LONDON (ShareCast) - (Sharecast News) - LSL Property Services reported some impacts on profit due to changes in the mortgage market in a trading update on Monday.
The London-listed company said it had made a number of recent strategic advances, including the franchising of its estate agency network and the sale of Marsh & Parsons and its direct-to-consumer financial services businesses.

It said its results for the first half were affected by substantial changes in the mortgage market.

The unexpected rise in the Bank of England base rate in June had led to a decrease in purchase and remortgage activity.

That shift affected group underlying operating profit, which was now predicted to be lower in the second half of 2023 than initially forecast.

In the financial services division, LSL said its independent mortgage broker business showed resilience amid challenges.

Notably, LSL Purchase lending fell 27% in the first half, compared to a 30% market drop, while total LSL mortgage lending advice saw a 4% decline.

Surveying meanwhile felt the brunt of challenging market conditions, with LSL lender instructions dropping by 27% in the first half.

The recent interest rate hike had further reduced lender instructions, with numbers nearly halving compared to the same period in 2022.

In the estate agency division, LSL completed the franchising of its entire branch network in June, with the ongoing transition seeing cost savings surpassing expectations.

Looking at its financial performance, LSL said adjusted revenue for the first half was around 20% lower than the prior year.

The reported revenue was around £104m, in contrast to £160.9m in the first half of 2022.

Its underlying operating profit totalled about £3.5m, with LSL having a net cash position of £36m at the end of June.

Looking ahead, LSL said the remainder of 2023 was uncertain for the mortgage lending market.

Full-year group profits were anticipated to be significantly lower than previously forecast, although the board said it expected second-half profits to show an improvement over the first six months of the year.

"LSL made a lot of progress over the past six months, delivering important strategic projects," said group chief executive officer David Stewart.

"Market conditions have been challenging, and more recently have become more difficult, impacting this year's financial performance.

"The more challenging market conditions in the short-term will not prevent us from continuing to take the required steps to deliver on the identified opportunities for future growth."

Stewart said the company's strong balance sheet allows it to take a long-term view, adding that it would continue to invest to deliver its Financial Services Network growth strategy and retain the capacity required to enable its surveying business to meet the future demands of clients.

"Our Financial Services Network and surveying businesses have established leading market positions and have performed strongly in recent years and will perform more strongly when the market recovers.

"Notwithstanding the near-term challenges, the board remains confident about the group's medium-term prospects."

At 1019 BST, shares in LSL Property Services were down 11.35% at 250p.

Reporting by Josh White for Sharecast.com.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE