LSL beats expectations as underlying operating profits leap 169%

Property services group LSL has seen a huge rise in profits following a shake-up of its business model and resurgent demand.

The Newcastle-based group behind brands such as Reeds Rains and Your Move beat market expectations to post a 169% rise in group underlying operating profit to £27.7m for 2024. That came from a 20% rise in revenue to £173.2m.

Recovery in demand for the group's mortgage and insurance and surveying and valuation services, as well as its franchised estate agency offer, helped drive the growth which follows LSL's major slimming down exercise started in 2023. The group shifted its network of more than 180 estate agent branches to become franchised - a move it says has helped it become leaner and achieve better margins.

It reported a group underlying operating margin of 16% - the business' highest in 15 years. LSL's breakthrough results came despite continued challenges in the housing market, with bosses pointing to activity levels below long term averages. Further profit growth is now expected this year.

David Stewart, group chief executive, said: "2024 was a year of positive progress, as we built successfully on the restructuring work completed in 2023. We were able to grow profits materially, and at a faster rate than we had anticipated at the start of the year. Trading in the early months of the new year is in line with expectations, indicating we will be able to improve performance again in 2025.

"I believe the group is now well positioned to build on solid foundations and I am sure that under the leadership of Adam Castleton, who will take over as group CEO on May 1, the group will go from strength to strength."

LSL said growth had come from all three of its divisions. Surveying and valuation benefited from contract extensions with improved terms, driving a 36% climb in revenue to £97.8m. Bosses noted that mortgage approvals were up 21% on 2023 levels.

In the group's financial services business, which includes mortgage-led services, total revenue dropped 6% due to the disposal of businesses in 2023 and the acquisition of TenetLime in the same year. The division increased its number of advisers selling both mortgages and protection by 214 to 2,282.

And across the franchised estate agency division, LSL said it had made the first loans to enable acquisitions of about 700 properties to franchisees' lettings books. With a 28% operating margin, the group said there was further cost efficiency opportunities across the division.