LSL shares slide as it posts a loss for 2022

LSL Property Services’ share price dipped yesterday after posting an operating loss in its 2022 annual accounts.

Its results showed a group operating loss of £56.7m, compared with £72.6m profit last year.

This was attributed to the board reducing the carrying value of goodwill by £87.2m, described as a non-cash item “reflecting the impact of more conservative mid-term housing market assumptions, higher discount rates and the disposal of non-core businesses.”

In 2021, the statutory operating profit was boosted by a £29.4m gain on the disposal of interests in joint ventures, which was also part of the strategy to exit from non-core businesses, LSL said.

Estate agency retained the residential sales market share gains made in its core catchment areas in 2021 and as a result slightly increased its national market share to 1.30% from 1.28% in 2021, the results said.

LSL said conversion of its exchange pipeline remained slow throughout the year, impacting its performance in the first half of the year.

The second half saw fewer new properties coming to market and fewer sales agreed “but the strong pipeline built in H1 secured an operating profit double the size of H2 2021.”

LSL said: “Unsurprisingly, given increased economic and housing market uncertainty, there was a trend towards more fall-throughs, largely affecting more recently agreed sales, both of which will impact performance in the first quarter of 2023.”

 The brand said it expects market conditions to remain challenging during the first half of this year but to improve in the second and thereafter, “supported by a strong re-mortgage market, and further improvements in consumer confidence and transaction levels assisted by recent reductions in mortgage rates.”

Overall, group Revenue was broadly in line with 2021 at £321.7m. This included record revenue of £81.7m in financial services and a “very strong” H1 2022 performance in surveying and valuation, which was subsequently “impacted by the significant and unexpected market disruption resulting from economic and political uncertainty in Q4 2022.”

Group underlying operating profit was down 25% annually at £36.9m, which was mostly attributable to reduced volumes in surveying and valuation during the fourth quarter of 2022 and the impact of a slowdown in the residential sales market in estate agency.

David Stewart, LSL group chief executive, said: "I am pleased to report that LSL is in good shape. 

“In 2022, the group traded well in challenging market conditions, whilst making substantial progress in the execution of our strategy to grow and to become a business-to-business financial services provider. As a result, we remain well-placed to deliver on our strategy and capitalise on the significant opportunities we see available."

LSL shares ended the trading day down 2% to 241p and has fallen 5% so far this year.