LSL Property Services ends year strongly, appoints new CEO

(Sharecast News) - LSL Property Services reported a strong 2024 financial performance on Thursday, with full-year results ahead of expectations and significantly improved from the prior year, as it also announced the appointment of its next chief executive officer.

The London-listed firm said group revenue rose 20% to around �173m, compared to �144.4m in 2023.

Underlying operating profit increased across all divisions, contributing to a group-wide operating margin of around 16%, up from the historical norm of 12%.

The company said its restructured business model led to improved cash flow conversion, surpassing 100% compared to negative 2% in 2023.

Performance in LSL's Financial Services Network business was robust, with a year-on-year rise in profit and a higher market share in the UK purchase and remortgage sector, reaching 11.6% from 10.7% in 2023.

The board said the operating margin for the segment improved to about 18%, up from 14%.

Surveying and valuation saw substantial gains, driven by a recovering market and extended contracts.

Operating margins rose significantly to around 23%, compared to 9% in 2023.

Meanwhile, the estate agency franchising division, completing its first full year with an entirely franchised branch network, recorded a notable profit increase, with operating margin reaching 28%, up from 21%.

LSL said it maintained a solid balance sheet, with net cash of �32.4m as of 31 December, slightly down from �35m in the prior year.

The company said it remained optimistic about 2025, despite economic challenges such as higher interest rates and employer National Insurance costs.

A strong start to the year, with January trading meeting expectations, supported LSL's forecast of further profit growth as market conditions continue to normalise.

In a leadership transition, LSL also announced the appointment of Adam Castleton as its chief executive officer designate.

Currently serving as group chief financial officer, Castleton would assume the CEO role on 1 May, following David Stewart's planned retirement from the executive board.

Castleton, who joined LSL in 2015, brought extensive leadership experience from companies including O2 UK, eBay, and the Walt Disney Company, the board noted.

It said Stewart would remain involved with LSL as a non-executive director for the group's financial services network and as LSL's nominated director for the Pivotal Growth joint venture.

The company said it had also launched a search for a new CFO.

As part of a governance overhaul, two non-executive board members would meanwhile take on additional responsibilities.

Michael Stoop would chair the estate agency division, leveraging his expertise in estate agency and franchising, while Darrell Evans would oversee the surveying and valuation division, drawing on his financial services experience.

John Lowe would meanwhile continue as chair of the financial services division.

."We are immensely grateful to David, who during his tenure as CEO led the transformation of LSL to a higher margin, less capital-intensive business that will perform more consistently through market cycles," said non-executive chair Adrian Collins.

"Under his leadership, we have simplified and restructured our financial services and estate agency businesses.

"Both are now focused on business-to-business services with a significantly lower cost base and the potential for higher free cash flow generation."

Collins said the board was "very confident" in Castleton as "the right person" to lead LSL forward, due to his "detailed knowledge" of the business, his "breadth and depth of experience" in corporate leadership, and his "close engagement" with its investors.

"Today, LSL is a streamlined, agile group comprising three strong businesses, each with attractive organic growth opportunities, and each overseen by an experienced non-executive chair.

"Our focus now is on maximising the performance of our businesses to deliver value to shareholders."

At 1158 GMT, shares in LSL Property Services were up 9.52% at 299p.

Reporting by Josh White for Sharecast.com.