LSL Property Services H1 2025 Earnings Report

LSL Property Services EPS Results

• Actual EPS: GBX 11
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

LSL Property Services Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

LSL Property Services Announcement Details

• Quarter: H1 2025
• Date: 9/17/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, September 17, 2025
• Conference Call Time: 4:00AM ET

LSL Property Services (LON:LSL), together with its subsidiaries, engages in the provision of business-to-business services to mortgage intermediaries and estate agency franchisees, and valuation services to lenders in the United Kingdom. The company operates through three segments: Financial Services, Surveying & Valuation, and Estate Agency Franchising. The Financial Services segment offers compliance and other services to mortgage and insurance networks. The Surveying & Valuation segment provides valuations and professional surveying services of residential properties to various lenders and individual customers; data services to lenders; and asset management services, including managing the sale of residential properties on behalf of corporate clients and property investors. The Estate Agency Franchising segment offers brand marketing, and commercial and information technology support services under brands, including Your Move and Reeds Rains, as well as various local brands; repossession services; and conveyancing panel management and support services to its franchisees and their customers. It also offers business and domestic software development; and conveyancing packaging services. The company was incorporated in 2004 and is based in Newcastle upon Tyne, the United Kingdom.

LSL Property Services H1 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Group revenue rose 5% to £89.7 m and underlying operating profit increased 3% to £14.8 m, while operating margin remained at a 15-year high of 17% and return on capital employed hit 31%.
• Positive Sentiment: The group maintained a highly cash-generative model with 95% cash conversion, £7.4 m operating cash flow and strong liquidity of £22 m cash plus a £60 m facility, while returning £9 m to shareholders through dividends and buybacks.
• Positive Sentiment: Surveying & valuation revenue grew 9% to £53.2 m, driven by a 43% increase in B2C revenue, 8% productivity gains per surveyor and renewal of a top-five lender contract.
• Positive Sentiment: Financial services saw new mortgage lending up 23%, revenue per advisor up 8% and delivered a positive contribution from the Pivotal joint venture despite exiting protection-only business.
• Positive Sentiment: The full-year outlook is unchanged, with management expecting a sequential profit step-up in each division from refinancing activity and strong pipelines, alongside ongoing investments in technology and acquisitions.

Presentation

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

Good morning. Thank you for joining LSL's interim results presentation. I'm Adam Castleton, LSL's Group CEO, and I'm here with David Wolff, Interim Group CFO. I'll first cover highlights, market context and progress we've made in our divisions. David will then take you through a financial review.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

I'll then talk about outlook and some key takeaways, and we'll take questions at the end. We're recording this event and a replay will be available on the LSL IR website. These are my maiden set of results as Group CEO. I'm really pleased to report the results are in line with expectations and we continue to make good operational progress. Revenue and profit are up, with operating margin maintained at a fifteen year high.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

Return on capital employed of 31% for the last twelve months is much higher than historical levels. These reflect the improvements we've achieved following the transformation of the group in recent years, and this was achieved while continuing to invest for growth. This performance underlines that our capital light resilient model is delivering consistently while we are reinvesting for the future, and the full year outlook remains unchanged. Moving to key financial highlights. Group revenue increased by 5% to £89,700,000 and we maintained our strong market share.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

Group underlying operating profit was up 3% to £14,800,000 while we continued to invest strategically in our business and absorbed the National Insurance increase. We are highly cash generative business. Our cash conversion for the last twelve months was 95%. This is at the upper end of our target range of 75% to 100%. We performed well in a recovering market.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

Total mortgage lending in the market increased by 5% with a very different picture in new lending, which was up 22%, whilst product transfers rebalanced back 10% year on year. We gained market share with our new mortgage lending up 23%. UK residential sales were up 17% with a pull forward of demand given the stamp duty changes. We maintained our market share of this market. Mortgage approvals increased 10%, with the change in our lender mix slightly reducing our estimated share in surveying and valuations with revenue up 9%.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

We operate three divisions with leading market positions, each benefit from strong, long standing client relationships with scale and strength in their markets, as well as their expertise and deep domain knowledge. Each delivered operational progress during the period. In surveying and valuation, productivity per surveyor increased by 8%. B2C revenue increased by 43%, and we renewed a top five lender contract and started working with another new lender. In financial services, new mortgage lending was up 23%, revenue per advisor increased by 8%, and the implementation of the new CRM is progressing well.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

In our estate agency franchising division, we increased the size of our lettings portfolio, making three acquisitions during the period with a strong pipeline, and we added three new branches to our franchise network. In summary, each division continues to execute well while maintaining discipline on margins and returns. I'll now hand over to David to take

[David Wolffe, Interim Group CFO at LSL Property Services]

you through the financial review in more detail. Thank you, Adam. Good morning. I'm David Wolff, interim CFO at LSL, previously CFO at a number of high growth tech driven and listed businesses. Let's look at the group's financial performance in more detail.

[David Wolffe, Interim Group CFO at LSL Property Services]

In the half year, revenue grew 5% to 89,700,000.0, driven by 9% growth in our largest division surveying and valuation. Underlying operating profit increased to 14,800,000.0, up 3% year on year, and I'll come back to that increase in just a moment. Operating margin remained strong at 17%, at the upper end of our historical range. Cash from operations at 7,400,000.0 reflects shareholder distributions, planned investment, and some working capital timing. Again, more on that shortly.

[David Wolffe, Interim Group CFO at LSL Property Services]

Return on capital employed for the last twelve months increased to 31%, very strong compared to historical levels. So the first half has delivered continuing growth while maintaining a high return on capital profile. Coming back to that operating profit increase, there are two main points to highlight. First, we have made positive operating performance progress with an underlying increase of 3,000,000 before strategic and investment decisions. This progress is driven by our volume growth across the business, improved pricing, and the first positive contribution from the Pivotal joint venture.

[David Wolffe, Interim Group CFO at LSL Property Services]

Second, we made strategic decisions in two areas which reduced profit in the period. We stepped away from some protection only business as we rebalanced our adviser firms towards mortgage and protection or or composite firms, and we made investment across financial services and surveying to drive future growth. So the headline growth of 3% is a combination of that underlying progress and the growth investment. Turning now to cash flow and capital allocation. In the half, we delivered positive operating cash flow of 7,400,000.0 after working capital movements around the 2024 end.

[David Wolffe, Interim Group CFO at LSL Property Services]

I'll come back to this in just a moment. We deployed capital in two key areas in the period. First, in shareholder returns, we distributed 9,000,000 in dividends and share buybacks. The interim dividend is maintained at four point zero p, and the buyback program continues with 3,000,000 deployed to date. Second, in strategic investment, 600,000.0 of cash was spent across CRM development, data and lettings books acquisitions to drive future growth.

[David Wolffe, Interim Group CFO at LSL Property Services]

Our balance sheet remains robust. With June cash at 22,000,000 and a 60,000,000 unutilized facility, we have strong liquidity and our capital light model ensures ongoing flexibility. Looking at the positive operating cash flow and working capital in a bit more detail now. The line at the bottom of this slide shows our adjusted cash from operations performance over the last few half periods. The 7,400,000.0 we reported in h one presents as a lower number than last year, but we had a timing effect of 4,000,000 excess working capital inflow just before the 2024 end that then unwound into an outflow into 2025.

[David Wolffe, Interim Group CFO at LSL Property Services]

You can see this in the lines above. In operating profit, we have stable progression. Depreciation is flat and low reflecting our capital light operating model. Cash on lease liabilities continues to moderate after the transformation of the estate agency business. But on working capital, h two twenty twenty four inflow of 5,900,000.0 you'll see in the box was an outlier, which illustrates these timing effects around the year end.

[David Wolffe, Interim Group CFO at LSL Property Services]

The unwind in 2025 makes our cash conversion look suppressed in the half, even though on a rolling twelve months basis, we made really good progress. We expect that the second half and full year 2025 cash conversion should be normalizing towards our target of 75 to a 100%. Taking each division in turn, let's run through the story of the half. In surveying and valuation, revenue grew 9% to 53,200,000.0, within which b to c was up 43%. Underlying operating profit was 11,900,000.0 with margins at 22%.

[David Wolffe, Interim Group CFO at LSL Property Services]

This is down on the elevated levels of h one last year with severe commissions now normalized, and this effect is in line with what we had flagged before. But in sequential performance compared to the 2024, we have made good margin progress, up 200 basis points. Volumes grew with jobs up 7%. Fee per job was up 2% with better terms and more b to c activity. And we improved surveyor productivity and jobs per surveyor, which was up 8%.

[David Wolffe, Interim Group CFO at LSL Property Services]

In financial services, revenue was flat overall, but this illustrates the combination of mortgage related revenue up 21% and protection revenue down 12%, following our strategic repositioning away from protection only brokers. As a result, adviser numbers were down to two six three seven, but adviser productivity increased 8% in completions per adviser, and we grew fee per completion by three percent. But overall, at a divisional level, despite the broker repositioning and some p and l investment in CRM, operating profit grew 23% to 4,800,000.0 with Pivotal making that positive contribution. In estate agency franchising, revenue overall grew 1%, but while residential sales revenue was up 24% and lettings revenue up 4%, our land and new homes business was pushed back by a contract change. As a result, underlying operating profit margin remained flat at 24%, but we are expecting improvement in the second half with cost savings feeding through.

[David Wolffe, Interim Group CFO at LSL Property Services]

Branches grew by 1% after three more openings in the half with overall sales income per branch up 22%. The lettings portfolio now stands at over 37,400 properties after seven lettings books acquisitions since mid twenty twenty four with overall income per property now at 1%. So with progress in each of the divisions, the group delivered on expectations in the first half whilst at the same time positioning itself for stronger growth in the second half of the year. And with that, I'll hand you back to Adam to take you through the outlook.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

Thank you, David. Expectations for the full year remain unchanged. In the second half, we expect a sequential step up in profit in each division with an increase in refinancing activity, a strong activity in two year and five year mortgages in 2020 and 2023 mature in large numbers. We've already seen this in July and August, with July the strongest refinancing month for us this year.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

We also came into the half with residential sales pipelines increased from this time last year. We will continue to invest in our business in the second half, for example, in lettings books and the FSCRM system. Indeed, in September, we've already completed a further three lettings books. When I presented our preliminary results back in April, just before I started out as Group CEO, I set out my early thoughts and priorities. These remain unchanged, and I'm pleased with early progress.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

Our senior leadership teams are responding well and are raising their sights and ambitions even higher for the future. We continue our investments in technology and data, notably the new CRM in FS and data in surveying and valuations, whilst we are also trialing new AI enabled solutions to improve productivity. I'm already working closely with our divisional business leaders on the opportunity to leverage group strengths, and I'm encouraged by the early signs that I'm seeing. I'm working very hard on even more transparent and clear communication, both internally and to the market. For example, we've just rolled out the first wave of updates to our IR website, adding some fresh new elements to allow greater accessibility and transparency.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

This is all steady, deliberate progress, and I look forward to sharing news of our ongoing progress. We are a diversified, resilient, cash generative group, strategically positioned for growth. We're delivering, performing in line with expectations, and we're investing carefully while maintaining shareholder distributions. We're building consistently. The LSL of today is stronger and leaner, delivering higher quality earnings.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

It is early days in my tenure as CEO, and I'm excited about the growth opportunities open to us as a group. With 2025 on track, we're looking ahead with renewed ambition and with confidence about our future. With that, operator, can we please move to Q and A?

[Operator]

Thank you. You. Appears to be no questions at this time, so I'd like to hand the call back over for questions via the webcast.

[Executive]

Okay. Thank you. We've got a number of questions on the webcast. I'll ask them one at a time. The first question is from Glynis at Jefferies.

[Executive]

Glynis asks about the surveying division and the year on year movement in the operating margin. You talked about this as a in the 2024, and you're talking about it again today. How should people think about the first half twenty twenty five margin? And what sort of level is considered normal?

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

Yes. Thank you, Glynis. Thank you for your question. So last year, as we flagged at the interims and the prelims, we had enhanced margins in the first half of last year. As we came into the year in 2024, we had a burst of activity, and we didn't bring back the surveyor incentives immediately.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

Secondly, there were some administrative heads that we didn't bring back immediately as well. Therefore, there was quite an enhanced margin for the first half of, I think it was 25%. Sequentially then, that fell in H2 and has now recovered to about 21%, 22%. We expect that really to be the norm. So at the moment, 21%, 22% is really the norm for our margin going forwards.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

As I said, 25% was elevated in the very top end of what we might normally expect to see. Great.

[Executive]

Thank you, Adam. The second question comes from Jonathan, who's at Edison. Jonathan asks about the impact of changes in stamp duty. Have you seen any material changes in demand in the months since the stamp duty changes came into effect?

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

Yes. Thank you. Thank you for your question. Yes, there was a spike, particularly in March, with the stamp duty changes. So we saw for the whole half 17% up for the overall market, which we tracked.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

March was particularly strong. It was actually 170,000 transactions in the market for that month. What we've seen since then is a good market as we expected. In fact, because H1 twenty twenty four was a bit softer, the 17% looks very high. But in fact, the second half of this year will be a little bit more in transactions than it was in the first half.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

So we see sequential rises notwithstanding the spike. So certainly, the question is which from time to time people have asked whether somehow there was a spike and then it sort of hollowed everything out, it certainly didn't. We entered this half year with increased pipelines, which is great. And as I said, we expect residential sales to be a little bit more in the second half than it was in the first half, notwithstanding the spike duty spike.

[Executive]

Great. Thanks, Adam. We have a follow-up question or a second question rather, sorry, from Glynis at Jefferies. There's been a lot of talk in recent weeks about potential government policy changes. How has this impacted your business in recent weeks?

[Executive]

And if some of the changes that are being speculated in the press were put into place, what are the implications for the group?

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

Thank you again, Glynis, for the question. Obviously, something that we're all reading in the newspapers. The autumn budget is obviously a couple of months away in November, and we read, as you do, Glynis, all the various either ideas or kites that are being flown. It's hard to tell which they are. I don't think I'll comment on speculating what or may not come through and what that might mean.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

Obviously, as a business, we stay very close to what will happen. What we focus on are the facts that we have at hand. And as a business that covers the whole range of services in the property and lending markets, we've got really deep knowledge and deep data. So if we look at all the information that we have across surveying financial services and estate agency covering mortgage applications, completions, fall throughs, which are when agreed sales fall through sometimes because the chain has fallen through or because people pull out. We're seeing nothing of any of our metrics.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

And I'm because I expected some of these questions rather than checking these numbers once a day, I'm checking them twice a day with people and ringing people up. We're not seeing anything at the moment. Whether there's a question of sentiment, I can't say. But certainly, all of our metrics are showing no change of customer behavior. And I think depending on what does or doesn't transpire in the budget, as we've demonstrated over many, many years, we're dynamic business.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

We're very quick to react and to change the market. We're well positioned for that. And for any negative shocks that comes to market in the future, of course, following our franchising restructure, we're a lot more even in our earnings, less volatile. And so we're certainly less spiky. And we're very, very quick to react.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

And as I said, the data that we have is very, very specific. Just as a little example, when our friends across the water introduced the tariffs, I made a call and said could they pull out fall through data from Sullyhole, which is where the Land Rover factory is, and in the Northeast where the Toyota factory is just in case people felt nervous because of the tariffs. So we really stay on top of data closely. And whilst I can't tell what may happen tomorrow or the day after in the budget, certainly everything we've seen demonstrating that the customer behavior is unchanged and in line with what our expectations are.

[Executive]

Great. We're actually going to move back to the conference call. We've had a question on the conference call, and then I've got another two questions on the web platform.

[Operator]

Thank you. And we take a question from Robert Sanders from Shore Capital. Please go ahead. Your line is open.

[Robert Sanders, Growth Companies Analyst at Shore Capital]

Okay. Good morning, Adam. Good morning, David. Just, I suppose, following on from that question about the government. So sort of the other aspect of the market that's been a bit open to surveys has been the lettings market and risks and whatever are saying that there's a downturn.

[Robert Sanders, Growth Companies Analyst at Shore Capital]

Is that is that an something that you're experiencing, and what do you think the outlook is going to be for the lettings market given renters' rights bill and as we move into the next year? And then as a follow on question, can I also ask you about what your you talked about the technology and data innovation and what you're seeing as the opportunities, particularly in the surveying and valuation division for the use of AI?

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

Certainly, yes. Thank you. Thanks very much. Good question about the lettings market. The first thing I'll say is the lettings market is extremely resilient.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

If you actually look at the number of privately rented dwellings in the country, has been very stable at 5,400,000, 5,500,000 for the last few years. So we've seen no change of that. From our perspective, we have slightly increased our lettings portfolio, as David said, to over 37,000. And actually as legislation, you mentioned the renters' rights, becomes a bit tighter, what we're seeing is that there's more interest from landlords who are self managing to move towards a managed service. And we're starting to see that movement and that interest in certainly marketing to those landlords.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

It's interesting you mentioned some of the metrics and the headlines that we see that forecast problems for the lettings market. I would just say that if you note some of those metrics, they don't necessarily show what they may appear to on the face of it. The first thing is there's been some publicity about lettings instructions being down, which is actually something we've seen over a number of years. One of the main reasons for that is that people are staying in their properties for longer and therefore there are less instructions than historically there were. Landlords will keep a good paying regular tenant and tenants will, with everything going on in the market, will prefer to stay where they are.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

So that's certainly the reason one of the main reasons that instructions are down. It's not demonstrating that things are leaving the market. And also we hear metrics quoted around there being more properties for sale that were previously rented. And whilst that might be the case, of course, those rental properties are often bought by other buy to let landlords. So certainly, we don't see a big change in the numbers of properties rented.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

We see opportunities for further growth. As David said, since the '4, we've done to the end of the period seven. Actually we did three lettings books during the half. And since the end of the half, actually in September, we've done three and we're just about to close a fourth. So we see some good opportunities there.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

It's certainly not buoyant as it was when originally buy to let really grew quite strongly, but we're seeing no material change in the numbers of properties dwellings that are privately let. In terms of renters' rights, as you mentioned, as I say, just to reiterate, a, we don't see that changing materially the structure of the market. As I said, it may certainly lead to an opportunity for us to bring landlords who are currently self managing over to a managed service. And that's probably a general point to make around regulation and regulatory changes. As a larger player, we're well placed to make the investments required to cover any changes necessary.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

And obviously, deep relationships with whether it be our franchisees or our financial services, we're able to give up sort of trusted advice as we have for many, many years.

[Executive]

I've got two questions here from Again, I'll ask them one at a time. In terms of the first question, could you please provide some more detail on pivotal growth in terms of current run rate of advisers, revenue, trading performance?

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

That's the first one. Okay. We'll hold for the second one. Okay, no problem at all. Yes, Pivotal's the Pivotal investments is scaling very well in terms of EBITDA, which is the actual entity results in the first half.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

That was again, these are within the interims. These are about $30,000,034,000,000 of EBITDA, so on a decent run rate for the year. So it's scaling up well. There were two small acquisitions during the half that we announced in the interims. And actually, in the post balance sheet note, you'll see that there was one further acquisition that completed after the end of the period.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

So scaling up nicely with over 500 advisers. The EBITDA run rate is going well. We're looking forward to continued growth and eventual realization of our investments. Certainly, expect that to be well over our return on our weighted average cost of capital.

[Executive]

Great. Thanks, Adam. And then there's a second question from Robin also about pivotal growth. So Robin's question is, can you please expand on your reference about LSL being founded twenty one years ago and it's being built on success being built on operational resilience, opportunistic deal making and entrepreneurial culture. What are LSL's strengths? And how does Pivotal fit into these strengths?

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

Okay. That's okay, interesting. So yes, I mean, I won't repeat the words, but the business has is quite entrepreneurial. It's very agile and it's very dynamic. We're very quick to move and to take opportunities.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

One of the examples actually I often use is when the pandemic hits at the same time that we were planning for the worst case for a year where we would have no business, we were also planning for the estate agency to open immediately, and we're planning for both. And in the end, we really, really farmed the market well as it recovered. So very, very quick and we're always agile. The opportunity, the opportunistic elements of Pivotal when it was founded was for a buy and build within the broking business, which exists in many other industries as we know, and an opportunity for us in the broking business, which we have launched. So really, it is an opportunistic approach to buy and build within a sector that had not seen it before.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

And so far, we're pleased with the scaling. And as I said, we expect a realization of our investments in due course.

[Executive]

Great. That's all the questions covered on the web platform. You. No further questions. That's back to you, Adam, for closing remarks.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

Thank you for all the questions. I apologize to my colleague, David. They've also been pointed at me, I've answered them all. So I'm sorry that all your numbers are not thank you very much. So listen, thank you for the questions.

[Adam Castleton, Group CEO & Executive Director at LSL Property Services]

We're really excited about the opportunities ahead for the group. We're available for any follow-up that you may need. And I thank you all for your questions, your interest, and I look forward to carrying on the dialogue with you. Thank you.

Participants

Executives

• Adam Castleton, Group CEO & Executive Director
• David Wolffe, Interim Group CFO

Analysts

• Executive
• Robert Sanders, Growth Companies Analyst at Shore Capital