LSL PROPERTY SERVICES PLC ANNUAL REPORT AND ACCOUNTS 2024
12
Financial Services Division
We have reinforced the leading position of our PRIMIS network in
the provision of services to independent mortgage brokers, aided by
the completion in February 2024 of the purchase of the TenetLime
network. At the end of the year, PRIMIS members totalled 2,282
advisers who sell mortgage and protection (2023: 2,068) and 421
advisers selling only protection and general insurance products (2023:
558), bringing the total number of advisers to 2,736 (2023: 2,661).
We were pleased with the contribution made by TenetLime advisers,
with the integration being completed on schedule and with both
financial performance and adviser retention in line with expectations.
This was despite the challenges that resulted from the placing into
administration of TenetLime’s seller, Tenet Group Limited, which had
contracted with us to provide transitional support services as part
of the terms of the transaction. As a result of this administration, we
had to take on additional work earlier than expected and incurred
additional costs to date of £0.5m as a result, which have been treated
as an exceptional cost. We expect to recover these, and any future
amounts, in 2025 from the deferred consideration balance of £3.3m.
The change in the split between mortgage and protection only
advisers reflects the work we have undertaken to develop a clear
focus for our future target market, as well as an assessment of the
relative risks of providing services in these segments. We incurred
exceptional costs of £1.9m associated with the exit of a large
protection only firm.
Total UK new mortgage lending increased slightly, by 7% to £242bn.
Our advisers total mortgage lending grew by 12% to £46.7bn,
reflecting an increase in market share in all key segments. We
increased our share of the purchase and remortgage and of the
product transfer markets, with a record share of purchase and
remortgage
2
(11.8%, up from 10.6%) and of product transfers (6.9%,
up from 6.1%). After adjusting for disposals, protection revenue
remained broadly flat.
The year also saw significant further steps taken to drive forward
our strategy focused on the mortgage-led adviser market. We
welcomed a number of senior appointments to the Divisional
management team, including experienced industry leaders as
Managing Director and Chief Distribution Officer, and in the early
part of 2025 will supplement the team further with the appointment
of a Chief Operating Officer. We have also completed the absorption
of our DLPS and Mortgage Gym technology businesses to focus
on supporting the growth of our Network business. Against this
background, we were pleased to report an increase in Underlying
Operating Profit
1
to £8.7m (2023: £7.4m). On a statutory basis,
Operating Profit was £4.7m (2023: £5.0m).
In December, we also announced a major programme of investment
to enhance the technology solutions provided to PRIMIS advisers to
improve efficiency and sales performance and underpin our leading
market position. We expect to spend around £3m by way of revenue
and capital expenditure in 2025 to support this programme.
Estate Agency Franchising Division
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 franchisees.
The Group supported franchisees in the acquisition of three lettings
books in 2024, providing total loan funding of £0.7m and adding
c.700 properties to the portfolio which now stands at over 37,000.
These deals will deliver returns in excess of the Group’s cost of
capital. We see scope for further similar support in the future.
During 2024 the Estate Agency Franchising Division has invested in
strengthening leadership capability with key senior appointments
within propositions and operations, with these roles funded from its
cost reduction programme.
The strength of our new operating model in Estate Agency
Franchising was demonstrated by the strong financial performance
achieved in 2024. Divisional revenue was up 29% to £27.0m, with
Underlying Operating Profit
1
of £7.6m, an increase of 77% over the
prior year (2023: £4.3m), achieved at an underlying operating margin
of over 28% (2023: 21%). We are significantly ahead of the plans we
set in 2023 for reducing costs and increasing margin. On a statutory
basis, Operating Profit was £6.5m (2023: £3.0m).
Pivotal Growth joint venture
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, was launched in 2021. 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.
After a slow start, Pivotal has gained substantial momentum and has
now acquired 17 businesses, including eight acquisitions made in
2024. With over 500 advisers, Pivotal is now one of the UK’s largest
mortgage and protection brokers.
We have invested just over £20m in Pivotal since 2021 via equity and
loan notes, and we continue to closely monitor Pivotal’s performance
to maximise returns for Shareholders. Pivotal remains on track to
deliver returns ahead of the Group’s cost of capital.
Dividend
The improvement in performance in 2024 underpins the Board’s
confidence in the underlying fundamentals and prospects of the
Group's businesses. Therefore, the Board has declared a final
dividend of 7.4 pence per share (2023: 7.4 pence), making a total
dividend of 11.4 pence per share (2023: 11.4 pence). The Group’s
dividend policy continues to be a pay-out of 30% of Group Underlying
Operating Profit after finance and normalised tax charges
3
.
The ex-dividend date for the final dividend is 8 May 2025, with a
record date of 9 May 2025 and a payment date of 27 June 2025.
Group Chief Executive Officer’s Review continued
Notes:
1 Group (and Divisional) Underlying Operating Profit is before exceptional items, contingent consideration assets & 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
2 Mortgage lending excluding product transfers - New mortgage lending by purpose of loan, UK Finance (Bank of England) – Table MM23 (30 January 2025)
3 Refer to note 12 to the Financial Statements for the calculation of Group Underlying Operating Profit after finance and normalised tax charges
