements.
Corporate Governance Report
(page 65)
Principal Risks and Uncertainties
(page 29)
About LSL and Business Model
(pages 03 and 11)
Directors’ Report (viability
statement) (page 33)
b. Describe Management’s role in
assessing and managing climate-
related risks and opportunities
Management’s role:
• Our Living Responsibly ESG programme is sponsored by the Group CEO and it
includes our environmental programme.
• Further details on Management’s role in our arrangements is outlined in the
Climate-related Risk Assessment Methodology section below.
• Our arrangements in 2023 include establishing a climate-related working group
(CRWG), which has contributed to the assessment of climate-related risks and
opportunities.
• Management has also considered climate-related impacts and concluded that
the impact is not material enough to impact our viability during the planning
window – for further information see the viability statement (included in
Principal Risks and Uncertainties).
Reporting:
• We have during 2023 developed our climate-related reporting to ensure
compliance with both TCFD and CFD. We are where appropriate engaging with
professional advisers to support our reporting.
• Our climate-related reporting is led by the EWG with support from our Head of
ESG who is enrolled on a Business Sustainability Specialist Masters programme.
By upskilling our colleagues, we are strengthening our internal arrangements.
36
Non-Financial and Sustainability Information Statement
including TCFD and CFD reporting
TCFD required disclosure Reporting and compliance
Further information/cross-
references to sections within
this Report
2024 priorities Development of Board and Audit & Risk Committee oversight arrangements:
• Review the processes and frequency for informing the Board and Audit & Risk
Committee about climate-related matters, including monitoring the meeting of
any targets, which will be recommended by the EWG.
• Review how the Board and Audit & Risk Committee consider climate-related
matters in its decision making including in relation to strategy and risk
management.
Development of management arrangements:
• Review, develop and support the roles of the EWG and CRWG within the
environmental strand of our Living Responsibly ESG programme, including how
the Group assess and manage climate-related risks within our Divisions.
• Ensure risk management frameworks fully integrate climate-related risks.
• Ensure business planning considers climate-related risks and opportunities.
Training and education:
• The EWG will monitor the delivery of colleague education and training as part of
our climate transition plans.
• We will develop this education and training based on the work e.surv have
undertaken in 2023, because their environmental programme is further
developed than the rest of the Group.
2. Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning where
such information is material
a. Describe the climate-related
risks and opportunities the
organisation has identified over
the short, medium, and long term
• Our key climate-related risks and opportunities are described in the climate-
related risks and opportunities section below.
• The time periods we applied to our assessment are:
– short term (0-3 years);
– medium term (4-9 years); and
– long term (10+ years).
• These time periods were chosen because they reflect best practice and they fit
in with our normal planning cycles:
– short term (0-3 years) aligns with our three-year planning cycle; and
– medium term (4-9 years) was selected to include 2030 due to the significance
of this date to UK transition plans and our lender clients. It also includes the
date for phasing out new petrol and diesel cars.
37
Other Information
Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
TCFD required disclosure Reporting and compliance
Further information/cross-
references to sections within
this Report
b. Describe the impact of climate-
related risks and opportunities
on the organisation’s businesses,
strategy, and financial planning
• Following the restructuring completed during 2023, our Divisions are asset light,
resulting in limited exposure to physical climate-related risks.
• Our businesses provide B2B services which generate relatively low levels of
Scope 1 and 2 emissions. We report our Scope 3 emissions for the first time in
this Report.
• We have, in 2023, focused on progressing our environmental programme and
our climate-related reporting.
c. Describe the resilience of the
organisation’s strategy, taking
into consideration different
climate-related scenarios,
including a 2°C or lower scenario
• Our strategic objectives include focusing on our Living Responsibly ESG
programme.
• We have performed scenario testing on the impact of the climate-related
risks and opportunities. Impacts that we have identified, are described in the
resilience testing section below.
• Our assessment is that we have appropriate mitigations in place to ensure that
the climate-related risks and opportunities will not have a material impact
(including financial) on our business model or strategy. We will keep this under
review if our assessment of the risks and opportunities changes.
Purpose, Strategy, Culture, Values
and Business Model (strategic
objectives) (page 11)
Scope 3 emissions reporting
(page 47)
2024 priorities • Complete work to further understand and set targets for reducing Scope
3 emissions, including our net zero target, taking into account the Group
restructuring completed during 2023.
• We will also update our climate transition plan to reflect the Group
restructuring.
• Continue to develop our response to climate-related issues and our modelling
to assess different climate-related scenarios.
3. Risk management
Disclose how the organisation identifies, assesses, and manages climate-related risks.
a. Describe the organisation’s
processes for identifying and
assessing climate-related risks
• Our governance and risk management arrangements include Divisional risk
frameworks. Each Division has a Chief Risk Officer or Head of Risk (referred to in
this Report as the CRO), who is part of each Division’s management team and is
the link between Group and the Divisional management teams when identifying
climate-related risks.
• During the year, the CROs participated in the CRWG to consider and review the
impact of climate scenarios on their Division. This resulted in the completion of
the risk assessment. Any risks emerging as material (using existing Divisional
risk frameworks) were included in each Division’s risk registers.
• The CROs are each responsible for ensuring climate-related risks are integrated
into Divisional risk management arrangements.
• Further information on materiality and the LSL response is included in the
climate-related risk assessment section below.
Audit & Risk Committee Report
(page 85)
Principal Risks and Uncertainties
(page 29)
b. Describe the organisation’s
processes for managing climate-
related risks
c. Describe how processes for
identifying, assessing, and
managing climate-related
risks are integrated into the
organisation’s overall risk
management
2024 priorities • The EWG and the CRWG will work to further develop our arrangements for
assessing and managing climate-related risk and opportunities, building on the
work we completed in 2023.
• Continue to review climate-related risks and opportunities identified in 2023,
taking into account the Group’s restructuring, and update them if necessary.
• Ensure climate-related risks are included in the continued development of our
Group risk framework and arrangements.
38
Non-Financial and Sustainability Information Statement
including TCFD and CFD reporting
TCFD required disclosure Reporting and compliance
Further information/cross-
references to sections within
this Report
4. Metrics and targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material
a. Disclose the metrics used by the
organisation to assess climate-
related risks and opportunities
in line with its strategy and risk
management process
• Our reporting on environmental metrics is set out in the climate-related metrics
and targets section below, which includes our Scope 1, 2 and 3 GHG emissions
reporting.
Living Responsibly Report 2024
b. Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse
gas (GHG) emissions, and the
related risks
• Our reporting on environmental metrics is set out in the climate-related metrics
and targets section below, which includes our Scope 1, 2 and 3 GHG emissions
reporting.
• Data collection and analysis has been a significant focus for us during 2023. Our
work has been supported by Energise (net zero consultancy and sustainability
expert).
• We report using a financial control methodology, in accordance with the GHG
protocol guidance and emissions factors.
• Pivotal Growth is not included in the 2023 figures, due to the lack of available
data, but will be included in future.
c. Describe the targets used by the
organisation to manage climate-
related risks and opportunities
and performance against targets
• We have reported against the targets contained within our climate transition
plan (published in 2022).
• Additional environmental metrics, including the Group’s baseline emissions data
and Divisional emission breakdown data, are included in the Living Responsibly
Report 2024.
• We have not currently set any additional targets, metrics or KPIs relating to
climate-related risks and opportunities.
Living Responsibly Report 2024
2024 priorities • Review and update the period for benchmarking emissions data, following the
restructuring completed during 2023.
• As a result of the restructuring, we are not currently using any other data to
manage our climate-related risks and opportunities.
• Update our climate transition plan to reflect the Group’s restructure and full
carbon footprint, including resetting the benchmark period, taking into account
the new emissions data.
• EWG will continue its work to enhance our understanding of our environmental
impacts and to identify and agree additional KPIs, and metrics and targets, if
where appropriate/necessary.
• Following further assessment and understanding of our Scope 3 emissions
during 2024 the EWG will prioritise updating our climate transition plan.
39
Other Information
Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
Climate-related risk and opportunities governance:
Governance structure:
Within our governance structure, climate-related issues are assessed and managed as follows:
Body Role Arrangements
Board Has overall oversight of the assessment
of climate-related risks and opportunities
within the Group.
• Each year as part of the Board’s meetings planning process, we schedule
a presentation on our Living Responsibly ESG programme, which includes
a report on the EWG’s work. Additional presentations, including updates
and progress reports, will be scheduled during each year as required.
• Environmental reporting is delivered by the Chief People Officer (CPO), the
Chair of the EWG and the Head of ESG, as appropriate.
• The Board receives reports from the Group CEO, Group CFO and each
Divisional managing director at Board meetings, which include a review of
financial and operational performance, including risk matters.
• The restructuring of the Group during 2023 has resulted in a need to
review and re-baseline our environmental data. The EWG is leading on
this work, and it will report to the Board.
Audit & Risk Committee Oversees compliance with our corporate
sustainability and ESG strategies and
programme, ensures our risk framework
incorporates sustainability-related risks and
opportunities, and considers what is material
to the business.
• Each year, the Committee reviews the Group’s Principal Risks and
Uncertainties (see page 29), including our ESG risks.
• The Committee reviews the methodology and assessment of our climate-
related risks and opportunities and provides oversight and assurance to
the Board on our assessment and reporting of them.
• As part of its annual meeting cycle, the Committee invites each Divisional
managing director to present on all material risks, including climate-
related risks where applicable.
• Reporting to the Committee includes a review of TCFD and CFD and
more generally the impact of climate-related matters within our financial
reporting.
Remuneration Committee Ensures that performance conditions for
incentive schemes are aligned with our
corporate sustainability and ESG strategies.
• The Committee considers ESG matters as part of setting the Executive
Director and Senior Management remuneration arrangements. (See
page 104 for more details).
Nominations Committee Ensures consideration of our corporate
sustainability and ESG strategies when
reviewing Board and Senior Management
appointments.
• During the year the Committee considered the skills, expertise and
experience of the Board and, as part of its regular review of Non Executive
skills and experience, it noted that Sonya Ghobrial, independent Non
Executive Director, has expertise in ESG matters. She provides feedback
on our programme and strategy each year.
Executive Directors – Group
CEO
Has overall responsibility for our corporate
sustainability and ESG strategy.
• David has established a Living Responsibly Steering Committee (SteerCo)
which he is also a member of (see below).
Executive Directors – Group
CFO
Leads reporting on risks and internal
controls and is responsible for the three-year
planning and budget processes.
• Group Finance, with support from Internal Audit, leads the assessment
of the Group’s Principal Risks and Uncertainties, which takes into account
climate-related risks.
• Within the three-year planning process, the Divisions identify in their
business plans: (a) climate-related transition risks and related costs; (b)
climate-related physical risks and related costs; and (c) climate-related
opportunities and any associated revenue.
• During 2024 the Group CFO is joining the SteerCo to support the
development of our governance arrangements and reporting.
40
Non-Financial and Sustainability Information Statement
including TCFD and CFD reporting
Body Role Arrangements
Living Responsibly Steering
Committee (SteerCo)
Responsible for guiding our Group-wide
ESG strategy, aligning it with our strategy
and business model, and implementing
arrangements to identify climate-related
risks and opportunities.
• The Group CEO has overall responsibility for our corporate sustainability
programme and he established the SteerCo to support its delivery,
including climate-related matters.
• SteerCo meets up to four times a year. It has also established the EWG and
the CRWG (see below).
• The SteerCo membership is kept under review and during 2024 the Group
CFO will join the SteerCo.
• During 2023 Executive Committee sponsorship of the environmental
programme moved to Paul Hardy (Managing Director — Estate Agency
Franchising).
Environmental Working
Group (EWG)
Leads the development of our environmental
strategy and programme on SteerCo’s
behalf, including assessing and managing
Group and Divisional climate-related risks
and opportunities.
• The EWG leads our environmental work and is chaired by Paul Hardy,
Managing Director of Estate Agency Franchising. It co-ordinates our
environmental strategy, programme and reporting, including climate-
related disclosures.
• The EWG works closely with the Divisions and Group functions, to ensure
Group-wide alignment of our environmental work.
• The EWG supports the identification of key stakeholders regarding
climate-related risks and opportunities and monitors how the Group and
the Divisions liaise with these stakeholders.
• The EWG facilitates collaboration between the Group and the Divisions to
share insights on climate-related risks and opportunities.
Climate‑related Working
Group (CRWG)
Identifies climate-related risks and
opportunities on behalf of the EWG and
reports into the EWG.
• The CRWG comprises:
– EWG Chair
– General Counsel and Company Secretary
– Group Financial Controller
– Head of ESG
– Head of Facilities Management
– Divisional CROs
– Divisional proposition leads
• The CRWG met twice in 2023, to lead the process for identifying and
assessing the Group’s climate-related risks and opportunities. This
was done in conjunction with the Divisional management teams via the
CROs.
• Meetings of the CRWG will be scheduled to take place at least twice a
year. The meetings will be scheduled to align with the Group’s annual and
three-year planning processes.
41
Other Information
Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
Body Role Arrangements
Divisional management
teams
Each Division has statutory boards and
Divisional management teams headed by a
managing director, who is also a member of
the Executive Committee which reports to
the Group CEO.
The climate-related risks and opportunities
we face arise within the Divisions and their
individual business units. This means the
success of the Divisional arrangements are
key to our assessment and management of
these risks and opportunities.
• The Estate Agency Franchising and Surveying & Valuation Divisions report
to the Group CEO and Group CFO and attend quarterly business reviews,
where they discuss financial and operational performance, including risk
management.
• The Financial Services Network has in place a combined board with
committees which the Group CEO and Group CFO attend to discuss
financial and operational performance, including risk management within
the Financial Services Network.
• The managing directors submit regular written reports to the Board and
deliver a risk presentation to the Audit & Risk Committee at least annually.
• In 2023, the CROs led discussions with the Divisional management teams,
to identify climate-related risks and ensured that this considered relevant
stakeholder feedback where available.
• The Divisional management teams include individuals responsible for
proposition development. Led by the proposition teams, in 2023 the
Divisional management teams were asked to identify climate-related
opportunities and to ensure that this considered stakeholder feedback
where this was available.
• During the year the Divisional management teams contributed to the
three-year planning process (see above) and the CRWG discussions.
• The Divisions have a variety of approaches to environmental programmes
and strategies, which are reported into the EWG. For details of Group
and Divisional environmental activities, see our Living Responsibly Report
2024.
• Divisional management teams undertake continuous monitoring and
horizon scanning of risks, including climate-related risks.
Group functions Central functions, including HR, Legal and
Company Secretariat and Facilities provide
support to Group and Divisional businesses.
• The Divisions receive support from Group functions on climate-related
matters, in particular from the Group Finance, Legal and Company
Secretariat, HR (Head of ESG), and Facilities teams.
• In addition, the Group’s Internal Audit team will include reviews of
climate-related matters in its planning cycles. Internal Audit activities
provide assurance on Group arrangements to the Audit & Risk Committee
and the Board.
Climate-related risks and opportunities activities in 2023:
During 2023, we sought to advance our assessment and management of climate-related risks and opportunities including engaging with Energise
to calculate our Scope 3 emissions and review and refine our processes around Scope 1 and 2 emissions. Our progress was impacted and limited by
the Group’s restructuring and the focus of management on related activities. The section below details the actions we have completed in 2023.
During the year, we engaged a third party to provide support to management on the development of our reporting. This was included in our
reporting to the Board and the Audit & Risk Committee in relation to our compliance with TCFD and CFD. We have also factored the advice into the
arrangements we have in place to enable the SteerCo, the Board and the Audit & Risk Committee to monitor our progress towards our priorities.
As part of its review of this Report, the Audit & Risk Committee (on behalf of the Board) also reviewed the methodology and analysis used to assess
our climate-related risks and opportunities.
Climate-related risk assessment methodology
The CRWG led our assessment activities, providing a forum for identifying and sharing information on climate-related risks and opportunities. The
CRWG met twice in 2023 to lead the process for identifying and assessing the Group’s climate-related risks and opportunities. The CRWG’s approach
to this included using climate scenario modeling data from the Network for Greening the Financial System (NGFS) portal and applying these to the
exposure dimensions listed with the template. In each dimension, the teams assessed the scale of the impact in the short, medium and long term.
42
Non-Financial and Sustainability Information Statement
including TCFD and CFD reporting
Overview of approach applied:
Established Climate
Risk Working Group
(CRWG)
• Divisional risk leads
and Group colleagues.
• Began with context
seƫng/educaƟon
around legislaƟve
changes and climate
change.
Created risk
assessment framework
• Created a template
including Divisional
profiles and impact
areas – customers,
colleagues and
environmental
footprint.
• Agreed Ɵme horizons
and the applicaƟon of
two climate scenarios.
Business model tesƟng
• Divisional risk leads
completed the risk
assessment of current
business model using
the template.
• Outputs were
combined into the
summary included in
this Report.
Risk framework
• EvaluaƟon of each
emerging risk was
completed by
Divisional CROs in line
with wider risk
management
processes.
We group climate-related risks into two categories:
• physical risks including those related to the physical impacts of climate change; and
• transition risks – those relating to the transition to a lower carbon economy. This could be the introduction of legislation or the costs associated
with becoming net zero.
To undertake our scenario analysis, we selected two contrasting NGFS
1
climate-change scenarios ‘net zero 2050’ and ‘current policies’. Under a
net zero 2050 scenario it was recognised that the transition to net zero will be more ordered, resulting in less significant physical risks, but more
transition-related risks as legislation is introduced to support the decarbonisation of the economy – particularly in the short to medium term.
Contrastingly under a ‘current policies’ scenario the impacts are likely to be more physical. Under this scenario the transition risks are likely to occur
later, and in a less ordered way (if at all).
After agreeing a template, our Divisions assessed the impact of each scenario on the current business model in the short, medium and long term.
The outputs of this work were centrally collated, including the Divisional assessment of the magnitude of the impact(s).
The risk assessment process concluded that the impact of climate change on our current business model has to date been assessed as low to
medium.
The outputs of our climate-risk assessment are included in the climate-related risks and opportunities section below, and this includes any actions
that are being taken during 2024 in response.
1 https://www.ngfs.net/ngfs-scenarios-portal/explore
43
Other Information
Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
Climate-related risks and opportunities:
The EWG is responsible for leading and supporting each Division with their ongoing review, assessment and monitoring of climate-related risks and
opportunities. This is in addition to other mitigation actions – the table below includes examples:
Type of risk
Climate‑related risk Scope
Division
impacted Actions
Transition risk 1. Customer choice driven by environmental
commitments.
Suppliers
Customers
All • Engagement with customers to ensure our
services align with their environmental
priorities.
2. Increased environmental administration
and B2B customer supply chain
expectations.
Suppliers
Customers
All • Developing our environmental expertise
across the Group and especially within the
Surveying & Valuation Division in response to
lender client requirements.
3. Costs associated with becoming net zero
across all emissions scopes.
Business
operations
All • Working with Energise to assess Scope 3,
and we will review our net zero pathway
following this review.
4. Increased regulation in the property
sector to improve the environmental
impact of properties, which could affect
the availability and affordability of
housing.
Suppliers
Customers
All • Surveying & Valuation Division is building
expertise in EPCs and valuation of energy
efficient properties.
5. Ban on new petrol and diesel cars from
2035.
Business
operations
All • Transition our fleet to electric vehicles (EVs)
or hybrid.
• Promote salary sacrifice benefit for
colleagues to move to EVs or hybrid.
6. Increasing need to consider climate-
related impacts when assessing capital
allocation/approving investment
proposals.
Business
operations
All • Created an Investment Committee to
oversee the Group’s capital allocation policy.
• Where relevant investment requests
will address climate-related risks and
opportunities.
7. Increased regulatory costs or climate-
related taxes.
Business
operations
All • Monitor changing landscape.
Physical risks 8. Impact of changing weather on colleagues
including health matters.
Business
operations
Colleagues
All • Additional monitoring via the Group HR
team.
9. Properties impacted by climate conditions
(e.g. floods) uninsurable and potentially
unsuitable as security for a mortgage.
Suppliers
Customers
Financial
Services
Surveying &
Valuation
• Monitor.
10. Increased delivery cost of supplies arising
from climate events.
Business
operations
All • Monitor.
11. Travel disruption affecting colleagues’
ability to complete their work (e.g. get
into offices or visit locations).
Business
operations
Colleagues
All • Remote working arrangements in place to
enable continued delivery of services.
• Development of remote survey and valuation
services.
44
Non-Financial and Sustainability Information Statement
including TCFD and CFD reporting
Type of opportunity Climate‑related opportunity Scope Division Actions
1. Increased stakeholder interest in
understanding energy efficiency (e.g. via
the EPC).
Suppliers
Customers
All • Investment in data services and EPC training
within the Surveying & Valuation Division.
• Engagement with the Mortgage Climate
Action Group (MCAG) by the Financial
Services Network.
• Across the Group, supporting the
development of relevant colleague skills and
expertise in environmental sustainability
matters.
2. ‘Green valuation’ product offering –
promoting use of local surveyors (i.e.
reduce travelling distances).
Suppliers
Customers
Surveying &
Valuation
3. Increased interest in data services from
B2B clients who are looking to mitigate
their own climate-related risks.
Suppliers
Customers
Surveying &
Valuation
4. Proactive engagement and positive
responses from stakeholders as a result of
our improved environmental strategy and
reporting.
Suppliers
Customers
All
5. Increasing prevalence of ‘green’
mortgages and green property upgrades.
Suppliers
Customers
Financial
Services
6. Potential growth in retrofitting
environmental upgrades for consumer
homes.
Suppliers
Customers
Surveying &
Valuation
Impact assessment
In 2023, we continued to develop our approach and assessment tools to identify and assess our climate-related risks and opportunities. The CRWG
met twice in 2023 to lead the process for identifying and assessing the Group’s climate-related risks and opportunities. The CRWG’s approach to
identifying climate-related risks and opportunities included utilising market research data sources and outputs from Divisional management teams,
and in each case the likely impact on costs and revenues of each was assessed with reference to the three-year plan, and considered the materiality
of any impact. As we build our capacity and capability in this area, we will review our materiality assessment alongside this. The assessment also
took into consideration the gross and net (mitigated) risk impacts.
An example of our impact assessment is e.surv’s risk of not retaining or securing valuations business from lenders where it does not meet the
clients specific climate-related requirements. This risk is mitigated by e.surv putting in place arrangements to meet client requirements which in
turn reduces the materiality of the risk.
Our impact assessment also takes place at a Divisional level, whereby (as set out in the risks and opportunities table above) different responses
are required dependant on the potential gross impact in the Divisions to different climate-related risks and opportunities (i.e. commercial contract
requirements in e.surv which is monitored and managed by an internal Sustainability and Business Development Collaboration Group).
During 2024 we will continue to refine the processes and approach to materiality impact assessment with the aim that climate-related risks are
subject to the same identification, analysis and mitigation processes as all operational risks and that ongoing consideration is given to either one-off
or continual financial impacts on the Group’s businesses.
Scenario testing to assess resilience
In identifying and evaluating the Group’s resilience and response to climate-related risks and opportunities, we conducted our analysis under the
following climate scenarios:
i. ‘Net zero 2050’, where the rise in global temperature is limited to less than 2⁰C.
ii. ‘Current policies’, whereby temperatures are likely to rise by more than 3⁰C due to a higher emissions pathway.
Each scenario is presented below, with a summary of the climate-related risks and opportunities considered against the short, medium and long-
term horizons, and a materiality assessment that incorporates a combined view across the Divisions.
The scenario testing is completed on a net risk impact basis. Our process for assessing the impact of climate change on our strategy is in its early
stages and will be developed by our EWG and CRWG in 2024 alongside our net zero strategy. Only the risks in the table have been included in our
scenario planning to date. Our impact assessment currently focuses more fully on the physical impacts of climate change.
i. Net zero 2050: global temperature rise is limited to less than 2⁰C
The scenario is based on The Paris Agreement, under which countries have committed to limiting global temperature increases to below 2⁰C above
pre-industrial temperatures and to strive to limit it to no more than 1.5⁰C. This scenario assumes climate policies are introduced early and become
gradually more stringent across the globe. In this scenario, the transitional risks associated with moving to a low-carbon economy are a greater risk
to the Group than physical risks.
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Overview
We believe our business model is resilient in this scenario because the physical impact is lower. We have mitigating actions in place to manage and
respond to potential impacts. For example, we regularly review our net zero pathway to understand the costs associated with becoming net zero.
In particular, as outlined below we have colleagues in the Group (especially within Surveying & Valuation) focused on sustainability and we are
engaging in industry-wide activity. Our EWG is looking to fully assess the costs associated with becoming net zero.
We expect the introduction of legislation and requirements to transition the economy to net zero to be delivered in an orderly manner and we are
positioning ourselves to identify and respond to any changes as they arise. This includes investing in relevant teams to support our horizon scanning
activities and ensure we identify emerging policy changes and their effect on our businesses early allowing us to factor these into our planning.
For example, the ESG team within e.surv supported by the Group’s Head of ESG, is responsible for monitoring and ensuring we are addressing
emerging environmental policy changes. In addition, through e.surv’s engagement with lender clients and PRIMIS’ engagement with the Mortgage
Climate Action Group (MCAG), we benefit from wider-sector insights which support us in identifying emerging transitional risks to our business.
Strategy impact assessment
Scenario: Net zero 2050
Short term (0‑3 years) Medium term (4-9 years) Long term (10+ years)
Risks: Higher transitional risks for the
Group, as the markets in which
it operates move to a net zero
economy and our suppliers and
customers seek commitment to
net zero.
Examples:
– Transition costs to enable the
Group to achieve emissions
commitments
– Increased regulatory driven costs
or carbon tax applied
– The increased frequency of
extreme weather conditions,
resulting in business travel
disruption.
Ongoing increasing transitional
risks.
– The transition costs become
more widely applied across
industry and society.
– Reputational risk increases to
maintain the pace of change and
adoption, as momentum and
commitment increases.
Non‑material increase in physical
risks.
Risk impact assessment
1
: Low Low Low
Assumptions: – Exclusively UK-based operations, keeping temperature increase to 1.5⁰C minimises suggest physical impacts would
be in line with the current levels.
– Current operational locations geographically dispersed, therefore unlikely to experience significant disruption at
more than one location simultaneously (due to a climate event).
– Around 54% of our current workforce is home-based increasing the geographical spread of the workforce. The
largest group of colleagues are surveyors who are based at home but carry out property inspections meaning they
spend time travelling.
– Housing market will continue to operate at ten-year average activity levels.
Mitigating actions/commitments: – We continue to work towards our environmental commitments, to achieve net zero on our emissions in our
operational control by 2040.
Opportunities: Opportunity for the Group to develop new data services, in response to client demand as they seek to understand
environmental sustainability and the impact of climate change on their businesses.
Opportunity impact assessment1: Low across all time horizons.
Note:
1
Impact materiality assessment thresholds: Low – below 5% of five-year average Underlying Operating Profit, Medium – 5-10% of Underlying Operating Profit,
High is above 10% of Underlying Operating Profit.
46
Non-Financial and Sustainability Information Statement
including TCFD and CFD reporting
ii. ‘Current policies’: a higher emissions pathway whereby temperatures rise by more than 3⁰C.
This is a more extreme scenario, where higher emissions are likely to lead to temperature increases of over 3⁰C compared to pre-industrial times by
the year 2100. As a result of the failure to transition, the physical impacts of climate change become increasingly severe. The increase in frequency
and severity of extreme weather and other physical hazards pose a greater risk. Whilst it is assumed transitional risks are lower in the shorter term
due to a lack of policy intervention, it may be that as the physical impacts become more prevalent, there are chaotic and uncoordinated policy
introductions by Government which create a disordered operating environment.
We believe our business model is resilient in this scenario because we are relatively asset light and our operations are geographically dispersed with
a high proportion of colleagues based at home, and we have mitigating actions in place to manage the potential harm caused by physical impacts.
Scenario: current policies
Short term (0‑3 years) Medium term (4-9 years) to long term (10+ years)
Risks: Increased frequency and severity of extreme
weather events.
– More extreme weather events lead
to increased business disruption for
colleagues travelling to workplaces and
seeing customers.
– Insurance costs increase for both the
business and homeowners, alongside
decreasing availability.
Medium/longer-term shift in weather patterns, causing increasingly
heavy rain and strong winds and temperature increases leading to higher
sea levels.
– More significant business disruption caused by adverse weather
conditions, requiring greater change in ways of working.
– Longer-term increases in frequency and severity of adverse weather
conditions change housing market fundamentals, leading to a potential
review of our operating model
Risk impact assessment: Low Low
Assumptions: – Exclusively UK-based operations, under the worst-case scenarios, the extreme physical impacts on the UK are
concentrated around coastal areas.
– Current operational locations geographically dispersed but due to frequency and severity may experience significant
disruption at more than one location simultaneously (due to a climate event).
– Around 54% of our workforce is home-based increasing the geographical spread of the workforce. The largest group of
colleagues are surveyors who are based at home but carrying out property inspections meaning they spend time travelling.
– Housing market will continue to operate at ten-year average activity levels.
Mitigating actions/commitments – We continue to work towards our environmental commitments, achieving net zero on emissions in our operational control
by 2040.
Opportunities: The Group can capitalise on opportunities in demand for energy efficiency drives from lenders and homeowners. We offer a
wide range of services to mortgage intermediaries, lenders and Estate Agency franchisees, and have a history of adapting our
products and services as demands change.
Opportunity impact assessment: Low across all time horizons.
Climate-related metrics and targets:
As noted above, our assessment is that the climate-related risks and opportunities we face are not currently material to our business model or
strategy. However, we have identified the reduction of our environmental footprint as a priority within our Living Responsibly ESG programme. We
set targets for improving our reporting of emissions in 2023 including, for the first time, quantifying our Scope 3 emissions. During the year e.surv
piloted the use of a software platform to calculate and monitor emissions. We were also supported by Energise to support us in reviewing our
methodology for Scope 1 and 2 and calculating our Scope 3 emissions.
We have stated our 2022-23 emissions separately from previous years due to the change in scope and methodology. In addition, for the first time,
we are undertaking dual emissions reporting in line with recommendations by the Greenhouse Gas Protocol. Location-based emissions are reported
alongside market-based emissions, which reflect the certified renewable supply of purchased electricity in Scope 2.
This section includes our current climate-related metrics and reporting against previously set targets. We will review these in line with our climate-
related risk and opportunity work during 2024 to ensure we have an appropriate set of metrics and targets.
Streamlined Energy and Carbon Reporting (SECR)
The Greenhouse Gas (GHG) Emissions (Directors’ Reports) Regulations 2013 and Part 7 of the Companies Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2013
Introduction
The Group recognises the importance of minimising its environmental impact and since 2021 this has been a priority in its Living Responsibly ESG
programme which is the Group’s sustainability strategy. As part of this commitment, the Group set targets to improve its emission reporting during
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Overview
2023 including calculating Scope 3 emissions for the first time. Within the Group, e.surv is in scope of the SECR requirements which came into force
for financial years beginning on or after 1 April 2019. In accordance with these regulations LSL has reported a Group-wide disclosure and therefore
e.surv as the in-scope entity will not be making any separate disclosures.
Methodology
The Group has reported on all emission sources required under The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018, which includes the SECR requirements. We have applied a financial control methodology, reporting emission
sources that fall within the Group Financial Statements (with the exception of Pivotal Growth – see below). We do not have responsibility for any
sources that sit outside this.
This section covers the seven main Greenhouse Gases (GHG) covered by the Kyoto Protocol which include carbon dioxide (CO2), methane (CH4),
nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3). It has used the
Greenhouse Gas (GHG) Protocol Corporate Accounting and Reporting Standard (Revised edition), and emission factors from the Government’s GHG
emission factors for Company Reporting.
GHG emissions data
Reporting period: The reporting period is 1 October to 30 September. This overlaps by nine months with the Group’s financial year and is used for
historical reporting reasons.
GHG emissions 2022-23 data summary table:
2022‑23 Group emissions kWh
Tonnes CO2e
Market‑based Location-based
Scope 1 Operation of facilities 1,569,490 287.1 287.1
Combustion 1,636,085 395.5 395.5
F-gas 47.8 47.8
Total 3,205,575 730.4 730.4
Scope 2 Purchased energy 4,810,751 637.4 996.3
Total Scope 2 4,810,751 637.4 996.3
Total Scope 1 and 2 emissions
1,367.8 1,726.7
Average colleague number 2,923
Group revenue (£m)
176.8
Intensity metrics tCO2e (Scopes 1 and 2) per FTE employee
0.5
tCO2e (Scopes 1 and 2) per £m Revenue 7.9
Scope 3 Purchased goods and services 10,391.0
Capital goods 39.3
Fuel and energy-related activities 415.9
Upstream transportation and distribution 120.4
Waste generated in operations 13.3
Business travel 1,315.9
Colleague commuting (including homeworking) 1,823.3
Franchises 341.4 (678
location-based)
Total 14,460.6 (14,797.2
location-based)
Total Scope 1, 2 and 3 15,828.4 (16,523.8
location-based)
tCO2e (all scopes) per £m Revenue – 89.5
Note:
48
Non-Financial and Sustainability Information Statement
including TCFD and CFD reporting
This disclosure is partial as we continue to work to improve our understanding of our Scope 3 emissions.
GHG emissions: previous year’s data
Corporate emissions 2021‑22 2020‑21 2019-20 2018-19
Combustion of fuel and operation of facilities (Scope 1) 1,998 2,125 2,517 3,420
Electricity, heat, steam and cooling purchased for our own use (Scope 2) 24 39 1,139 1,535
Total (Scope 1 and 2 including Grey Fleet) 2,022 2,165 3,656 4,955
tCO2e per FTE employee
0.50 0.52 0.94 1.17
tCO2e per £m revenue 6 7 14 16
Total kWh 6,287,0 01 7,68 4, 216 ND ND
Total (Scope 1 and 2) 2,022 2,165 3,656 4,955
Note:
Figures included in this table include car fuel emissions which are now reported in Scope 3 (emissions from colleague owned vehicles).
2022-23 emissions data notes:
As stated elsewhere, 2023 was a year of significant change for the Group including franchising the Estate Agency network, the sale of Marsh &
Parsons and sale of businesses to Pivotal Growth. The changes to our operations took place in stages throughout the year. The data presented
above includes emissions in our control up to the point of sale (and where relevant franchise). The emissions from franchises post-May are included
in the relevant Scope 3 category.
We have reported market and location-based emissions for our franchises due to the quality of the data we hold and our ability to report in this
way.
Greenhouse gas reporting assumptions and estimations: in some cases, missing data has been estimated using either extrapolation of available data
from the reporting period or estimated using CIBSE Guide F (2021) Building Benchmark and facility floor size. The methodology used to estimate the
supply chain emissions from purchased goods and services, upstream transportation and distribution, and capital goods is based on the Exiobase
environmentally extended input-output (EEIO) dataset. EEIO combines economic information about the trade between industrial sectors with
environmental information about the emissions arising directly from those sectors.
Data coverage and quality:
Emissions from water supply and water treatment for Financial Services and Estate Agency have been omitted from reporting due to data
inaccessibility.
Emissions from investments, which would include joint ventures with less than a 50% stake, such as the Pivotal Growth joint venture, have been
omitted from reporting due to data inaccessibility. These omissions are not believed to be material and are expected to consist of less than 1% of
overall emissions.
Employee commuting emissions have been estimated using a UK average benchmark estimated by consultants Energise on a per employee basis
under the assumption that office-based employees commute twice per week. The remainder of the week has included colleagues as home-based. It
is our understanding that in terms of data quality, we consider:
– Scope 1 = 80% good quality, 17% adequate quality and 3% poor quality data.
– Scope 2 = 100% good quality data.
– Scope 3 (business travel) = adequate/proxy data with 50% uncertainty.
Note:
Where good quality is defined as 10% margin of error, adequate 25% and poor quality a 50% or more margin of error.
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Update against 2021 climate transition plan:
As noted above, comparing emissions to previous years is difficult due to the more accurate and granular approach to calculating our footprint.
However, we have sought to update on targets published in 2022 below, and as noted elsewhere, during 2024 we will publish an updated Climate
Transition Plan.
Scope Target Update
1 Limit emissions in line with The Paris Agreement 1.5⁰C emissions
trajectory.
Unable to update on progress in relation to previous reporting years
but have re-baselined data and set targets for our future emissions
reduction trajectory within our Living Responsibly Report 2024.
1 Procure gas from renewable sources at 100% of Group locations. 100% of Group locations under our control at the close of the year
procure gas from renewable sources.
42% of locations have no gas on site and 32% are landlord controlled.
1 Transition 57% of leased petrol and diesels to EVs or hybrid in a
phased approach by 2025.
Our fleet has reduced in size significantly due to the changes that
took place in 2023, reducing by 54% broadly in line with the
overall headcount reduction.
At 30 September 2023, 78% of our leased fleet is EVs or hybrid,
compared to 18% in 2021.
2 Achieve net zero Scope 2 emissions by 2023 and maintain for the
foreseeable future.
On a comparable basis, Scope 2 emissions are now 4.3 tonnes
(electricity use, market-based methodology). Improved
accounting methodology includes electricity for vehicle use in
Scope 2 which means Scope 2 is not zero.
2 Procure electricity from renewable sources at 100% of locations
where we have utility control.
Target has been achieved.
3 Quantify Scope 3 emissions. Target has been achieved – eight categories were completed for
the 2022-23 reporting year. We have calculated upstream and
downstream categories, despite intention to only calculate upstream.
Additional actions in-year to reduce our emissions:
• Where the Group manages the electricity and/or gas supply for franchisees (i.e. as landlord of the premises) now our Scope 3 emissions, these
are also procured from certified renewable/green sources, 98% branches on renewable electricity tariffs and 99% on ‘green’ gas.
• Upgrades to LED lighting and air conditioning were paused during 2023 due to the restructuring activities as offices where we were planning
these upgrades moved into franchisee control.
• 55.9% recycling rate for operations included within Scope 1 and 2 emissions reporting boundaries.
Next steps and further analysis:
• As previously stated, we will be re-setting our benchmark year for emissions reporting to 2022-23.
• In addition to this we will review our net zero commitment and emissions reduction plan in 2024.
Stakeholder engagement reporting on environmental matters:
The Stakeholder Engagement section of this Report details how we engage with our stakeholders including our customers. In this section of the
Report, we describe some specific examples of how we have engaged with stakeholders in relation to environmental matters.
Surveying & Valuation:
During the year, a specific focus for our Surveying & Valuation business was the progression of environmental initiatives in conjunction with our
lender clients. The impact assessment also takes place at a Divisional level, whereby (as set out in the climate-related risks and opportunities
table above) different responses are required dependent on the potential gross impact in the Divisions to different climate-related risks and
opportunities. For example, the Surveying & Valuation Division has established a framework and mechanisms to ensure compliance with any
agreed contractual commitments around sustainability, and to mitigate against and reduce the risk of not achieving agreed environmental supplier
standards.
Financial Services Network:
The PRIMIS Network participates in the Mortgage Climate Action Group (MCAG). MCAG is an industry-wide group focusing on education and
collaboration in the transition to a net zero economy. Colleagues within PRIMIS are participating in work to create communication tools for brokers
and the wider sector.
50
Environmental, Social and Governance (ESG) Report
We deliver our ESG initiatives through our Living Responsibly ESG programme, which we report on in our Living Responsibly Report 2024 published
on our website. A summary of relevant progress and information is included in this Environmental, Social and Governance Report.
We continued to deliver our Living Responsibly ESG programme throughout 2023 and invested in our Group resources. Our Head of ESG supports
our Chief People Officer (CPO), to lead our Group-wide approach. The Board received presentations on the Living Responsibly ESG programme from
the CPO and Head of ESG during the year. The programme was also covered in the new Chair’s induction.
For further information on our:
a. Environmental matters – see the Non-Financial and Sustainability Information Statement including TCFD section at page 34.
b. Governance – see the Corporate Governance Report at page 65.
Living Responsibly Steering Committee (SteerCo)
Our programme aims are guided by the SteerCo, which is chaired by David Stewart. The Corporate Governance Report (page 65) explains how
the Living Responsibly ESG programme fits into our governance framework and details the SteerCo’s membership. Following a review, we made
some changes to its membership and we intend to include the Group CFO from 2024, to increase Executive Director oversight of our strategy and
commitments. During 2023, the SteerCo met three times.
Living Responsibly – our sustainability strategy
Our Group culture statement is at the heart of our Living Responsibly ESG programme:
The right people (becoming a better place to work), doing the right things (investing in communities), in the right way (reducing our environmental
impact and excellent governance).
The table below describes our sustainability strategy. For 2023 progress and details of our 2024 priorities, see the Living Responsibly Report 2024.
Our Group‑wide sustainability strategy
The right people, doing the right things, in the right way
PEOPLE
COMMUNITY
ENVIRONMENT
GOVERNANCE
Programme component Responsible with our
people
Responsible with our
communities
Responsible with our
environment
Responsible in the way
we work
We are committed to… …being a better place to
work
…supporting colleague
initiatives and giving back
…reducing our impact on
the environment
…excellent governance
Why? People are our greatest
asset and central to
securing our sustainability
We want to have a
positive and lasting impact
on the communities we
work in
We have a responsibility
to do this as a global
citizen and our
stakeholders are keen for
us to play our part
Our customers depend on
our excellent governance
to support them in their
business operations
Executive Committee
sponsor
Debra Gardner,
Chief People Officer
Sapna B. FitzGerald,
General Counsel and
Company Secretary
Paul Hardy,
Managing Director –
Estate Agency Franchising
Sapna B. FitzGerald,
General Counsel and
Company Secretary
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Strategic Report Strategic Report
Overview
Responsible with our people
Colleagues
Gender
Colleagues are central to our success as a Group. The strategic projects we completed in 2023 have changed the composition of our workforce and
leadership. Changes to our Board and Executive Committee are included in our Corporate Governance Report (page 71).
Changes to our Senior Management Team and the wider Group are illustrated in the tables below:
31 December 2023 31 December 2022
2
Female Male Female Male
Senior Management Team
1
33% 15 67% 30 28% 16 72% 41
All colleagues
3
46% 792 54% 932 53% 2,364 47% 2,088
Notes:
1
Our Executive Committee and their direct reports who are A1 and A2 grades (excluding Executive Directors).
2
We have revised our 2023 reporting to clarify our populations. The 2022 data is as we reported in our Annual Report and Accounts in 2022.
3
All colleagues.
Details of the ethnicity of the Board and the Executive Committee are included in our Corporate Governance Report (page 72). Details regarding our
Senior Management and wider Group are detailed below:
31 December 2023 31 December 2022
3
White
Ethnic
minority White
Ethnic
minority
Senior Management Team
1
38 95% 2 5% 91% 9%
All colleagues
2
1172 92% 107 8% 94% 6%
Notes:
1
Our Executive Committee and their direct reports who are A1 and A2 grades (excluding Executive Directors). Non-disclosure rate is 11% (5 colleagues).
2
All colleagues. Ethnicity data obtained through the all-colleague survey. Non-disclosure rate is 5% (66 colleagues) which is the proportion of colleagues
completing the survey who chose not to disclose their ethnicity.
3
We have revised our 2023 reporting to clarify our populations. The 2022 data is as we reported in our Annual Report and Accounts in 2022.
As a result of the restructuring and simplification projects, our workforce at 31 December 2023 had reduced by 61% to 1,724 colleagues, from 4,452
colleagues a year earlier. We have seen an increase in the proportion of colleagues identifying as ethnic minority across the workforce but observe
lower representation in senior roles. We will continue to work with the I&D Forum and LSL Voices to improve diversity and inclusion across the
Group.
31 December
2023
31 December
2022
31 December
2021
31 December
2020
Total colleagues 1,724 4,452 4,617 4,335
Total voluntary turnover (%) 18.2 30.5 28.1 17.4
Male (%) 47% 47% 47% 49%
Female (%) 53% 53% 53% 51%
We are pleased to note that there was a reduction in our workforce turnover rate during 2023. Our workforce reduced in size by more than half
which included a significant amount of colleagues from the Estate Agency Division as we transitioned into the franchising business model. This
Division typically had higher voluntary attrition. We are still seeing slightly more movement among females and will continue to monitor this,
including reviewing for any differences in experience highlighted in our annual colleague survey. Analysis of data to date suggests that females are
more engaged than males within the Group.
Ethnicity
In 2022 we adopted the diversity targets emerging from the Hampton-Alexander review which have been incorporated into the Listing Rules. Our
progress towards these targets is reported in the Corporate Governance Report on page 80.
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Environmental, Social and Governance (ESG) Report
Disability
Over the last two years, we have focused on being a better place to work for our colleagues who have a disability or long-term health condition. We
were awarded ʽDisability Confident’ employer status by the Department of Work and Pensions in 2022, and we have worked on a programme of
training with Disability Rights UK, to upskill colleagues on the Equality Act and its implications.
We reported last year on the development of ‘Accessibility Passports’ to support colleagues in transferring reasonable adjustments with them when
moving roles internally. We now have a programme of manager training to support this, which is ready for roll out.
We have continued to use our annual colleague survey to understand how many of our colleagues have a disability or long-term health condition,
and we are delighted that our colleagues felt more comfortable sharing this information with us via the survey in 2023. In total, 17% of our
workforce (2022: 6%) disclosed that they have a disability or long-term health condition, which is in line with national census data for the working
age population. Our non-disclosure rate has reduced from 7% to 4%, which is a positive indicator of increased trust. During 2024, we hope to launch
‘Disability Voices’ – our affinity group for colleagues interested in the challenges and opportunities for individuals with disabilities or long-term
health conditions but will keep this under review with the rest of LSL Voices.
Further information on the diversity demographics of our colleagues is reported within our Living Responsibly Report 2024.
Colleague dialogue
We have three Group-wide colleague forums to support our colleague engagement. Further details are included in our Stakeholder Engagement
Report (page 23).
Our forums are:
Forum Examples of feedback and discussions
(previously the Employee
Engagement Forum)
This forum consists of 18 colleagues who have been
elected as representatives. Through the year, the
CEF has worked to build a collaborative forum where
colleague-related issues are raised by both our CPO
and forum members, facilitated (where appropriate)
by an elected proxy chair.
Darrell Evans is the Non Executive Director
representative for workforce engagement. Further
details about this role are included in the Corporate
Governance Report at page 71.
We sought colleague feedback on changes to the
appraisal and succession planning process. As a result
of this, we rolled out the new personal development
review process at the end of the year.
Forum members raised the need to review our
benefits offering and better communicate what is
available for colleagues, as well as wanting to see
greater celebration and acknowledgement of long-
service milestones. Our Group Head of Reward is
reviewing colleague benefits and will communicate
the outcomes in due course. We have integrated
long-service milestones into our new quarterly
colleague newsletter.
Forum members requested a focus on colleague
mental health and invited mental health first aiders
to one of the meetings. As a result, they are now
building a process to extend the support available
across the Group.
The I&D Forum is now in its fourth year. During
2023, the forum launched the first three LSL Voices
(cultural, LGBT+, and gender) which are colleague
affinity groups designed to provide a networking and
collaboration space for colleagues interested in the
opportunities and challenges faced by colleagues of
certain demographics.
As with the CEF, the I&D Forum provides feedback to
the Group HR team. It is currently contributing to the
simplification of our colleague policies.
Now also in its fourth year, this forum champions
opportunities for colleagues to support communities
and charities.
The forum identifies opportunities for colleagues
collectively to engage in community issues. More
detail of work in 2023 is reported in our Living
Responsibly Report 2024.
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Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
Annual colleague survey – ʽHave your Say’
During 2023, we engaged a new survey provider – People Insight – to support us in understanding the feedback and experiences of our colleagues.
While we have used some historical data here to illustrate the current position, due to Group restructuring and simplification and changes in the
way we collect the data, the engagement data has not been compared to previous years.
2023 colleague survey in numbers:
We are delighted that 77% (1,345) of our colleagues responded to our survey in October 2023, a 16% increase (2022: 61%). As this was our first year,
we compared our results to an external benchmark, comprising data that People Insight holds for companies like ours.
Overall, the survey revealed that:
• Colleagues responded particularly positively to questions relating to ʽPurpose’ (80% positive, 3 points above the external benchmark). Strongest
responses were to understanding business aims (91% positive), understanding own contribution to those aims (95% positive) and believing the
business is committed to high quality work (87% positive).
• Colleagues’ view of the components required to do their role such as communication, training and development, physical environment and
support (together the ʽEnablement’ theme) is notably above the benchmark (73% positive, 67% benchmark).
• Colleague engagement is below the benchmark (73% positive, 79% benchmark).
• Reward and benefits received less positive feedback than other themes (62% positive, 3 points below external benchmark). This is consistent with
the feedback received from our CEF.
As a result of the feedback, we identified three areas of focus for 2024:
1. Leadership and action – We will continue to build on work begun in 2023 around communicating strategy and progress across the Group,
including regular Senior Management conferences. We are using our Group-wide colleague forums (CEF and I&D) to address and communicate
actions in response to survey feedback.
2. Reward and recognition – During 2024, we are reviewing colleague benefits across the Group. We will also be launching an internal career page
and we are exploring the feasibility of a Group-wide competency framework.
3. Workload and flexibility – Colleague feedback in this area identified different experiences across the Group, with some colleagues reporting
appropriate flexibility and others seeking more. We will work alongside the CEF and with local management teams to ensure this works for the
business and colleagues. We will also take this opportunity to review and relaunch our Group-wide flexible working policy.
Sharesave
During quarter four 2023 we launched a colleague sharesave scheme. We were delighted with the take up, with 20% of colleagues signing up,
indicating their engagement with the Group. This compared to 16% signing up for the last scheme we launched in 2021.
Human rights and modern slavery
We create employment directly for our colleagues and indirectly within our supply chains. This means human rights and modern slavery are at
the core of our commitment to doing the right thing. We are committed to adhering to the UN Guiding Principles on Business and Human Rights,
promoting the highest standards of integrity, personal conduct, ethics and fairness, in line with the UK regulatory environment we operate in.
We protect and promote the human rights of our colleagues in the following ways:
1. Undertaking pre-employment checks on all new colleagues, confirming their identity and eligibility to work in the UK.
2. Providing clear and timely information to colleagues on their statutory rights, including sick pay, holiday pay and other benefits they are
entitled to.
3. Paying our colleagues fairly. During 2023, we undertook to ensure all colleagues across the Group are paid at least the Real Living Wage. During
2024, we will seek external validation of this through the Real Living Wage Foundation.
4. Maintaining regular communication with our colleague community, using the CEF and regular colleague surveys.
5. Regularly calculating and monitoring our gender pay gap within our Divisions and, for the first time, reviewing this Group-wide in 2023.
6. Completing annual compliance training on modern slavery and human trafficking.
7. Making available grievance and whistleblowing channels for colleagues and ensuring whistleblower protection.
Across the Group we expect all parts of our supply chain to adhere to international standards on human rights, including with respect to child and
forced labour, land rights and freedom of association. Our Surveying & Valuation Division includes a risk assessment as part of its supplier due
diligence processes. Further, during 2023 we also have implemented new procedures to comply with the FCA’s new consumer duty regime.
54
Environmental, Social and Governance (ESG) Report
We are committed to taking active steps to identify human rights issues. During 2023, within our Surveying & Valuation Services Division we
made around 200 reports setting out safety or vulnerability concerns relating to our customers, and we will continue to take steps to ensure
our colleagues have the confidence and awareness to identify vulnerabilities, whether they be in relation to customers with particular needs or
concerns or to ensure we are proactive in protecting human rights and addressing any risks of modern slavery in our supply chain.
These procedures collectively help to address our ongoing commitment to protect our colleagues’ and stakeholder human rights and the
elimination of all forms of forced and compulsory labour.
Colleague policies
We have centralised colleague policies, as well as Divisional policies, which either supplement the central ones or are separate and specific to the
Division. For the following Group policies, the implementation and compliance of these policies, is the responsibility of the Divisional management
teams. We are establishing attestation processes, like those put in place by our DISC (see Audit & Risk Committee Report for further details) to
ensure continued compliance.
Central and local learning and development teams also publish training material to support colleague learning and compliance with the policies.
Combined ethics policy
Our Group-wide combined ethics policy outlines our approach to anti-corruption and bribery (including hospitality), anti-slavery and human
trafficking, conflicts of interest, tax evasion, whistleblowing and fraud. We have an annual programme of compliance training for colleagues that
includes anti-money laundering, financial crime and information security.
Whistleblowing – ʽSpeak Up’
Our Group-wide ʽSpeak Up’ policy outlines our colleague whistleblowing channel. During 2023, we again ran a ‘Speak Up’ week to raise awareness
of the channel and the protection offered to any whistleblowers. Our CPO regularly reports the outcomes to the Board. See the Corporate
Governance Report on page 83 for further information.
Health and safety
Adam Castleton (Group CFO) is responsible for health and safety across the Group.
We are committed to ensuring colleagues work in a safe and healthy working environment. Within e.surv, which is our largest employer, we are
certified to ISO 45001. The nature of the field work within the Surveying & Valuation Division underlines the importance of our health and safety
arrangements to us.
As part of our management of occupational health and safety, we monitor the identification of hazards, occurrence of accidents, and employer and
public liability claims. During 2023, there was one RIDDOR reportable incident (2022: 5) and no work-related fatalities. There were no employer
liability claims in 2023 (2022: 1). Group-wide health and safety reports go to the Board bi-annually. Internal Audit undertakes a rolling audit of
health and safety data and procedures and there are currently no high-priority actions outstanding.
In the annual survey, 67% of colleagues responded positively about being able to comfortably manage their workload (3% above sector benchmark)
which is a positive indicator of our colleagues’ ability to manage their wellbeing, health and safety at work.
Payment practices reporting
Your Move, Reeds Rains and e.surv annually submit their payment practices reports, which are available on the Government’s website for report
submissions (check-payment-practices.service.gov.uk).
Group HR colleague policies
Great policies provide the framework for colleagues to thrive. Following the Group’s restructuring and simplification, we have begun to review and
revise our colleague employment policies to ensure they are clear, transparent and supportive. We are planning to launch 18 refreshed colleague
policies in 2024. Colleagues from our forums have supported our review of these policies and we have a register of further developments.
Our colleague employment policies are contained in our Group HR system, which we upgraded during the last quarter of 2023. We also reviewed
our colleague employment policy signposting during the year, with this forming part of the Group-wide colleague induction launched in the same
period.
55
Other Information
Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
Policy Scope Published/last reviewed
1. Family friendly Parental pay and leave arrangement across
maternity, adoption, shared and additional
parental and emergency leave.
Revised and updated to ensure equality of
provision and language Q1 2024
2. Equality and diversity in the workplace Fairness and equal treatment for all
colleagues.
Updated Q1 2024
3. Pregnancy loss Supporting colleagues who suffer the loss of
their unborn child.
Updated Q1 2024
4. Fertility Supporting colleagues undergoing fertility
treatment.
Updated Q1 2024
5. Menopause Supporting colleagues to access appropriate
support when going through the menopause.
Updated Q1 2024
6. Stress and mental wellbeing Promoting a healthy work environment for
colleagues.
Updated Q1 2024
7. Environmental Organisational approach and individuals’
roles in improving the environmental
sustainability of the Group and minimising
our environmental footprint.
April 2021
8. Data information security framework Includes policies relating to colleague
data protection and information security
arrangements.
Updated Q1 2024
9. Combined ethics Includes the Group’s approach to anti-bribery
and corruption, modern slavery and human
trafficking, conflicts and personal interest, tax
evasion, whistleblowing and fraud.
November 2023
56
The Board
This section of the Report includes information on the Directors and the Company Secretary as at 24 April 2024.
Executive Directors
Adam Castleton, Group Chief Financial Officer
Adam was appointed Group Chief Financial Officer on 2 November 2015. He has broad financial skills and experience in
the retail and services sectors. Adam joined LSL from French Connection Group PLC, where he was the Group Finance
Director. He previously held leadership roles at several market-leading companies including O2 UK, eBay and The Walt
Disney Company. Adam has over 30 years’ experience in finance, having started his career with Price Waterhouse, where he
qualified as a Chartered Accountant in 1989.
David Stewart, Group Chief Executive Officer
David was appointed Group Chief Executive Officer on 1 May 2020 and has primary responsibility for LSL’s performance,
strategy and development. Prior to this David was a Non Executive Director, having joined the Board on 1 May 2015. He
was also Chair of the Audit & Risk Committee and a member of the Remuneration and Nominations Committees. David has
significant experience in finance, strategy, operations, risk and compliance, with particular expertise in financial services.
He was Chief Executive of Coventry Building Society from 2006 to 2014, having earlier served as Finance Director and
Operations Director. Prior to joining the Coventry, David spent ten years at DBS Management plc, holding several board
positions including Group Chief Executive and Group Finance Director. David qualified as a Chartered Accountant with Peat
Marwick (KPMG) and is a graduate of Warwick University.
Non Executive Directors
Gaby Appleton, Independent Non Executive Director
Committees: Remuneration (Chair), Nominations, Audit & Risk
Other responsibilities: designated Non Executive Director for workforce engagement
Gaby joined LSL as an independent Non Executive Director on 1 September 2019. She has significant experience in strategy,
technology, operations and sales and marketing, particularly in the professional information solutions sector. This includes
her current appointment as Chief Digital Product Officer at Reed Exhibitions (a RELX Group plc company). Gaby previously
held several executive strategic digital and marketing roles including Global Director of Strategy and Director of Research
Strategy at Elsevier in Amsterdam. Before joining Elsevier, Gaby held operating positions at Sainsbury’s Supermarkets Ltd,
within the Procter & Gamble group of companies, and was a senior manager at McKinsey & Co. Gaby holds a BA from the
University of Cambridge.
Simon Embley, Non Executive Director
Simon was Non Executive Chair of LSL from 1 January 2015 until 28 April 2021, when he stepped down following his
appointment as Chief Executive of Pivotal Growth Limited, the joint venture between LSL and Pollen Street Capital. Simon
has remained on the Board so the Group can continue to benefit from his knowledge and experience, and the Board keeps
this position under review. Simon was Deputy Chair from 2014 to 2015 and Group Chief Executive Officer until 2014, a
role which he held at the time of the management buyout of e.surv and Your Move from Aviva (formerly Norwich Union
Life) in 2004. Simon was responsible for the strategic direction of these companies prior to the management buyout and
he subsequently led the turnaround of the initial Group. Simon’s other directorships include a small estate management
company, Eveclo Holdings Limited (an IT business) and Road to Health (a healthcare provider). He is also Non Executive Chair
at Global Property Ventures, a market-leading insurance-based tenant deposit company. Simon is stepping down from the
Board on 1 May 2024 to focus on executing Pivotal Growth’s growth plan.
57
Other Information
Financial Statements
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Strategic Report Strategic Report
Overview
Darrell Evans, Interim Chair
Committees: Nominations (Interim Chair), Remuneration
Darrell was appointed as an independent Non Executive Director on 28 February 2019 and became Interim Chair from
26 February 2024. He has significant experience in financial services and he was previously Chief Commercial Officer at the
Co-Operative Bank plc. He spent the first part of his career at Royal Bank of Scotland plc, where he was Managing Director,
Mortgages, Loans and Retail Telephony in the retail banking division, responsible for all aspects of the Group’s mortgage
proposition. Prior to that he was Product Director for the RBS retail bank. Darrell has also held senior executive roles at Direct
Line Insurance Group plc, Virgin Money plc and The Consulting Consortium, where he was CEO.
Sonya Ghobrial, Independent Non Executive Director
Committees: Audit & Risk, Remuneration
Sonya was appointed as an independent Non Executive Director on 4 March 2022. She has significant experience in banking,
finance, strategy, investor relations, governance and ESG, which she has gained from her roles in the consumer sector,
including her current position as Head of Investor Relations at Haleon. Sonya was previously Head of Investor Relations at
Heineken and provided investor relations and consultancy services as Clear Giraffe IR. Her experience also includes senior
roles with investment banks, including Barclays Capital, Goldman Sachs and Morgan Stanley. She qualified as an accountant
with KPMG and holds a BAcc (Hons) in Accountancy and Economics.
James Mack, Senior Independent Director
Committees: Audit & Risk (Chair), Nominations
Other responsibilities: Senior Independent Director
James was appointed as an independent Non Executive Director on 27 September 2021. He has significant experience
in audit, risk and financial services, particularly in retail financial services. James was previously Chief Financial Officer at
Barclays Bank UK plc and Aldermore plc and acting Chief Financial Officer at the Co-operative Bank. His experience also
includes senior roles in finance and internal audit at Skipton Building Society. James qualified as an accountant with KPMG
and holds a BA from the University of Nottingham. James is deemed to have recent and relevant financial experience to Chair
the Audit & Risk Committee.
Company Secretary
Sapna B. FitzGerald, General Counsel and Company Secretary
Sapna qualified as a solicitor in 1998 and has been General Counsel and Company Secretary at LSL since 2004. Prior to the
management buyout of Your Move and e.surv, Sapna was a member of Aviva Life Legal Services and had, since 2001, been
part of the team that supported Your Move and e.surv Chartered Surveyors.
58
The Executive Committee
This section of the Report includes information on the Executive Committee as at 24 April 2024.
David Stewart
Group Chief Executive Officer
Executive Director
Additional responsibilities:
Living Responsibly ESG programme sponsor
Executive responsible for colleague matters
Adam Castleton
Group Chief Financial Officer
Executive Director
Additional responsibilities:
Health and safety
Group risk
Debra Gardner
Chief People Officer
Additional responsibilities:
Living Responsibly ESG programme
͵ Programme owner
͵ Colleague I&D lead
͵ Executive Committee sponsor I&D
Forum
͵ Chair of DISC
Sapna B. FitzGerald
General Counsel and Company
Secretary
Additional responsibilities:
Living Responsibly ESG programme
͵ Governance lead (including Board
diversity)
͵ Executive Committee sponsor
Communities Forum
Richard Howells
Group Financial Services Director
PDMR
Steve Goodall
Managing Director
Surveying & Valuation
PDMR
Paul Hardy
Managing Director
Estate Agency
PDMR
Additional responsibilities:
Living Responsibly ESG programme
͵ Chair EWG
The Strategic Report is approved by and signed on behalf of the Board of Directors
David Stewart
Group Chief Executive Officer
24 April 2024
Adam Castleton
Group Chief Financial Officer
24 April 2024
Directors’ Report (including Corporate
Governance and Committee Reports)
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
59
In this section:
60 Statement of Directors’ Responsibilities in
Relation to the Financial Statements
61 Report of the Directors
65 Corporate Governance Report
85 Audit & Risk Committee Report
92 Directors’ Remuneration Report
Statement of Directors’
Responsibilities in Relation to
the Financial Statements
60
The Directors are responsible for preparing the Annual Report and the Financial Statements of the Group and the Company in accordance with
applicable UK law and regulations.
Company law requires the Directors to prepare Financial Statements for each financial year. Under that law the Directors have elected to prepare
the Group and the Company Financial Statements in accordance with UK adopted International Accounting Standards (IAS). Under company law the
Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group
and the Company and of the profit or loss of the Group and the Company for that period.
Under the FCA’s Disclosure Guidance and Transparency Rules, the Financial Statements are required to be prepared in accordance with UK adopted
IAS.
In preparing each of the Group and the Company Financial Statements the Directors are required to:
a. select suitable accounting policies in accordance with IAS 8 Accounting Policies, Change in Accounting Estimates and Errors and then apply them
consistently;
b. make judgements and accounting estimates that are reasonable and prudent;
c. present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
d. provide additional disclosures when compliance with the specific requirements in IAS is insufficient to enable users to understand the impact of
particular transactions, other events and conditions on the Group and/or Company’s financial position and financial performance;
e. in respect of the Group and the Company Financial Statements, state whether UK adopted IAS have been followed, subject to any material
departures disclosed and explained in the Financial Statements; and
f. prepare the Financial Statements on the going concern basis unless it is appropriate to presume that the Group and/or Company will not continue
in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company, and enable them to ensure that
the Group and the Company Financial Statements comply with UK adopted IAS. They are also responsible for safeguarding the assets of the Group
and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing the Strategic Report, Report of the Directors, Directors’
Remuneration Report and Corporate Governance Report that comply with that law and those regulations. The Directors are responsible for the
maintenance and integrity of the corporate and financial information included on the Company’s website.
Directors’ responsibility statement (DTR 4.1)
Each of the Directors as at the date of this Report confirm that, to the best of their knowledge:
• that the consolidated Financial Statements, prepared in accordance with UK adopted International Accounting Standards, give a true and fair
view of the assets, liabilities, financial position and profit of the Parent Company and undertakings included in the consolidation taken as a whole;
• that the Annual Report, including the Strategic Report, includes a fair review of the development and performance of the business and the
position of the Company and undertakings included in the consolidation taken as a whole, together with a description of the principal risks and
uncertainties that they face; and
• that they consider the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s position, performance, business model and strategy.
Report of the Directors
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
61
Statutory information contained elsewhere in the Annual Report
Information required to be part of the Report of Directors can be found elsewhere in this Report and is incorporated into this section of the Report by
reference, as indicated below:
Reporting requirement and report section Pages
Review of the Group’s business, including performance, developments and strategy, and likely future developments: Strategic Report 10
Corporate Governance Report 65
Financial results: Strategic Report and Financial Statements 14 and 113
Dividends: Strategic Report 07
Financial instruments: Strategic Report, and note 32 to the Financial Statements 21 and 169
Employees, suppliers, customers and other stakeholders: Stakeholder Engagement Arrangements, and Environmental, Social and
Governance Report
23 and 50
Greenhouse gas emissions: Strategic Report 47
Directors: Corporate Governance Report and The Board 65 and 56
Directors’ service contracts and letters of appointment: Directors’ Remuneration Report 101 and 102
Annual general meeting (AGM)
Our AGM will be held at a venue in London on Thursday 20 June 2024. It is expected to start at 10am with doors open at 9.45am. The Notice of
Meeting convening the AGM will be issued in a separate circular to shareholders prior to the AGM and this will confirm the location for the meeting.
The Notice of Meeting will also include a commentary on the business of the AGM and notes to help shareholders to attend, speak and vote at the
AGM. We will issue an announcement when the AGM Notice has been published confirming details for the meeting. For shareholders who have
elected to receive electronic communications, the AGM Notice will be available on our website. For all other shareholders, the AGM Notice will be
posted to them.
Going concern
The UK Corporate Governance Code requires the Board to assess and report on the prospects of the Group and whether the business is a going
concern. In considering this requirement, the Directors have prepared a going concern assessment which takes into account the Group’s current
financial position and future prospects for the period through to 30 June 2025 (‘the going concern period’). In preparing this assessment, the
Directors have considered the forecast cash flows and total liquidity available to the Group, including assessment of the availability of borrowing
facilities and the Group’s compliance with related covenants.
The Group expects to continue to meet its day-to-day working capital requirements through cash flows generated by its trading activities and
available cash resources (31 December 2023: £35.0m). The Group’s banking facility, a committed £60m revolving credit facility, has a maturity date of
May 2026 and is therefore available throughout the going concern period. As shown in note 25 to the Financial Statements, the Group had not utilised
any of this facility at 31 December 2023 and the Group has not drawn down upon this facility subsequent to the 2023 year end. The facility agreement
contains financial covenants, including a minimum net debt to EBITDA ratio. At the balance sheet date, the Group could have drawn a maximum of
c£50m from the facility and remain compliant with covenants. This provides the Group with significant liquidity at the balance sheet date.
The Directors have continued to run a variety of scenario models throughout the year to help the ongoing assessment of risks and opportunities. The
Directors’ forecasting demonstrates that the Group is expected to maintain sufficient liquidity throughout the going concern assessment period and
operate within the terms of its committed revolving credit facility.
In preparing their assessment, the Directors have also modelled a downside scenario under which inflation and interest rates remain higher than
external sources currently predict. This downside scenario as a result assumes a continuation of current trading throughout the going concern period
to 30 June 2025. Under this scenario the Group maintains sufficient liquidity and remains compliant with the terms of the revolving credit facility.
The Directors have performed a reverse stress test to determine the market and performance levels that would result in the Group having insufficient
liquidity to continue its operations. Such a scenario would require market transaction volumes to reduce to a level lower than those experienced
during the global financial crisis and in turn reduce Group annual revenue by over 25% compared to Group revenue forecasts through the going
concern period, which the Directors do not consider to be plausible. The scenario modelling includes certain mitigating actions within the Group’s
control; however there are further cost mitigations that could be applied in such a severe scenario. Underpinned by LSL’s strong balance sheet and
the actions taken in 2023 to simplify the Group and create a more focused business that will perform more consistently through market cycles, the
Directors consider a scenario in which the Group has insufficient liquidity to be remote.
The Directors are satisfied that the Group will continue to maintain sufficient liquidity and compliance with the terms of the revolving credit facility
throughout the going concern period to 30 June 2025. As such, the Directors conclude it is appropriate to continue to use the going concern basis of
preparation in preparing this Report.
Report of the Directors
62
Director appointment, election and re-election
Our articles provide that the Board may appoint a Director, who will then retire from office at the next AGM and seek election. Shareholders may by
ordinary resolution elect or re-elect any individual as a Director.
Our policy, as set out in the Nominations Committee’s terms of reference, is to have annual re-elections of our Directors. As a result, all of the
Directors are standing for election/re-election at the 2024 AGM.
Directors’ interests
LSL shares
The Directors’ interests as at 31 December 2023 are contained within the Directors’ Remuneration Report (page 108). During the period between
31 December 2023 and the date of this Report, there were no changes in the Directors’ interests, other than share purchases by David Stewart
(280 shares) and Adam Castleton (279 shares) as participants of our SIP/BAYE scheme. These shares were purchased by the Trust at the prevailing
market rate.
Conflicts
During 2023, the Board maintained its arrangements for managing and recording conflicts, in line with its policy. This includes observing an anti-
bribery and hospitality policy, to ensure compliance with section 176 of the Companies Act 2006.
During the year, no Director was materially interested in any contract that is or was significant to the business of the Group or any subsidiary
undertaking, other than Simon Embley, who has a direct interest in Pivotal Growth and indirect shareholding in Southern Home Move Ltd and Favsco
Limited (both are Estate Agency franchisees (see note 33 for further details).
Directors’ qualifying third‑party indemnity provisions
We had qualifying third-party indemnity provisions for the benefit of the Directors in force from the start of the financial period to the date of this
Report, subject to the conditions set out in the Companies Act 2006. We have put in place Directors’ and Officers’ liability insurance and indemnities
to cover this liability.
Compensation for loss of office – change of control
There are no agreements between LSL and its Directors or any colleagues providing for compensation for loss of office or employment (whether
through resignation, purported redundancy or otherwise) that occurs because of a takeover bid.
Auditor
Ernst & Young LLP, our external auditor, has advised of its willingness to continue in office. A resolution to reappoint it and to give the Directors the
authority to determine its remuneration will be proposed at the 2024 AGM. This is the penultimate year that Ernst & Young can be appointed as our
external auditor, as it has been our auditor since we listed in November 2006. During 2024, we intend to conduct a tendering exercise to identify and
appoint a new external auditor to take over the audit in 2025.
Further information on matters related to the external auditor is included in the Audit & Risk Committee Report on page 88.
Share capital
Our 0.2 pence ordinary shares are listed on the London Stock Exchange and are the only class of shares in issue. At 31 December 2023, our issued
share capital comprised 105,158,950 shares (2022: 105,158,950). The authorised share capital is 500,000,000 shares. Details of our share capital are
also set out in note 28 to the Financial Statements.
There are 1,179,439 ordinary shares held in treasury. These treasury shares are not entitled to dividends and have no voting rights at our general
meetings. As the issued share capital at the date of this Report is 105,158,950 shares, the total number of voting rights (excluding treasury shares) is
therefore 103,982,511.
While we did not make any market purchase of ordinary shares in 2023, the Directors have an authority under section 701 of the Companies Act 2006
to make market purchases, on such terms and in such a manner that they determine. The number of shares we can buy back is capped at 10% of our
issued ordinary share capital excluding the treasury shares, which is 10,392,511 ordinary shares. This authority will expire at the conclusion of the
2024 AGM, and we are seeking a renewal of this authority. Please see the Notice of Meeting for further details.
Rights and obligations attached to shares
Each issued share has the same rights attached to it. The rights of each shareholder include:
a. the right to vote at general meetings;
b. to appoint a proxy or proxies;
c. to receive dividends; and
d. to receive circulars from LSL.
63
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
We will seek shareholder approval to renew the Directors’ authority to allot unissued shares and to disapply statutory pre-emption rights at the 2024
AGM. We obtained shareholder approval to disapply pre-emption rights at the 2023 AGM.
Full details of the deadline for exercising voting rights in respect of the resolutions to be considered at the 2024 AGM are set out in the Notice of
Meeting.
On a show of hands at a general meeting, every holder of ordinary shares present in person and entitled to vote shall have one vote and, on a poll,
every member present in person or by proxy and entitled to vote shall have one vote for every ordinary share they hold. The Notice of Meeting which
is published with this Report specifies deadlines for appointing a proxy in relation to resolutions to be passed at the AGM. Where the Chair of the
AGM is appointed as proxy, such proxy votes are counted and the numbers for, against or withheld in relation to each resolution are announced at the
AGM and published on our website after the meeting (lslps.co.uk).
There are no restrictions on transferring our ordinary shares, other than:
a. certain restrictions which may from time to time apply under applicable laws and regulations (for example, insider trading laws and market
requirements relating to closed periods); and
b. pursuant to the Listing Rules of the FCA/UKLA and our Share Dealing Policy, whereby certain employees require approval to deal in our securities.
Our articles of association may only be amended by way of a special resolution at a general meeting of our shareholders.
Employee share schemes
We have two employee benefit trusts. The first was established in 2006, prior to our flotation on the London Stock Exchange. We appointed Apex
Financial Services (Trust Company) Limited (formerly Capita Trustees Limited) (ESOT Trustees) to operate the LSL Property Services plc Employee
Share Scheme (ESOT). The ESOT is able to acquire and hold shares to satisfy options or awards granted under any discretionary share option scheme,
long-term incentive arrangement or Save As You Earn (SAYE) plan operated by us. Details of the shares acquired by the Trust are set out in note 15
to the Financial Statements. The ESOT Trustees have waived the right to any dividend payment in respect of each share held by them (including
future payments).
We also operate the LSL Property Services plc Employee Share Incentive Plan (BAYE or SIP) for our colleagues, which was established in 2007 and is
administered by Link Market Services (Trustees) Limited (formerly Capita IRG Trustees Limited) (Link). Link is the trustee of the LSL Property Services
Employee SIP Trust (Trust), in which shares are held on behalf of participants in the BAYE. The shares held in the Trust have dividend and voting rights
in line with the rules of the BAYE. At 31 December 2023, the Trust held 0.94% (2022: 1.01%) of the issued share capital in trust for the benefit of
employees of the Group and their dependents. The voting rights in relation to these shares are exercised by the Trustees.
Significant agreements – change of control
Some of our subsidiaries are party to agreements which take effect, alter or terminate upon a change of control of the subsidiary company, following
a takeover bid. The majority of our income from surveying, valuation and asset management is derived from specific contracts. Any termination of
such contracts on the change of control of the relevant subsidiary company will have a significant impact on those income streams.
The Group is party to a number of banking agreements, which are terminable by the bank upon a change of control of the Group and all outstanding
amounts become immediately due.
Events after the reporting period
On 2 February 2024, the Group acquired the entire issued share capital of TenetLime Limited (TenetLime), a subsidiary of Tenet Group Limited (Tenet
Group). TenetLime operates a network providing services to mortgage and protection advisers operating within appointed representative (AR) firms.
Following completion TenetLime became part of the PRIMIS Network and the Financial Services Network acquired 153 AR firms. The transaction also
includes the transfer of AR firms from Tenet Connect Limited (Tenet Connect) into other parts of the PRIMIS Network.
The Group did not acquire TenetLime’s network platform and only a small number of Tenet Group compliance staff were transferred to the Group
through the operation of TUPE. No other staff or assets were transferred in connection with the transaction. The Group has therefore determined
that the purchase was an asset acquisition and not a business combination on the basis that no substantive process was acquired. The primary asset
acquired is the contractual relationship with each of the individual AR firms acquired.
The Group has paid initial consideration of £5.7m and will pay further consideration of up to c£4.6m in the first half of 2025, calculated by reference
to the number of AR firms who remain in the PRIMIS Network 12 months following completion and calculated by reference to the turnover of these
firms in 2022 and an expected payment of £1.4m for assets which form part of TenetLime’s regulatory capital.
Report of the Directors
64
Substantial shareholdings
At 31 December 2023 and as at 24 April 2024, the shareholders set out below have notified LSL of their interest under DTR 5:
31 December 2023 24 April 2024
Institution
Nature of
shareholding
Number of
ordinary
shares
% of ordinary shares
(excluding treasury
shares
1
)
Number of
ordinary
shares
% of ordinary shares
(excluding treasury
shares
1
)
FMR LLC Beneficial 9,901,380 9.52 9,901,380 9.52
Kinney Asset Management, LLC Beneficial 9,298,489 8.94 9,298,489 8.94
Setanta Asset Management Limited Beneficial 6,288,162 6.05 6,288,162 6.05
SMF UK Management LLP Beneficial 5,523,218 5.31 5,523,218 5.31
Liontrust Asset Management plc Beneficial 5,485,475 5.28 5,485,475 5.28
Harris L.P Beneficial 5,220,081 5.02 5,220,081 5.02
Brandes Investment Partners L.P Beneficial 5,218,057 5.02 5,218,057 5.02
FIL Limited Beneficial 5,161,887 4.96 5,161,887 4.96
Utah State Retirement Systems Beneficial 3,356,555 3.23 3,356,555 3.23
Franklin Templeton Institutional LLC Beneficial 3,211,900 3.09 3,211,900 3.09
Individual shareholders (excluding Directors):
David Newnes Beneficial 3,479,910 3.35 3,479,910 3.35
Note:
1
Treasury shares are not entitled to dividends and have no voting rights at the Company's general meetings.
Political donations
We do not make any monetary contributions to political campaigns or to any political organisations or other tax-exempt groups. We may from time
to time engage the services of a lobbying organisation in relation to a specific issue. Group companies may also join trade associations which may
be involved in political or lobbying activities. We do not consider that these activities amount to our companies being engaged in or contributing to
political activities.
Directors’ responsibility statement
Each of the Directors confirm, to the best of their knowledge:
a. That the consolidated Financial Statements, prepared in accordance with UK adopted International Accounting Standards, give a true and fair
view of the assets, liabilities, financial position and profit of the Parent Company and undertakings included in the consolidation taken as a whole.
b. That this Report, including the Strategic Report, includes a fair review of the development and performance of the business and the position of
the Company and undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties
that they face.
c. That they consider this Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to
assess the Company’s position, performance, business model and strategy.
Disclosure of information to the auditor
Having made enquiries of fellow Directors and of the external auditor, each of the Directors on the Board at the date of this Report confirm that:
a. To the best of his/her knowledge and belief, there is no information (as defined in the Companies Act 2006) relevant to the preparation of this
Report of which the external auditor is unaware.
b. He/she has taken all the steps a Director might reasonably be expected to have taken to be aware of relevant audit information and to establish
that the external auditor is aware of that information.
The Report of the Directors has been approved by and is signed on behalf of the Board of Directors
Sapna B. FitzGerald
Company Secretary
24 April 2024
Corporate Governance Report
including Nominations Committee Report
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
65
Dear Shareholder,
It gives me great pleasure to introduce our Corporate Governance Report for 2023. I was appointed as Interim Non Executive Chair of the Board
with effect from 26 February 2024 and I have been on the Board as an independent Non Executive since February 2019. We are currently in a
process to appoint an independent Chair and I will continue in the role of Interim Chair until then.
The Corporate Governance Report sets out our corporate governance framework and explains how we have applied the principles and
complied with the provisions of the UK Corporate Governance Code 2018 (Code) during the year. During 2023, we complied with all aspects
of the provisions of the Code, including commencing a Board and Committee evaluation process which we intend to update once we have
appointed a new Chair. This will also consider undertaking an externally facilitated evaluation.
The Board is committed to good corporate governance and as Interim Chair, I am ensuring that our discussions are focused on the key topics of
strategy, financial and operational performance, customers, colleagues, risk and governance. I am also responsible for ensuring that all of our
decisions take our shareholders and other stakeholders into account. Further details on this are set out in our Stakeholder Engagement Report,
which explains how as Directors we have complied with our duties under s172 Companies Act 2006. Since my appointment as Interim Chair I,
and other Directors, have met a number of our shareholders and we continue to maintain an open dialogue with our investors.
Key governance activities during 2023
Board and its Committees
During the year, we reviewed the composition of our Remuneration and Nominations Committees, which resulted in changes to their
memberships in November 2023. In March 2024 we again reviewed the composition of all three Committees following the February 2024 Board
changes.
Following the revisions to our Committees, our Committees are operating in line with best practice, by not having the same individuals
attending all of the Committees, and by promoting efficiency through sharing the Committees’ work amongst the independent Non Executive
Directors. In addition, I have stepped down from the Audit & Risk Committee and as Chair of the Remuneration Committee to ensure we
continue to operate in compliance with the Code.
Financial Services Network
During the year, we also continued to review our governance arrangements within the Financial Services Network, building on the work
completed in 2022 which led to John Lowe’s appointment as Non Executive chair of PRIMIS. During 2023 we conducted a search for two
additional independent Non Executive directors to join the PRIMIS Board and at the end of the year, we appointed Bryce Glover and Lynzi
Harrison. Both have significant experience in retail financial services businesses. Since the beginning of 2024, the Financial Services Network
has also established two new committees: Risk & Customer Outcomes and Audit & Compliance, which will be chaired by Bryce and Lynzi
respectively. Bryce has also been appointed as the PRIMIS Consumer Duty Champion.
Board evaluation
During the year, we undertook an internally facilitated evaluation process which, due to the Board changes announced on 27 February 2024, we
intend to update once we have appointed a new Chair. The responses to the questionnaire supported the evaluation of each Director who is on
the Board at the date of this Report. Further details of this the evaluation process, including our reasons for not proceeding with an externally
facilitated evaluation, are included in the Corporate Governance Report.
AGM
I will be available at the 2024 AGM, along with my fellow Directors, to answer shareholders’ questions relating to the Board and our
Committees, and how we discharged our roles and responsibilities during 2023.
Darrell Evans
Chair of the Board and the Nominations Committee
24 April 2024
Corporate Governance Report including Nominations Committee Report
66
LSL has a premium listing on the London Stock Exchange. As a result, we are subject to the 2018 edition of the UK Corporate Governance Code and
the Financial Conduct Authority’s (FCA) requirements under the Listing Rules. A copy of the Code can be obtained from frc.org.uk.
We note the publication of the updated Code and Guidance in January 2024, which will apply to us from 1 January 2025. During 2024, we will review
the new Code and implement measures where needed to comply with it.
Compliance with the Code in 2023
Throughout the year we complied with the provisions of the Code in all respects.
This Code compliance statement has been prepared in accordance with the principles of the Code and the following pages explain how we apply the
principles.
Code principle Details of how we apply
Further information in
this Report
1 Board leadership
and company
purposes
• Board is led by an independent Chair, who drives strategic focus and robust debate.
• Diverse Board, with a strong mix of knowledge and experience.
• 2023 focus on strategic transformation.
• Company purpose, culture and values align to the Group strategy, provide an anchor
point for risk management and articulate what joins our three Divisions together.
• Board’s responsibilities include:
Д the ongoing process for identifying, evaluating, and managing the principal risks faced
by the company;
Д that the systems have been in place for the year under review and up to the date of
approval of the annual report and accounts; and
Д that the systems are regularly reviewed by the Board.
Purpose, Strategy,
Culture, Values and
Business Model
2 Division of
responsibilities
• Arrangements in place for Board, Executive and Senior Management engagement,
including a Matters Reserved for the Board policy which supports Board decision making.
3 Composition,
succession and
evaluation
• Diverse Board with breadth of experience, knowledge and skills.
• Board and its Committees are led by experienced Chairs.
• Board, Executive and Senior Management succession arrangements in place.
• Annual evaluation exercise is undertaken, with tracking of actions during each year.
• Regular engagement with shareholders by Executive and Non Executive Directors, to
ensure Board understands their priorities.
Stakeholder
Engagement Report
4 Audit, risk and
internal control
• Audit & Risk Committee led by an independent Non Executive Chair, with recent and
relevant financial experience.
• Clear oversight of external and internal audit functions and planning.
• Effective oversight of internal control environment, with a programme of work
supporting compliance and governance changes.
• Detailed consideration of the development of our TCFD arrangements.
• Ensures adequacy of the Divisional risk management framework and process and
participates in risk reviews, including identifying emerging risk.
• Oversight of financial reporting, including judgements made in preparing financial
reporting.
Non-Financial
and Sustainability
Information Statement
including TCFD
Audit & Risk Committee
Report
5 Remuneration • Remuneration Committee led by an independent Non Executive Chair.
• Oversight of Remuneration Policy content and application.
• Reviewing incentive schemes to ensure the attraction and retention of talent, driving our
culture and values and create alignment with stakeholder interests.
Directors’
Remuneration Report
67
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
Application of the Code and 2023 Compliance Statement
This section of the Report explains the main aspects of our governance arrangements and details how we apply the principles and comply with the
provisions in the Code. Other sections of this Report also contain details relating to the measures we have put in place to comply with the Code,
including:
Code principle Subject Further information
Principle C The Principal Risks and Uncertainties section details our framework of prudent and effective
controls, which enable risks to be assessed and managed.
Principal Risks and
Uncertainties
Principle E This section of the Report, together with the Stakeholder Engagement and ESG sections,
detail how we seek to take into account the views of our workforce and ensure that our
workforce policies and practices are consistent with our values and support our long-term
sustainable success.
Stakeholder Engagement
Report
Environmental, Social and
Governance Report
Corporate Governance
Report
Principles F and H The roles of the Chair and the Non Executive Directors are central to our compliance with the
Code. The Chair leads the Board, providing oversight of its arrangements and promoting a
culture of openness and debate. The Non Executive Directors provide constructive challenge,
strategic guidance, offer specialist advice and hold Management to account.
The Board
Principles P, Q and R Remuneration policies and practices should be designed to support strategy and promote
long-term sustainable success. Executive remuneration should be aligned to company
purpose and values, and be clearly linked to the successful delivery of the company’s
long-term strategy. A formal and transparent procedure for developing policy on executive
remuneration and determining director and senior management remuneration should be
established. No director should be involved in deciding their own remuneration outcome.
Directors should exercise independent judgement and discretion when authorising
remuneration outcomes, taking account of company and individual performance, and wider
circumstances.
Directors Remuneration
Report
Principles M, N
and O
The Board should establish formal and transparent policies and procedures to ensure the
independence and effectiveness of internal and external audit functions and satisfy itself on
the integrity of financial and narrative statements. The Board should present a fair, balanced
and understandable assessment of the company’s position and prospects. The Board should
establish procedures to manage risk, oversee the internal control framework, and determine
the nature and extent of the principal risks the company is willing to take in order to achieve
its long-term strategic objectives.
Audit & Risk Committee
Report
Code explanation: Bill Shannon extended term – explanation to confirm compliance with the Code
Provision 19 states that: The chair should not remain in post beyond nine years from the date of their first appointment to the board. To facilitate
effective succession planning and the development of a diverse board, this period can be extended for a limited time, particularly in those cases where
the chair was an existing non executive director on appointment. A clear explanation should be provided.
In January 2023, Bill Shannon’s term on the Board exceeded nine years and on 20 February 2023 we announced Bill’s intention to retire at the 2023
AGM. To support the succession process, the Board extended Bill’s term to expire at the end of December 2023. Notwithstanding this extension,
Bill retired from the Board at the end of the 2023 AGM (25 May) and David Barral, who joined the Board on 3 April 2023 as Chair Designate, was
appointed as Non Executive Chair on 25 May 2023. This limited extension of Bill’s term was in compliance with the Code as the Board felt it was
necessary to support the Chair appointment and succession arrangements.
Corporate Governance Report including Nominations Committee Report
68
Group governance structure
The Group’s governance structure provides the framework within which the Group operates and delivers on our strategy. The information in the table
below describes our governance arrangements as at the date of this Report.
Body Role and responsibilities Members
Board • The Board is responsible for establishing the Group’s purpose, its overall management and
for decisions on strategy.
• It also monitors financial and operational performance and, under the Group’s Matters
Reserved for the Board (MRB) policy, it also formulates the Group’s risk appetite
framework (see page 29).
• The Board has delegated matters to its Committees (detailed in their terms of reference)
and to the Executive Directors under the MRB policy.
Chair
Executive Directors
Non Executive Directors
Audit & Risk
Committee¹
• The Committee discharges governance responsibilities in respect of audit, risk and internal
controls, and reports to the Board as appropriate.
• It also oversees our arrangements with external auditors.
Independent Non Executive
Directors
Remuneration
Committee
1
• The Committee determines the policy for Executive Director remuneration and sets
remuneration for the Chair, Executive Directors, Company Secretary and Senior
Management (with the definition of Senior Management for this purpose being
determined by the Board), in accordance with the principles and provisions of the Code.
• It also reviews workforce remuneration and related policies and the alignment of
incentives and rewards with culture, taking these into account when setting the policy for
Executive Director Remuneration.
Chair and independent
Non Executive Directors
Nominations
Committee
1
• The Nominations Committee leads the process for appointments to the Board and ensures
plans are in place for orderly succession to both the Board and Senior Management
positions.
• It also oversees the development of a diverse pipeline for succession planning.
Chair and independent
Non Executive Directors
Disclosure
Committee
1
• Where requested by the Board, the Disclosure Committee oversees our compliance with
the disclosure and control of inside information obligations, as set out in the UKLA’s Listing
Rules (LR), Disclosure and Transparency Rules (DTR) and the UK Market Abuse Regulation
(UK MAR).
Chair
Executive Directors
Senior Independent
Director
Executive
Committee
• The Executive Committee is established and chaired by the Group CEO and includes his
direct reports.
• It is responsible for co-ordination across the Group.
Executive Directors (Group
CEO and Group CFO)
Divisional managing
directors
Chief People Officer
Group Chief Strategy Officer
General Counsel and
Company Secretary
Investment
Committee
• This Committee is established to consider investment decisions, in accordance with the
Group’s capital allocation policy.
• Where authority is delegated by the Board, the Committee can approve investment
requests, otherwise it will determine if a request is suitable for submission to the Board for
approval.
• The Committee will also monitor investments once approved, to ensure they deliver in
accordance with their business case.
Group CEO
Group CFO
Living Responsibly
Steering Committee
(SteerCo)
• The Group CEO established the SteerCo to support our corporate sustainability and ESG
strategy and programme.
• The following sub-groups report into the SteerCo:
Д Environmental Working Group
Д Inclusion and Diversity Forum
Д Communities Forum
Group CEO
Chief People Officer
General Counsel and
Company Secretary
Chair Environmental
Working Group
Head of Environmental,
Social and Governance
69
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
Divisional
management teams
• Each trading Division has statutory boards for each of its companies, and an executive
management team led by the Divisional managing director.
• The Divisional management teams meet every quarter with the Group CEO and Group CFO
to review financial and operational performance and risks.
• The Divisional managing directors submit regular reports to the Board and are invited
to present to the Board and the Audit & Risk Committee during the year on a range of
matters, including financial and operational performance and risk.
• The Divisional governance arrangements include committees with specific roles and
responsibilities. The Audit & Risk Committee receives a report each year detailing the
committees within each Division.
• The Financial Services Network has established a combined board with an Audit &
Compliance Committee and a Risk & Customer Outcomes Committee. The PRIMIS
combined board and its committees are chaired by independent non executive directors.
Divisional management
teams include:
Managing directors
Finance directors
Sales directors
Operations directors
Chief risk officers
Note:
¹ Further details about the roles and responsibilities of the Board’s Committees are set out below in The Board’s Committees section.
The Group’s governance arrangements are supported by Group Finance, LSL Legal (in-house legal team), Company Secretariat, Group HR and Internal
Audit.
Purpose, culture, values, strategy and business model
The diagram below explains how our Group purpose, culture, values, strategy and business model link with each other, how they interact with our
governance arrangements and how they deliver long-term value for our stakeholders.
Our purpose:
To provide first class services to mortgage
and insurance advisers, estate agents,
lenders and their customers, to create
long-term benefits for external
stakeholders and our people.
Strategy:
Financial Services is at the heart of
our strategy and we will conƟnue to
grow our Surveying & ValuaƟon and
Estate Agency Franchising Divisions,
including a specific focus on
leveraging their capabiliƟes to grow
the Financial Services Division.
Business model:
We leverage our technology,
infrastructure, capital and
people to provide first class
products and services to
mortgage and insurance
intermediaries, franchisees,
lenders and consumers for the
benefit of our shareholders,
colleagues, customers and
suppliers.
Culture and values:
The right people:
who accept accountability
for their acƟons.
Doing the right things:
which deliver customer
expectaƟons.
In the right way: being
open, challenging of
themselves and supporƟng
others.
Long-term value for our
stakeholders:
Long-term benefits for our
external stakeholders, our
people and our surroundings.
Our commitment to
Living Responsibly:
Increase the diversity of our
Board and workforce.
Build an inclusive culture
where colleagues are
supported to develop and
thrive.
Support colleagues to
connect with our
communiƟes.
Minimise our environmental
footprint.
Ensure excellent
governance.
Our business model and
strategy generate value
for our stakeholders
Culture aligned to
purpose, values and
strategy
Become a more
sustainable
business
Purpose drives our business model and
shapes our strategic decisions
Corporate Governance Report including Nominations Committee Report
70
Alongside these arrangements, the Divisions have also adopted Divisional purpose, culture and values which are aligned with the Divisional strategies
and business models. See the ESG section of this Report for further details on the Divisions’ purpose, culture and values.
During the year, the Board considers Group culture in a range of ways including an annual review presented by the CPO. If any issues are identified,
action plans will be put in place and monitored by the Board.
The Board’s Committees
The Board has established four Committees:
• Audit & Risk
• Nominations
• Remuneration
• Disclosure
The terms of reference for the Audit & Risk, Nominations and Remuneration Committees are available on our website: lslps.co.uk.
The Audit & Risk, Nominations and Remuneration Committees have meetings scheduled as part of the annual planning process, with other meetings
organised during the year as required. The Disclosure Committee only meets when required.
See below for details of the number of meetings for the Board and each of the Committees in 2023. During the year the Board reviewed and updated
the memberships of the Nominations, Remunerations and Disclosure Committees, to ensure our governance arrangements reflect best practice.
Further details are included in the Nominations Committee report later in this section of the Report.
Committee
Members as at
31 December 2023
Members as at
5 March 2024 Role and responsibilities
Nominations
1
David Barral
2
(Chair)
Gaby Appleton
Darrell Evans
Darrell Evans (Interim
Chair)
Gaby Appleton
James Mack
• Lead the process for appointments to the Board and its Committees.
• Oversee succession plans for the Directors and members of the
Senior Management Team (including the Executive Committee).
• Approve the Diversity Policy and targets, and monitor the Group’s
compliance with the Policy and targets.
Remuneration
1
Darrell Evans (Chair)
Gaby Appleton
David Barral
2
Gaby Appleton (Chair)
Darrell Evans
Sonya Ghobrial
• Determine the Policy for Executive Director remuneration and set the
remuneration for the Executive Directors, the Chair and members of
the Senior Management Team (including the Executive Committee),
together referred to as the RemCo Population.
• Review workforce remuneration and related policies and alignment
of incentives and rewards with culture, when setting Executive
Remuneration Policy.
• See the Directors’ Remuneration Report for further details on how
the Committee has discharged its roles and responsibilities in 2023
(page 92).
Audit & Risk James Mack (Chair)
Gaby Appleton
Darrell Evans
Sonya Ghobrial
James Mack (Chair)
Gaby Appleton
Sonya Ghobrial
• Oversight of audit, risk and internal control arrangements. See the
Audit & Risk Committee Report (page 85) and the Principal Risks and
Uncertainties section (page 29) for further details, including details of
our internal controls and risk management arrangements.
Disclosure David Barral
2
Gaby Appleton
David Stewart
Adam Castleton
Darrell Evans
James Mack
David Stewart
Adam Castleton
• Ensuring compliance with the UKLA’s Listing Rules (LR), Disclosure and
Transparency Rules (DTR) and the UK Market Abuse Regulation (UK
MAR).
Notes:
1
James Mack and Sonya Ghobrial were also members of the Nominations Committee and Remuneration Committee until 13 November 2023. The memberships
of the Nominations and Remuneration Committees were reduced in 2023 following a review of Committee memberships. Sonya rejoined the Remuneration
Committee and James rejoined the Nominations Committee in March 2024 following the Board changes announced in February 2024. See Nominations
Committee Report for further information.
2
Bill Shannon was chair of the Nominations Committee and a member of the Remuneration Committee until he retired from the Board at the AGM on 25 May
2023. David Barral joined the Remuneration Committee and Nominations Committee on 3 April 2023 and was appointed chair of the Nominations Committee
when he took over the role of Chair of the Board on 25 May 2023. David also replaced Bill as a member of the Disclosure Committee with effect from 25 May
2023. David left the Board and its Committees on 26 February 2024. Following this Darrell was appointed as Interim Chair of the Board and Nominations
Committee. He also retired as Chair of the Remuneration Committee and as a member of the Audit & Risk Committee to ensure we continue to operate our
Committees in accordance with the Code.
71
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
Executive Committee
We have an Executive Committee, which is headed by David Stewart. At the date of this Report the team comprises:
Name Role Other information
David Stewart Group Chief Executive Officer (CEO) Executive Director
Adam Castleton Group Chief Financial Officer (CFO) Executive Director
Richard Howells
1
Group Director of Financial Services PDMR
3
Steve Goodall Managing Director – Surveying & Valuation PDMR
3
Paul Hardy
2
Managing Director – Estate Agency Franchising PDMR
3
Sapna B. FitzGerald General Counsel and Company Secretary –
Debra Gardner Chief People Officer (CPO) –
Notes:
1
Richard was appointed as Group Financial Services Director in February 2024. Jon Round held this position during 2023.
2
Paul was appointed as Managing Director – Estate Agency in March 2023. Prior to March 2023 Helen Buck was the Executive Director – Estate Agency.
3
Reference to ‘PDMR’ is to a ‘person discharging managerial responsibilities’ for the purposes of the UK Market Abuse Regulation.
Executive Committee diversity
At the date of this Report, the Executive Committee comprises seven people, and includes two women and one person from a minority ethnic
background.
In this Report we have used the definition of minority ethnic background which has been implemented in the reporting requirements set out in
Listing Rules 9.8.6R and 14.3.33R(1). Minority ethnic background is defined by reference to the following ONS categories, excluding the category
‘White British or other White (including minority-white groups)’:
• Asian/Asian British.
• Black/African/Caribbean/Black British.
• Mixed/Multiple Ethnic Groups.
• Other Ethnic Group, including Arab.
For further details relating to the diversity of our colleagues, including the Senior Management Team, see the Environmental, Social and Governance
Report (page 50).
Board composition
The Directors at 31 December 2023 are shown in the table below. Biographical details of each person who was a member of the Board in 2023 and is
a member of the Board at the date of this Report are contained in The Board section of this Report (page 56).
The details include information relating to other directorships. The Board does not consider that any of the Directors’ other appointments interfere
with their role at LSL.
Name Role Additional role during 2023 Additional role from 5 March 2024
3
David Stewart Executive Director Group Chief Executive Officer (CEO) -
Adam Castleton Executive Director Group Chief Financial Officer (CFO) -
David Barral
1
Non Executive Director Chair Left the Board on 26 February 2024
Gaby Appleton Independent Non Executive
Director
Senior Independent Director (SID) Chair of Remuneration Committee
Non Executive Director designated
for workforce engagement
Darrell Evans
2
Independent Non Executive Director Chair of the Remuneration
Committee and Non Executive
Director for workforce engagement
Interim Chair of the Board
Chair of Nominations Committee
James Mack Independent Non Executive Director Chair of the Audit & Risk
Committee
Chair of the Audit & Risk Committee
Senior Independent Director (SID)
Sonya Ghobrial Independent Non Executive Director - -
Simon Embley Non Executive Director - -
Notes:
1
David Barral was considered to be independent prior to his appointment as a Director. David joined the Board as Chair Designate on 3 April 2023 and took over
as Chair on 25 May 2023. He left the Board on 26 February 2024.
2
Darrell Evans was considered to be independent on his appointment as Interim Chair on 26 February 2024. We have commenced a search for a new independent
Chair.
3
As a result of the Board changes which took place on 26 February 2024, we have revised our Committee memberships.
Corporate Governance Report including Nominations Committee Report
72
Board diversity
At 31 December 2023, the Board included six male and two female Directors and it included one person from a minority ethnic background
(see above for definition of minority ethnic background). In relation to the Board’s senior roles, this included three males (Chair, Group CEO and Group
CFO) and one female (SID).
Following the Board changes announced on 27 February 2024 and 6 March 2024, the Board includes five male and two female Directors, with the
Board’s senior roles held by four males.
The Board’s composition does not meet all of the Group’s diversity targets, which are aligned to the diversity targets in the Listing Rules and detailed
in our Diversity Policy. See Board diversity and inclusion below for further details.
Board skills and experience
During 2023, the Board included skills and experience in the following areas:
Strategy ESG Digital products
Technology and digital services Investor relations Strategic leadership
Financial services Risk and compliance Value creation
Operations Sales and marketing Transformation
Governance Finance Audit
Residential and commercial property Employment and human resources Professional information solutions
Entrepreneurship Banking and treasury Financial controls
Independent Non Executive Directors
During the year and as at the date of this Report, each of the Directors identified above as independent continued to meet the criteria set out in
provision 10 of the Code.
Director elections/re-elections
All Directors will retire at the AGM and, except for Simon Embley who will step down on 1 May 2024, they will stand for election/re-election. Further
details relating to the Directors’ election will be included in the Notice of Meeting.
Director appointment arrangements
Each Executive Director has a service contract, and each Non Executive Director (including the Chair) has a letter of appointment. These documents
are available for inspection at our registered office and at our York office (location of Company Secretariat Team) during normal business hours and at
each AGM. Further details relating to the Directors’ appointments are contained in the Directors’ Remuneration Report.
Key Board roles
There is clear division of responsibilities between the key roles on the Board, details of which are set out on our website (lslps.co.uk) and are
summarised below.
Role Responsibilities summary
Chair
• Leadership of the Board, including setting its agenda and overseeing its decision making processes
and arrangements.
• Shaping the culture, style and tone of discussions and promoting openness and debate.
• Leading regular Non Executive Director only meetings, to support the Board’s discussions.
• Overseeing our stakeholder engagement arrangements.
• Supporting the Group CEO and other Directors, including ensuring appropriate training and induction
arrangements are in place.
• Leading our annual Board and Committee evaluation exercise.
Group CEO
• Running the business, using delegated powers set by the Board.
• Proposing and delivering Group strategy.
• Overseeing Group culture and sustainability priorities (i.e. Living Responsibly/ESG).
• Supporting the Board’s decision making by providing appropriate information.
Senior Independent Director
• Acting as a sounding board for the Chair.
• Leading the evaluation of the Chair.
• Providing an alternative point of contact for Directors and stakeholders (including shareholders).
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Overview
Board and Committee meetings in 2023
Each year, we put in place a schedule of meetings for the Board and our Committees, which are supplemented by additional meetings as required.
The Directors meet in person and virtually. The table below summarises the meetings for 2023 and each Director’s attendance. Where a Director is
not a member of a Committee, their attendance or non-attendance is not reported. We also schedule meetings for the Non Executive Directors to
meet without the Executive Directors. The Audit & Risk Committee also meets the auditor without the Executive Directors.
The Disclosure Committee did not meet during 2023.
2023 Board Member
Attendance at Board
meetings (including
strategy meetings)
(total 13 held in the year)
Attendance at Audit
& Risk Committee
meetings (total 4 held in
the year)
Attendance at
Remuneration
Committee meetings
(total 4 held in the year)
Attendance at
Nominations Committee
meetings
(total 3 held in the year)
Gaby Appleton 13 4 3 3
David Barral
1
8 2 1
Helen Buck
2
4
Adam Castleton 13
Simon Embley 13
Darrell Evans
3
11 4 4 3
Sonya Ghobrial
3/5
12 4 3 3
James Mack
3/5
12 4 3 3
Bill Shannon
3
8 2 2
David Stewart 13
Notes:
1
David Barral joined the Board on 3 April 2023 and the table records his attendance following his appointment.
2
Helen retired from the Board on 31 March 2023 and the table records her attendance prior to her retirement.
3
Bill retired from the Board and the Nominations, Remuneration and Disclosure Committees on 25 May 2023 and the table records his attendance prior to his
retirement.
4
James and Sonya each missed one Board meeting during the year and Darrell missed two. Ahead of the meeting they each received the papers and were able to
provide feedback for the other Directors to consider at the meeting.
5
Sonya and James retired from the Nominations and Remuneration Committee in November 2023 following a review of the membership of these Committees.
Board meeting and decision‑making arrangements
At the start of each year, we create a schedule of matters for discussion, which includes special business as well as standing items. This ensures
the Board’s sessions focus on material matters and strategy. At the end of each meeting during the year, the Board discusses and agrees items for
inclusion in the agenda for the next meeting(s).
The Board also has a MRB policy, which identifies matters that require Board approval, matters that are delegated to the Group CEO and Group
CFO for approval, and matters which the Board will receive for information. During 2023 the Board reviewed its MRB policy, with the exercise also
considering governance best practice, including guidance published by the Chartered Governance Institute. No amendments were identified as being
required.
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74
For each scheduled meeting the Directors receive regular reports that may include the following:
Report Content
Group CEO’s report
• Strategy
• Key project updates
• Commentary on the Group’s performance
• Material risk issues
• Colleague report (detailing colleague matters and KPIs including staff turnover data and whistleblowing reporting)
• Living Responsibly ESG KPIs
Group CFO’s report Group financial performance review and other financial and operational matters
Division’s report Each managing director provides a report on:
• Financial performance
• Risk
• Operational matters
• KPIs
Governance report Legal and MRB policy reporting (being either information which is required to be given to the Board or proposals
requiring Board approval).
Shareholder report Report detailing changes to our investor register.
Board planner Record of meetings conducted during the year, together with agenda items scheduled for future meetings.
During the year, each member of the Executive Committee submitted a report to each scheduled Board meeting, focusing on key matters and risks
relevant to the Division or team. In months with no scheduled meetings, the Group CEO and Group CFO continued to report on Group performance
and strategic projects.
The Board will also receive special business presentations, which could relate to a particular aspect of strategy, business area, investment opportunity
or initiative.
The meeting arrangements ensure we effectively manage the volume of Board reporting. The quality of Board reporting and meeting arrangements
are topics specifically covered in the annual Board and Committee evaluation exercise, as we seek to continuously improve our reporting and
decision-making arrangements. Further details of our annual evaluation exercise is included below.
The Directors, the Board and the Committees are all supported by the Company Secretary (Sapna B. FitzGerald), who is responsible for ensuring
adherence to governance requirements. All Directors have access to the advice of the Company Secretary on governance matters. The Company
Secretary’s duties include managing meeting arrangements and supporting Director induction and training.
The Directors ensure Board decisions promote the success of LSL for the benefit of our shareholders, taking into account our stakeholders, in
accordance with s172 of the Companies Act 2006. Details of how we do this is included in our s172 Statement, which is within the Stakeholder
Engagement section of this Report (page 26).
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Overview
Board decisions in 2023
Set out below is a summary of some of the Board’s key decisions during 2023, together with how any relate to our strategy and our key stakeholders:
Key topic Link to strategy Relevant stakeholder(s)
Group simplification through divestments:
The Board approved the disposal of assets which are not core to the Group’s strategy. These disposals are in line
with our strategy to simplify the Group, focus on developing our B2B business, and reduce exposure to market
cycles.
• Shareholders
• Colleagues
• Customers
• Suppliers
Disposal of Marsh & Parsons Marsh & Parsons, while part of the Estate Agency Division, had operated
autonomously from other parts of the Division.
After evaluation it was not considered suitable for inclusion in the Group's
Estate Agency Franchising business and the opportunity was taken to
dispose of for cash at an attractive earnings multiple.
The disposal provided the Group with capital and balance sheet flexibility
to take advantage of opportunities to support investment in our strategy
and reduce our exposure to housing market cycles.
• Shareholders
• Colleagues
• Customers
• Suppliers
Franchising of the entire Estate
Agency networks
The restructuring of Estate Agency into the Franchising Division involved
the franchising of the Your Move, Reeds Rains and LSLi brands.
Operating a franchise network offers significant advantages, including:
• A higher-margin business with a significantly smaller fixed cost base,
resulting in improved and substantially less-volatile earnings through
housing market cycles.
• The continued distribution of related products and services, including
long-term provision of financial services.
• The potential to grow network footprint without significant additional
investment, by supporting the expansion of franchisees and recruiting
new franchisees.
• The opportunity to benefit from the entrepreneurship and agility of
independent franchisees, resulting in a more productive, flexible, and
resilient business model.
• Shareholders
• Colleagues
• Customers
• Suppliers
Disposal of D2C broker businesses to
Pivotal Growth
The divestments of the Financial Services D2C broker businesses simplified
the Group structure, and our strategy is now focused on growing our
Financial Services Network business (B2B).
The businesses were acquired by our joint venture, Pivotal Growth, which
is better placed to increase their value. LSL retains the ability to capitalise
on opportunities in D2C financial services through its equity share in
Pivotal Growth.
• Shareholders
• Colleagues
• Customers
• Suppliers
Disposal of PRSim property
management business
The Group operated a small private rented sector property management
business (PRSim), which was subscale in the market. Its divestment has
simplified the Group structure.
• Shareholders
• Colleagues
• Customers
• Suppliers
Acquisition to grow the Financial Services Network
Acquisition of TenetLime The acquisition of the directly authorised network expands our Financial
Services Network business with the addition of appointed representative
firms and advisers to the PRIMIS Network. This increases the scale of
PRIMIS providing opportunities for scale economies.
• Shareholders
• Colleagues
• Customers
• Suppliers
• Regulator (FCA)
Corporate Governance Report including Nominations Committee Report
76
Key topic Link to strategy Relevant stakeholder(s)
Customer contracts
Renewal of lender valuation services
contracts
e.surv successfully renewed contracts with key lenders, including our
contract with the Lloyds Banking Group (which due to its significance falls
within our MRB policy). The renewal of these contracts underpins e.surv's
strong market position and provides increased security over medium-term
income streams.
• Shareholders
• Colleagues
• Customers
Capital
Group’s banking facility During the year, the Board approved the amendment and restatement
of the Group’s banking arrangements. The revised facility provides the
Group with capital and balance sheet flexibility, to take advantage of
opportunities to support and invest in our strategy.
• Shareholders
Capital allocation policy The Board has approved the establishment of an Investment Committee
and, during the year, reviewed our capital allocation policy. The
Investment Committee is responsible for receiving and reviewing
investment requests and making recommendations to the Board, in
accordance with the capital allocation policy.
• Shareholders
Corporate sustainability
ESG: The Board considered the
development of the Group’s
sustainability programme
We have focused on developing our Living Responsibly ESG programme
and environmental reporting, especially in relation to our reporting under
the recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD).
As a result of the Group simplification programme, we have reviewed
our purpose statement and the updates are included in this Report. See
the Purpose, Strategy, Culture, Values and Business Model section of this
Report for the updates to our purpose, strategy and business model.
• Shareholders
• Colleagues
• Customers
Governance matters (not directly linked to strategy)
Review of Financial Services
Network governance arrangements
We have focused during the year on the development of the governance
arrangements within the Financial Services Network business. This
included a third-party review, resulting in a number of recommendations
which are being implemented. The actions taken include recruiting two
additional independent non executive directors onto the PRIMIS Board
and the creation of two new committees within the PRIMIS Network
(Audit & Compliance and Risk & Customer Outcomes). Together with the
two new independent non executive directors, the PRIMIS combined
board has three independent non executive directors and one non
executive director who was previously the managing director.
• Shareholders
• Colleagues
• Customers
• Suppliers
Directors’ conflicts of interest
We have arrangements to manage any conflict of interest that may arise in relation to a Director. We maintain a register of Directors’ interests
and ensure that where a conflict is declared, the Director is either excluded from discussions or obtains the Board’s approval to participate.
Notwithstanding this, no Director is permitted to participate in any decision relating to their appointment, including their remuneration.
Director induction and training
Induction plans are tailored for each Director when they join. During 2023, Sonya Ghobrial and David Barral both completed their induction plans
(Sonya’s started in 2022 and her induction was completed in 2023). Inductions include receiving previous meeting papers, and meetings with
members of the Board and the Executive Committee, our corporate brokers and our internal and external auditors. Induction plans also include
meetings with significant shareholders and customers (as appropriate), to discuss a range of issues.
For existing Directors, training is arranged as required. This could be triggered by a change in regulation which impacts LSL or by a Director or the
Board requesting training or information on a particular subject.
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Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
Board and Committee evaluation
Each year, the Directors review the performance of the Board and the Committees in respect of the reporting year, and this was completed in respect
of 2023. However, due to the recent Board changes we intend to update the exercise once we have completed our search for a new independent
Chair.
For 2023, we chose to undertake the exercise as in previous years using a questionnaire which was completed by all Directors. We decided not to use
an external facilitator due to the significant changes to the Group and the Board that took place in the year, because we felt we needed to embed
the changes before embarking on an external evaluation, in order to ensure we are getting the best value from the exercise. The responses to the
questionnaires were shared with the Board and they contributed to the Board’s assessments with regards to the effectiveness of the Directors who
are on the Board at the date of this Report. As we are outside of the FTSE 350 companies, we are not required by the Code to undertake an externally
facilitated evaluation.
Based on the responses to the questionnaire, the Board has identified the following actions to be completed in 2024 to further enhance our
governance arrangements. Our priority is to appoint a new Chair and once this happens, we will update our evaluation exercise, and these actions
(if required):
1. Reporting: building on the improvements made in 2023, further develop reporting including the development of existing and additional KPIs and
ensuring papers and meeting arrangements support continued Board effectiveness.
2. Succession: develop the Board’s succession planning arrangements with a focus on diversity and ensuring the Board is equipped with the right
mix of skills to support the Group’s strategy, taking into account the restructuring which has occurred in 2023, and prioritise the development of
succession planning arrangements for the Executive Committee, especially in relation to the key roles of Group CEO and Group CFO.
3. Risk and governance: develop the Group’s arrangements in relation to both Group risk management and climate-related risk and opportunity
arrangements ensuring compliance with TCFD. This will include a review of the Audit & Risk Committee composition and its meeting
arrangements.
4. Stakeholder engagement: continue with the shareholder engagement arrangements ensuring we maintain an open dialogue with our
stakeholders, especially our shareholders.
5. Evaluation/performance: consider use of an externally facilitated evaluation in the next few years with the new Chair.
In addition to the above actions identified by the annual exercise, we are also looking to appointment three additional independent non executive
directors to the Board including two into the roles of non executive chair and senior independent director.
Board and Committee composition
The Board and the Nominations Committee each year review the Board’s composition and this is an important part of the Board’s succession
planning, as it provides an opportunity to review skills and expertise and to agree plans for filling any gaps in and developing the Board’s diversity.
Further details relating to succession planning, diversity and recruitment are set out below, within the Nominations Committee Report.
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78
Actions in response to the 2022 evaluation exercise
As part of the Board’s 2023 year-end review, the Directors assessed the completion of actions identified during the previous year and confirmed that
the actions were either completed or deferred for completion in 2024.
These included:
Agreed action Progress report
a. Continue the Board’s succession planning with a focus on improving its diversity
of skills, gender, ethnicity, experience and social background and, in relation to
the NEDs, seek to have a mix of portfolio NEDs and NEDs with executive roles.
Continuing to progress
b. Continue to improve Board reporting, meeting arrangements and
communication of Board expectations to the Divisional management teams, to
support continued Board effectiveness.
Continuing to progress
c. Consider an externally-facilitated evaluation for 2024. Deferred – the Board decided to defer this, as discussed
above.
Nominations Committee Report
During 2023, Bill Shannon chaired the Nominations Committee until he retired on 25 May, with David Barral taking over the role. From 1 January to
13 November 2023, the Committee’s other members were Gaby Appleton, Darrell Evans, James Mack and Sonya Ghobrial. On 13 November 2023,
following a review of Committee membership, James Mack and Sonya Ghobrial retired from the Committee.
Since 26 February 2024, the Nominations Committee is being Chaired by Darrell Evans and its other members are Gaby Appleton and James Mack.
James Mack, as SID, is leading in the search for a new Chair on behalf of the Nominations Committee.
2023 highlights
The Nominations Committee met three times in 2023 and its discussions and decisions included:
a. Bill Shannon’s retirement and the appointment of David Barral as Chair Designate and then Non Executive Chair.
b. Extensions of Simon Embley’s Non Executive term from 31 December 2023 to the conclusion of the 2024 AGM.
c. Review of the Executive and Senior Management Teams (including the Executive Committee). This included considering the Divisional leadership
teams and appointments to senior management roles across the Group, including:
i. Jon Round moving into the role Non Executive Director of PRIMIS.
ii. Richard Howells being appointed as the Group Financial Services Director.
d. Review of Board composition, including the Non Executive Directors’ skills, experience, expertise, diversity and recruitment.
e. Consideration of the Group’s diversity and inclusion projects, and the FCA consultation on the diversity of listed company boards, committees,
and senior management teams. The Committee also reviewed and reapproved the Diversity Policy (including the existing targets). See below for
further details.
f. Oversight of Senior Management succession planning arrangements, which are being led by the CPO and Group CEO.
g. Annual review of its terms of reference.
Non Executive Director Appointments
Appointment of David Barral as Non Executive Chair
During 2022, following a tender process, we selected and appointed Heidrick & Struggles to assist with the recruitment of a Non Executive Chair to
succeed Bill Shannon, which resulted in the appointment of David Barral. This search started in 2022 and was completed in 2023.
We sought to ensure that Heidrick & Struggles presented the Nominations Committee with a diverse longlist from which it could make its selection.
From this longlist, Board members selected a shortlist of appointable candidates for interview, following which David Barral was appointed as Chair
Designate and then Chair. Bill Shannon did not participate in the search or selection process, which was led by Gaby Appleton.
Whilst we believe that all appointments should be on merit, we recognise the imbalance that exists and the role that we can play in improving
diversity and inclusion. We also recognise the benefits that diversity has on decision making and on the Group’s performance and this is supported
by our Diversity Policy (see below). In all of our Director searches, we are clear that the Board is committed to improving its diversity (including
gender, ethnicity and expertise) and this was a very important consideration for the Board and the Nominations Committee in 2023.
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Governance Reports and Committee Reports)
Overview
Appointment of independent non executive directors into the Financial Services Network
During 2023, as a result of the review of governance arrangements within the Financial Services Network, we sought to recruit two additional
independent non executive directors to join the PRIMIS Board. To support us, we selected and appointed HW Global and set it a target in respect of
female candidates on the shortlist. For more details, see below.
Voluntary Code of Conduct for Executive Search Firms
Heidrick & Struggles and HW Global are both signatories to the Government’s Standard Voluntary Code of Conduct for Executive Search Firms*.
We chose this code of conduct because signatories are actively committed to helping clients increase the effectiveness of their boards and senior
executive teams and acknowledge the value that diversity brings. Neither firm has any connection to the Group, other than the provision of these
services.
Appointment of new Chair and search for additional independent Non Executive Director
Since the Board changes announced on 27 February 2024, we have commenced a process to appoint a new Non Executive Chair, an experienced
Senior Independent Director and an additional independent Non Executive Director to strengthen the Board. We have instructed Miles Advisory to
assist us with these searches.
Board diversity and inclusion
The Nominations Committee and the Board received presentations on the Group’s initiatives to promote diversity and inclusion. Details of these
initiatives in relation to colleagues are included in the Environmental, Social and Governance Report (page 50).
The Board has adopted its Diversity Policy, which relates to the diversity of the Board, its Committees and our Senior Management Team (including
the Executive Committee). This followed the FCA’s publication of the final rules in 2022 and the recommendation of the Nominations Committee.
The Policy sits alongside other Group employment policies, which also seek to promote diversity and inclusion across the Group. A copy of the
Policy is available at lslps.co.uk.
Summary of the Diversity Policy:
Topic Policy summary
Importance of
diversity
The Board recognises the benefits of diversity. Through its recruitment, appointment and succession planning arrangements,
LSL seeks to promote diversity including professional skills, experience, social backgrounds, gender and ethnicity, in addition
to individual cognitive and personal strengths.
In relation to the Board, LSL believes that diversity has a positive effect on decision making and benefits shareholders
and other stakeholders. The Directors recognise that the Board and Committees set the tone for diversity and inclusion
throughout the Group and that by actively reviewing, monitoring and engaging with discussions of diversity and inclusion, the
Board is best able to drive a positive impact to the advantage of all stakeholders.
While the Policy includes targets in relation to gender and ethnicity, LSL recognises that other types of diversity exist,
including sexual orientation, disability, neurodiversity and socio-economic background.
Role of the
Nominations
Committee
The Committee leads the process for appointments to the Board and its Committees, and ensures that plans are in place for
orderly succession to both the Board and Senior Management positions. In discharging its duties, the Committee oversees the
development of a diverse pipeline for succession.
Role of the
Remuneration
Committee
The Committee is responsible for the Remuneration Policy relating to the Chair, the Executive Directors and Senior
Management (including the Company Secretary). The Remuneration Committee also reviews workforce remuneration and
related policies and the alignment of incentives and rewards with culture and the promotion of diversity and inclusion in the
LSL Group.
Annual evaluation As part of the annual evaluation exercise, the Directors consider the Board and each Committee’s composition, diversity and
how effectively the members work together to achieve LSL’s objectives.
Diversity targets The Board has adopted measurable objectives for diversity of the Board and the Senior Management, which align with the
FCA’s final rules (see below).
Annual reporting LSL will report annually in the Corporate Governance Report on whether it has met its targets and if not, the reasons for not
meeting the targets. The reporting will also include details of the processes used in relation to appointments to the Board, its
Committees and Senior Management, and their succession plans. It will detail any changes to the Board between the year end
and the date that the annual report and accounts are approved by the Board. Finally, the reporting will include an explanation
of LSL’s approach to collecting data used in the disclosures required by the Listing Rules.
Policy review The Policy is subject to an annual review by the Nominations Committee on behalf of the Board.
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80
Diversity targets (adopted since April 2022):
31 December 2023 24 April 2024
Board
Gender diversity:
a. At least 40% women Target not met: 33% No change
b. At least one woman in the role of Chair, Group CEO, Group CFO or
SID
Target met: Gaby Appleton is the SID Target not met: the roles of Chair,
Group CEO, Group CFO and SID are
held by males
Ethnic diversity: at least one director who is from a minority ethnic
1
background
Target met: One Target met: One
Senior Management Team
Gender diversity: by 1 January 2023, at least 33% are women and at
least 33% are men
Female target met: 33% female
Male target met: 67% male
No change
Ethnic diversity: by 1 January 2023, at least 11% are from a minority
ethnic
1
background
Target not met: 5% No change
Note:
1
Minority ethnic background is defined as from one of the following categories of ethnic background, as set out in the tables in LR 9 Annex 2.1R(b) and LR 14
Annex 1.1R(b), excluding the category ‘White British or other White (including minority-white groups)’:
• Asian/Asian British.
• Black/African/Caribbean/Black British.
• Mixed/Multiple Ethnic Groups.
• Other Ethnic Group, including Arab.
Changes to the Board or Senior Management diversity between 31 December 2023 and the date of this Report are included in the table above. The
definition of Senior Management is determined by the Board and includes members of the Executive Committee and their direct reports who are
A1 and A2 grades (excluding Executive Directors).
Our Board and Senior Management targets will be reviewed during 2024 and may be adjusted by the Board, on the recommendation of the
Nominations Committee. We would not adopt targets lower than those stipulated in the Listing Rules.
We have not to date met all of our targets relating to Board or Senior Management level diversity. This has been due to limited movement at these
levels since the Policy was first adopted in 2022. The limited movement and the Group restructuring mean that there has been limited opportunities
to promote or recruit diverse candidates onto the Board or into the Senior Management Team. In relation to the Board, see above for the process
we followed in the appointment of David Barral as Chair, including ensuring the selection process was diverse.
In relation to recruitment, the Nominations Committee is focused on ensuring the inclusion of women and individuals from minority ethnic
backgrounds in searches for the Board and Senior Management (including Executive Committee). We have reviewed our engagement with
recruitment partners for senior roles and ensured that they have signed up to the Voluntary Code of Conduct for Executive Search Firms.* As part
of any exercise, we brief our recruitment/search partners on the importance of diversity and inclusion and are also working to ensure the lists they
provide meet their commitments in the code of conduct.
By way of example, when selecting the two independent non executive directors for the PRIMIS board, we set HW Global a target for the shortlist
to be at least 30% women. HW Global’s approach included advertising the roles on prominent platforms such as ‘Women on Boards’ and ‘Dynamic
Boards’ job board portals, to maximize visibility and attract a diverse range of candidates.
The PRIMIS board also intends to designate one of the new non executive directors to focus on and support workforce engagement within the
Financial Services Division. This will include inclusion and diversity initiatives, strategic oversight, and ensuring that diversity and inclusion efforts
align with the LSL Group’s overall goals and objectives.
During 2024, we will continue to promote diversity and develop our approach (including setting targets where appropriate) when engaging
recruitment/search partners, to ensure the promotion of our diversity and inclusion priorities for prospective applicants.
* https://www.gov.uk/government/publications/standard-voluntary-code-of-conduct-executive-search-firms/the-standard-voluntary-code-of-conduct-for-
executive-search-firms
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Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
Diversity metrics and targets
The data set out below related to the Board and Executive Committee as at 31 December 2023 (2022: 4 March 2023) and the date of this Report:
Table 1 reporting on sex/gender representation
Gender
Number
of Board
members
1
% of Board
Number
of senior
positions on
the Board
2
Number in
Executive
Committee
3
% of Executive
Committee
Men
31 December 2023 6
(2022: 7)
75
(2022: 78)
3
(2022: 3)
6
(2022: 7)
67
(2022: 78)
24 April 2024 5 71 4 5 71
Women
31 December 2023 2
(2022: 2)
25
(2022: 22)
1
(2022: 1)
2
(2022: 2)
33
(2022: 22)
24 April 2024 2 29 0 2 29
Other categories
31 December 2023 - - - - -
24 April 2024 - - - - -
Not specified/prefer not to say
31 December 2023 - - - - -
24 April 2024 - - - - -
Notes:
1
LSL Board includes all Executive and Non Executive Directors.
2
Senior positions are the Group CEO, Group CFO, Chair of the LSL Board and Senior Independent Director.
3
Executive Committee includes all colleagues with a direct reporting line to the Group CEO that attend Executive Committee meetings and provide leadership to
the Group (excluding Executive Directors).
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82
Table 2 reporting on minority ethnic background
2
representation
Ethnicity
Number
of Board
members % of Board
Number
of senior
positions on
the Board
1
Number in
Executive
Committee
% of Executive
Committee
White British or other White (including minority white groups)
31 December 2023 7
(2022: 8)
88
(2022: 89)
4
(2022: 4)
7
(2022: 7)
88
(2022: 78)
24 April 2024 6 86 4 6 86
Mixed/Multiple Ethnic Groups
31 December 2023 1
(2022: 1)
12
(2022: 11)
- - -
24 April 2024 1 14 - - -
Asian/Asian British
31 December 2023 - - - 1
(2022: 1)
12
(2022: 11)
24 April 2024 - - - 1 14
Black/African/Caribbean/Black British
31 December 2023 - - - -
(2022: 1)
-
(2022: 11)
24 April 2024 - - - - -
Other Ethnic Group, including Arab
31 December 2023 - - - - -
24 April 2024 - - - - -
Not specified/prefer not to say
31 December 2023 - - - - -
24 April 2024 - - - - -
Notes:
1
Senior positions are the Chair, Group CEO, Group CFO and Senior Independent Director.
2
Minority ethnic background is defined as from one of the following categories of ethnic background, as set out in the tables in LR 9 Annex 2.1R(b) and LR 14
Annex 1.1R(b), excluding the category ‘White British or other White (including minority-white groups)’:
• Asian/Asian British.
• Black/African/Caribbean/Black British.
• Mixed/Multiple Ethnic Groups.
• Other Ethnic Group, including Arab.
The 2022 reporting on minority ethnic background incorrectly reported that we had no member of the Board who is from a minority ethnic
background. This arose due to an error in our data collection which has been rectified and the reporting has been corrected in the table above.
Further details relating to colleague diversity matters are included in the Enviromental, Social and Governance Report (page 50), including our
reporting on gender pay and gender and ethnic diversity in our Senior Management Team and the wider workforce.
The Living Responsibly Report 2024, which is published at the same time as this Report and is available on our website (lslps.co.uk), also contains
further details of our diversity and inclusion initiatives.
Culture
The Board is mindful that it has the ultimate responsibility for our culture. The right culture provides the foundation to drive purpose and the
delivery of strategy, and therefore plays a key role in our long-term success. The Group’s desired culture is to be:
a. Having the right people: who accept accountability for their actions.
b. Doing the right things: which deliver customer expectations.
c. In the right way: being open, challenging of themselves and supporting others.
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Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
In addition to the Group culture, the following two Divisions have also established and published culture and value statements, which sit alongside
the Group culture and are monitored within the Divisional governance structures. The Estate Agency Franchising Division, having undergone a
significant restructuring in the year, will establish and publish its culture and value statements in 2024.
Division Culture
PRIMIS Network At PRIMIS we are passionate about doing the right thing for all stakeholders: brokers, customers, partners and our
employees.
e.surv Our purpose, vision and values underpin everything we do at e.surv, every day. They define us and set the tone for the
way we work and because we believe that success comes from within, we’ve developed an honest and open culture
that empowers our people to do their best, and enables our business to deliver results.
Further information on our culture is also included in our ESG reporting and our Living Responsibly Report 2024.
The Board has a range of mechanisms for monitoring our Group culture, including:
a. Monitoring employee engagement, as part of the Board engagement programme:
i. Results of the annual employee survey and regular pulse surveys are reported to the Board throughout the year.
ii. The Group’s whistleblowing policy (including an updated ‘Speak Up’ policy) has been approved by the Board and is included within our MRB
policy. The Board also receives annual reporting on our whistleblowing arrangements.
iii. The Group held a Senior Management Conference in 2023 and the content of the conference was shared with the Board.
iv. The Designated Non Executive Director for Workforce Engagement (Gaby Appleton with effect from 5 March 2024 and previously Darrell
Evans) attends meetings with the Employee Engagement Forum each year. The composition of the Employee Engagement Forum was
revised in 2023 to ensure it is more representative of the Group’s workforce, following the Group simplification which saw the total number
of employees reduce from c4,000 to 1,752.
v. The CPO reports and presents regularly to the Board on Group HR matters, including colleague engagement and communication
arrangements.
vi. The Board receives regular updates on the work of the Group’s Communities and Inclusion and Diversity forums, which are chaired by and
made up of colleagues from across the Group.
b. Receiving an annual presentation on the Group’s culture, from the Group HR Team.
c. Receiving regular reporting on our colleague diversity, equality and inclusion projects.
d. Conducting an annual deep dive on our people strategy, including metrics on colleague attrition, talent and succession for Senior Managers,
presented by the CPO.
e. Monitoring Senior Managers’ leadership capability, development and succession through the Nominations Committee.
f. Overseeing progress against Senior Managers’ non-financial measures, which form part of the annual bonus plan.
g. Regular updates on and annual reviews of our core Group compliance policies.
Share Dealing Code and Disclosure Committee
The Board may delegate responsibilities to a Disclosure Committee, which supports our compliance with the disclosure and control of inside
information obligations, as required by UK MAR. Notwithstanding this, the Board remains responsible for our compliance with all regulatory
disclosure obligations and the Disclosure Committee refers matters to the Board as it sees fit. The Disclosure Committee did not meet during 2023
and any determination of information of inside information was carried out by the Board.
We also have a Share Dealing Policy and Share Dealing Code to ensure compliance with UK MAR. The Share Dealing Policy and Share Dealing Code
apply to our Directors, our PDMRs (all listed on page 71) and other relevant employees of LSL.
Subsidiary governance
Day-to-day management of the Group’s subsidiary companies is delegated to the respective Divisional management committees and to the boards
of the subsidiary companies. We are continuing to work on the delivery of online remote training for Group directors and we have Group subsidiary
governance guidance in place.
During the year we improved our governance arrangements within our Financial Services Network business, as described earlier in this section of
the Report. Progress with some of our other governance initiatives was impacted by the Legal and Company Secretariat Teams being focused on
delivering the strategic projects.
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84
Colleague matters
Gender pay reporting
We published our gender pay reports for all Group companies with more than 250 employees in April 2023 and further reporting will be published
in 2024. The 2023 report is available to view at gender-pay-gap.service.gov.uk.
Ethnic pay reporting
We are continuing to monitor the Government’s reviews in relation to ethnic pay reporting and looking at what steps would need to be taken to
ensure compliance with any proposed future reporting.
We are also signed up to the CBI’s Change the Race Ratio charter which requires us to:
a. Set and publish targets for Board diversity – which we do.
b. Set and publish targets for the Executive Committee and the Senior Management Team – which we do. Publish ethnicity pay gap reporting
within two years of joining – we intend to complete this work during 2024.
For further details, see the Environmental, Social and Governance Report (page 50).
Whistleblowing, fraud and anti-bribery arrangements
The Board oversees our whistleblowing arrangements and the Audit & Risk Committee receives reports on fraud and anti-bribery matters, including
those reported through the Group’s whistleblowing procedures. The Audit & Risk Committee also receives reports on any matters which relate to
our internal controls and risk management arrangements, including those relating to any incidents of fraud or bribery. Further details are included
in the Audit & Risk Committee Report (page 85) and the Principal Risks and Uncertainties (page 29) sections of this Report.
The Environmental, Social and Governance Report (page 50) includes details of our whistleblowing arrangements, alongside other colleague policies
included within the governance workstream of our ESG programme.
The Corporate Governance Report is approved by and signed on behalf of the Board of Directors
Sapna B. FitzGerald
Company Secretary
24 April 2024
Audit & Risk Committee Report
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
85
Dear Shareholder
As Chair of this Committee, I am pleased to present our report for the year ended 31 December 2023.
In this section of the Report, we detail how the Committee discharged its roles and responsibilities during 2023, provide highlights from the
year and set out our priorities for 2024. We also provide an update on our 2023 priorities.
During the year, the Group has made substantial progress implementing our strategy to simplify the business, reduce our exposure to the
volatility of future housing cycles within our Financial Services and Estate Agency Franchising Divisions and focus our investment on high-
growth areas. We have also invested in the governance arrangements of our Financial Services Network and monitored the implementation of
the FCA’s new Consumer Duty and the Appointed Representatives Regime.
We have continued to manage our key risks and to identify emerging risks. However, due to the amount of change the Group underwent
in the year, we have deferred some of the enhancement of our internal controls and risk management arrangements, which we intend to
progress in 2024, taking the new Group structure and operating model into account.
The Committee has also started the process of tendering for external audit services, noting that Ernst & Young’s tenure cannot continue
beyond the full year 2025 audit.
The Group’s 2024 priorities include concluding the external audit tender process; embedding the new governance arrangements in the PRIMIS
Network and ensuring our control environment reflects strategic updates.
I will be available at the 2024 AGM, along with my fellow Directors, to answer shareholders’ questions relating to the Audit & Risk Committee
and how we discharged our roles and responsibilities during 2023.
James Mack
Chair of the Audit & Risk Committee
24 April 2024
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86
Audit & Risk Committee
The Audit & Risk Committee discharges governance responsibilities in respect of audit, risk and internal controls and reports to the Board on its
work. The Committee’s roles and responsibilities are set out in its terms of reference, which are available at lslps.co.uk. The Corporate Governance
Report also summarises the Committee’s roles and responsibilities and describes how the Committee forms part of the Group’s governance
arrangements.
Membership
All of the Committee’s members are independent Non Executive Directors. James Mack has chaired the Committee since September 2021 and
during the annual Board and Committee evaluation, the Committee determined that James has relevant and recent financial experience to Chair
the Committee. The Committee also noted that Darrell Evans, who is a Committee member, has recent financial experience which is relevant to the
Committee.
The Committee holds three scheduled meetings each year and meets at other times as required. The Committee also ensures that it meets regularly
with both the external and internal auditors, independently of the Executive Directors. The Committee members’ attendance at its meetings in
2023 are set out in the Corporate Governance Report (page 65).
The remainder of this section of the Report is split as follows:
1. The Committee’s key discussions, decisions and activities in 2023.
2. The Committee’s work in relation to this Report.
3. An update on the Committee’s priorities for 2023, as set out in the 2022 report.
4. The Committee’s areas of focus for 2024.
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Directors’ Report (including Corporate
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Overview
Committee discussions, decisions and activities in 2023
Area Activity
Financial reporting
Annual Report and
Accounts 2022
2023 Interim Results
• Provided assurance to the Board that the 2022 Annual Report and Accounts, taken as a whole, was fair, balanced and
understandable.
• Examined the integrity of the full year and half year Financial Statements and recommended their approval to the
Board.
• Considered:
• The accounting for the franchising of the entire owned estate agency network (183 branches). This resulted in
the Group re-examining the accounting treatment for a much smaller transaction in the first half of 2019, when
39 owned estate agency branches were franchised. This resulted in goodwill being written down by £5.2m and a
franchise intangible (net of amortisation and associated deferred tax) of £1.2m being recognised, with a cumulative
non-cash impact on retained earnings at 1 January 2022 of £4.0m.
• The prior-year restatement of the fair value less the disposal costs of Marsh & Parsons as at 31 December 2022,
which had been reported as held for sale. On re-examination of the judgements taken at that time, the Group
restated its prior-year financial statements to reduce this value by a further £2.0m.
Both restatements were included in our 2023 interim results and are included in these Financial Statements.
• For 2022 reporting, reviewed the annual goodwill impairment test and the carrying value of goodwill, and considered
whether a reasonably possible change to assumptions in the impairment test would result in a material impairment
and therefore require sensitivity disclosure in the Financial Statements.
• Reviewed Management’s application of revenue recognition policies and monitored compliance with financial
reporting and accounting controls linked to revenue recognition. The Committee also assessed the revenue
arrangements applied following the change in Estate Agency to a wholly franchised business model.
• Reviewed Management’s estimates of the commission refund liability provisions and considered the risk that revenue
is recognised in the wrong period, either due to cut-off errors, management bias and/or estimation uncertainty.
• Reviewed the Group’s Non-Financial and Sustainability Information disclosures, including TCFD.
Capital structure • Assessed the Group’s capital structure and capital allocation policy, including the dividend policy.
Internal controls • Considered the effectiveness of the wider control environment and underlying financial reporting systems.
• Considered outputs from the Divisional ‘three lines of defence’ audit, oversight and compliance routines.
• Reviewed control environment assessments prepared by Group Finance and the Divisional managing directors,
supported by their risk teams.
• Evaluated control benchmarks and compliance performance versus defined policy and procedural standards.
• Monitored the effectiveness of internal and external auditing processes and themes arising from their outputs.
Going concern and
viability
• Assessed the measures to ensure the Group maintains sufficient liquidity, together with the stress tests and financial
modelling assumptions used to conclude on the Group’s Going Concern Statement and Viability Statement in respect
of the 2022 Financial Statements.
• Reviewed the Viability Statement and Going Concern Statement and advised the Board that the Group is able to
continue in operation and meet its liabilities as they fall due for at least the next 12 months.
Internal Audit • Oversaw the Group’s Internal Audit arrangements and ensured the function’s independence. The Director of Group
Internal Audit has a dotted reporting line into the Committee Chair.
• Approved the annual Internal Audit plan, including the wider three-year assurance cycle, the Internal Audit charter and
related resourcing assessments for the Internal Audit team.
• Considered the results of an extensive range of related thematic assurance reviews. Focus areas included FCA-led
regulatory changes, second-line effectiveness, information security and data protection arrangements, financial
controls, valuation controls, Group simplification and Pivotal Growth.
• Focused on Management’s closure of outstanding actions arising from Internal Audit reports and invited Divisional
managing directors to present to the Committee on outstanding actions.
• Assessed Internal Audit’s effectiveness through internal feedback and benchmarking against the Institute of Internal
Auditors professional standards, following an external quality assurance exercise the previous year.
• Focused on second-line effectiveness reviews and co-ordination of assurance plans across the lines of defence.
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Area Activity
Financial Services
Network
• Monitored arrangements in the Financial Services Division relating to the implementation of the new Consumer Duty
and AR Regime requirements.
• Received a presentation from the managing director and chair of the PRIMIS board.
Risk • Reviewed the Group’s principal risks and uncertainties and the disclosures in the 2022 Annual Report and Accounts and
2023 interim results.
• Reviewed Divisional risk presentations, including views on key and emerging risk, risk management frameworks and
consideration of Group matters not fully captured at Divisional level.
• Reviewed Divisional risk arrangements, including risk appetite themes, escalation routines and routines to define,
identify and respond to areas outside risk tolerance. This work included a focus on the development of risk
management structures and governance routines within PRIMIS. The Committee ensured the Divisions take a cautious
approach to risks relating to health and safety or sales conduct.
• Monitored the development of the risk framework and related governance structures within the Financial Services
Network, including the appointment of two independent non executive directors to the PRIMIS board and the creation
of new Audit & Compliance and Risk & Customer Outcomes committees, which are being chaired by the new non
executive directors.
• Reviewed the operation of our three lines of defence risk management structures across the Group and concluded that
the risk management frameworks are effective.
• Promoted a culture which is designed to ensure regulatory compliance, stakeholder safety and ‘speaking-up’ on any
concerns.
External audit • Considered the external auditor’s independence, specifically:
• ensuring Ernst & Young had adequate processes to maintain its independence;
• compliance with our Audit Independence Policy, which includes our policy on the Group employing the auditor’s
former employees and our allocation of non-audit work; and
• Ernst & Young’s report on its independence arrangements and confirmation to the Committee that it considered
itself to be independent.
• Concluded that Ernst & Young continued to be independent.
• Oversaw the appointment of the new audit partner. David Wilson was appointed as the audit partner in 2023 but is
unable to continue beyond this year due to his previous period serving as the engagement quality control reviewer on
the audit. Mark Woodward has been appointed as our new audit partner for 2024.
• Reviewed the materiality and effectiveness of audit planning, including relevant risk-based focus areas and the
changing profile of profit contributions across relevant entities.
• Evaluated the audit findings, including resolution of any issues and feedback on the quality of interactions with relevant
Divisional senior management, including consideration of the prior-year restatements detailed above.
• Considered the auditor’s fee. The only fees incurred in respect of non-audit services were in relation to the interim
review, which included the prior-year restatement considerations (see note 11).
• Reviewed the effectiveness of the external audit process, taking into consideration applicable UK professional and
regulatory requirements, independence considerations and feedback from Divisional senior management and the
Group Finance team.
• Recommended Ernst & Young’s reappointment as external auditor at the 2023 AGM, following consideration of its
effectiveness and independence.
• Continued planning for an external audit tender exercise in 2024. Ernst & Young’s audit tenure began in 2004 and LSL
listed on the LSE in 2006. LSL and Ernst & Young have concluded that Ernst & Young’s 20-year term cannot exceed 20
years from our listing. This means 2024 is the last year it can provide audit services to the Group, as the audit of the
2025 financial statements will take place in 2026. A new external auditor will therefore be appointed before the 2025
audit. The last audit tender took place in 2016.
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Strategic Report
Directors’ Report (including Corporate
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Overview
Area Activity
Governance • Discussed the Group’s whistleblowing arrangements and recommended that the Chief People Officer present to the
Board on the Group’s whistleblowing policy and processes, with the presentation taking place later in the year.
• Reviewed the Committee’s terms of reference and the CPO,taking into account the FRC’s review of the Code and its
associated guidance. The Committee also considered whether to adopt the Audit Standard early and decided to defer
its decision until the FRC completed its review of the Code.
• Received updates in relation to Group and Divisional governance structures.
• Tracked completion of Committee priorities for 2023 which were included in the 2022 Report (see update below).
• Confirmed the Committee is effective, as part of the annual Board and Committee evaluation process. This included
confirming that the skills and expertise of our members are appropriate and specifically that James (Chair) has recent
and necessary financial experience, in addition to Darrell (member).
• Tracked fraud-related suspicions across the Group and logged investigations, conclusions and remedies.
• Received updates on the FRC’s review of the Code in relation to matters relevant to the Committee’s role and
responsibilities including consideration of the Audit Committee and External Audit: Minimum Standard.
Activities in 2024 relating to this Report (see also note 2 to the Financial Statements for details of the significant issues which were considered in
relation to the Financial Statements and how these were addressed). The Committee has undertaken the following activities on behalf of the Board:
Area Activity
Reporting balance Considered whether this Report taken as a whole, is fair, balanced and understandable.
Significant issues Examined the integrity of the full year Financial Statements and recommended their approval to the Board. This
included a review of significant issues in relation to the Financial Statements as outlined in note 2. These included
accounting for discontinued operations following the franchising of the Estate Agency Division and disposal accounting
for several non-core businesses in H1 2023. The committee also considered a number of prior-year restatements
relating to original accounting for a previous franchising transaction in 2019, adjustments to assets held for sale and
customisation costs in computing arrangements and cash offsetting, as set out in note 36.
Accounting policies Assessed the appropriateness of key accounting policies and practices, judgements, estimates and compliance
with accounting standards and tax requirements, including recent developments. In particular, the Committee has
considered the appropriateness of revenue recognition, including commission refund liabilities provisions, and the
carrying value of goodwill.
Reviewed Management’s calculations and assumptions applied in the annual goodwill impairment test. Following the
disposal of goodwill of £38.1m in the year there was no impairment required upon assessment of the remaining balance
(see note 17).
Noting the reduction in goodwill and the current level of headroom, considered whether a reasonably possible change
to assumptions in the impairment test would result in a material impairment and therefore require sensitivity disclosure
in the Financial Statements (see note 17).
Reviewed Management’s application of revenue recognition policies and continued monitoring of compliance with
financial reporting and accounting controls linked to revenue recognition. The Committee also assessed the revenue
arrangements applied following the change in Estate Agency to a wholly franchised business model (see note 2).
Reviewed Management’s estimates of the commission refund liabilities provisions and considered the risk that revenue
is recognised in the wrong period, either due to cut-off errors, management bias and/or estimation uncertainty.
Going concern and
viability
Reviewed the Viability Statement and Going Concern Statement and assessments and their supporting material and
advised the Board that the Group is able to continue in operation and meet its liabilities as they fall due for at least the
next 12 months (see pages 29 to 33 of Principal Risks and Uncertainties).
Capital structure Assessed the Group’s capital structure and capital allocation policy including the dividend policy.
ESG Reviewed the Group’s Non-Financial and Sustainability Information disclosures including TCFD and the CFD.
Audit & Risk Committee Report
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Updates on 2022 priorities
In the 2022 Report, the Committee listed the following areas of focus, which have been progressed in 2023:
Focus area Status
Continued focus area in 2023
• Monitoring emerging areas affecting the Group’s risk profile,
including changes in the regulatory environment and clearly defining
our risk appetite.
• This includes monitoring arrangements for the implementation of
the FCA’s new Consumer Duty principle.
• The Committee has continued to monitor emerging areas of risk.
• The Committee monitored the Financial Services Network
successfully completing its implementation of arrangements relating
to the new FCA Consumer Duty and the AR Regime.
• Promoting ownership and alignment of robust risk management
routines across all of our businesses and lines of defence.
• The Committee monitored the development of the risk management
framework and governance arrangements within the Financial
Services Network.
• The Committee received Internal Audit reports including in relation to
Pivotal Growth (joint venture).
• Developing escalation and attestation routines from underlying
committee structures on risk and control matters.
• The Committee monitored the development of the risk management
framework and governance arrangements within the Financial
Services Network including escalation routines.
• The Committee monitored DISC’s continued operation of an
attestation process to confirm adherence to data protection and
information security minimum standards.
• Ensuring robust and resilient cyber security controls. This will involve
feedback from the technology assurance routines driven by relevant
governance forums and oversight functions.
• The Committee noted Management’s review of cyber insurance
arrangements as part of the annual Group insurance renewal process.
• The Committee noted DISC continued to monitor IT security and
discussed risks associated with the use of AI (in particular ChatGPT).
• Reviewing Internal Audit engagements covering the effectiveness of
financial controls, regulatory change management, technology risk
and second-line oversight routines.
• Internal Audit activities are reported to each Committee meeting.
• Each year the Committee also reviews the audit plan for the following
year and reviews the effectiveness of the team.
New focus areas for 2023
• Developing the Group risk framework and risk appetites, including a
review of risk management roles.
• The focus this year has been on developing the Financial Services
Network risk management framework and governance structures.
• Continuing to plan for the appointment of a new external auditor
ahead of 2026, including conducting the audit tender exercise.
• The audit tender process continued to progress during the year (see
above).
• Monitoring risks associated with delivery of the high-priority
projects and any related Group restructuring/simplification.
• The Group delivered on several strategic transactions during the 2023
projects, which were monitored through to their completion.
• Strengthening the Financial Services risk management
arrangements, reflecting the importance of the Division to our
strategy and the significant regulatory changes which are impacting
this part of our business.
• An external review of the Financial Services Network’s governance
arrangements was completed and recommendations reported to the
Board.
• This review led to the appointment of two additional independent
non executive directors on to the PRIMIS board and the creation of
two new committees (see above).
• Reviewing our participation in the Pivotal Growth joint venture,
reflecting its part in the Group’s growth strategy.
• The annual strategy meeting and the Internal Audit plan in 2023 both
included a review of Pivotal Growth.
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Priorities for 2024
In relation to 2024, the Committee has identified the following priorities for their focus:
a. Completion of the audit tender process and the appointment of a new external auditor to conduct the 2025 full year audit.
b. Continued focus on second-line effectiveness and co-ordination of the assurance plans across all lines of defence.
c. Review of Divisional risks post-simplification of the Group in 2023, taking into account development of new strategic initiatives which are outlined
in our strategy report.
d. Continue to oversee the development of processes to support Management representations to the external auditor.
e. Review and update Group governance arrangements ahead of the new Code requirements which will apply to LSL from 1 January 2025 and 2026.
This will include a review of internal controls and associated reporting and consideration of the new Audit Committee Minimum Standard.
The Audit & Risk Committee Report is approved by and signed on behalf of the Board.
James Mack
Chair of the Audit & Risk Committee
24 April 2024
Directors’ Remuneration Report including
Remuneration Committee Report
92
Annual Statement
Dear Shareholders
I am pleased to present the Directors’ Remuneration Report for 2023 following my appointment as Remuneration Committee Chair on
5 March 2024, with Darrell Evans (the Remuneration Committee Chair prior to this date) assuming the role of Interim Non Executive Chair of
the Board.
This Directors’ Remuneration Report is divided into the following sections:
• Annual Statement: summarising remuneration outcomes for 2023, explaining decisions made during the year and the operation of the
Directors’ Remuneration Policy for 2024.
• Directors’ Remuneration Policy (Policy): a summary of the main elements of the Policy that was approved by shareholders with 99.99% of
the votes cast at the 2023 AGM. The full Policy is included in the Directors’ Remuneration Report in the Annual Report and Accounts 2022.
• Annual Report on Remuneration: setting out details of the remuneration earned by Directors in 2023 and how the Policy will be
implemented during 2024.
The Annual Statement and the Annual Report on Remuneration are subject to a combined shareholder advisory vote at the 2024 AGM.
LSL’s performance in 2023
2023 has been a transformational year for the Group, with significant strategic progress made to simplify the Group and focus on business-
to-business services. This included the successful conversion of the Estate Agency Division into a franchise business, the disposals of Marsh &
Parsons and our direct-to-consumer financial services businesses and the agreement to the acquisition of the TenetLime mortgage network.
During the year, good progress was also made against our Living Responsibly ESG priorities which included increasing ethnic diversity across
our workforce, continuing to promote an inclusive culture through our Inclusion and Diversity Forum and investing in our local communities
through the work of our Communities Forum.
The Group’s financial performance over the year was, however, impacted by significant changes in the mortgage market and the increase
to the Bank of England’s base rate in June. As a result of these challenging market conditions, financial performance was lower than our
expectations at the start of the year, with revenue at £176.8m and Underlying Operating Profit of £9.3m. It is within this context that the
Committee has reviewed remuneration for the year.
Incentive outcomes
Annual bonus
The Executive Directors’ bonus scheme was based 70% on Underlying Operating Profit and 30% on the successful delivery of strategic
objectives, with the maximum bonus opportunity set at 100% of basic salary. The bonus targets were set at the start of 2023 and reflected
the market outlook at the time. As a result of market conditions that proved significantly more challenging than expected during the second
half of the year, when the Bank of England unexpectedly increased the base rate in June, the threshold Underlying Operating Profit target
was not met. The significant restructuring of the Group highlighted the good progress made against strategic objectives, with 65% for the
Group CEO and 62% for the Group CFO, demonstrating strong delivery against most objectives other than shareholder value, which was
naturally impacted by the reduced profitability. The impact on financial performance for the year resulted in only very limited bonuses
being made payable to colleagues more broadly and notwithstanding the strong progress made against the strategic targets, the Committee
concluded that it would not be appropriate for bonuses to be awarded to the Executive Directors. Both the Group CEO and Group CFO
also independently concluded that no bonus would be accepted and made this known to the Committee. As such the Committee exercised
discretion to reduce the formulaic bonus outcome to zero.
LTIP
As set out in last year’s Directors’ Remuneration Report, the 2020 LTIP was granted later than normal as the COVID-19 pandemic made it
difficult to set targets. This award was also scaled back from 125% to 104% of salary, to reflect the lower share price at grant compared to the
prior year. The TSR element, which was assessed exceptionally over a three-year period from grant to 8 November 2023, has now been tested,
with vesting at 41.1% of maximum. Combined with the EPS outcome of 47.2% of maximum, this provides an overall vesting level of 44.1% of
maximum. The Committee is comfortable there are no circumstances requiring a potential scale back as a result of ‘windfall gains’, noting the
share price on vesting was £2.39 and the grant price was £2.10, in addition to the scale back of the award on grant.
The 2021 LTIP was based 50% on adjusted EPS and 50% on relative TSR performance measures. Performance against the stretching EPS
targets was below threshold and as a result there is no payout under the EPS element. Performance between median and upper quartile
against the FTSE SmallCap (excluding investment trusts) resulted in 44.7% of maximum vesting under the TSR element. The award overall will
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Overview
therefore vest at 22.4% of maximum. Again, the Committee is comfortable there are no windfall gains to consider, noting that the awards
were granted in May 2021, at a share price of £4.09 which is well above the current share price of £2.70.
Further details of performance against the targets for the annual bonus and LTIP awards are set out in the Annual Report on Remuneration
(page 104).
In determining whether the incentive outcomes for 2023 were appropriate and if the Policy had operated as intended, the Committee
considered the underlying performance of the Group’s businesses, workforce remuneration and incentive outcomes. The Committee also
considered whether there were any relevant ESG matters that needed to be taken account of and concluded that there were none. The
Committee concluded that the Policy has operated as intended, that it was appropriate to scale back the payment under the annual bonus to
zero given overall profitability for the year but that no adjustment to the formulaic outcomes of the 2020 and 2021 LTIPs vesting was required.
The Committee noted the moderate level of vesting against longer-term financial and relative TSR performance, as well as being comfortable
there were no circumstances resulting in windfall gains for the awards.
2023 LTIP award
The Annual Statement in 2022, set out the Committee’s intention to grant, at the normal time, the 2023 LTIP award of 125% of basic salary
to the Executive Directors. It was also noted that a further LTIP award of up to 75% of salary may be granted later in the year, depending on
progress against various strategic projects. The EPS targets which the Committee expected to set for the awards based on market conditions
at that time in relation to 50% of the normal LTIP award were included within the report.
We were prevented from granting the 2023 LTIP awards until November 2023, because of restrictions under the UK MAR connected to
financial reporting and the progression of our strategic projects. By the time the awards were granted in November, the economic outlook
and market expectations had significantly changed since we considered EPS targets in early 2023, with high inflation and significantly higher
interest rates impacting all aspects of our business. As a result, the EPS target range we set for the 2023 LTIP award is different to that set out
in the 2022 Report, at 16.0 pence to 24.0 pence compared to 25.4 pence to 33.0 pence. The Committee is aware that the range is significantly
reduced from that envisaged in early 2023. However, we consider the revised range to appropriately balance achievability at the lower end of
the range and stretch at the top end, taking into account the significant impact on our business of increased interest rates during 2023, and
various scenarios in terms of timing for rate reduction and the recovery of the business. We have not changed the TSR performance target
range.
Noting the lower target range and the lower share price determining the number of shares subject to the 2023 award compared to the 2022
award, the LTIP award for the Executive Directors was scaled back from the normal award of 125% of salary to 100% of salary. No additional
LTIP grant was made during the year.
Implementation of the Policy for 2024
The Executive Directors will receive salary increases of 3%, rounded to the nearest £250. This increase is at the lower end of the pay increases
awarded across the wider workforce which ranges from 3-10% of salary (with the exception of Real Living Wage increases). Colleagues in
the lowest pay grades will receive the highest increases, to help address ongoing cost of living challenges. In line with the Executive Director
awards, the Non Executive Directors and Chair of the Board will also receive fee increases of 3%, rounded to the nearest £250.
The annual bonus opportunity will be unchanged at 100% of salary. Performance will be measured 70% on Underlying Operating Profit and
30% on strategic objectives. The strategic objectives will be focused on driving growth within our three Divisions; Financial Services, Surveying
& Valuation and Estate Agency Franchising, in addition to progressing our ESG priorities. The strategic objectives will be disclosed in full in
next year’s report.
The Executive Directors will be granted LTIP awards in line with the normal award level of 125% of salary. Performance will be assessed 50%
against EPS and 50% against relative TSR. These performance conditions continue to be used for our LTIP awards with TSR rewarding the
delivery of long-term returns to our shareholders and EPS is a KPI for the Group measuring financial growth. Details of the targets applying
to these awards can be found later in this report. The EPS target range reflects the ongoing volatile market outlook and uncertain timing for
recovery of the business.
Colleague pay
The Committee continues to ensure it understands the workforce’s views on remuneration. Darrell Evans as our designated Non Executive
Director for Workforce Engagement during 2023, with the support of our Chief People Officer engaged with the Colleague Engagement
Forum. Topics discussed with the Forum during the year included the colleague engagement survey, a review of benefits, succession planning
and performance. I am assuming the role of Workforce Engagement Director and will be delighted to support our Colleague Engagement
Forum in the forthcoming year.
During 2023 we made significant progress towards becoming a Real Living Wage employer. We will continue to build on this progress in 2024
by embedding this into our 2024 Colleague Pay Review principles.
Directors’ Remuneration Report including Remuneration Committee Report
94
In October, we invited colleagues to take part in the 2023 Sharesave scheme, offering a 20% discount on the option price. Participation in
the scheme increased from previous years with 20% of the workforce applying to the scheme compared with 16% in 2021.
Committee arrangements and Board changes
Details about the Committee’s membership and its meetings during 2023 are included in the Corporate Governance Report.
As shareholders would have noted from our RNS released on 27 February 2024, David Barral left the Board as Non Executive Chair on
26 February and Darrell Evans was appointed as Non Executive Interim Chair thereafter. There have been some other consequential changes
as set out on page 71. The fees for the Non Executive Directors will be aligned to the new roles and within our shareholder approved policy.
Conclusion
While good progress has been made during 2023 with delivery of our strategic priorities, changes in the mortgage market largely as a result
of increased interest rates significantly impacted financial performance and this is reflected in our bonus and LTIP outcomes. The Committee
believes that the remuneration outcomes for the Executive Directors are aligned to performance, shareholder value and consistent with the
approach taken to colleagues more generally. In addition, the Committee is comfortable with targets set for the 2023 and 2024 LTIP awards,
taking into account the market and business outlook.
The Committee continues to welcome shareholder feedback and will proactively engage in relation to any changes to the Policy or significant
changes to the application of the Policy. During the year, there were no remuneration-related items that required engagement with
shareholders. I will be pleased to hear from you if you have any specific feedback or questions on our approach to remuneration. I look
forward to your support for the advisory resolution on the Directors’ Remuneration Report at our forthcoming Annual General Meeting.
Gaby Appleton
Chair of the Remuneration Committee
24 April 2024
95
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
Directors’ Remuneration Policy
Introduction
This part of the Directors’ Remuneration Report summarises the Policy for the Directors and has been prepared in accordance with The Large and
Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 and subsequent amendments.
The Policy was approved by shareholders at our AGM on 25 May 2023 and is intended to apply until the 2026 AGM. Full details of the Policy can be
found in the Directors’ Remuneration Report in the Annual Report and Accounts 2022.
Consideration of Code Provision 40
In determining the Policy and its operation, the Committee assessed the following six Code factors:
• Clarity – the Policy is well understood by our Senior Management Team and has been clearly explained to our shareholders through direct
engagement and our annual remuneration reporting. Engaging on all people-related matters, including remuneration, is a key responsibility for
Gaby, the Remuneration Committee Chair and designated Non Executive Director for Workforce Engagement, and for our Chief People Officer.
This engagement is conducted via meetings with our Employee Engagement Forum and our colleague surveys, the results of which are presented
to the Board. Further details on our colleague engagement are included in the Stakeholder Engagement section of this Report and the Living
Responsibly Report 2024.
• Simplicity – our focus is to ensure that our Policy and practices are simple and straightforward and that the objectives and deliverables are clear.
We only operate two incentive plans, an annual bonus and a long-term incentive scheme (LTIP). Targets are based on business KPIs and measure
performance against them, tracking and rewarding progress toward achieving our strategies and longer-term sustainable growth.
• Risk – the Policy is designed to ensure that reputational, behavioural and other risks are managed and will not be rewarded via (i) a balanced use
of fixed and variable pay, with both short and long-term incentive plans, which employ a blend of financial, non-financial and shareholder return
targets, (ii) the significant role played by equity in the incentive plans (together with executive shareholding guidelines in service and the post-
service policy) and (iii) the inclusion of malus/clawback provisions.
• Predictability – our incentive plans are subject to individual caps, with share plans also subject to market standard dilution limits. The scenario
charts illustrate how the rewards potentially receivable by the Executive Directors vary based on performance delivered and share price growth.
The Committee also has the discretion to adjust any vesting outcomes if they are not considered appropriate.
• Proportionality – there is a clear link between individual awards, delivery of strategy and our long-term performance. In addition, the significant
role played by incentive or ‘at-risk’ pay, together with the structure of the Executive Directors’ service contracts, ensures that poor performance
is not rewarded.
• Alignment to culture – the incentive schemes drive behaviours consistent with our purpose, values and strategy (including the Group’s ESG and
corporate sustainability strategies), by using metrics in both the annual bonus and the LTIP that underpin the delivery of our strategies. Colleague
personal success is directly linked to the success of our clients and businesses, through the short- and long-term incentive plans and targets
which we operate. See Purpose, Strategy, Culture, Values and Business Model for further details.
Directors’ Remuneration Report including Remuneration Committee Report
96
Policy
Element of
remuneration
arrangements
How this component supports LSL
strategies
Operation Maximum Performance metrics
and period
Basic salary • Reflects the value of the
individual and their role.
• Reflects skills and experience
over time.
• Provides an appropriate
level of basic fixed income,
avoiding excessive risk
arising from over reliance on
variable income.
• Reviewed annually, normally effective 1
January (with effect from 2024 moved
to 1 April to align with workforce review
date).
• Periodic comparison to companies
with similar characteristics and sector
comparators.
• There is no prescribed
maximum annual basic
salary increase.
• The Committee is
guided by the general
increase for employees
but may decide
to award a lower
increase for Executive
Directors, or a higher
increase to recognise,
for example, an
increase in the scale,
scope or responsibility
of the role and/
or to take account
of relevant market
movements.
• Current basic salary
levels are set out in
the Annual Report on
Remuneration.
• Not applicable.
97
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
Element of
remuneration
arrangements
How this component supports LSL
strategies
Operation Maximum Performance metrics
and period
Annual bonus • Incentivises annual delivery
of financial and strategic
goals.
• Maximum bonus only
payable for achieving
demanding targets.
• Targets reviewed annually.
• Bonus level is determined by the
Committee after the end of the financial
year, subject to performance against
targets set at the start of the financial
year.
• The Committee has the discretion to
adjust or override formulaic outcomes
for the annual bonus payment, if the
Committee considers it does not reflect
the Group’s underlying performance,
taking into account amongst other
things, the quality of earnings that
underlie the pay and vesting outcomes,
which may put at risk future cash flows,
as well as investor experience and the
employee reward outcome.
• The Group CEO is required to purchase
and hold shares equivalent to 33% of
any bonus earned, net of tax, for a
period of two years. The other Executive
Director(s) is required to purchase and
hold shares equivalent to 25% of any
bonus earned net of tax, for a period
of two years, which will in normal
circumstances continue post-cessation
of employment. For all Executive
Directors on cessation of employment,
these shares will not be forfeited for
any reason. However clawback and the
holding period will continue to apply.
• Not pensionable.
• Bonus awards are subject to clawback
and malus for six years from payment, in
circumstances of: material misstatement
of financial results, corporate failure,
failure of risk management, reputational
damage, error, inaccurate or
misleading information in determining
a performance condition or any other
matter determining the vesting of an
award, breach of relevant regulations,
an act or omission during the vesting
period to the significant detriment
of customers, or an act or omission
leading to gross misconduct. Recovery
can be made through scaling back
existing awards, reducing future awards,
including under the LTIP, and requesting
repayment as a cash sum.
• Maximum
opportunity: 100% of
basic salary with the
ability to increase to
125% of basic salary*.
*Maximum opportunity
will not be increased
above 100% of basic
salary without significant
shareholder consultation.
• Performance
period of one year.
• Performance
metrics:
– a maximum of 30%
of the award will
be determined
by non-financial
measures and
a minimum of
70% by financial
measures; and
– not more than 20%
of the total bonus
will pay out at
threshold.
Directors’ Remuneration Report including Remuneration Committee Report
98
Element of
remuneration
arrangements
How this component supports LSL
strategies
Operation Maximum Performance metrics
and period
LTIP awards • Aligned to Group key
performance indicators
that drive the strategies
and performance of the
businesses.
• Awards of nil-cost or conditional
shares are made annually, with vesting
dependent on achieving performance
conditions over three years.
• The Committee reviews the quantum
of awards annually and monitors
the continuing suitability of the
performance measures.
• The Committee has the discretion to
adjust and override formulaic outcomes
of LTIP vesting, if it considers that it
does not reflect the Group’s underlying
performance, taking into account
amongst other things the quality of
earnings that underlie the vesting
outcomes, which may put at risk future
cash flows, as well as the investor
experience and the employee reward
outcome.
• The Committee has discretion to provide
for dividend equivalents in shares to
accrue from the date of award to the
vesting date or, if applicable, to the end
of any post-vesting holding period.
• LTIP awards are subject to clawback
and malus for six years from vesting, in
circumstances of: material misstatement
of financial results, corporate failure,
failure of risk management, reputational
damage, error, inaccurate or
misleading information in determining
a performance condition or any other
matter determining the vesting of an
award, breach of relevant regulations,
act or omission during the vesting
period to the significant detriment
of customers, or an act or omission
leading to gross misconduct. Recovery
can be made through scaling back
existing awards, reducing future awards,
including under the annual bonus and
requesting repayment as a cash sum.
• Normal maximum
limit of 125% of basic
salary, with grants
of up to 200% of
basic salary being
made in exceptional
circumstances.
• Performance
period: normally
three years.
• A two-year post-
vesting holding
period applies
and in normal
circumstances
continues to apply
post-cessation of
employment.
• Up to 30% of
the award may
be determined
by non-financial
measures such as
strategic measures
or ESG. The
remaining value
of the award will
be determined by
financial measures,
for example but
not limited to EPS
and TSR.
• 25% vests at
threshold for all
parts of the LTIP.
99
Other Information
Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
Element of
remuneration
arrangements
How this component supports LSL
strategies
Operation Maximum Performance metrics
and period
All-employee
share schemes:
SAYE, SIP/BAYE
and CSOP
• Encourages long-term
shareholding in LSL.
• Invitations from the Remuneration
Committee under the approved SAYE,
SIP/BAYE and CSOP.
• As per HMRC limits. • None.
Executive share
ownership
guidelines
• Aligns Executive Directors
and shareholders.
• The Group CEO is required to build
and maintain a minimum shareholding
equivalent to 200% of basic salary over
a period of five years from the later of
approval of the 2020 Policy and the date
of appointment.
• The other Executive Director(s) is
required to build and maintain a
minimum shareholding equivalent to
150% of basic salary over a period of
five years from the later of approval
of the 2020 Policy and the date of
appointment.
• All Executive Directors are expected to
retain all vested long-term incentive
awards (subject to any sales necessary
to meet tax liability on vesting or
exercise) and shares purchased from
annual bonus under the Policy, until the
guideline is met.
• A post-employment shareholding policy
applies as follows, with the Committee
retaining the discretion to amend the
Policy in exceptional circumstances:
– Directors to hold the lower of shares
with a value equivalent to 150% of salary
(200% for the Group CEO) and actual
shares held on cessation for two years.
– The two-year holding period for
annual bonus shares continues post-
employment.
– The two-year post-vesting holding
period for LTIP awards continues post-
employment.
• Minimum of 200% of
basic salary for Group
CEO and 150% of basic
salary for the other
Executive Director(s) –
no maximum.
• None.
Directors’ Remuneration Report including Remuneration Committee Report
100
Element of
remuneration
arrangements
How this component supports LSL
strategies
Operation Maximum Performance metrics
and period
Benefits • Provides insured benefits
to support the Executive
Directors and their families
during periods of ill health,
or in the event of accident
or death.
• Car allowance facilitates
travel.
• Includes car allowance, life assurance
and private medical insurance. Other
benefits may be provided where
appropriate.
• Any reasonable business-related
expenses (including tax thereon) can
be reimbursed if determined to be a
taxable benefit.
• At cost. • None.
Pension • Provides modest retirement
benefits.
• Opportunity for Executive
Directors to contribute to
their own retirement plan.
• Defined contribution.
• HMRC approved arrangement.
• Directors receive
employer pension
contributions in line
with the contribution
for the majority of the
workforce at the time
of appointment.
• Existing Directors are
offered a pension in
accordance with auto
enrolment minimums.
• None.
Chair and
Non Executive
Directors
• To provide fees reflecting
the time commitments and
responsibilities of each role,
in line with those provided by
similarly sized companies.
• Cash fee paid monthly.
• Fees are normally reviewed annually.
• Any reasonable business-related
expenses can be reimbursed (including
tax thereon if determined to be a
taxable benefit).
• There is no prescribed
maximum annual fee
increase, although
there is a total fee cap
of £750,000 in LSL’s
articles of association.
• Fees are determined
and reviewed
taking into account
experience, time
commitment,
responsibility and
scope of role, as
well as the general
increase for employees
and market data
for similar roles in
other companies of
a similar size and
complexity. Current
fees are set out in
the Annual Report on
Remuneration.
• None.
101
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Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
Reward scenarios (illustration of application of the Policy for 2024)
The chart below shows how the composition of the remuneration packages for each of the Executive Directors varies at different levels of
performance under the Policy, both as a percentage of total remuneration opportunity and as a total value.
The graph also indicates the maximum remuneration under a scenario of 50% share price appreciation over the three-year performance period of
the LTIP award:
Notes to the reward scenarios:
Scenario Salary, pension and benefits Annual bonus outcome
(% of maximum)
LTIP outcome (% of maximum)
Minimum (fixed remuneration) Basic salary as applicable from
1 April 2024.
Pension in line with Policy.
Benefits as reported for the
previous financial year.
Nil Nil
On‑plan performance (target
achievement)
50% 50%
Maximum performance (exceeds
target)
100% 100%
Maximum performance plus share
price appreciation
100% 100% + 50% share price growth
Service contracts for Executive Directors
The service contracts for the two Executive Directors are not fixed term and are terminable by either LSL or the Executive Director as detailed
below:
Director Commencement of service contract Notice period (from Executive Director and LSL)
David Stewart
Group Chief Executive Officer
1 May 2020 Nine months
Adam Castleton
Group Chief Financial Officer
2 November 2015 Nine months
Copies of Directors’ service agreements are available for inspection at the Company Secretary’s office (see Shareholder Information at page 203 for
details).
At the Committee’s recommendation and at the Board’s discretion, an Executive Director’s service contract can be terminated early by payment of
basic salary and benefits in lieu of the required notice period.
Directors’ Remuneration Report including Remuneration Committee Report
102
Non Executive Directors
Non Executive Directors, including the Chair, have letters of appointment which set out their roles and responsibilities. The Non Executive Directors,
including the Chair, are not eligible to participate in incentive arrangements or receive pension provision. The following table shows details of the
terms of appointment of our Non Executive Directors who are on the Board at the date of this Report.
Director Date original term commenced Date current term commenced Expiry date of current term
Gaby Appleton
Independent Non Executive Director,
Chair of the Remuneration Committee
1 September 2019 1 September 2022 31 August 2025
Simon Embley
Non Executive Director
1 January 2015 1 January 2021 2024 AGM
Darrell Evans
Non Executive Interim Chair and Interim
Chair of the Nominations Committee
28 February 2019 28 February 2022 27 February 2025
James Mack
Independent Non Executive Director,
Senior Independent Director and Chair
of the Audit & Risk Committee
27 September 2021 – 26 September 2024
Sonya Ghobrial
Independent Non Executive Director
4 March 2022 – 3 March 2025
Copies of Non Executive Director letters of appointment are available for inspection at the Company Secretary’s Office (see Shareholder Information
at page 203 for details).
Annual Report on Remuneration
Implementation of the Policy for the year ending 31 December 2024
Executive Directors
Remuneration element Group CEO Group CFO
Salary 3% increase
£493,000
3% increase
£333,000
Pension and benefits Cash in lieu of 3% of banded earnings.
Benefits in line with Policy.
Pension contribution of 3% of banded
earnings.
Benefits in line with Policy.
Annual bonus opportunity 100% of salary
33% of any bonus earned, net of tax, will
be used to purchase shares which must
be held for two years.
100% of salary
25% of any bonus earned, net of tax, will
be used to purchase shares which must
be held for two years.
Annual bonus performance measures 70% Group Underlying Operating Profit
30% strategic objectives
LTIP award level 125% of salary
A two-year post-vesting holding period applies to vested shares.
LTIP performance measures and targets 50% adjusted EPS
50% relative TSR vs FTSE
Small Cap (excluding investment trusts)
Threshold Maximum
EPS 26.5 pence 32.5 pence
TSR Median Upper
quartile
Shareholding guidelines 200% of salary 150% of salary
Post-cessation Executive Directors must hold the lower of shares with a value
equivalent to the in-service shareholding requirement and actual shares held on
cessation for two years.
103
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Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
Non Executive Directors
The fees for the Non Executive Directors are increased by 3% effective from 1 April 2024, aligned to the increase for Executive Directors. The fees
for 2024 are set out below.
Role 2024 (£) 2023 (£)
Chair of the Board 159,750 155,000
Independent Non Executive Director 52,000 50,500
Senior Independent Director 8,750 8,500
Chair of the Remuneration Committee 9,250 9,000
Chair of the Audit & Risk Committee 9,250 9,000
Designated Non Executive Director for workforce engagement 2,000 2,000
Directors’ remuneration payable in 2023 – audited information
Directors’ remuneration
The remuneration of the Directors for 2023 was as follows:
Notes Year
Basic salary
or fees
£
Benefits
5
£
Pension
contributions
6
£
Sub total –
fixed pay
£
Annual
bonus
7
£
Share
awards
8
£
Other
9
£
Sub total –
variable pay
£
Grand total
£
Chair
David Barral 1 2023 100,800 100,800 100,800
2022 0
Bill Shannon 2 2023 62,992 62,992 62,992
2022 150,500 150,500 150,500
Executive Directors
Helen Buck 3 2023 82,301 4,050 86,351 0 33,015 121 33,136 119,487
2022 320,000 16,139 336,139 0 129,619 1,361 130,980 467,119
Adam Castleton 2023 323,250 16,501 1,321 341,072 0 50,648 1,095 51,743 392,815
2022 313,750 16,424 1,321 331,495 0 157,781 1,474 159,255 490,750
David Stewart 2023 478,750 16,501 1,161 496,412 0 75,065 531 75,596 572,008
2022 464,750 16,424 1,149 482,323 0 233,809 932 234,741 717,063
Non Executive Directors
Gaby Appleton 2023 59,000 59,000 59,000
2022 57,250 57,250 57,250
Simon Embley 2023 50,500 50,500 50,500
2022 49,000 49,000 49,000
Darrell Evans 2023 61,500 61,500 61,500
2022 59,750 59,750 59,750
Sonya Ghobrial 2023 50,500 50,500 50,500
4 2022 40,509 40,509 40,509
James Mack 2023 59,500 59,500 59,500
2022 57,750 57,750 57,750
Total 2023 1,329,093 37,052 2,482 1,368,627 0 158,728 1,747 160,475 1,529,102
2022 1,513,259 48,987 2,469 1,564,715 0 521,209 3,767 524,976 2,089,691
Notes to Directors’ remuneration table:
1. David Barral joined the Board as an independent Non Executive Director (Chair Designate) on 3 April 2023. On 25 May 2023, he was appointed Chair of the Board
and Nominations Committee. David Barral left the Board on 26 February 2024.
2. Bill Shannon retired from the Board and his role as Chair of the Board and the Nominations Committee on 25 May 2023.
3. Helen Buck retired from the Board and as an Executive Director on 31 March 2023.
4. Sonya Ghobrial was appointed to the Board as an independent Non Executive Director on 4 March 2022.
5. Benefits comprise private medical cover and company car or car allowance.
6. David Stewart receives 3% of banded earnings in lieu of pension. Adam Castleton is part of the auto enrolment pension scheme and receives 3% of banded
earnings as an employer contribution.
7. The Group’s financial performance in 2022 and 2023 resulted in no bonuses being paid to Executive Directors.
Directors’ Remuneration Report including Remuneration Committee Report
104
8. The share awards for 2022 have been restated to reflect the actual level of vesting for the 2020 LTIP award of 44.1% of maximum and the share price on vesting
on 13 November 2023 of 239 pence. The share awards for 2023 reflect the vesting level under the 2021 LTIP award of 22.4% of maximum. The value of these
awards is based on our closing share price over the last three months of the financial year to 31 December 2023 (240.3 pence). Share award values for Helen
Buck represent the pro-rated vesting level in line with good leaver treatment.
9. The ‘other’ column includes the value of matching shares, dividend shares and a free share award (2022) received through the SIP, at the date the shares were
awarded.
Annual bonus payments 2023 – audited information
The maximum bonus potential for the Group CEO and Group CFO was 100% of salary. Helen Buck was not eligible to receive a bonus in respect of
2023 given her retirement from the Board on 31 March 2023.
The table below summarises the annual bonus performance measures and targets, and performance for 2023. As set out in the Annual Statement,
taking into account overall performance during the year and the stakeholder experience, the Committee exercised discretion to reduce the bonus
outcome to zero.
Measure Weighting Threshold
(25% of max)
Maximum
(100% of max)
Actual Outcome
(of element)
Group Underlying Operating Profit 70% £26.3m £41.9m £9.3m 0%
Non-financial measures 30% See table below Group CEO: 65.5%
Group CFO: 62%
Total formulaic outcome Group CEO: 19.7%
Group CFO: 18.6%
The table below sets out the Executive Directors’ objectives under the non-financial measures and the outcome against each objective.
Group CEO – David Stewart
Focus area Weighting Objective Performance assessment
Shareholder value 15% Development of investor base. 9%
Execution of Estate Agency strategy 20% Execution of strategic plan for Estate Agency. 18%
Execution of Financial Services
strategy
25% Execution of specific agreed aspects of Financial Services strategy
around leadership and financial performance.
12.5%
Execution of Surveying & Valuation
strategy
20% Execution of specific agreed aspects of strategy to lay foundations for
future growth.
12%
Execution of ESG 20% Driving aspects of the Living Responsibly ESG programme across the
Group, focused on embedding LSL culture and increasing colleague
engagement.
14%
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Overview
Group CFO – Adam Castleton
Focus area Weighting Objective Performance assessment
Shareholder value 25% Development of investor base. 15%
Organisational design, financial
execution and deployment of
resources
25% Lead organisational design changes, with clearly defined roles for the
Group and the Divisions.
Introduction and operation of new effective cost management systems
across the Group.
Enhance consolidated KPI and financial reporting, to support focus on
key strategic drivers to drive performance.
21%
Risk management 25% Enhance risk control framework, for the management of key controls. 12%
ESG strategy 25% Driving aspects of the Living Responsibly ESG programme across the
Group focused on embedding LSL culture and increasing colleague
engagement.
14%
2020 LTIP award vesting
As disclosed in the Annual Report and Accounts 2022, the performance period for the TSR element of the 2020 LTIP award ended on 8 November
2023, with the final vesting outcome of the 2020 awards determined at that time. The table below sets out the performance targets and final level
of vesting.
Performance measure
Percentage of award
subject to condition Performance period
Threshold
performance level
(25% vesting)
Maximum
performance level
(100% vesting) Actual performance Percentage vesting
Adjusted basic EPS 50% 3 years ending
31 December 2022
25.6 pence 35.1 pence or more 28.4 pence 47.2%
TSR (versus FTSE Small
Cap ex investment
trusts)
50%
3 years ending
8 November 2023
Median
(50
th
percentile)
Upper quartile
(75
th
percentile)
55
th
percentile 41.1%
Total 44.1%
The table below sets out details of the LTIP awards granted in 2020 and the number of shares vesting. A two-year post-vesting holding period
applies to vested shares.
Executive Director Date of grant Date of vesting
2
Number of shares
under award Vesting
Number of shares
vesting
Number of shares
lapsing Total vesting
3
Helen Buck
1
9 November 2020 13 November 2023
122,980
44.1%
54,234 68,746 £129,619
Adam Castleton 149,700
66,017
83,683
£157,781
David Stewart 221,833
97,828
124,005
£233,809
Notes:
1. Helen Buck’s LTIP award has been pro-rated to reflect cessation of employment on 31 March 2023 as a good leaver.
2. The Committee approved the vesting of this award on 13 November 2023.
3. The value of vesting has been calculated using LSL’s share price on 13 November 2023 (239 pence).
Directors’ Remuneration Report including Remuneration Committee Report
106
2021 LTIP award vesting
The performance period for the 2021 LTIP award ended on 31 December 2023. The table below sets out the performance targets and final level of
vesting for the 2021 LTIP award.
Performance measure
Percentage of award
subject to condition Performance period
Threshold
performance level
(25% vesting)
Maximum
performance level
(100% vesting) Actual performance Percentage vesting
Adjusted basic EPS 50%
3 years ending
31 December 2023
28.6 pence 40.5 pence or more 7.6 pence 0%
TSR (versus FTSE Small
Cap ex investment
trusts)
50% Median
(50
th
percentile)
Upper quartile
(75
th
percentile)
57
th
percentile
44.7%
Total 22.4%
The table below sets out details of the LTIP awards granted in 2021 and the number of shares vesting. A two-year post-vesting holding period
applies to vested shares.
Executive Director Date of grant Date of vesting
Number of shares
under award Vesting
Number of shares
vesting
Number of shares
lapsing Total vesting
2
Helen Buck
1
5 May 2021 5 May 2024
61,337 22.4% 13,739 47,598 £33,015
Adam Castleton 94,094
22.4% 21,077
73,017
£50,648
David Stewart 139,458
22.4% 31,238
108,220
£75,065
Notes:
1. Helen Buck’s LTIP award has been pro-rated to reflect cessation of employment on 31 March 2023 as a good leaver.
2. The value of vesting has been calculated using LSL’s average share price over the three months to 31 December 2023 (240.3 pence).
Share awards granted during 2023
Details of LTIP (nil cost option) awards granted in 2023 are as follows:
Executive Director Date of grant Date of vesting
Share price at
grant date
1
Number of shares
under award
Face value of
award as % of
salary
Face value of
award £ at grant
date
Adam Castleton
7 November 2023 7 November 2026 246 pence
131,402 100% £323,249
David Stewart 194,613 100% £478,748
Note:
1. The share price at grant was an average of the closing price three days prior.
The LTIP awards are subject to a two-year post-vesting holding period that continues post-cessation of employment.
The performance measures applicable to the 2023 LTIP grant are as follows:
Performance measure
Percentage of award subject to
condition Performance period
Threshold performance level
(25% vesting)
Maximum performance level
(100% vesting)
Adjusted basic EPS 50%
3 years ending 31 December
2025
16.0 pence 24.0 pence
TSR (performance against FTSE Small Cap
excluding investment trusts)
50% Median
(50
th
percentile)
Upper quartile
(75
th
percentile)
External appointments
Neither of the Executive Directors holds Non Executive directorships of any other companies, other than to represent the Group’s investment
interests in those companies.
Payments to past Directors
No payments have been made to past Directors.
Payments for loss of office
The remuneration for Helen Buck for 2023 is included in the single figure table of remuneration. Full disclosure of Helen’s remuneration
arrangements on retiring from the Board were disclosed in our Annual Report and Accounts 2022.
David Barral left the Board on 26 February 2024 and will receive his fee in respect of his three month notice period.
107
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Financial Statements
Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
Outstanding share awards
Options granted to Executive Directors to acquire shares are as follows:
Director
Award
type Date of grant
Share price
on grant
Exercise
price
As at
1 January
2023
Awards
granted
during year
Awards
lapsed
during year
Awards
exercised
during year
As at
31 December
2023 Exercise period
Helen Buck
Executive Director Estate
Agency
LTIP 9 November 2020 210.50p Nil 152,665 – 98,431 54,234 0 13 November 2023 to
13 May 2024
LTIP 5 May 2021 408.50p Nil 96,006 – 34,669 – 61,337 5 May 2024 to
5 November 2024
SAYE 28 May 2021 468.00p 327.00p 2,388 – 2,388 – 0 31 March 2023 to
30 September 2023
LTIP 29 March 2022 369.00p Nil 108,401 – 72,267 – 36,134 29 March 2025 to
29 September 2025
Adam Castleton
Group Chief Financial
Officer
LTIP 9 November 2020 210.50p Nil 149,700 – 83,683 66,017 0 9 November 2023 to
9 November 2030
LTIP 5 May 2021 408.50p Nil 94,094 – – – 94,094 5 May 2024 to
5 May 2031
SAYE 28 May 2021 468.00p 327.00p 3,302 – 3,302 – 0 1 July 2024 to
31 December 2024
LTIP 29 March 2022 369.00p Nil 106,283 – – – 106,283 29 March 2025 to
28 March 2032
LTIP 7 November 2023 246.00p Nil – 131,402 – – 131,402 7 November 2026 to
6 November 2033
SAYE 10 November 2023 248.00p 199.00p – 9,321 – – 9,321 1 December 2026 to
31 May 2026
David Stewart
Group Chief Executive
Officer
LTIP 9 November 2020 210.50p Nil 221,833 – 124,005 97,828 0 9 November 2023 to
9 November 2030
LTIP 5 May 2021 408.50p Nil 139,458 – – – 139,458 5 May 2024 to
5 May 2031
SAYE 28 May 2021 468.00p 327.00p 3,302 – – – 3,302 1 July 2024 to
31 December 2024
LTIP 29 March 2022 369.00p Nil 157,435 – – – 157,435 29 March 2025 to
28 March 2032
LTIP 7 November 2023 246.00p Nil – 194,613 – – 194,613 7 November 2026 to
6 November 2033
SAYE 10 November 2023 248.00p 199.00p – 3,728 – – 3,728 1 December 2026 to
31 May 2026
Notes to outstanding share awards:
1. All of the above are scheme interests. Details of LTIP awards granted in 2023 are set out in this section of the Report, while details of previous outstanding
awards are presented in the previous year’s Directors’ Remuneration Report and are included in note 15 to the Financial Statements.
2. Following Helen Buck’s retirement in March 2023, because she had good leaver status she had six months within which to exercise her Sharesave 2021 and
therefore the expiry of the exercise period for the plan was in September 2023.
3. Adam Castleton terminated his Sharesave 2021 saving contract to enable him to contribute in the 2023 scheme as per the saving limits.
4. The aggregate gains made by Helen Buck, Adam Castleton and David Stewart on the exercise of awards during the year was £129,981, £140,800 and £208,647
respectively.
Directors’ Remuneration Report including Remuneration Committee Report
108
Directors’ interests in shares
The interests of the Directors who served on the Board during the year, including their connected persons, are set out in the table below.
The Executive Directors’ shareholdings reflect the limited vesting of LTIP awards and the impact of challenging market conditions on the amount
absent from the bonus in recent years. The Directors’ Remuneration Policy outlines executive share ownership guidelines which require the Group
CEO and Group CFO to purchase and hold shares equivalent to 33% and 25% respectively of any bonus earned, net of tax for a period of two years.
The Group CEO has committed to invest all of his bonus, net of tax for full year 2024 into shares.
The Committee is comfortable that the Executive Directors continue to build their shareholdings, with further increases as a result of the vesting
of the 2021 LTIP award, and will keep shareholding levels under review. The Policy supports the continued building of shareholdings through the
requirement to purchase shares with a proportion of bonus and through the retention of all vested LTIP awards.
Shareholdings
(number of shares)
Share awards
(number of shares)
Total
(number of
shares)
Shareholding
guideline
Executive Director
shareholding
2
Director
31 December
2023
31 December
2022
Unvested and
subject to
performance
targets
Vested but
unexercised
31 December
2023
31 December
2023
(% of basic salary) (% of basic salary)
David Barral
3
219,259 – – – 219,259 – N/A
Chair of the LSL Board
Bill Shannon
4
25,329 25,329 – – 25,329 – N/A
Chair of the LSL Board
Helen Buck
5
133,601 104,213 97,471 – 133,601 150% N/A
Executive Director – Estate
Agency
Adam Castleton 130,111 94,086 341,100 – 130,111 150% 103.8%
Group Chief Financial Officer
David Stewart 78,329 25,714 498,536 – 78,329 200% 42.2%
Group Chief Executive
Officer
Gaby Appleton – – – – – – N/A
Non Executive Director
Simon Embley 6,835,624 6,835,624 – – 6,835,624 – N/A
Non Executive Director
Darrell Evans
6
– – – – – – N/A
Non Executive Director
Sonya Ghobrial – – – – – – N/A
Non Executive Director
James Mack – – – – – – N/A
Non Executive Director
Notes on Directors’ interest in shares:
1. The shareholdings include matching shares, dividend shares and free share awards received under the SIP subject to a retention period. The total shares
received by Helen Buck, Adam Castleton and David Stewart is 1,277, 1,872 and 563 respectively.
2. The shareholdings are calculated based on shares owned and vested but unexercised awards, net of tax, as at 31 December 2023. Shareholding guideline
calculations are based on the share price at year end of 258 pence and the Executive Director’s basic salary at 31 December 2023. The unvested share awards
have been pro-rated for Helen Buck to reflect her unvested share awards as at the date stepping down.
3. David Barral joined the Board as an independent Non Executive Director (Chair Designate) on 3 April 2023 and left the Board on 26 February 2024.
4. Bill Shannon retired from the Board on 25 May 2023 and therefore his share interests represent the position at this date.
5. Helen Buck retired from the Board on 31 March 2023, her share interests as of this date were 104,417 shares.
6. Darrell Evans assumed the role of Interim Non Executive Chair on 5 March 2024.
All of the share interests detailed above are beneficial to the Directors. Apart from the interests disclosed above, no Directors held interests at any
time in the year in the share capital of any other Group company.
There have been no changes in the interests of any Director between 31 December 2023 and the date of this Report, other than the purchases of
shares by Adam Castleton (279 shares) and David Stewart (280 shares) as participants of LSL’s SIP/BAYE scheme (in January, February, March and
April 2024). These shares were purchased by the Trust at the prevailing market rate.
No Director has, or has had, any direct or indirect interest in any transaction, contract or arrangement (excluding service agreements), which is or
was unusual in its nature or conditions, or significant to the Group’s business, during the current or immediately preceding financial year.
109
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Strategic Report
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Overview
Performance graph and table
The following graph shows the value, up to 31 December 2023, of £100 invested in LSL compared with the value of £100 invested in the FTSE Small
Cap (excluding investment trusts) Index on 31 December 2013. The FTSE Small Cap Index has been chosen because LSL is a constituent of the Index.
Group CEO’s total remuneration
The total remuneration figures for the role of Group CEO during each of the last ten financial years are shown in the table below. The total
remuneration figure includes the annual bonus based on that year’s performance and share awards based on three-year performance periods
ending in or just after the relevant year.
Ian Crabb to 30 April 2020 David Stewart from 1 May 2020
2014 2015 2016 2017 2018 2019 2020 2020 2021 2022 2023
Total remuneration £571,500 £852,869 £499,000 £835,120 £774,629 £760,679 £161,214 £310,932 £859,207 £717,0 63 £571,685
Annual bonus
54% 93.30% 16% 97% 79.80% 61.70% 0% 0% 84.70% 0% 0%
LTIP vesting N/A 66.81% 0% 0% 0% 0% N/A N/A N/A 44.1% 22.4%
Directors’ Remuneration Report including Remuneration Committee Report
110
Percentage change in Directors’ remuneration
The table below shows the annual percentage change in salary/fees, benefits and bonus for each of the Directors in 2023, compared to the average
for our wider workforce over the last five financial years.
2023 vs 2022 2022 vs 2021 2021 vs 2020 2020 vs 2019
% Change in
salary/fees
% change
in taxable
benefits
(excluding
pension)
% change
in bonus
(includes
commission)
% Change in
salary/fees
% change
in taxable
benefits
(excluding
pension)
% change
in bonus
(includes
commission)
% Change in
salary/fees
% change
in taxable
benefits
(excluding
pension)
% change
in bonus
(includes
commission)
% Change in
salary/fees
% change
in taxable
benefits
(excluding
pension)
% change
in bonus
(includes
commission)
Chairman
Bill Shannon
1
N/A N/A N/A 21.5 N/A N/A N/A N/A N/A N/A N/A N/A
David Barral
2
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Executive
Directors
Helen Buck
3
N/A N/A N/A 2.0 0.7 -100.0 1.5 -0.6 N/A 0 -1.2 -100.0
Adam Castleton 3.0 0.5 N/A 2.0 0.8 -100.0 1.5 -0.8 N/A 0 -1.7 -100.0
David Stewart 3.0 0.5 N/A 2.0 0.8 -100.0 N/A N/A N/A N/A N/A N/A
Non Executive
Directors
Gaby Appleton 3.1 N/A N/A 13.6 N/A N/A 14.5 N/A N/A N/A N/A N/A
Simon Embley 3.1 N/A N/A -36.5 N/A N/A N/A N/A N/A -13.2 N/A N/A
Darrell Evans 2.9 N/A N/A 11.3 N/A N/A 16.7 N/A N/A N/A N/A N/A
Sonya Ghobrial
4
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
James Mack 3.0 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
All employees
Median of LSL
workforce
5
55 447 -92 5.0 186.2 19.0 1.9 -71.8 -7.0 2.1 67.8 5.2
Notes on percentage change in Directors’ remuneration for the period 2023 vs 2022:
1. Bill Shannon retired from the Board on 25 May 2023 and therefore a change from the prior year has not been provided.
2. David Barral joined the Board as an independent Non Executive Director (Chair Designate) on 3 April 2023 and was appointed Non Executive Chair of the Board
on 25 May 2023 and therefore a change from the prior year has not been provided. David Barral left the Board on 26 February 2024.
3. Helen Buck retired from the Board and as an Executive Director on 31 March 2023 and therefore a change from the prior year has not been provided.
4. Sonya Ghobrial was appointed to the Board during 2022 and therefore a change from the prior year has not been provided.
5. The median full-time equivalent pay of all employees in the LSL Group and still in employment as at 31 December has been provided as an appropriate
comparator. This excludes employees who joined the business during December but received their first pay in January 2024. The high percentage change for
employee salary, benefits and bonus is due to a reduction in the workforce, as a result of our Estate Agency Division moving to a franchise mode, disposal of B2C
Financial Services businesses and disposal of Marsh & Parsons.
6. For notes of changes in previous years, please refer to previous Annual Reports and Accounts.
Group CEO to employee pay ratio
The table below discloses the ratio between the Group CEO’s remuneration and our wider workforce since 2018.
Financial year Method 25
th
percentile
pay ratio
Median
pay ratio
75
th
percentile
pay ratio
2018 Option A 40.5 : 1 27.9 : 1 16.2 : 1
2019 Option A 38.1 : 1 26.1 : 1 14.9 : 1
2020 Option A 23.4 : 1 15.8 : 1 9.1 : 1
2021 Option A 40.3 : 1 26.5 : 1 15.4 : 1
2022 Option A 29.3 : 1 20.0 : 1 11.6 : 1
2023 Option A 22.5 : 1 13.4 : 1 9.1 : 1
The 2023 employee data used to calculate the ratios is set out in the table below:
25
th
percentile Median 75
th
percentile
Total pay and benefits of employees £25,389 £42,687 £62,984
Basic salary of employees £22,877 £37, 20 0 £51,978
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Governance Reports and Committee Reports)
Overview
Notes on percentage change in Group CEO to employee pay ratio:
We have chosen option A (which compares our full-time equivalent total remuneration for all UK employees against the Group CEO) as the most
appropriate methodology to report the ratios, in line with the recommendation from the UK Government’s Department for Business and Trade, and
a number of shareholder representative and proxy voting bodies.
The ratio above includes all UK-based employees who were employed in any part of the Group as at 31 December 2023. The employee
remuneration data includes the full-time equivalent data in respect of basic pay, bonus, commission, taxable benefits, share-based remuneration
and pension benefits, so as to provide a comparable figure to the Group CEO single figure total remuneration. The full-time equivalent data for each
employee was grossed up based on the full-time equivalent hours for each role.
In calculating the bonus and commission elements for employees, we have used the bonus and commission paid to employees during 2023. In some
instances, employees receive bonus or commission payments in arrears. However, due to a number of these elements (for example year end annual
bonuses) not being finalised at the time of writing, this Report was written with these elements not being reapportioned to the relevant financial
year. However, we consider that this approach provides a broadly similar outcome to the result if 2023 year end bonuses had been included.
The Committee notes the decrease in the ratio from 2022 as a result of higher base salary increases for the workforce compared with the Group
CEO, no bonus being payable to the Group CEO in respect of 2023 and a reduction in the workforce as a result of our Estate Agency Division moving
to a franchise model, disposal of B2C Financial Services businesses and disposal of Marsh & Parsons.
As at 31 December 2023, we employed over 1,727 people in a wide variety of roles. The reward policies and practices for employees follow those
set for the Executive Directors, as detailed on page 110 of this Report. The Committee also has responsibility for setting the remuneration of the
Executive Committee and reviews and monitors the Group’s wider remuneration policies and practices. On this basis, the Committee is satisfied the
median pay ratio is consistent with the pay, reward and progression polices of the companies UK-based employees.
Relative importance of spend on pay
The following table shows our actual spend on pay for all employees, relative to dividends paid and profit earned:
2023 (£m) 2022 (£m)
3
Change (%)
Staff costs
1
99.1 145.3 -32%
Dividends 11.7 11.7 –
Profit after tax
2
8.0 (26.8) 130%
Adjusted profit after tax
3
7.8 28.3 -72%
Notes:
1. See note 15 to the Financial Statements for calculation of staff costs.
2. The percentage change in profit after tax and adjusted profit after tax has been shown as this is considered an important financial KPI used to monitor our
performance. See note 12 to the Financial Statements for the calculation.
3. 2022 staff costs and profit after tax have updated as they have been restated.
Statement of shareholders’ voting
The Annual Statement and Report on Remuneration for 2022 and the Policy (all included in the Annual Report and Accounts 2022) were presented
to shareholders at the 2023 AGM on 25 May 2023. The voting outcomes were as follows:
Annual Statement and Annual
Report on Remuneration
Directors’ Remuneration Policy
Votes cast in favour 99.99% 99.99%
Votes cast against 0.01% 0.01%
Total votes withheld 1,286 1,286
Remuneration Committee
Role and membership
Details of the Committee’s composition and responsibilities are set out in the Corporate Governance Report on page 68 of this Report. During
2023, the Committee was chaired by Darrell Evans and its other members were Bill Shannon, David Barral, Gaby Appleton, James Mack and Sonya
Ghobrial. David Barral joined the Committee on 3 April 2023 and Bill Shannon retired from the Committee at the close of the 2023 AGM. Following
a review of the Committee’s composition in the year, James Mack and Sonya Ghobrial stepped down from the Committee in November 2023.
Following the Board changes on 26 February 2024, further changes were made to the Committee and at the date of this Report, the Committee
is: Gaby Appleton (Chair); Darrell Evans; and Sonya Ghobrial.
The Committee’s terms of reference are available from the Company Secretary or from our website (lslps.co.uk).
Directors’ Remuneration Report including Remuneration Committee Report
112
The work of the Remuneration Committee
The Remuneration Committee met three times in 2023.
Set out below is a summary of the topics discussed by the Committee during the year:
Annual reporting
a. Recommended the Directors’ Remuneration Report for inclusion in the Annual Report and Accounts 2022, including completing an annual review
of the Executive Directors’ shareholdings.
b. Recommended the Directors’ Remuneration Policy for presentation to the 2023 AGM for shareholder approval.
Executive and colleague remuneration:
c. Received market updates and remuneration reports from Korn Ferry, including a presentation on the use and operation of long-term incentive
schemes.
d. Reviewed arrangements for the 2020 LTIP vesting and approving the quality of earnings assessment.
e. Reviewed and approved the grant of the 2023 LTIP awards.
f. Reviewed the Financial Services Network’s remuneration arrangements, including a presentation from the Financial Services managing director
on commission arrangements.
g. Conducted the 2023 colleague pay review.
h. Oversaw the bonus scheme designs, including approving Executive Director non-financial measures, and reviewed bonus payments.
i. Received information on and approved, where relevant, ad hoc promotions and appointments throughout the year.
Governance
j. Completed an annual review of the Committee’s terms of reference, for recommendation to the Board.
Remuneration Committee advisers
The Committee received independent professional advice during the year from Korn Ferry on matters relating to Executive Director and Senior
Management remuneration. Korn Ferry does not provide any other services to the Group.
The Committee appointed Korn Ferry in 2017. Korn Ferry’s fees for 2023, which are primarily based on an hourly rate, were £65,000 (excluding VAT)
(2022: £29,391).
Korn Ferry is a signatory to the Remuneration Consultants’ Code of Conduct and has confirmed that it adheres in all respects to the terms of this
code. The Committee is comfortable that its advice continues to be independent and objective.
The Directors’ Remuneration Report is approved by and signed on behalf of the Board of Directors
Gaby Appleton
Chair of the Remuneration Committee
24 April 2024
Other Information
Financial Statements
Strategic Report
Overview
113
Financial Statements
In this section
114 Independent Auditor’s Report to the Members of
LSL Property Services plc
123 Group Income Statement
124 Group Statement of Comprehensive Income
125 Group Balance Sheet
126 Group Statement of Cash Flows
127 Group Statement of Changes in Equity
128 Notes to the Group Financial Statements
181 Parent Company Balance Sheet
182 Parent Company Statement of Cash Flows
183 Parent Company Statement of Changes in Equity
184 Notes to the Parent Company Financial
Statements
114
114
Independent Auditor’s Report
for the year ended 31 December 2023
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF LSL PROPERTY SERVICES PLC
Opinion
In our opinion:
• LSL Property Services plc’s group financial statements and parent company financial statements (the “financial statements”) give a true and fair
view of the state of the group’s and of the parent company’s affairs as at 31 December 2023 and of the group’s loss for the year then ended;
• the group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
• the parent company financial statements have been properly prepared in accordance with UK adopted international accounting standards as
applied in accordance with section 408 of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of LSL Property Services plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended
31 December 2023 which comprise:
Group Parent company
Group Income Statement for the year ended 31 December 2023 Parent Company Balance Sheet as at 31 December 2023
Group Statement of Comprehensive Income for the year ended
31 December 2023
Parent Company Statement of Cash Flows for the year ended
31 December 2023
Group Balance Sheet as at 31 December 2023 Parent Company Statement of Changes in Equity for the year ended
31 December 2023
Group Statement of Cash Flows for the year ended 31 December
2023
Related notes 1 to 22 to the financial statements including material
accounting policy information
Group Statement of Changes in Equity for the year ended
31 December 2023
Related notes 1 to 37 to the financial statements, including material
accounting policy information
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards and
as regards the parent company financial statements, as applied in accordance with section 408 of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the group and parent in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we remain independent
of the group and the parent company in conducting the audit.
115
115
Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors’ assessment of the group and parent company’s ability to continue to adopt the
going concern basis of accounting included the following procedures:
How we evaluated the directors’ going concern assessment
• We evaluated the directors’ going concern assessment process to determine whether it was appropriate in the context of our own risk assessment
on going concern;
• We assessed the appropriateness of the duration of the going concern assessment period to 30 June 2025 and considered the existence of any
significant events or conditions beyond this period based on our procedures over the group’s cash flow forecasts and from knowledge arising from
other areas of the audit;
• We understood the basis on which the directors’ going concern assessment was prepared, which included understanding the terms of the group’s
undrawn revolving credit facility; the nature of the facility, facility amount, repayment terms, covenants and attached conditions. We verified via
an independent confirmation that the facility is committed for the entire going concern period and understood the conditions (including financial
conditions) that must exist in order for the facility to be drawn down upon;
• We verified the mathematical accuracy of the directors’ going concern model and covenant calculations for the period to 30 June 2025;
• We challenged the appropriateness of the key assumptions in the directors’ forecasts with reference to industry and economic forecasts and
through consideration of historical forecasting accuracy;
• We assessed the plausibility of both the directors’ downside scenario analysis and reverse stress testing by considering key market and macro-
economic forecast data across multiple sources and searching for contradictory evidence in relation to the appropriateness of key assumptions.
Further we considered whether there could be any material impact of climate change in the going concern period;
• We performed our independent assessment with consideration to the various changes in group structure which have taken place during and
subsequent to the year ended 31 December 2023, including the post year end acquisition of TenetLime described in note 34. This included
independent reverse stress testing in order to identify and understand the likelihood of factors which would lead to the group utilising all available
liquidity or breaching the financial covenants attached to the group’s revolving credit facility during the going concern period;
• We considered the quantum and timing of mitigating factors available to the directors, the extent to which these are included in the directors’
forecasts and challenged the extent to which these are within the directors’ control; and
• We reviewed the disclosures made relating to going concern included in the Annual Report & Accounts in order to assess the appropriateness of
the disclosures and conformity with reporting standards.
Our key observations
• The directors’ assessment forecasts that the group will maintain sufficient liquidity throughout the going concern assessment period in the base
case scenario and will not breach banking covenants;
• Under the directors’ downside scenario analysis, which assumes a continuation of 2023 activity levels throughout the assessment period, liquidity
remains and there is no breach of covenant;
• We have not identified any climate related risks that would materially impact the group’s forecasts to 30 June 2025; and
• Controllable mitigating actions available to management over the going concern assessment period include reductions to non-declared dividend
payments.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group and parent company’s ability to continue as a going concern for the period from the date the
financial statements are authorised for issue through to 30 June 2025.
In relation to the group and parent company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s ability to continue as a
going concern.
116
116
Independent Auditor’s Report continued.
for the year ended 31 December 2023
Overview of our audit approach
Audit scope • We performed an audit of the complete financial information of 8 components and audit procedures on specific
balances for a further 8 components.
• The components where we performed full or specific audit procedures accounted for 96% of revenue from
continuing operations (the basis upon which we have determine group materiality) 97% of absolute profit
before tax and 93% of total assets.
Key audit matters • Risk of inappropriate recognition of revenue around the year end (including valuation of the commission refund
liability)
• Risk of inappropriate accounting applied to the transition of Estate Agency to a Franchise business
Materiality • Overall group materiality of £0.7m which represents 0.5% of revenue from continuing operations.
An overview of the scope of the parent company and group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for each company
within the group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into account size, risk profile,
the organisation of the group and effectiveness of group-wide controls, changes in the business environment (including the impact of the transition
of Estate Agency to a Franchise business), the potential impact of climate change and other factors such as recent Internal Audit results when
assessing the level of work to be performed at each component.
In assessing the risk of material misstatement to the group financial statements, and to ensure we had adequate quantitative coverage of significant
accounts in the financial statements, of the 30 reporting components of the group, we selected 16 components covering entities within the UK and
Guernsey, which represent the principal business units within the group.
Of the 16 components selected, we performed an audit of the complete financial information of 8 components (“full scope components”) which
were selected based on their size or risk characteristics. For the remaining 8 components (“specific scope components”), we performed audit
procedures on specific accounts within that component that we considered had the potential for the greatest impact on the significant accounts in
the financial statements either because of the size of these accounts or their risk profile.
The coverage achieved through full, specific and other procedures is illustrated below and calculated on an absolute basis. In 2023, we report
coverage over revenue from continuing operations and profit before tax (2022: total revenue and adjusted profit before tax). This reflects a change in
our materiality basis.
The following table summarises the coverage obtained from the work performed by our audit teams.
Scope
2023 2022
Revenue from
continuing
operations
Absolute
profit
before tax
Total
Assets Revenue
Absolute
adjusted profit
before tax
Total
Assets
Full
84% 88% 88% 85% 85% 95%
Specific
12% 9% 5% 10% 11% 3%
Other procedures
4% 3% 7% 5% 4% 2%
The audit scope of the specific scope components may not have included testing of all significant accounts of the component but will have
contributed to the coverage of significant accounts tested for the group.
Of the remaining 14 components (the components other than those assigned a full or specific scope) that together represent 4% of the group’s
revenue from continuing operations, none are individually greater than 3% of the group’s revenue from continuing operations. For these
components, we performed other procedures, including external bank confirmation, analytical review, review of internal audit reports, review
of minutes of board meetings, testing of consolidation journals and review of entity level controls to respond to any potential risks of material
misstatement to the group financial statements. Within the 7% of the group’s total assets audited through other procedures, external bank
confirmations covered 5% of the group’s total assets. The remaining 2% of the group’s total assets were covered through other procedures as
described above.
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Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Changes from the prior year
The changes in our current year scoping, when compared to our prior year scoping, are driven by the disposals of Marsh & Parsons and the four
direct-to-consumer financial service advice businesses in addition to the transition of Estate Agency to a Franchise business which together changed
the composition of the group and the relative contribution of each component.
Involvement with component teams
In establishing our overall approach to the group audit, we determined the type of work that needed to be undertaken at each of the components
by us, as the primary audit engagement team, or by component auditors from other EY global network firms operating under our instruction. Of the
8 full scope components, audit procedures were performed on 5 of these directly by the primary audit team and 3 by the component audit team.
Of the 8 specific scope components audit procedures were performed on 3 of these directly by the primary audit team and 5 by the component audit
team. For the 3 full scope and 5 specific scope components where the work was performed by component auditors, we determined the appropriate
level of involvement to enable us to determine that sufficient audit evidence had been obtained as a basis for our opinion on the group as a whole.
The component team is also based in the UK. The primary team interacted regularly with the component team, where appropriate, during various
stages of the audit, reviewed relevant working papers and were responsible for the scope and direction of the audit process. At critical periods of the
audit, we increased the use of online collaboration tools to facilitate team meetings, information sharing and the evaluation, review and oversight of
the component team. We utilised fully the interactive capability of our global audit workflow tool, to review remotely the relevant underlying work
performed and retained component working papers in key risk areas on the group audit file. This, together with the additional procedures performed
at group level, gave us appropriate evidence for our opinion on the group financial statements.
Climate change
Stakeholders are increasingly interested in how climate change will impact LSL Property Services plc. Given the nature of the business in a non-
carbon intensive industry, management does not consider there to be a material impact from climate change. The group has determined that
the most significant future impacts from climate change on its operations will be from physical risks, such as severe weather events impacting
office-based locations, as well as transition risks such as policy and regulation changes. However, with a predominantly leased property footprint,
group management concludes there is little risk of significant business disruption and no significant financial impact from climate change. These
are explained on pages 34 to 49 in the required Task Force On Climate Related Financial Disclosures and on pages 29 to 33 in the principal risks and
uncertainties. They have also explained their climate commitments on pages 34 to 49. All of these disclosures form part of the “Other information,”
rather than the audited financial statements. Our procedures on these unaudited disclosures therefore consisted solely of considering whether they
are materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear to be materially
misstated, in line with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the group’s business and any consequential material
impact on its financial statements.
The group has explained in note 2 to the group financial statements its articulation of how climate change has been reflected in the financial
statements. The group did not identify any climate risk that would materially impact the carrying values of the group’s assets or have any other
impact on the financial statements. The group has explained how the impact of climate change aligns with their commitment to the aspirations of the
Paris Agreement to achieve net zero emissions by 2050. These disclosures also explain where governmental and societal responses to climate change
risks are still developing, and where the degree of certainty of these changes means that they cannot be taken into account when determining asset
and liability valuations under the requirements of UK adopted international accounting standards. There are no significant judgements or estimates
relating to climate change in the notes to the financial statements due to the group’s assessment that there is no significant financial impact from
climate change on the group given the nature of its operations.
Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating management’s assessment of
the impact of climate risk, physical and transition, their climate commitments. As part of this evaluation, we performed our own risk assessment to
determine the risks of material misstatement in the financial statements from climate change which needed to be considered in our audit.
We also challenged the directors’ considerations of climate change risks in their assessment of going concern and viability and associated disclosures.
Where considerations of climate change were relevant to our assessment of going concern, these are described above.
Based on our work we have not identified the impact of climate change on the financial statements to be a key audit matter or to impact a key audit
matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion
thereon, and we do not provide a separate opinion on these matters.
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Independent Auditor’s Report continued.
for the year ended 31 December 2023
Risk Our response to the risk
Key observations communicated to the
Audit & Risk Committee
Risk of inappropriate recognition of revenue
around the year end (including valuation of
the commission refund liability)
Refer to the Audit & Risk Committee Report
(page 85); Accounting policies (page 128);
and Note 3 of the group financial statements
(page 138)
The group has reported revenue from
continuing operations of £144.4m
(2022: total revenue of £321.7m).
The group has recognised a commission
refund liability of £2.9m (2022: £5.2m).
The risk was one of the most significant
assessed risks of material misstatement due
to the potential for bias or error in the timing
of transactions.
There is also judgement in the value of
commission income that will be clawed back.
We identified the following specific risk
of fraud and error in respect of improper
revenue recognition and management
override given the nature of the group’s
services:
• Inappropriate cut-off of revenue at the
period end in addition to the date of
transition to the franchise business model
for relevant Estate Agency components;
and
• Inappropriate measurement of the
reduction to revenue recorded for expected
clawback of commissions on lapsed
insurance policies.
The risk has increased in the current year due
to the challenging market conditions being
experienced by the group.
At each full and specific scope audit component
with material revenue streams:
• We performed walkthroughs of each
significant stream of revenue and confirmed
the existence of key controls around the
recognition of revenue and measurement of
the commission refund liability;
• We performed cut-off testing for a period
before and after the year end for those
components which remained part of
the group as at the year end date and
for a period before and after the date of
transition to the franchise business model
for relevant Estate Agency components.
These procedures have been performed
with reference to underlying contracts and
evidence of management’s assessment
of the point of revenue recognition. This
included assessment of the appropriateness
of the cut-off model applied by management
in the Financial Services division;
• We performed transactional testing through
to underlying contracts and data analysis
procedures to assess the recognition of
revenue around the year end or date of
transition to the franchise business model,
as relevant to the respective component.
Where items did not follow the expected
transaction flow, we investigated outliers
and corroborated to third party evidence
where appropriate.
• We performed targeted journal entry testing
with a focus on entries posted to revenue
accounts.
For the commission refund liability:
• We tested the underlying calculations for
arithmetical accuracy and consistency across
the group.
• We verified the appropriateness of the
insurance policy lapse rate applied in the
commission refund liability model and where
relevant, tested a sample of historical lapses
to third party evidence.
• We performed full and specific scope audit
procedures over this risk area in the 14
in-scope locations which have revenue. This
covered 96% of the group’s revenue from
continuing operations.
We have not identified any material
misstatements in the revenue recognised in
the year.
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Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Risk Our response to the risk
Key observations communicated to the
Audit & Risk Committee
• We also performed other procedures in
the locations which covered the remaining
4% of the group’s revenue. This consisted
of analytical procedures over material
movements in revenue and related balance
sheet accounts as compared to the prior
year.
Risk of inappropriate accounting applied to
the transition of Estate Agency to a Franchise
business
Refer to the Audit & Risk Committee Report
(page 85); Accounting policies (page 128);
and Note 6 of the Consolidated Financial
Statements (page 142)
In 2023, the group has transitioned its
owner-managed Estate Agency business to
a Franchise business model which included
the sale of the trade and assets or statutory
entities, as applicable, as well as the signing of
franchise agreements.
The accounting applied to this transition is
complex and includes significant estimation
and judgement. As a result, there is a
significant risk of inappropriate accounting
applied to the transition of the Estate Agency
business to a Franchise business.
The most significant judgements and
estimates related to the presentation of the
previously owned network of estate agency
branches as a discontinued operation and the
identification and measurement of the fair
value of non-cash proceeds arising from the
transaction.
We challenged key judgements, estimates
and assumptions applied by management in
accounting for the transition. Specifically, we:
• Performed walkthrough procedures to verify
our understanding of the accounting processes
performed by management in relation to the
transition, and confirmed the existence of key
controls over valuation and presentation and
disclosure;
• Obtained the underlying transaction
agreements and compared the key terms to the
accounting treatment applied;
• Challenged the judgement applied by
management in presenting the disposal of the
owned network of estate agency branches
as a discontinued operation, by considering
the requirements of IFRS 5 and assessing the
characteristics and structure of the business
disposed compared to the operations retained
by the group;
• Challenged management on the fair value
calculation of the non-cash proceeds arising
from the transaction through engaging
EY valuation specialists to determine an
independent range of acceptable outcomes
on the discount rate applied and by
assessing the reasonableness of growth
rates applied to the forecasts with reference
to market data;
• Challenged management on the completeness
of the assets disposed as part of the transaction;
• Recalculated management’s calculations to
determine arithmetical accuracy; and
• Reviewed the disclosures made by
management in respect of the transaction,
including compliance with relevant
accounting standards.
Based on the audit procedures performed,
we consider management’s accounting
applied to the transition of Estate Agency to a
Franchise business to be appropriate.
We have concluded that the key judgements,
estimates and assumptions applied by
management, and the disclosures thereof,
are reasonable and compliant with relevant
accounting standards.
In the prior year, our auditor’s report included a key audit matter in relation to the risk of inappropriate valuation of goodwill in relation to
Your Move / Reeds Rains and LSLi. In the current year this no longer represents a key audit matter, following the disposal of the goodwill associated
with these businesses as part of the transition of Estate Agency to a Franchise business, which itself represents a key audit matter, as described above.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in
forming our audit opinion.
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Independent Auditor’s Report continued.
for the year ended 31 December 2023
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
We determined materiality for the group to be £0.7 million (2022: £1.4 million), which is 0.5% of group revenue from continuing operations
(2022: 5% of adjusted profit before tax). We believe that group revenue from continuing operations is a key focus for the users of the financial
statements and is used prominently in communications to investors and in recent annual reports. The change in the basis upon which we determine
materiality from adjusted profit before tax used in the prior year to revenue from continuing operations in the current year, is driven by the current
year performance of the business and the transition of Estate Agency to a Franchise business part way through the year, which together would mean
the use of current year adjusted profit before tax as our basis would not result in an appropriate materiality figure for the size of the business.
We determined materiality for the parent company to be £0.8 million (2022: £1.0 million), which is 1% (2022: 1%) of equity. For our testing of parent
company balances that are consolidated into the group financial statements, an allocation of group performance materiality was used.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the group’s overall control environment, our judgement was that performance
materiality was 50% (2022: 50%) of our planning materiality, namely £0.3m (2022: £0.7m). We have set performance materiality at this percentage
reflecting our prior audit experience of the group.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken based
on a percentage of total performance materiality. The performance materiality set for each component is based on the relative scale and risk
of the component to the group as a whole and our assessment of the risk of misstatement at that component. In the current year, the range of
performance materiality allocated to components was £0.1m to £0.2m (2022: £0.1m to £0.5m).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit & Risk Committee that we would report to them all uncorrected audit differences in excess of £0.03m (2022: £0.07m),
which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report set out on pages 1 to 112, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we
do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in
the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
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Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we
have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our
opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches
not visited by us; or
• the parent company financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the
accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit
Corporate Governance Statement
We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement
relating to the group and company’s compliance with the provisions of the UK Corporate Governance Code specified for our review by the Listing
Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement
is materially consistent with the financial statements or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties
identified set out on page 61;
• Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the period is appropriate set out
on page 32;
• Director’s statement on whether it has a reasonable expectation that the group will be able to continue in operation and meets its liabilities set out
on page 61;
• Directors’ statement on fair, balanced and understandable set out on page 64;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 64;
• The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 88;
and;
• The section describing the work of the Audit & Risk Committee set out on page 85
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 64, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group and parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend
to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or
through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
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Independent Auditor’s Report continued.
for the year ended 31 December 2023
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the company and
management.
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and determined that the most significant
are those that relate to the reporting framework (UK adopted international accounting standards, Companies Act 2006, and the UK Corporate
Governance Code 2018), and the relevant tax compliance regulations in the UK.
• We considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which
may be fundamental to the group’s ability to operate. These include compliance with FCA regulations, the Estate Agents Act 1979, and the Data
Protection Act.
• We understood how LSL Property Services plc is complying with those frameworks making enquiries of management, internal audit, those
responsible for legal and compliance procedures and the Company Secretary. We corroborated our enquiries through our review of board minutes
and papers provided to the Audit & Risk Committee, also, where necessary, reports provided to other Committees of the Board, and attendance at
all meetings of the Audit & Risk Committee.
• We assessed the susceptibility of the group’s financial statements to material misstatement, including how fraud might occur by meeting with
management from various components of the group to understand where it considered there was a susceptibility to fraud. We also considered
performance targets and their propensity to influence efforts made by management to manage earnings. We considered the programmes and
controls that the group has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how senior management
monitors those programmes and controls. Where the risk was considered to be higher, we performed audit procedures to address each identified
fraud risk or other risk of material misstatement. These procedures included those on revenue recognition detailed above and the testing of
manual journals and were designed to provide reasonable assurance that the financial statements were free from material fraud and error.
• Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures
involved journal entry testing, with a focus on manual consolidation journals and journals indicating large or unusual transactions based on our
understanding of the group; enquiries of legal counsel, management and internal audit; and testing as described above. In addition, we completed
procedures to conclude on the compliance of the disclosures in the Annual Report and Accounts with the requirements of the relevant accounting
standards, UK legislation and the UK Corporate Governance Code 2018.
• At a component level, our full and specific scope component audit team’s procedures included inquiries of component management, journal entry
testing and focused testing, including in respect of the key audit matter of revenue recognition.
• Where we identified potential non-compliance with laws and regulations at a group level through review of Audit & Risk Committee papers, we
communicated this to relevant components who developed an appropriate audit response.
A further description of our responsibilities for the audit of the financial statements is located on the inancial Reporting Council’s website at https://
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
• Following the recommendation from the Audit & Risk Committee, we were appointed by the company on 7 July 2004 to audit the financial
statements for the year ending 31 December 2004 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments is 20 years, covering the years ending
31 December 2004 to 31 December 2023. LSL Property Services plc listed on the London Stock Exchange in 2006.
• The audit opinion is consistent with the additional report to the Audit & Risk Committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work
has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
David Wilson (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
25 April 2024
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Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Group Income Statement
for the year ended 31 December 2023
| Restated* | |||
| 2023 | 2022 | ||
| Note | £’000 | £’000 | |
| Continuing operations: | |||
Revenue | 3 | ||
| Operating expenses: | |||
Employee costs | 15 | ( | ( |
Depreciation on property, plant and equipment and right-of-use assets | 18 | ( | ( |
Other operating costs | ( | ( | |
Other (losses)/gains | 3 | ( | |
Share of post-tax (loss) from joint venture | 20 | ( | ( |
Share-based payments | 15 | ( | |
Amortisation of intangible assets | 17 | ( | ( |
Exceptional gains | 9 | ||
Exceptional costs | 9 | ( | ( |
Contingent consideration payable | 25 | ( | |
Group operating profit/(loss) | 4 | ( | |
Finance income | 7 | ||
Finance cost | 8 | ( | ( |
Net finance income/(cost) | ( | ||
Profit/(loss) before tax | ( | ||
Taxation | 16 | ( | |
Profit/(loss) for the period from continuing operations | ( | ||
| Discontinued operations: | |||
Loss for period from discontinued operations | 6 | ( | ( |
Loss for the period | ( | ( | |
| Attributable to: | |||
Owners of the parent | ( | ( | |
Non-controlling interest | ( | ( | |
( | ( | ||
| Loss per share from total operations (expressed in pence per share): | |||
Basic | 12 | ( | ( |
Diluted | 12 | ( | ( |
| Earnings/(loss) per share from continuing operations (expressed as pence per share): | |||
Basic | 12 | ( | |
Diluted | 12 | ( | |
| *See note 36 for details regarding restatements. |
The notes on pages 128 to 180 form part of these Financial Statements.
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124
Group Statement of Comprehensive Income
for the year ended 31 December 2023
| Restated* | |||
| 2023 | 2022 | ||
| Note | £’000 | £’000 | |
Loss for the year | ( | ( | |
| Items that will not to be reclassified to profit and loss in subsequent periods: | |||
Revaluation of financial assets not recycled through the income statement | ( | ( | |
Tax on revaluation | ( | ||
Total other comprehensive loss for the year, net of tax | ( | ( | |
Total comprehensive loss for the year, net of tax | ( | ( | |
| Attributable to: | |||
Owners of the parent | ( | ( | |
Non-controlling interest | ( | ( |
*See note 36 for details regarding restatements.
The notes on pages 128 to 180 form part of these Financial Statements.
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Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Group Balance Sheet
as at 31 December 2023
Group Balance Sheet
as at 31 December 2023 Company No. 05114014
Note
| Restated* | Restated* | |||
| 2023 | 2022 | 1 January 2022 | ||
| £’000 | £’000 | £’000 | ||
| Non-current assets | ||||
Goodwill | 17 | |||
Other intangible assets | 17 | |||
Property, plant and equipment and right-of-use assets | 18 | |||
Financial assets | 19 | |||
Deferred tax asset | 16 | |||
Investment in sublease | 19 | |||
Investment in joint venture | 20 | |||
Contract assets | 21 | |||
Loans to franchisees and appointed representatives | 19 | |||
Total non-current assets | ||||
| Current assets | ||||
Trade and other receivables | 22 | |||
Financial assets | 19 | |||
Contract assets | 21 | |||
Investment in sublease | 19 | |||
Current tax assets | 16 | |||
Loans to franchisees and appointed representatives | 19 | |||
Cash and cash equivalents | 23 | |||
Assets held for sale | ||||
Total current assets | ||||
Total assets | ||||
| Current liabilities | ||||
Financial liabilities | 25 | ( | ( | ( |
Trade and other payables | 24 | ( | ( | ( |
Provisions for liabilities | 26 | ( | ( | ( |
Bank overdrafts | 23 | ( | ( | ( |
( | ( | ( | ||
Liabilities held for sale | ( | |||
Total current liabilities | ( | ( | ( | |
| Non-current liabilities | ||||
Financial liabilities | 25 | ( | ( | ( |
Deferred tax liability | 16 | ( | ( | |
Provisions for liabilities | 26 | ( | ( | ( |
Total non-current liabilities | ( | ( | ( | |
Total liabilities | ( | ( | ( | |
Net assets | ||||
| Equity | ||||
Share capital | 28 | |||
Share premium account | 29 | |||
Share-based payment reserve | 29 | |||
Shares held by employee benefit trust and share incentive plan | 2,29 | ( | ( | ( |
Treasury shares | 29 | ( | ( | |
Fair value reserve | 29 | ( | ( | ( |
Retained earnings | ||||
Total equity attributable to owners of the parent | ||||
Non-controlling interest | ( | |||
Total equity |
*See note 36 for details regarding restatements.
The notes on pages 128 to 180 form part of these Financial Statements.
The Financial Statements were approved by and signed on behalf of the Board by:
David Stewart
Group Chief Executive Officer
24 April 2024
Adam Castleton
Group Chief Financial Officer
24 April 2024
126
126
Group Statement of Cash Flows
for the year ended 31 December 2023
| Restated* | |||
| 2023 | 2022 | ||
| Note | £’000 | £’000 | |
Profit/(loss) before tax from continuing operations | ( | ||
Loss before tax from discontinued operations | ( | ( | |
Loss before tax | ( | ( | |
| Adjustments for: | |||
Exceptional costs | |||
Exceptional gains | ( | ( | |
Contingent consideration payable | ( | ||
Depreciation of tangible assets | 18 | ||
Amortisation of intangible assets | 17 | ||
Share-based payments | 6,15 | ( | |
Loss on disposal of property, plant and equipment and right-of-use assets | 6 | ( | ( |
Loss from joint venture | 20 | ||
Recognition of investments at fair value through the income statement | 19 | ( | |
Decrease in contract assets | 21 | ||
Finance income | 7 | ( | ( |
Finance costs | 6,8 | ||
Operating cash flows before movements in working capital | |||
| Movements in working capital | |||
Decrease/(increase) in trade and other receivables | ( | ||
Decrease in trade and other payables | ( | ( | |
Increase/(decrease) in provisions | ( | ||
( | ( | ||
Cash generated from operations | |||
Interest paid (leases) | 27 | ( | ( |
Interest received (leases) | 27 | ||
Income taxes paid | ( | ||
Exceptional costs paid | ( | ( | |
Net cash (expended)/generated from operating activities | ( | ||
| Cash flows used in investing activities | |||
Interest received | |||
Disposal of businesses, net of cash disposed | |||
Payment of contingent consideration | 25 | ( | ( |
Investment in joint venture | 20 | ( | ( |
Proceeds from sale of financial assets | 19 | ||
Franchisees and appointed representatives loans granted | 19 | ( | |
Franchisees and appointed representatives loan repayments | 19 | ||
Receipt of lease income | 27 | ||
Purchase of property, plant and equipment and intangible assets | 17,18 | ( | ( |
Proceeds from sale of property, plant and equipment | 18 | ||
Net cash generated/(expended) on investing activities | ( | ||
| Cash flows used in financing activities | |||
Purchase of LSL shares by the employee benefit trust | ( | ||
Repurchase of treasury shares | ( | ||
Proceeds from exercise of share options | 15 | ||
Payment of lease liabilities | 14 | ( | ( |
Dividends paid | 13 | ( | ( |
Net cash expended in financing activities | ( | ( | |
Net decrease in cash and cash equivalents | ( | ( | |
Cash and cash equivalents at the beginning of the year | 23 | ||
Cash and cash equivalents at the end of the year | 23 |
*See note 36 for details regarding restatements.
Closing cash and cash equivalents includes £nil (2022: £3.4 m) presented in assets held for sale on the Group Balance Sheet.
The notes on pages 128 to 180 form part of these Financial Statements.
127
127
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Group Statement of Changes in Equity
for the year ended 31 December 2023
| Equity | ||||||||||
| Share- | Shares | attributable | ||||||||
| Share | based | held by | to owners | Non- | ||||||
| Share | premium | payment | EBT and | Treasury | Fair value | Retained | of the | controlling | Total | |
| capital | account | reserve | SIP | shares | reserve | earnings | parent | interest | equity | |
| £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |
At 1 January 2023 | ( | ( | ( | |||||||
Loss for the year | ( | ( | ( | ( | ||||||
Revaluation of financial assets | ( | ( | ( | |||||||
Tax on revaluations | ( | ( | ( | |||||||
Total comprehensive loss for the year | ( | ( | ( | ( | ( | |||||
Acquisition of non-controlling interests | ( | |||||||||
Exercise of options | ( | ( | ||||||||
| Vested share options lapsed | ||||||||||
during the year | ( | |||||||||
Dividend paid | ( | ( | ( | |||||||
| Fair value reclassification | ||||||||||
following disposals | ( | |||||||||
Share-based payments | ( | ( | ( | |||||||
Tax on share-based payments | ( | ( | ( | |||||||
At 31 December 2023 | ( | ( | ( | ( | ||||||
During the period, Employee Benefit Trust. LSL received £nil on exercise of these options. | ||||||||||
| The notes on pages 128 to 180 form part of these Financial Statements. | ||||||||||
| Group Statement of Changes in Equity | ||||||||||
| for the year ended 31 December 2022 | Equity | |||||||||
| Share- | Shares | attributable | ||||||||
| Share | based | held by | to owners | Non- | ||||||
| Share | premium | payment | EBT and | Treasury | Fair value | Retained | of the | controlling | Total | |
| capital | account | reserve | SIP | shares | reserve | earnings | parent | interest | equity | |
| £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | |
At 1 January 2022 | ( | ( | ||||||||
| Prior year restatements | ||||||||||
(net of tax)* | ( | ( | ( | |||||||
At 1 January 2022 (Restated) | ( | ( | ||||||||
Loss for the year (Restated) | ( | ( | ( | ( | ||||||
Revaluation of financial assets | ( | ( | ( | |||||||
Tax on revaluations | ||||||||||
Total comprehensive loss for the year | ( | ( | ( | ( | ( | |||||
Shares repurchased into treasury | ( | ( | ( | |||||||
Shares repurchased into EBT | ( | ( | ( | |||||||
Exercise of options | ( | ( | ||||||||
Dividend paid | ( | ( | ( | |||||||
Share-based payments | ||||||||||
Tax on share-based payments | ( | ( | ( | |||||||
At 31 December 2022 | ( | ( | ( |
*See note 36 for details regarding restatements.
During the year ended 31 December 2022, the Trust acquired 1,351,000 LSL shares. During the period, 890,146 share options were exercised relating
to LSL’s various share option schemes resulting in the shares being sold by the Employee Benefit Trust. LSL received £0.8 m on exercise of these
options.
The notes on pages 128 to 180 form part of these Financial Statements.
128
Notes to the Group Financial Statements
for the year ended 31 December 2023
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129
130
Notes to the Group Financial Statements continued.
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131
132
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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133
134
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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135
136
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
Other Information
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137
138
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
Other Information
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139
140
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
Other Information
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141
142
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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143
144
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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145
146
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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147
148
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
Other Information
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149
150
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
Other Information
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151
152
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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153
154
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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155
156
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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157
158
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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159
160
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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161
162
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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163
164
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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165
166
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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167
168
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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169
30. Pension costs and commitments
The Group operates defined contribution pension schemes for certain Executive Directors and certain employees. The assets of the schemes are held
separately from those of the Group in independently administered funds, the total contributions to the defined contribution schemes in the year
were £4.5m (2022: £6.0m). At 31 December 2023, there were outstanding pension contributions of £0.5m (2022: £0.9m) included in trade and other
payables.
170
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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171
172
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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173
174
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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175
36. Prior year restatements
Franchising of previously owned branches
During the current period, the Group franchised its entire owned estate agency network (183 branches). In accounting for this significant transaction,
the Group re-examined the accounting treatment that had been applied to a much smaller transaction in the first half of 2019, when 39 owned
estate agency branches were franchised. The Group has re-examined certain judgements made in accounting for the 2019 transaction, which
were deemed appropriate at the time, and has determined that restatement of the prior year financial information, in accordance with IAS 8, is
appropriate. The cumulative impact on retained earnings on 1 January 2022 was a reduction of £4.0m and was not cash-adjusting. The restatements
are discussed in points 1-3 below:
1. Disposal of goodwill
When the transaction in 2019 was originally accounted for, it was considered not necessary to dispose of goodwill associated with the previously
owned branches which were franchised. Having re-examined the accounting treatment applied; the Group has determined that goodwill of £5.2m,
associated with the previously owned Your Move and Reeds Rains branches, should have been derecognised in 2019. Restatement of the prior year
financial information in this regard results in a decrease in non-current assets only and has no impact on cash.
2. Recognition of franchise intangible and subsequent amortisation
The franchise agreements entered upon disposal of the previously owned branches were not considered to represent assets of the Group and were
not recognised in 2019 when the transaction was accounted for. Having re-examined the accounting treatment applied; restatement of the 2022
opening net assets in this regard will be an increase of £1.7m and has no impact on cash.
The fair value of the franchise intangible asset has been calculated based on the assumptions that would have been made had it been determined in
2019. This was calculated using the expected future cash flows (at the date of the agreement), discounted using a post-tax discount rate of 8.2% (the
Group’s WACC at the date of the agreement). A term of 15 years has been applied, consistent with Management’s estimate of most likely minimum
term per the franchise agreement. Market growth rates, consistent with the Group’s assumptions in 2019 were applied to 2020 and 2021, with a
long-term growth rate of 1.8% applied thereafter.
3. Revision to goodwill impairments
In light of point 1 above, the impairment charged to the goodwill of Your Move and Reeds Rains at 31 December 2022 (£42.0m) has been
re-examined to take account of the restated disposal of goodwill in 2019, resulting in increased headroom. The impact of this assessment is a
reduction to the impairment charge of £3.7m. Restatement of the prior year financial information in this regard results in an increase in non-current
assets and has no impact on cash.
Adjustments to assets held for sale
At 31 December 2022 the Group reported Marsh & Parsons, a single CGU as held for sale. Marsh & Parsons was written down to its fair value
less cost to sell (FVLCTS), which was calculated as the initial consideration received less transaction costs (£28.9m). The sale agreement included
provisions for adjustments to the initial consideration for debt-like items and working capital adjustments. Such amounts were subject to negotiation
and judgement and were not reflected in the fair value assessment at 31 December 2022. The Group has re-examined the judgements made and has
determined that an adjustment to consideration for debt-like items of £2.0m could have been reliably estimated at 31 December 2022. Rather than
recognising this adjustment as an increase in the loss on disposal in 2023, the prior year financial information has been restated, in accordance with
IAS 8. Restatement of the prior year financial information in this regard results in a decrease in current assets, an increase in exceptional costs and
has no impact on cash.
176
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
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177
36. Prior year restatements (continued)
Balance sheet (extract)
Reported
year ended
31 December
2021
£’000
1. Disposal
of goodwill
£’000
2. Franchise
intangible
asset
£’000
5. Custom-
isation
costs
£’000
6. Cash
offsetting
£’000
Restated
year ended
31 December
2021
£’000
Reported
year ended
31 December
2022
£’000
1. Disposal
of goodwill
£’000
2. Franchise
intangible
asset
£’000
3. Revision
of goodwill
impairments
£’000
4. Adjust-
ments to
assets held
for sale
£’000
5. Custom-
isation
costs
£’000
6. Cash
offsetting
£’000
Restated
year ended
31 December
2022
£’000
Current assets
Assets held for
sale – – – – – – 56,437 – – – (2,035) – – 54,402
Cash and cash
equivalents 48,464 – – – 24,248 72,712 36,755 – – – – – 24,460 61,215
Non-current
assets
Goodwill 160,865 (5,211) – – – 155,654 56,530 (5,211) – 3,678 – – – 54,997
Other intangible
assets 29,604 – 1,670 (1,757) – 29,517 15,747 – 1,533 – – (2,582) – 14,698
Current
liabilities
Bank overdrafts – – – – (24,248) (24,248) – – – – – – (24,460) (24,460)
Non-current
liabilities
Deferred tax
liability (2,073) – (418) – – (2,491) (2,008) – (384) – – – – (2,392)
Net assets 218,119 (5,211) 1,252 (1,757) – 212,403 131,053 (5,211) 1,149 3,678 (2,035) (2,582) – 126,052
Equity
Retained
earnings 224,832 (5,211) 1,252 (1,757) – 219,116 149,134 (5,211) 1,149 3,678 (2,035) (2,582) – 144,133
Total equity 218,119 (5,211) 1,252 (1,757) – 212,403 131,053 (5,211) 1,149 3,678 (2,035) (2,582) – 126,052
Income statement (extract)
Reported
year ended
31 December
2022
£’000
2. Recognition
of franchise
intangible and
subsequent
amortisation
£’000
3. Revision
of goodwill
impairments
£’000
4. Adjustments
to assets held
for sale
£’000
5. Customisation
costs in
computing
arrangements
£’000
Restated
year ended
31 December
2022
£’000
Continued
operations
£’000
Discontinued
operations
£’000
Other operating
costs (67,500) – – – (1,054) (68,554) (35,502) (33,052)
Amortisation of
intangible assets (4,112) (137) – – 229 (4,020) (2,787) (1,233)
Exceptional costs (88,898) – 3,678 (2,035) – (87,255) (48,316) (38,939)
Operating profit/
loss (56,709) (137) 3,678 (2,035) (825) (56,028) (21,700) (34,328)
Taxation charge (4,891) 34 – – – (4,857) (3,020) (1,837)
Profit/(loss) for
the year (64,017) (103) 3,678 (2,035) (825) (63,302) (26,791) (36,511)
178
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
Other Information
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179
180
Notes to the Group Financial Statements continued.
for the year ended 31 December 2023
181
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Parent Company Balance Sheet
as at 31 December 2023 Company No. 05114014
Note
2023
£’000
Restated*
2022
£’000
Non-current assets
Other intangible assets 3 36 79
Property, plant and equipment and right-of-use assets 4 937 1,945
Investment in subsidiaries 5 113,484 116,666
Financial assets 6 1,640 115
Investment in joint venture 7 9,359 5,068
Trade and other receivables 8 4,408 18,079
Contract assets 9 329 –
Deferred tax asset 14 3,659 1,019
133,852 142,971
Current assets
Trade and other receivables 8 10,537 20,376
Cash and cash equivalents 10 32 –
Contract assets 9 40 –
Assets held for sale – 26,815
10,609 47,191
Total assets 144,461 190,162
Current liabilities
Trade and other payables 11 (49,157) (85,536)
Bank overdrafts 10 (16,663) (4,826)
Financial liabilities 12 (107) –
Provision for liabilities 13 (571) –
(66,498) (90,362)
Non-current liabilities
Financial liabilities 12 (65) (31)
Total liabilities (66,563) (90,393)
Net assets 77,898 99,769
Equity
Share capital 15 210 210
Share premium account 16 5,629 5,629
Share-based payment reserve 16 3,564 5,331
Shares held by employee benefit trust and share incentive plan 16 (2,871) (5,457)
Treasury shares 16 (3,983) (3,983)
Fair value reserve 16 (306) (20,190)
Retained earnings 75,655 118,229
Total equity 77,898 99,769
*See note 21 for details regarding the restatement.
As permitted by Section 408 (3) of the Companies Act 2006, no profit and loss account of the Company is presented. The loss after tax for the
financial year of the Company was £9.8m (2022: £24.4m loss after tax). The notes on pages 184 to 196 form part of these Financial Statements.
The Financial Statements were approved by and signed on behalf of the Board by:
David Stewart Adam Castleton
Group Chief Executive Officer Group Chief Financial Officer
24 April 2024 24 April 2024
182
Parent Company Statement of Cash Flows
for the year ended 31 December 2023
Note
2023
£’000
Restated*
2022
£’000
Parent operating loss before tax (12,673) (25,010)
Adjustments for:
Exceptional costs 8,215 (45)
Exceptional gains (1,394) –
Increase in contract asset (369) –
Impairment of investments 5 2,672 36,687
Disposal of investments 5 533 –
Impairment of receivables 8 1,925 5,684
Depreciation of tangible assets 4 675 1,175
Amortisation of intangible assets 3 43 –
Share-based payments (132) 1,527
Loss from joint venture 7 390 1,361
Finance income (566) (80)
Finance costs 2,348 1,261
Dividend income (14,500) (27,000)
Operating cash flows before movements in working capital (12,833) (4,440)
Movements in working capital
Decrease/(increase) in trade and other receivables 11,110 (6,430)
(Decrease)/increase in trade and other payables (41,295) 13,465
Increase in provisions 571 –
(29,614) 7,035
Cash generated from operations (42,447) 2,595
Interest paid (758) (1,181)
Income taxes paid – (1,271)
Group tax relief settlement 6,897 –
Net cash generated from operating activities (36,308) 143
Cash flows used in investing activities
Investment in joint venture 7 (4,681) (3,952)
Dividends received from subsidiaries 14,500 27,000
Purchases of property, plant and equipment 4 (129) (3,112)
Proceeds from sale of subsidiary 26,100 –
Net cash generated on investing activities 35,790 19,936
Cash flows used in financing activities
Interest received 319 –
Drawdown of overdraft 31,195 6,699
Repayment of overdraft (19,390) (6,821)
Proceeds from exercise of share options – 825
Purchase of LSL shares by employee benefit trust – (5,026)
Repurchase of treasury shares – (3,983)
Dividends paid to equity holders of the Parent (11,714) (11,773)
Repayment of lease liabilities 108 –
Net cash (expended) in financing activities 518 (20,079)
Net increase/(decrease) in cash and cash equivalents – –
Cash and cash equivalents at the beginning of the year – –
Cash and cash equivalents at the end of the year – –
* See note 21 for details regarding the restatement.
The notes on pages 184 to 196 form part of these Financial Statements.
183
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Parent Company Statement of Changes in Equity
for the year ended 31 December 2023
Share
capital
£’000
Share
premium
£’000
Share-based
payment
reserve
£’000
Shares held
by EBT
and SIP
£’000
Treasury
shares
£’000
Fair value
reserve
£’000
Retained
earnings
£’000
Total
£’000
As at 1 January 2023 210 5,629 5,331 (5,457) (3,983) (20,190) 118,229 99,769
Loss for the year – – – – – – (9,825) (9,825)
Revaluation of financial assets – – – – – (116) – (116)
Total comprehensive loss for the year – – – – – (116) (9,825) (9,941)
Exercise of options – – (1,106) 2,586 – – (1,480) –
Vested share options lapsed in the year – – (445) – – – 445 –
Share-based payment transactions – – (109) – – – – (109)
Fair value reclassification following disposal – – – – – 20,000 (20,000) –
Tax on share-based payments – – (107) – – – – (107)
Dividends paid – – – – – – (11,714) (11,714)
As at 31 December 2023 210 5,629 3,564 (2,871) (3,983) (306) 75,655 77,898
During the period, 567,665 share options were exercised relating to LSL’s various share option schemes resulting in the shares being sold by the
Employee Benefit Trust. LSL received £nil on exercise of these options.
The notes on pages 184 to 196 form part of these Financial Statements.
Share
capital
£’000
Share
premium
£’000
Share-based
payment
reserve
£’000
Shares held
by EBT
and SIP
£’000
Treasury
shares
£’000
Fair value
reserve
£’000
Retained
earnings
£’000
Total
£’000
As at 1 January 2022 210 5,629 5,263 (3,063) – (15,695) 154,469 146,813
Loss for the year (Restated)* – – – – – – (24,466) (24,466)
Revaluation of financial assets – – – – – (4,495) – (4,495)
Total comprehensive loss for the year – – – – – (4,495) (24,466) (28,961)
Shares repurchased into treasury – – – – (3,983) – – (3,983)
Shares repurchased into EBT – – – (5,026) – – – (5,026)
Exercise of options – – (1,806) 2,632 – – (1) 825
Share-based payment transactions – – 1,977 – – – – 1,977
Tax on share-based payments – – (103) – – – – (103)
Dividends paid – – – – – – (11,773) (11,773)
As at 31 December 2022 210 5,629 5,331 (5,457) (3,983) (20,190) 118,229 99,769
*See note 21 for details regarding the restatement
During the year ended 31 December 2022, the Trust acquired 1,351,000 LSL shares. During the period, 890,146 share options were exercised relating
to LSL’s various share option schemes resulting in the shares being sold by the Trust. LSL received £0.8m on exercise of these options.
The notes on pages 184 to 196 form part of these Financial Statements.
184
Notes to the Parent Company Financial Statements
for the year ended 31 December 2023
1. Accounting policies
Basis of preparation
The Company Financial Statements have been prepared in accordance with UK-adopted IAS. The Company Financial Statements have been prepared
on a going concern basis and on a historical cost basis, except for, certain debt and financial assets and liabilities that have been measured at fair
value.
The accounting policies which follow set out those significant policies which apply in preparing the Financial Statements for the year ended
31 December 2023. The Company’s Financial Statements are presented in pounds sterling and all values are rounded to the nearest thousand pounds
(£’000) except when otherwise indicated.
In preparing the Parent Company Financial Statements Management has considered the impact of climate change, taking into account the relevant
disclosures in the Strategic Report. The impact of climate-related risks on the Group Financial Statements have been disclosed in the Group basis of
preparation note. The extent to which the Group climate-related risks effect the Parent Company accounts is focused on how medium (4-9 years) to
long term risks (beyond 10 years) may impact our future revenue profile, which could further impact the carrying value of investments. The potential
impact of climate-related risks on the Parent Company’s impairment assessment is considered sufficiently remote at this point in time and therefore
no sensitivity analysis has been performed.
Judgements and estimates
The preparation of financial information in conformity with UK-adopted IAS, requires management to make judgements, estimates and assumptions
that affect the application of policies and reporting amounts of assets and liabilities, income and expenses. The estimates and associated assumptions
are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and
future periods.
• Judgements
There are no areas of judgement that have a significant effect on the amounts recognised in the Financial Statements of the Company.
• Estimates
The key assumption affected by future uncertainty that has significant risks of causing material adjustment to the carrying value of assets and
liabilities within the next financial year is:
Recoverability of investments and receivables from Group companies (estimate)
The Company assesses whether there are any indicators of impairment of investments or receivables from Group companies at each reporting date.
Investments and receivables from Group companies are tested for impairment when there are indicators that the carrying amounts may not be
recoverable. Details of impairments of investments recorded during the year are included in note 5 and details of intercompany impairments are
included in note 8.
Deferred tax
The Company recognises deferred tax assets on all applicable temporary differences where it is probable that future taxable profits will be available
for utilisation. This requires Management to make judgements and assumptions regarding the amount of deferred tax that can be recognised based
on the magnitude and likelihood of future taxable profits. The carrying amount of deferred tax assets is reviewed at each balance sheet date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Summary of significant accounting policies
The accounting policies adopted in the preparation of the Company Financial Statements are consistent with those followed in the preparation of the
Company Annual Financial Statements for the year ended 31 December 2023.
Income taxes
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates
and laws that are enacted or substantively enacted by the balance sheet date. Management periodically evaluates positions taken in the tax returns
with respect to the situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
185
Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
1. Accounting policies (continued)
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in
the Financial Statements, with the following exceptions:
• where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss;
• in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and
• deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is
realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are
reassessed at each reporting period and are recognised to the extent that it has become probable that future taxable profits will allow the deferred
tax asset to be recovered.
Deferred income tax assets and liabilities are offset, only if a legally enforceable right exists to set off current tax assets against current tax liabilities,
the deferred income taxes relate to the same taxation authority and that authority permits the Group to make a single net payment. Income tax is
charged or credited directly to other comprehensive income or equity, if it relates to items that are charged or credited in the current or prior periods
to other comprehensive income or equity respectively. Otherwise income tax is recognised in the income statement.
Pensions
The Company operates a defined contribution pension scheme for employees of the Company. The assets of the scheme are invested and managed
independently of the finances of the Company. The pension cost charge represents contributions payable in the year.
Share-based payment transactions
The fair value of employee share option plans and share award scheme, which are all equity-settled, is calculated at the grant date using the Black
Scholes model. The resulting cost is charged to the Company income statement over the vesting period. The value of the charge is adjusted to reflect
expected and actual levels of vesting.
Treasury shares
Where the Company repurchases shares from existing shareholders, they are held as treasury shares and are presented as a deduction from equity.
No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Treasury
shares are ignored for the purposes of calculating the Group’s earnings per share.
Shares held by employee benefit trust (EBT) and share incentive plan (SIP)
The Group has an employee share scheme (ESOT) for the granting of LSL shares to Executive Directors and selected senior employees and an
employee share incentive plan (trust). Shares in LSL held by the ESOT and the trusts are treated as treasury shares and presented in the balance sheet
as a deduction from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the Group’s own
equity instruments. The finance costs and administration costs relating to the ESOT and the trusts are charged to the income statement. Dividends
earned on shares held in the ESOT and the trusts have been waived.
Investments in subsidiaries
Investments are shown at cost less provision for impairment. The cost of an investment is measured as the aggregate of the consideration
transferred, measured at acquisition date fair value. Any contingent consideration will be recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration are recognised through profit and loss.
Investments are reviewed for impairment annually or more frequently if events or changes in circumstances indicate that its carrying value may be
impaired.
186
Notes to the Parent Company Financial Statements continued.
for the year ended 31 December 2023
1. Accounting policies (continued)
Investments in joint venture
The Company’s share of the results of joint ventures is included in the Group Income Statement using the equity method of accounting. Investments
in joint ventures are carried in the Parent Company Balance Sheet at cost plus post-acquisition changes in the Company’s share of the net assets of
the entity, less any impairment in value. Goodwill relating to the joint venture is included in the carrying amount of the investment and is not tested
for impairment individually. Unrealised gains and losses resulting from transactions between the Company and the joint venture are eliminated to the
extent of the interest in the joint venture.
In addition, when there has been a change recognised directly in the equity of the joint venture, the Company recognises its share of any changes,
when applicable, in the statement of changes in equity.
The Financial Statements of the joint venture are prepared for the same reporting period as the Company. When necessary, adjustments are made to
bring the accounting policies in line with those of the Group.
Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when
annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount. An asset’s recoverable
amount is the higher of its fair value less costs to sell (FVLCTS) and value-in-use (VIU). Where the carrying amount of an asset exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount. In assessing an asset’s VIU, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with
the function of the impaired asset.
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s recoverable amount.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Property, plant and equipment is depreciated
on a straight-line basis to its residual value over its anticipated useful economic life:
Office equipment, fixtures and fittings – over three to seven years
Computer equipment – over three to four years
Leasehold improvements – over the shorter of the lease term or ten years
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the
asset) is included in the income statement when the asset is derecognised. These assets’ residual values, useful lives and methods of depreciation are
reviewed at each financial year end, and adjusted prospectively, if appropriate.
Financial instruments
Financial assets and financial liabilities are recognised in the Company’s Balance Sheet when the Company becomes a party to the contractual
provisions of the instrument. When financial assets are recognised initially, they are measured at fair value, being the transaction price plus, in the
case of financial assets not at fair value through the income statement, directly attributable transaction costs. Financial assets are derecognised when
the Company no longer has the rights to cash flows, the risks and rewards of ownership or control of the asset. Financial liabilities are derecognised
when the obligation under the liability is discharged, cancelled or expires. The subsequent measurement of financial assets depends on their
classification.
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Company can elect to classify irrevocably its equity investments as equity instruments designated at fair value through
OCI when they meet the definition of equity under IFRS 9 Financial Instruments and are not held for trading. The classification is determined on an
instrument-by-instrument basis. Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other
income in the statement of profit or loss when the right of payment has been established, except when the Company benefits from such proceeds as
a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through
OCI are not subject to impairment assessment.
187
Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
1. Accounting policies (continued)
The Company’s accounting policy for each category of financial instruments is as follows:
Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at fair value less directly attributable transaction costs. After initial recognition, interest-bearing loans
and borrowings are subsequently measured at amortised cost using the effective interest method. Gains and losses arising on repurchase, settlement
or otherwise cancellation of liabilities are recognised respectively in finance income and finance costs. Finance costs comprise interest payable on
borrowings calculated at the effective interest rate method and recognised on an accruals basis. Borrowing costs are recognised as an expense when
incurred.
Intercompany receivables
Intercompany receivables are classified as current where the balance is expected to be repaid in the next 12 months and non-current when they are
expected to be repaid in more than 12 months. The Company recognises a loss allowance based on the lifetime expected credit loss for intercompany
receivables at each reporting date.
2. Cash flow from financing activities
At 1 January
2023
£’000
Cash flow
£’000
Acquisitions
£’000
Foreign
exchange
£’000
Unwind of
discount
£’000
At 31 December
2023
£’000
Short term liabilities 4,826 11,837 – – – 16,663
4,826 11,837 – – – 16,663
Short term liabilities
At 31 December 2023 short term liabilities include a bank overdraft of £16.7m (2022: £4.8m) see note 10.
3. Intangible assets
Software
£’000
Total
£’000
Cost
At 1 January 2023 79 79
Additions – –
As at 31 December 2023 79 79
Amortisation
At 1 January 2023 – –
Amortisation 43 43
As at 31 December 2023 43 43
Net book value
As at 31 December 2023 36 36
As at 31 December 2022 79 79
188
Notes to the Parent Company Financial Statements continued.
for the year ended 31 December 2023
4. Property, plant, and equipment
Land and
buildings
£’000
Leasehold
improvements
£’000
Fixtures, fittings
and computer
equipment
£’000
Total
£’000
Cost
At 1 January 2022 90 74 120 284
Additions – – 3,112 3,112
At 31 December 2022 90 74 3,232 3,396
Additions 125 – 4 129
Disposals – – (1,606) (1,606)
At 31 December 2023 215 74 1,630 1,919
Depreciation
At 1 January 2022 90 67 119 276
Charge for the year – – 1,175 1,175
At 31 December 2022 90 67 1,294 1,451
Charge for the year 32 – 643 675
Disposals – – (1,144) (1,144)
At 31 December 2023 122 67 793 982
Net book value
At 31 December 2023 93 7 837 937
At 31 December 2022 – 7 1,938 1,945
Owned assets – 7 837 844
Right-of-use assets 93 – – 93
93 7 837 937
5. Investment in subsidiaries
Details of the subsidiaries held directly and indirectly by the Company are shown in note 37 to the Group Financial Statements.
2023
£’000
Restated
2022
£’000
At 1 January 116,666 179,718
Additions – –
Adjustments for share-based payment 23 450
Disposals (533) –
Impairment in cost of investments (2,672) (36,687)
Reclassified as held for sale – (26,815)
At 31 December 113,484 116,666
In 2023 there was a decrease of £0.02m (2022: increase of £0.5m) in investment in subsidiaries for share-based payments, representing the financial
effects of awards by the Company of options over its equity shares to employees of subsidiary undertakings. The decrease in the year was driven by
large volume of options lapsing due to restructuring across the subsidiary undertakings.
During the year, the Company disposed of its subsidiaries Marsh & Parsons (Holdings) Limited (M&P) and Embrace Financial Services Limited (EFS). As
a result, investment balances of £0.4m in M&P and £0.1m in EFS were disposed from the investment in subsidiaries balance.
In 2023, the Company recognised an impairment of £2.7m (2022: £12.7m) in its investment in Reeds Rains. The charge was calculated based on the
recoverable amount of each of the investments, the recoverable amount is based on the higher of each investments value-in-use (VIU) or fair value
less cost to sell (FVCLTS). Where the recoverable amount has been assessed based on a VIU calculation, a discount rate 15.7% (2022: 14.2%) and
terminal growth rate of 2.0% (2022: 2.0%) has been applied. The carrying value of Reeds Rains at the period end is £13.7m (2022: £16.4m).
189
Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
5. Investment in subsidiaries (continued)
Sensitivity to change in assumptions
Sensitivity analysis has been performed for investments held by the Company at the reporting date to assess the extent to which reasonably possible
changes in key assumptions would impact the impairment charge. During the year, the Company recorded a total impairment charge of £2.7m in
relation to its investment in Reeds Rains. In addition, the Company’s investment in Albany was sensitive to any changes in key assumptions used
within the VIU calculation.
The following sensitivities have been applied to the investments at the period end:
i. Growth rate – a reduction in growth rate of 0.5% -1.0%
ii. Discount rate – an increase in discount rate of 1.0% -1.5%
iii. Reduction in future cash flows – a reduction in future cash flows of 10.0%
If growth rate was reduced by 1%, the impairment charge to Reeds Rains would increase to £3.0m and there would be an impairment to Albany of
£0.1m. No impairment charge required for any other investments.
If discount rate was to increase by 1.5%, the impairment charge to Reeds Rains would increase to £3.5m and there would be an impairment to Albany
of £0.3m. No impairment charge required for any other investments.
If a reduction in future cash flows of 10% was applied, the impairment charge to Reeds Rains would increase to £3.5m and there would be an
impairment to Albany of £0.3m. No impairment charge required for any other investments.
6. Financial assets
2023
£’000
2022
£’000
(a) Investment in equity instruments – at fair value
Unquoted shares at fair value – 115
– 115
At 1 January 115 4,610
Additions – –
Disposals – –
Revaluation (115) (4,495)
At 31 December – 115
Investment in equity instruments
The financial assets include unlisted equity instruments which are carried at fair value. Fair value is judgemental given the assumptions required and
have been valued using a level 3 valuation techniques (see note 32 to the Group Financial Statements). During the period, the Company also revalued
downwards its investment in Global Property Ventures to £nil at 31 December 2023 (2022: £0.1m).
2023
£’000
2022
£’000
(b) Financial assets at fair value through income statement (FVPL)
Contingent consideration receivable 1,640 –
1,640 –
Contingent consideration receivable
Contingent consideration of £1.6m relates to EFS which was sold in H1 2023. The consideration payable will be 7x the combined EBITDA in calendar
year 2024, subject to working capital adjustments and is payable in the first half of 2025. The fair value of the contingent consideration receivable
has been calculated for each of the three disposals noted above based on forecast profitability in calendar year 2024, discounted at 15.5% (Financial
Services Division’s weighted average cost of capital for an 18-month period).
The future cash flow and discount rate assumptions are key to the calculation, if full year 2024 profitability was to reduce by 10% this would result
in a reduction in the receivable of £0.1m, if profitability was to increase, this would result in an increase in the receivable of the same amount. If the
discount rate was to increase by 1%, the receivable would decrease by £21k and if the discount rate was to reduce by 1%, this would result in an
increase in the receivable of the same amount.
190
Notes to the Parent Company Financial Statements continued.
for the year ended 31 December 2023
7. Investment in joint venture
2023
£’000
2022
£’000
At cost
At 1 January 5,068 2,477
Equity investment in Pivotal Growth 4,681 3,952
Equity accounted loss (549) (1,361)
Adjustment for non-controlling interests 159 –
At 31 December 9,359 5,068
Pivotal Growth
A further £4.7m equity investment in Pivotal Growth was made throughout 2023, please refer to note 20 in the Group Financial Statements for
further information.
8. Trade and other receivables
2023
£’000
2022
£’000
Non-current
Amounts owed by Group undertakings 4,408 18,079
4,408 18,079
Current
Group relief receivable 8,203 15,100
Prepayments 923 2,392
Other taxes and social security 264 151
Amounts owed by Group undertakings 1,147 2,733
10,537 20,376
The expected credit loss relating to intercompany receivables is £7.6m at 31 December 2023 (31 December 2022: £5.7m) and non-current
intercompany receivables are presented net of this provision. No allowance for expected credit losses is deemed necessary in respect of current
intercompany receivables.
9. Contract assets
2023
£’000
2022
£’000
Non-current contract asset 329 –
Current contract asset 40 –
369 –
191
Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
10. Cash and cash equivalents and bank overdrafts
2023
£’000
2022
£’000
Cash and cash equivalents 32 –
Cash and cash equivalents (excluding bank overdrafts) 32 –
Cash at bank earns interest at floating rates based on daily bank overnight deposit rates.
2023
£’000
2022
£’000
Bank overdrafts 16,663 4,826
Bank loans – RCF and overdraft
The Company’s bank loan totals £nil (2022: £nil) and the Company’s overdraft totals £16.7m (2022: £4.8m).
In accordance with the terms at 31 December 2023, the utilisation of the RCF may vary each month as long as this does not exceed the maximum
£60.0m facility (2022: £90.0m). The Group’s overdraft is also secured on the same facility, and the combined overdraft and RCF cannot exceed
£60.0m (2022: £90.0m). The banking facility is repayable when funds permit on or by May 2026.
The interest rate applicable to the facility is SONIA plus a margin rate, the margin rate is linked to the leverage ratio of the Group and is reviewed at
six-monthly intervals.
The bank loan totalling £nil (2022: £nil) is secured via cross guarantees issued from the following businesses: LSL Property Services plc, Your-move.
co.uk Limited, Reeds Rains Limited, e.surv Limited, Lending Solutions Holdings Limited, First Complete Limited, New Daffodil Limited, St Trinity
Limited, LSL Corporate Client Services Limited, Advance Mortgage Funding Limited, LSLi Limited, David Frosts Estate Agents Limited, ICIEA Limited,
JNP Estate Agents Limited, Vitalhandy Enterprises Limited, Personal Touch Financial Services Limited and Personal Touch Administration Services
Limited. The bank loan is considered on a group wide net cash position basis, please see note 35 in the Group financial statements for further detail
on Group net cash.
11. Trade and other payables
2023
£’000
2022
£’000
Trade payables 424 525
Accruals 2,431 1,968
Amounts owed to Group undertakings 46,302 83,043
49,157 85,536
Amounts owed to Group undertakings are repayable on demand.
12. Financial liabilities
2023
£’000
2022
£’000
Current
Contingent liabilities 65 –
IFRS 16 financial liabilities 42 –
107 –
Non-current
Contingent liabilities – 31
IFRS 16 financial liabilities 65 –
65 31
192
Notes to the Parent Company Financial Statements continued.
for the year ended 31 December 2023
13. Provision for liabilities
Provision
£’000
Balance at 1 January –
Transfer from accruals 571
Balance at 31 December 571
Current liabilities 571
Non-current liabilities –
571
Claims indemnity provision and contingency
Included in the sale agreement of LMS (a former joint venture of the Company) was a claims indemnity of £2.0m, for which the Company has
provided £0.6m, which it considers to be the most likely outcome. Further cases exist and are considered possible, not probable; therefore, no
further provision has been made for these cases in the Financial Statements. Should these claims succeed, the estimated further costs would
be £1.4m. In the prior year, the LMS provision was included within accruals but in the current year, this has been reclassed and disclosed within
provisions for liabilities.
14. Deferred tax
2023
£’000
2022
£’000
Deferred tax asset
Depreciation charged in advance of capital allowances 259 89
Share options 627 930
Losses 2,773 –
Deferred tax asset at 31 December 3,659 1,019
2023
£’000
2022
£’000
Deferred tax asset at 1 January 1,019 578
Deferred tax credit in profit and loss account for the year 2,747 338
Deferred tax (charge)/credit to other comprehensive income (107) 103
Deferred tax asset at 31 December 3,659 1,019
A deferred tax asset has been recognised on the basis that the Group is anticipated to make suitable taxable profits in the foreseeable future against
which the Company’s attributable assets can be utilised. The Group’s three-year plan indicates that the Company’s losses within the Group through
group relief. Management is therefore satisfied that these can be utilised in a future period.
At December 2023, a deferred tax asset is recognised in relation to share-based payments of £3.7m (2022: £1.0m). No deferred tax liability is
recognised in respect of equity financial assets.
15. Called‑up share capital
2023 2022
Shares £’000 Shares £’000
Authorised:
Ordinary shares of 0.2 pence each 500,000,000 1,000 500,000,000 1,000
Issued and fully paid:
At 1 January 105,158,950 210 105,158,950 210
Issued in the year – – – –
At 31 December 105,158,950 210 105,158,950 210
193
Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
16. Reserves
Share premium
The amount subscribed for share capital in excess of nominal value less any costs attributable to the issue of new shares.
Share-based payment reserve
This represents the amount provided in the year in respect of share awards. The Company has operated long-term incentive plans (including CSOP)
and a number of SAYE schemes for the employees in the Company and the Group. See note 15 to the Group Financial Statements for details of the
LTIP, JSOP, CSOP, SIP/BAYE and the SAYE schemes. The effect of share-based payment transactions on the Company’s profit for the period was a gain
of £0.1m (2022: charge of £1.5m).
Shares held by employee benefit trust (EBT) and share incentive plan (SIP)
Shares held by EBT represent the cost of LSL shares purchased in the market and held by the Trust to satisfy future exercise of options under the
Group’s employee share options schemes. At 31 December 2023 the Trust held 517,949 (2022: 1,063,097) LSL shares at an average cost of £3.86
(2022: £3.72), and the SIP held 991,419 (2022: 1,185,692) LSL shares at an average cost of £0.88 (2022: £0.88). The market value of the LSL shares at
31 December 2023 was £3.9m (2022: £4.1m). The nominal value of each share is 0.2 pence.
Treasury shares
Treasury shares represent the cost of LSL shares purchased in the market as a result of a share buy-back scheme which commenced in April 2022
and ceased in September 2022. At 31 December 2023, LSL had repurchased 1,179,439 (2022: 1,179,439) LSL shares at an average cost of £3.38
(2022: £3.38). The market value of the LSL shares at 31 December 2023 was £3.0m (2022: £4.1m). The nominal value of each share is 0.2 pence.
Fair value reserve
The fair value reserve is used to record the changes in fair value of equity financial assets.
17. Company loss for the financial year after tax
The Company has not presented its own profit and loss account as permitted by section 408 of the Companies Act 2006. The loss after tax for the
year was £9.8m (2022: loss of £24.4m).
Remuneration paid to Directors of the Company is disclosed in note 15 to the Group Financial Statements.
The Company paid £0.5m (2022: £0.5m) to its auditors in respect of the audit of the Financial Statements of the Company.
Fees paid to the external auditors and their associates for non-audit services to the Company itself are not disclosed in the individual accounts of the
Company because Group financial statements are prepared which are required to disclose such fees on a consolidated basis. These are disclosed in
note 11 to the Group Financial Statements.
18. Pension costs and commitments
Total contributions to the defined contribution schemes in the year were £204,330 (2022: £186,986). The amount outstanding in respect of pensions
as at 31 December 2023 was £nil (2022: £nil).
The average monthly number of employees (including Directors) was 117 (2022: 127).
194
Notes to the Parent Company Financial Statements continued.
for the year ended 31 December 2023
19. Related party transactions
During the year the transactions entered into by the Company are as follows:
Sales to related
parties
£’000
Purchases from
related parties
£’000
Amounts owed by
related parties
£’000
Amounts owed to
related parties
£’000
Wholly owned subsidiaries
2023 – – 13,760 45,787
2022 – – 35,866 82,521
Sales to related
parties
£’000
Purchases from
related parties
£’000
Amounts owed by
related parties
£’000
Amounts owed to
related parties
£’000
Non-wholly owned subsidiaries
2023 – – – 515
2022 – – 46 522
The expected credit loss relating to related parties receivables is £7.6m at 31 December 2023 (31 December 2022: £5.7m) and the related parties
receivables are presented net of this provision. The increase in provision of £1.9m (2022: £5.7m) recorded in the Company’s income statement was
split between £0.3m (2022: £5.7m) in operating expenses and £1.6m (2022: £nil) in exceptional costs.
20. Financial instruments – risk management
The Company’s principal financial instruments comprise of cash and cash equivalents with access to a £60m loan facility. The main purpose of these
financial instruments is to raise finance for the Company’s operations and to fund acquisitions. The Company has various financial assets and liabilities
such as trade receivables, cash and short-term deposits and trade payables, which arise directly from its operations.
It is the Company’s policy that trading in derivatives shall not be undertaken. The Company may, from time to time and as necessary, enter into
interest rate swaps for risk management purposes but did not hold any such swaps during either the current or prior year.
The Company is exposed through its operations to the following financial risks:
• interest rate risk;
• liquidity risk; and
• credit risk.
Policy for managing these risks is set up by the Board following recommendations from the Group Chief Financial Officer. The policy for each of the
above risks is described in more detail below.
Interest rate risk
The Group’s exposure to the risk of changes in market interest rates relates primarily to the use of the Group’s RCF facility. The RCF incurs interest on
drawings at a variable rate, based on SONIA plus a margin rate and this policy is managed centrally by the Group treasury function. The subsidiaries
are not permitted to borrow from external sources directly without approval from the Group treasury function.
The Group has not drawn down on its RCF facility during the year to 31 December 2023 and therefore has incurred no interest.
Liquidity risk
The Company aims to mitigate liquidity risk by managing cash generation by its operations, dividend policy and acquisition strategy. Acquisitions are
carefully selected with authorisation limits operating up to Group Board level and cash payback periods applied as part of the investment appraisal
process.
The Company monitors its risk to a shortage of funds using a recurring liquidity planning tool and daily cash flow reporting. This includes
consideration of the maturity of both its financial investments and financial assets (e.g. accounts receivable, and other financial assets) and projected
cash flows from operations. The Company’s objective is to maintain a balance between continuity of funding and flexibility for potential acquisitions
through the use of its banking facilities.
At 31 December 2023, the Group had available £60.0m of undrawn committed borrowing facilities, of which the Group could have drawn £33.0m
under the terms of the facility (2022: the Group could have drawn £90.0m of the facility available at 31 December 2023).
195
Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
20. Financial instruments – risk management (continued)
The Company’s bank overdraft and trade and other payables are all repayable on demand (2022: repayable on demand) and the undiscounted cash
flows payable under these liabilities are consistent with the amounts presented in the balance sheet (2022: consistent).
The liquidity risk of the Company entity is managed centrally by the Group Treasury function. The Company’s cash requirement is monitored closely.
The Company has a RCF with a syndicate of major banking corporations to manage longer term borrowing requirements.
Capital management
The primary objective of the Company’s capital management is to ensure that it maintains appropriate capital structure to support its business
objectives, including any regulatory requirements, and maximise shareholder value. Capital includes share capital and other equity attributable to the
equity holders of the parent company.
In the medium to long term, the Company will strive to maintain a reasonable leverage (i.e. balance between debt and equity) to help achieve the
Company’s business objectives of growth (through acquisitions and organic growth) and dividend policy. In the short term, the Company does not
have a set leverage ratio to be achieved but the Directors monitor the ratio of net debt to operating profit to ensure that the debt funding is not
excessively high.
Credit risk
There are no significant concentrations of credit risk within the Company.
Interest rate risk profile of financial assets and liabilities
Treasury policy is described in the note above.
The interest rate profile of the financial assets and liabilities of the Company as at 31 December 2023 are as follows:
Within 1 year
£’000
1‑2 years
£’000
2‑3 years
£’000
3‑4 years
£’000
Total
£’000
Floating rate
Overdraft (16,663) – – – (16,663)
The interest rate profile of the financial assets and liabilities of the Company as at 31 December 2022 are as follows:
Within 1 year
£’000
1-2 years
£’000
2-3 years
£’000
3-4 years
£’000
Total
£’000
Floating rate
Overdraft (4,826) – – – (4,826)
Fair values of financial assets and financial liabilities
The fair values for the majority of the financial instruments have been calculated by discounting the expected future cash flows at interest rates
prevailing for a comparable maturity period for each instrument. There are no material differences between the book value and fair value for any of
the Company’s financial instruments.
Fair value hierarchy
The Company uses the following hierarchy for determining and disclosing the fair value of the financial instruments by valuation technique:
• Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or
indirectly; and
• Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
196
Notes to the Parent Company Financial Statements continued.
for the year ended 31 December 2023
20. Financial instruments – risk management (continued)
The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities.
2023
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
Assets and liabilities measured at fair value
Financial assets 1,640 – – 1,640
Financial liabilities 172 107 – 65
2022
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
Assets measured at fair value
Financial assets 115 – – 115
The fair value of equity financial assets that are not traded in the open market of £1.6m (2022: £0.1m) are using level 3 techniques in accordance
with the fair value hierarchy and Management use all relevant and up to date information (including cash flow forecasts and financial statements) to
arrive at their judgement. Where appropriate a range of potential outcomes is considered in reaching a conclusion.
21. Prior year restatements
Adjustments to assets held for sale
At 31 December 2022 the Company reported its investment in Marsh & Parsons as held for sale. The investment was written down to its fair value
less cost to sell (FVLCTS), which was calculated as the initial consideration received less transaction costs (£28.9m). The sale agreement included
provisions for adjustments to the initial consideration for debt-like items and working capital adjustments. Such amounts were subject to negotiation
and judgement and were not reflected in the fair value assessment at 31 December 2022. The Company has re-examined the judgements made and
has determined that an adjustment to consideration for debt-like items of £2.0m could have been reliably estimated at 31 December 2022. Rather
than recognising this adjustment as an increase in the loss on disposal in 2023, the prior year financial information has been restated, in accordance
with IAS 8. Restatement of the prior year financial information in this regard results in a decrease in current assets, an increase in the impairment
charge and has no impact on cash.
Balance sheet (extract)
Reported
year ended
31 December
2022
£’000
Adjustment to
assets held for
sale
£’000
Restated
year ended
31 December
2022
£’000
Current assets
Assets held for sale 28,850 (2,035) 26,815
Net assets 101,804 (2,035) 99,769
Equity
Retained earnings 120,264 (2,035) 118,229
Total equity 101,804 (2,035) 99,769
Income statement (extract)
Reported
year ended
31 December
2022
£’000
Adjustment to
assets held for
sale
£’000
Restated
year ended
31 December
2022
£’000
Exceptional costs (22,431) (2,035) (24,466)
Profit/(loss) for the year (22,431) (2,035) (24,466)
Profit/(loss) for the year (22,431) (2,035) (24,466)
Total comprehensive income/(loss) for the period, net of tax (22,431) (2,035) (24,466)
22. Events after the reporting period
On 2 February 2024, the Company acquired the entire issued share capital of TenetLime Limited from Tenet Limited, a subsidiary of Tenet Group
Limited (‘Tenet Group’) for total consideration of up to £11.6m. Please refer to note 34 in the Group Financial Statements for further information.
197
Other Information
Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
In this section
198 Definitions
203 Shareholder Information (including
forward-looking statements information)
198
Definitions
“Adjusted Basic Earnings per Share” or “Adjusted Basic EPS” is defined at note 12 to the Financial Statements.
“Adjusted EBITDA” is Group Underlying Operating Profit (note 5 to the Financial Statements) plus depreciation on property, plant and equipment.
“AGM” annual general meeting.
“Advance Mortgage Funding” Advance Mortgage Funding Limited.
“AI” artificial intelligence.
“Albany” Albany Insurance Company (Guernsey) Limited.
“AR” appointed representative.
“AR Regime” the FCA’s Appointed Representatives Regime.
“Audit & Risk Committee” LSL’s Audit & Risk Committee.
“Auditor Independence Policy” LSL policy relating to non-audit services provided by the external auditor.
“Basic Earnings per Share” or “EPS” is defined at note 12 to the Financial Statements.
“Board”/“Board of Directors” the board of Directors of LSL.
“BAYE” Buy As You Earn (also referred to as SIP).
“BoE” Bank of England.
“B2B” business to business.
“Committee(s)” refers to LSL’s Nominations Committee, the Audit & Risk Committee, the Remuneration Committee and the Disclosure Committee.
“Company” or “Parent Company” refers to LSL Property Services plc.
“CBI” Conference of British Industry.
“Corporate Governance Report” the Corporate Governance and Nominations Committee Report contained within this Report.
“Code” UK Code of Corporate Governance published by the Financial Reporting Council (FRC) (July 2018 edition).
“Company Secretary” Sapna B. FitzGerald.
“CEO” Chief Executive Officer, David Stewart.
“CFD” Climate-related Financial Disclosures Regulations 2022.
“CFO” Chief Financial Officer, Adam Castleton.
“Colleague Forums” or “Forums” our LSL Group Colleague Engagement, Inclusion and Diversity, and Communities forums.
“COVID-19” coronavirus.
“CPO” Chief People Officer, Debra Gardner.
“CRO” chief risk officer.
“CRWG” climate-related working group.
“CSOP” Company Share Ownership Plan.
“D2C” direct to consumer.
“Data and Information Security Committee” or “DISC” LSL’s Data and Information Security Committee.
“Davis Tate” trading name of Davis Tate Ltd.
“Director” an Executive Director or Non Executive Director of LSL.
“Division(s)” refers to each of our Financial Services, Surveying & Valuation and Estate Agency Franchising divisions.
“DLPS” or “Direct Life and Pension Services” or “Direct Life and Pensions” Direct Life and Pension Services Limited.
199
Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
“DPO” Data Protection Officer.
“EBITDA” earnings, before interest, taxes, depreciation and amortisation.
“Elsevier” Elsevier Limited.
“Embrace Financial Services” Embrace Financial Services Limited.
“EPS” Earnings per Share.
“EPC” energy performance certificate.
“Ernst & Young” Ernst & Young LLP.
“ESG” Environmental, Social and Governance.
“ESOT” LSL’s employee share scheme.
“ESOT Trustees” Apex Financial Services (Trust Company) Limited.
“Estate Agency Division” or “Estate Agency” this refers to LSL’s residential sales and lettings businesses. Following the change to a franchise model
this Division has become the Estate Agency Franchising Division. It also included LSL’s asset management businesses until 31 March 2023.
“Estate Agency Franchising Division” this refers to the provision of estate agency franchising services such as brand marketing and commercial and
IT support, to a network of territories across the UK.
“e.surv” or “e.surv Chartered Surveyors” trading names of e.surv Limited.
“EWG” LSL’s Environmental Working Group.
“Executive Committee” Executive Committee of the Group, which includes the Executive Directors.
“Executive Director(s)” David Stewart, Adam Castleton and Helen Buck (up to 31 March 2023).
“FCA” Financial Conduct Authority.
“Financial Services Division” or “Financial Services” or “FS” refers to LSL’s financial services division (including mortgage, non-investment insurance
brokerage services and the operation of LSL’s intermediary networks).
“Financial Services Networks” or “Networks” refers to the PRIMIS Network and TMA mortgage club.
“Financial Services Other” refers to Pivotal Growth, New Homes businesses, D2C and technology businesses (Mortgage Gym and DLPS).
“First2Protect” First2Protect Limited.
“First Complete” First Complete Limited.
“Financial Services Network” the PRIMIS Mortgage Network.
“Financial Statements” financial statements contained in this Report.
“FRC” Financial Reporting Council.
“FTE” full-time equivalent.
“FY” full year.
“Global Property Ventures” refers to Global Property Ventures Limited.
“Group” LSL Property Services plc and its subsidiaries.
“Group First” Group First Ltd, holding company of Mortgages First Ltd and Insurance First Brokers Ltd.
“Group Revenue” total revenue for the LSL Group.
“Group Underlying Operating margin” Group Underlying Operating Profit divided by Group Revenue.
“Goodfellows” trading name of GFEA Limited.
“H1 2023” 1 January 2023 – 30 June 2023.
200
Definitions continued.
“H2 2023” 1 July 2023 – 31 December 2023.
“Hawes” or “Hawes & Co” trading name of Hawes & Co Limited.
“HMRC” His Majesty’s Revenue and Customs.
“Homefast Property Services” Homefast Property Services Limited.
“Home Report” a report which includes a single survey, energy report and property questionnaire and which must accompany all residential property
marketing in Scotland.
“IAS” International Accounting Standards.
“IBNR” Incurred But Not Reported.
“I&D” Inclusion and Diversity.
“IFRS” International Financial Reporting Standards.
“Insurance First Brokers” Insurance First Brokers Ltd.
“Interim Chair”or “Interim Non Executive Chair” refers to Darrell Evans.
“JNP” trading name of JNP Estate Agents Limited.
“JSOP” joint share ownership plan.
“Korn Ferry” trading name of Korn Ferry Hay Group Limited.
“KPI” key performance indicators.
“Land & New Homes” LSL Land & New Homes Ltd.
“Lauristons” trading name of Lauristons Limited.
“LGBT+” lesbian, gay, bisexual and trans.
“Listing Rules” FCA Listing Rules.
“LMS” LMS Direct Conveyancing Limited and Cybele Solutions Holdings Limited.
“Linear” or “Linear Financial Solutions” are trading names of Linear Mortgage Network Limited.
“Living Responsibly Report 2024” report published on our website setting out our Living Responsibly ESG programme.
“LSE” London Stock Exchange.
“LSLi” LSLi Limited and its subsidiary companies. During 2023 the estate agency branches owned by the LSLi companies were franchised as part of
the conversion of the entire LSL owned estate agency network to franchises, these included JNP, Intercounty, David Frost Estate Agents Limited,
Goodfellows, Davis Tate, Lauristons, Hawes & Co and Thomas Morris).
“LSL” or “Group” or “Parent Company” refers to LSL Property Services plc and its subsidiaries.
“LSL Corporate Client Department” trading name of LSL Corporate Client Services Limited.
“LTIP” Long Term Incentive Plan.
“Management” refers to the Group’s management teams.
“MAR” the UK Market Abuse Regulation.
“Marsh & Parsons” trading name of Marsh & Parsons Limited.
“MCAG” industry-wide Mortgage Climate Action Group.
“Mortgages First” Mortgages First Ltd.
“Mortgage Gym” Mortgage Gym Solutions Ltd.
“Net Bank Debt” see note 35 to the Financial Statements.
201
Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
“Net Cash” see note 35 to the Financial Statements.
“New Build” refers to RSC New Homes Limited and the Group First companies.
“Non Executive Director” refers to Gaby Appleton, Darrell Evans, Simon Embley, and Sonya Ghobrial and James Mack.
“Notice of Meeting” the circular made available to shareholders setting out details of the AGM.
“Deutsche Numis” Numis Securities Limited.
“OCI” refers to other comprehensive income.
“P&L” profit and loss statement.
“PDMRs” Persons Discharging Managerial Responsibility as defined in Article 3(1) (25) of UK MAR.
“Personal Touch Financial Services” or “PTFS” Personal Touch Financial Services Limited.
“Personal Touch Administration Services” or “PTAS” Personal Touch Administration Services Limited.
“Pivotal Growth” Pivotal Growth Limited.
“PI” professional indemnity.
“PI Costs” costs relating to ongoing and expected future PI claims relating to Surveying & Valuation business.
“Pollen Street Capital” or “PSC” Pollen Street Capital Limited.
“PRIMIS Network” or “PRIMIS” or “PRIMIS Mortgage Network” a trading name of Advance Mortgage Funding Limited, First Complete Limited and
Personal Touch Financial Services Limited.
“PRSim” refers to our private rented sector property management business which was divested in the first quarter of 2023.
“RCF” revolving credit facility.
“Real Living Wage” a UK wage rate based on the cost of living.
“Reeds Rains” trading name of Reeds Rains Limited.
“Registered Office” Newcastle House, Albany Court, Newcastle Business Park, Newcastle upon Tyne, NE4 7YB.
“RELX” RELX Group plc.
“Report” LSL’s Annual Report and Accounts 2023.
“RICS” Royal Institution of Chartered Surveyors.
“RIDDOR” Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013.
“Road to Health” RoadtoHealth Group Ltd.
“RSC New Homes” or “RSC” RSC New Homes Limited.
“SAYE” Save As You Earn.
“SECR” Streamlined Energy and Carbon Reporting.
“Senior Management Team” or “Senior Managers” refers to our Executive Committee and their direct reports who are A1 and A2 grades (excluding
the Executive Directors).
“SID” Senior Independent Director. During 2023 Gaby Appleton was the SID. James Mack took on the role of SID with effect from 5 March 2024.
“SIP” Share Incentive Plan (also referred to as BAYE).
“SteerCo” Living Responsibly Steering Committee.
“Surveying & Valuation” refers to e.surv Limited (including where it trades as Walker Fraser Steele) and asset management businesses with effect
from 1 April 2023.
“Templeton” trading name of Templeton LPA Limited.
Definitions continued.
“TenetLime” TenetLime Limited.
“TCFD” Task Force on Climate-related Financial Disclosures.
“The Property Franchise Group” or “TPFG” The Property Franchise Group plc.
“Thomas Morris” trading name of Thomas Morris Limited.
“The Mortgage Alliance” or “TMA” are trading names of Advance Mortgage Funding Limited’s mortgage club.
“Treasury Shares” shares held in treasury with no dividend rights and no voting rights at LSL’s general meetings.
“Trust” LSL’s SIP trust.
“Trustees” Link Market Services (Trustees) Limited.
“TSR” Total Shareholder Return.
“UKLA” UK Listing Authority.
“Underlying Operating Margin” operating profit before exceptional costs, contingent consideration, amortisation and share-based payments shown
as a percentage of turnover.
“Underlying Operating Profit/Loss” before exceptional costs, contingent consideration, amortisation of intangible assets and share-based payments.
“Var” variance.
“VEM” or “Vibrant Energy Matters” Vibrant Energy Matters Limited.
“Walker Fraser Steele” a trading name of e.surv Limited.
“YOPA” YOPA Property Limited.
“Your Move” trading name of your-move.co.uk Limited.
“Zeus” Zeus Capital Limited.
202
203
Other Information
Financial Statements
Strategic Report
Overview
Directors’ Report (including Corporate
Governance Reports and Committee Reports)
Shareholder InformationShareholder Information
(including forward-looking statements information)
Company details
LSL Property Services plc
Registered in England (company number 5114014)
LEI number 213800T4VM5VR3C7S706
Registered office
Newcastle House, Albany Court, Newcastle Business Park, Newcastle upon Tyne, NE4 7YB
Telephone: 0191 233 4600
Email: investorrelations@lslps.co.uk
Website: lslps.co.uk
Company Secretary’s office
Howard House, 3 St Marys Court, Blossom Street, York, YO24 1AH
Email: investorrelations@lslps.co.uk
Share listing
LSL Property Services plc 0.2 pence ordinary shares are listed on the London Stock Exchange under ISIN GB00BIG5HX72
Registrar
Link Group, Central Square, 29 Wellington Street, Leeds, LS1 4DL
Telephone: 0371 664 0300
Calls are charged at the standard geographic rate and will vary by provider. Calls outside the UK will be charged at the applicable international rate. Link Group
is open between 09:00 -17:30, Monday to Friday excluding public holidays in England and Wales.
Website: linkgroup.eu
Email: shareholderenquiries@linkgroup.co.uk
If you move, please do not forget to let the registrar know your new address.
Independent Auditors:
Ernst & Young LLP
1 More London Place
London
SE1 2AF
United Kingdom
Brokers:
Numis Securities Limited
Zeus Capital Limited
Calendar of events
Preliminary results released 25 April 2024
AGM proxy form deadline 18 June 2024 at 10am
AGM 20 June 2024 at 10am
The Notice of Meeting convening the AGM will be issued as a separate circulate to shareholders and will confirm the location for the meeting, and detail the
proposed resolutions.
In accordance with our articles of association, we publish shareholder information, including notice of AGMs and the Annual Report and Accounts on our
website, lslps.co.uk. Reducing the number of communications sent by post not only results in cost savings to us, it also reduces the impact that unnecessary
printing and distribution of reports has on the environment.
Our articles of association enable all communications between us and our shareholders to be made in electronic form (as permitted by the Companies Act
2006). Documents will be supplied via our website to shareholders who have not requested a hard copy or provided an email address to which documents of
information may be sent. Where a shareholder has consented to receive information via the website, a letter will be sent to the shareholder on release of any
information directing them to the website (lslps.co.uk).
If a shareholder wishes to continue to receive hard copy documents, they should contact Link Group (details above).
Forward-looking statements
This Report may contain certain statements that are forward-looking statements. They appear in a number of places throughout this Report and include
statements regarding LSL’s intentions, beliefs or current expectations and those of its officers, directors and employees concerning, amongst other things,
LSL’s results of operations, financial condition, liquidity, prospects, growth, strategies and the business it operates. By their nature, these statements involve
risks and uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-
looking statements reflect knowledge and information available at the date of preparation of this update and, unless otherwise required by applicable law,
LSL undertakes no obligation to update or revise these forward-looking statements. Nothing in this update should be construed as a profit forecast. LSL and its
Directors accept no liability to third parties in respect of this update save as would arise under English law. Information about the management of the Principal
Risks and Uncertainties facing LSL is set out within the Strategic Report on pages 29 to 33.
Any forward-looking statements in this Report speak only at the date of this Report and LSL undertakes no obligation to update publicly or review any forward-
looking statement to reflect new information or events, circumstances or developments after the date of this Report.
203
lslps.co.uk
Registered in England
(Company number 5114014)
Registered office:
Email: investorrelations@lslps.co.uk
LSL Property Services plc Annual Report and Accounts 2023