27 May 2022

LSL Property Services plc ("LSL" or "Group")

AGM Update

Ahead of its Annual General Meeting at 12:15pm today, LSL issues the following trading update.

Group Revenue over the first four months of 2022 was £104.5m, which is in line with that achieved in buoyant markets in the same period in 2021. The Board is particularly pleased with the strong performance of our Surveying Division where revenue was up 11% year on year.

We can also report 5% revenue growth in the Financial Services Network business, which was a solid performance in a smaller market. Over the first four months of the year, purchase and re-mortgage lending totalled £10bn, an increase of 9% over 2021. We would expect this to represent a market share of around 10%. We were very pleased that earlier this week, our Financial Services Network business, PRIMIS, was recognised as the "Best Network, 300+ appointed representatives" at the 2022 Mortgage Strategy Awards.

The Estate Agency Division consolidated the market share gains made during 2021, maintaining our share of instructions in the locations we trade, and growing our market share of housing transactions on a national level.

Our Estate Agency and our Direct-to-Consumer Financial Services businesses were naturally affected by residential pipeline conversion rates which remained extremely slow across the market principally due to the continuing industry-wide capacity issues in conveyancing. This resulted in a 9% reduction in Estate Agency Division revenue largely driven by a fall of 16% in residential exchange income. Fall-through rates remain at normal levels, meaning that the residential sales exchange pipeline now stands at nearly record levels, having increased by over £4m since the beginning of the year.

Geopolitical uncertainties remain which have added to inflationary cost pressures, particularly in relation to energy and employee costs. We continue to focus on proactive management of our cost base, to limit the impact of these pressures, and consequently expect these pressures to have only a modest impact on profitability.

Following investment in 2021, we have continued to invest in capability and technology, in particular, across the Financial Services Division. We plan to continue to do so during the second half of the year.

Our Net Cash balance on 30 April 2022 was £30.4m, compared to Net Debt of £7.8m at the same date last year.

We were pleased to recently announce the third acquisition by Pivotal Growth. Whilst there is a good pipeline of deals, and we remain confident of the medium-term prospects for value creation, completion of acquisitions has been slower than expected, and as a result Pivotal Growth has remained in an investment phase for longer than previously anticipated.

At the start of the year, we expected to deliver full year profits at broadly the same level as our record results in 2021, in markets with reduced levels of activity. Recent market estimates indicate that residential pipeline conversion rates should improve resulting in full year 2022 house purchases not being materially behind previous expectations. Assuming activity is in line with these estimates, overall profit is expected to be slightly behind the record profits posted in 2021, principally reflecting slower than anticipated deal flow in Pivotal Growth, and the limited impact of cost inflation noted above.

We have yet to see clear evidence of a sustained improvement in residential pipeline conversion and should the current slow conversion rates across the market persist or fall throughs increase, then more significant pressure would be placed on profits in our Estate Agency Division and to a lesser extent in our Financial Services businesses.

Whilst uncertainty over the pace of housing transactions may impact the second half of the year, we are encouraged by continued progress we are making in the execution of our strategy. This year's performance demonstrates the benefits of both our growth strategy in Financial Services and the significant progress made in our Surveying Division, and we expect that the impact of housing market cycles will continue to have a reducing impact on the Group's results.

As previously reported, the split of H1:H2 profit in 2022 is expected to revert to a more typical profile with a skew to H2, after record housing transactions in H1 2021.

The Board places a high priority on LSL's Living Responsibly strategy to make sure that LSL is a responsible business and one that has a positive impact on the communities in which we operate. We have established colleague forums which variously focus on the environment, inclusion and diversity, and communities and these have been instrumental in taking forward our activities in these areas. Further information can be found in our Living Responsibly Report 2022 which we published on 29 April 2022.

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Notes on LSL

LSL is one of the largest providers of services to mortgage intermediaries and mortgage and protection advice to estate agency customers, completing around £41bn of mortgages in 2021. It represents around 10% of the total purchase and re-mortgage market with around 2,900 financial advisers. PRIMIS was named Best Network by Money Marketing in their 2021 awards and Best Network, 300+ appointed representatives at the 2022 Mortgage Strategy Awards.

LSL is one of the UK's largest providers of surveying and valuation services, supplying seven out of the ten largest lenders in the UK, employing around 500 operational surveyors, and performing over 500,000 valuations and surveys per annum for key lender clients. It was named Mortgage Surveyor of the Year at the 2021 Mortgage Awards with Money Age.

LSL also operates a network of 225 owned and 128 franchised estate agency branches.

For further information please visit LSL's website: lslps.co.uk