FULL YEAR RESULTS TO 31 DECEMBER 2024

26 March 2025

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

FULL YEAR RESULTS TO 31 DECEMBER 2024

A YEAR OF POSITIVE PROGRESS AND SIGNIFICANT PROFIT GROWTH

LSL reports its results for the 12 months ended 31 December 2024 with Group Underlying Operating Profit1,2 of £27.7m (2023: £10.3m). On a statutory basis Group Operating Profit was £21.9m (2023: £3.7m).

These results demonstrate the benefits of the strategic transformation of the Group over the last two years and are just above consensus expectations and materially ahead of prior year. We have made a positive start to the year with trading in line with our expectations in markets operating broadly in line with our assumptions. We continue to expect that in 2025 we will increase profits further over 2024 and the Board's expectations for the full year remain unchanged.

David Stewart, Group Chief Executive commented:

"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 1 May, the Group will go from strength to strength."

STRATEGIC AND OPERATIONAL HIGHLIGHTS

2024 performance demonstrates the benefits of the successful completion of our significant restructuring and transformation programmes in 2023, as a result of which LSL is now a much simpler Group, well positioned to deliver higher operating margins, and more consistent earnings through market cycles.

This helped the Group to deliver a substantial profit increase in markets that remained supressed in 2024 compared to the long-term average, with new lending 6% below the 10-year average3 and housing transactions4 9% below. Economic and geo-political uncertainty, sticky inflation and delays to interest rate reductions continued to impact consumer confidence during H2.

· Significant recovery in profitability with Group Underlying Operating Profit increasing by £17.4m to £27.7m. All divisions reported increases in profitability

· Investment to support future growth. During 2024, the Group invested £1m, £0.7m in H2, to develop new products in Surveying & Valuation and announced a major programme to upgrade its Financial Services technology offering, that will commence in 2025

· Estate Agency Franchising continues to support the growth of franchisees, to facilitate territory expansion and by supporting three lettings book acquisitions completed in H2 2024

· Acquisition during 2024 of eight businesses by our Pivotal Growth JV, with advisers increasing to over 500

· Purchase of TenetLime mortgage network completed in February with integration programme on track and financial performance and adviser retention in line with expectations

· In January 2025, LSL announced the appointment of Adam Castleton, previously Group CFO, as CEO Designate, formally taking up the CEO position on 1 May 2025, following David Stewart's notification to the Board of his intention to retire from his Executive role and the LSL Board

· Strengthened management bench strength with a number of senior Divisional appointments

· Adrian Collins appointed as Chair and Michael Stoop as Non-Executive Director, strengthening the Group's Board

· Full year dividend of 11.4p (2023: 11.4p), with final dividend maintained at 7.4p per share, reflecting strong balance sheet and Board's confidence in prospects

FINANCIAL HIGHLIGHTS

· Group Revenue was £173.2m (2023: £144.4m). Revenue was 20% above prior year in a total mortgage lending market that was broadly flat and housing market that increased by 7%

· Group Underlying Operating Profit was £27.7m (2023: £10.3m from continuing operations1,2, £9.3m from total operations1,2), significantly ahead of the prior year, with particularly strong recovery in the Surveying & Valuation Division

· Material improvement in Group Underlying Operating margin to 16% (2023: 7%), representing the highest margin reported in over 15 years

· Group operating profit was £21.9m (2023: £3.7m)

· Net Cash7 of £32.4m at 31 December 2024 (31 December 2023: £35.0m), with adjusted cash flow from operations of £31.1m (2023: £(0.2)m) and cash flow conversion rate8 of 114% (2023: (2)%) reflecting a return to more normalised profit levels in the period

· Net Exceptional costs8 of £2.4m (2024: £4.4m) primarily relating to costs incurred in the exit of a large protection only firm and costs associated with the administration of the company from which TenetLime was purchased (the latter of which we expect to be recovered against deferred consideration)

DIVISIONAL PERFORMANCE

Surveying & Valuation Division

· Surveying & Valuation performance was strong reflecting the benefit of contract extensions with improved terms as well as a recovery in market conditions following the significant reduction experienced in 2023

· Surveying & Valuation revenue increased significantly to £97.8m, an increase of 36% on 2023 (£71.9m), reflecting a 26% increase in jobs performed and 8% increase in income per job on the comparative period

· Mortgage approvals9 were 21% above 2023, driven by higher purchase approvals (up 31%) with remortgage and other approvals 8% higher

· We estimate that our market share of physical and remote valuation instructions7 was around 38%, representing a small increase over 2023 (c.37%)

· Long-term contract extension with Lloyds Banking Group, underpinning the Group's leading market position. We also secured a substantial improvement in terms and allocation with another major lender

· Retained contracts with all lending customers with no loss in allocations

· Underlying Operating Profit2 increased to £22.5m (2023: £6.7m)

· Good progress continues against strategic objectives to develop new survey and valuation income from the end customer: B2C revenue increased by 87% to £6.8m (2023: £3.6m), having grown from £1.1m in 2020

· Substantial investment made throughout 2024, increasing in H2, to support data and model development initiatives to diversify future revenue streams and meet lender client needs

Financial Services Division

· Our Financial Services Network business increased its focus on its core market, serving the needs of smaller, mortgage-led financial services businesses, reflecting the strategic decision to reduce its focus on larger, pure protection brokerages

· Successfully integrated 145 TenetLime firms with both profit contribution and adviser retention in line with expectations

· Increased market share of the UK purchase and remortgage market3 of 11.8% (2023: 10.6%)

· Total advisers increased by 75 to 2,736 as at 31 December 2024 (2023: 2,661) including 247 TenetLime advisers

· The number of advisers that sell both mortgages and protection increased by 214 to 2,282. The number of protection only advisers was reduced by 137, following the decision to exit some firms whose business model was not in line with our risk appetite and strategic focus

· LSL advisers continue to adapt effectively to changes in the mortgage market, increasing product transfer mortgage lending by 2%, resulting in a further increase in share of the product transfer market to 6.9% (2023: 6.1%)

· Financial Services Network business traded resiliently, reporting Underlying Operating Profit2 of £8.7m (2023: £7.4m)

· The weighting of margin dilutive product transfers in the refinancing market remained above the long-term average

· Network protection revenue remained broadly flat at £12.9m after adjusting for disposals

· Total revenue of £48.4m was down 6% on the prior year as reported (2023: £51.7m), reflecting the net impact of the disposal of businesses in 2023 and the purchase of TenetLime in 2024

· The number of Network firms increased to 1,108 as at 31 December 2024 (2023: 1,000), including 145 TenetLime firms

Estate Agency Franchising Division

· Continued support of the growth of franchisees, including the first loans granted to support lettings book acquisitions, adding c.700 properties to the franchisee lettings portfolios

· Benefits of new business model are reflected in a substantial increase in Underlying Operating Profit2 to £7.6m (2023: £4.3m) with an underlying operating margin of 28%

· Scope remains for further cost efficiency gains within Estate Agency business as the operating model approaches target state

· The number of properties under franchisees management remained stable at 37,462 (31 December 2023: 37,502)

Pivotal Growth Joint Venture

· Acquisition during 2024 of eight businesses, including John Charcol with 150 mortgage and protection advisers

· Pivotal Growth now has over 500 advisers, making it one of the largest mortgage and protection brokers in the UK, giving it critical mass to leverage its scale to attract deals and drive revenue synergies and profitability

· Pivotal Growth's financial performance has steadily improved (in trading EBITDA before transaction costs) as it has increased in scale and moved out of its establishment phase

· Following material growth in trading EBITDA (before transaction costs) in 2024 compared to prior year, our share of Pivotal profit after tax is expected to continue to improve in future periods

CURRENT TRADING AND OUTLOOK

We have made a positive start to the year with trading in line with expectations. Our end markets have been operating broadly in line with our assumptions.

We continue to expect the Group to deliver a further increase in profits in 2025. The Board remain positive about the Group's short and medium-term prospects and fully supports the programme of investment across each of its businesses to take advantage of the value accretive growth opportunities ahead.

For further information, please contact:

Notes:

1 Stated on basis of continuing operations unless otherwise stated. Following the conversion of the entire owned estate agency network to franchises in H1 2023, the previously owned network was classified as a discontinued operation and is presented as such in the Financial Statements. Refer to note 6 to the Financial Statements

2 Group (and Divisional) Underlying Operating Profit is stated before exceptional items, contingent consideration assets & liabilities, amortisation of intangible assets and share-based payments. Refer to note 5 to the Financial Statements for reconciliation of Group and Divisional Underlying Operating Profit to statutory operating profit/(loss) for continuing, discontinued and total operations

3 Mortgage lending excluding product transfers - New mortgage lending by purpose of loan, UK Finance (Bank of England) - Table MM23 (30 January 2025)

4 Number of residential property transaction completions with value £40,000 or above, HMRC (31 January 2025)

5 Following the conversion of the entire owned estate agency network to franchises in H1 2023, the previously owned network was classified as a discontinued operation and is presented as such in the Financial Statements. Refer to note 6 to the Financial Statements

6 Refer to note 12 to the Financial Statements for the calculation 

7 Refer to note 34 to the Financial Statements

8 Refer to note 9 to the Financial Statements

9 Approvals for lending secured on dwellings, Bank of England - Table A5.4 (30 January 2025)

Notes on LSL

LSL is one of the largest providers of services to mortgage intermediaries and estate agent franchisees.

Over 2,700 advisers representing over 11% of the total purchase and remortgage market.

Its 62 estate agency franchisees operate in 310 territories.

LSL is also one of the UK's largest providers of surveying and valuation services, supplying five out of the six largest lenders in the UK.

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

LEI: 213800T4VM5VR3C7S706

GROUP CHIEF EXECUTIVE'S REVIEW

We have made positive progress through 2024, delivering a substantial increase in profits, with our full year results being just ahead of market expectations, while continuing to reshape the Group to deliver attractive, long-term returns in line with our prudent risk appetite.

Each of our principal markets improved against the difficult conditions experienced in 2023, although they remained muted with headwinds persisting and activity levels below long-term averages. Against this background, I am pleased to report that each of our principal businesses increased or retained their strong market shares and advanced key strategic initiatives that will help support future growth.

We have seen a clear step-up in the regulatory focus across many financial services sectors, including some of the markets in which we operate. As a Group, we have always taken regulatory compliance extremely seriously and over the last three years have added over 20 in additional headcount across our regulatory and compliance functions. Furthermore, in 2024 we recruited a new Group Chief Risk Officer and put in place an experienced Financial Services Division board, including three independent non-executive directors to provide further governance and regulatory oversight for this Division. The Group will continue to monitor regulatory developments and is committed to taking the steps needed to deliver against emerging requirements.

Subsequent to the year end, we have made further enhancements to our overall governance model, appointing two of the Group's Non-Executive Directors as chairs of the Surveying & Valuation and Estate Agency Franchising Divisions. Darrell Evans will chair our Surveying Division and Michael Stoop our Estate Agency Division. The Financial Services Division already had in place an independent chair, John Lowe.

We retain a very strong balance sheet and are well placed to take advantage of any further market improvements while developing a broader set of products and services designed to deliver more consistent returns in all market conditions. Management continue to focus on maximising the operational potential in each of our businesses and on ensuring that this potential is fairly reflected in the wider perceptions of our Group.

We are fortunate to have the support of highly committed colleagues and I would like to place on record my appreciation for their support and hard work throughout 2024.

Review of 2024 performance

The Group's performance benefited from a recovery in demand and further contract wins in our Surveying & Valuation business, as well as the structural benefit afforded by the transformation programme undertaken in 2023, transitioning to a franchise operating model in our Estate Agency Franchising Division and focusing our activities on business-to-business services in Financial Services. All three Divisions have maintained or improved market share.

We have made a number of targeted investments during 2024, both organic and inorganic. Our organic investments will develop new revenue opportunities, notably in Surveying & Valuation, while taking pro-active steps to reshape and focus our Financial Services Division on its core business of providing services to smaller mortgage-led adviser businesses. This continues in 2025. Our inorganic investments have focused on supporting bolt-on acquisitions by our franchisees within our Estate Agency Franchising Division, creating increased scale for our lettings business, and completing the purchase of the TenetLime mortgage network in Financial Services. 

Group Revenue increased 20% to £173.2m (2023: £144.4m) above prior year in a total lending market that was broadly flat and housing market that increased by 8%.

Group Underlying Operating Profit1 recovered strongly to £27.7m (2023: £10.3m), with a year-on-year increase in each Division. Group Underlying Operating margin of 16% was its highest point in over 15 years, reflecting the return to high utilisation in Surveying and the benefits of the franchising model in Estate Agency for the whole period. On a statutory basis, Group Operating Profit was £21.9m (2023: £3.7m).

Surveying & Valuation Division

Our Surveying & Valuation business has performed very well in recent years, receiving increased allocations from existing customers and winning new contracts. This continued in 2024, with notable developments including the commencement of our renewed, long-term, exclusive deal with Lloyds Banking Group and the renewal of other contracts with major lenders.

These contract wins reinforced our leading market position and helped drive a significant increase in activity as the market recovered, resulting in an increase of more than three-fold in Underlying Operating Profit1 to £22.5m (2023: £6.7m). Underlying operating margin also recovered strongly to 23.0% (2023: 9.4%), reflecting the efficient use of surveyor time. Average jobs per surveyor was 1,040, very substantially ahead of 2023 (782), when we decided to retain excess capacity in anticipation of a market recovery and in line with the strong utilisation achieved in 2021 and 2022. On a statutory basis, Operating Profit was £22.1m (2023: £3.4m).

Surveying & Valuation Revenue increased by 36% to £97.8m. During 2024, we continued our work to develop new revenue streams, for example from the provision of automated valuation and data services to lenders, and increasing the number of valuation and surveying jobs undertaken for the end customer. As mortgage lenders increasingly make use of data and automated valuation services, we see further opportunities to provide more services to the end customer.

Throughout 2024, and in particular in the second half of the year, we invested significantly to develop these emerging revenue streams. This investment included around £1m to support our data and valuation work, including adding senior headcount in our data and valuation modelling teams, whilst increasing our consumer and marketing spend by £0.5m. This spend helped support an increase of 87% in our direct-to-consumer revenue, which reached £6.8m. This represents a 500% increase in 4 years since 2020, when it stood at £1.1m.

Financial Services Division

We have reinforced the leading position of our PRIMIS network in the provision of services to independent mortgage brokers, aided by the completion in February 2024 of the purchase of the TenetLime network. At the end of the year, PRIMIS members totalled 2,282 advisers who sell mortgage and protection (2023: 2,068) and 421 advisers selling only protection and general insurance products (2023: 558), bringing the total number of advisers to 2,736 (2023: 2,661).

We were pleased with the contribution made by TenetLime advisers, with the integration being completed on schedule and with both financial performance and adviser retention in line with expectations. This was despite the challenges that resulted from the placing into administration of TenetLime's seller, Tenet Group Limited, which had contracted with us to provide transitional support services as part of the terms of the transaction. As a result of this administration, we had to take on additional work earlier than expected and incurred additional costs to date of £0.5m as a result, which have been treated as an exceptional cost. We expect to recover these, and any future amounts, in 2025 from the deferred consideration balance of £3.3m.

The change in the split between mortgage and protection only advisers reflects the work we have undertaken to develop a clear focus for our future target market, as well as an assessment of the relative risks of providing services in these segments. We incurred exceptional costs of £1.9m associated with the exit of a large protection only firm.

Total UK new mortgage lending increased slightly, by 7% to £242bn. LSL advisers total mortgage lending grew by 12% to £46.7bn, reflecting an increase in market share in all key segments. We increased our share of the purchase and remortgage and of the product transfer markets, with a record share of purchase and remortgage2 (11.8%, up from 10.6%) and of product transfers (6.9%, up from 6.1%). After adjusting for disposals, protection revenue remained broadly flat.

The year also saw significant further steps taken to drive forward our strategy focused on the mortgage-led adviser market. We welcomed a number of senior appointments to the Divisional management team, including experienced industry leaders as Managing Director and Chief Distribution Officer, and in the early part of 2025 will supplement the team further with the appointment of a Chief Operating Officer. We have also completed the absorption of our DLPS and Mortgage Gym technology businesses to focus on supporting the growth of our Network business. Against this background, we were pleased to report an increase in Underlying Operating Profit1 to £8.7m (2023: £7.4m). On a statutory basis, Operating Profit was £4.7m (2023: £5.0m).

In December, we also announced a major programme of investment to enhance the technology solutions provided to PRIMIS advisers to improve efficiency and sales performance and underpin our leading market position. We expect to spend around £3m by way of revenue and capital expenditure in 2025 to support this programme.

Estate Agency Franchising Division

With the completion of the conversion of our Estate Agency business to a franchise model during 2023, we are now focused on further enhancing our franchising expertise to bring on new partners and develop our services for franchisees.

The Group supported franchisees in the acquisition of three lettings books in 2024, providing total loan funding of £0.7m and adding c.700 properties to the portfolio which now stands at over 37,000. These deals will deliver returns in excess of the Group's cost of capital. We see scope for further similar support in the future.

During 2024 the Estate Agency Franchising Division has invested in strengthening leadership capability with key senior appointments within propositions and operations, with these roles funded from its cost reduction programme.

The strength of our new operating model in Estate Agency Franchising was demonstrated by the strong financial performance achieved in 2024. Divisional revenue was up 29% to £27.0m, with Underlying Operating Profit1 of £7.6m, an increase of 77% over the prior year (2023: £4.3m), achieved at an underlying operating margin of over 28% (2023: 21%). We are significantly ahead of the plans we set in 2023 for reducing costs and increasing margin. On a statutory basis, Operating Profit was £6.5m (2023: £3.0m).

Pivotal Growth joint venture

Pivotal Growth, our joint venture with Pollen Street Capital (PSC), established to execute a buy-and-build strategy in the mortgage and protection intermediary markets, was launched in 2021. Our joint aim is to build the business together with a view to an exit event over a three-to-six-year period after launch.

After a slow start, Pivotal has gained substantial momentum and has now acquired 17 businesses, including eight acquisitions made in 2024. With over 500 advisers, Pivotal is now one of the UK's largest mortgage and protection brokers.

We have invested just over £20m in Pivotal since 2021 via equity and loan notes, and we continue to closely monitor Pivotal's performance to maximise returns for Shareholders. Pivotal remains on track to deliver returns ahead of the Group's cost of capital.

Dividend

The improvement in performance in 2024 underpins the Board's confidence in the underlying fundamentals and prospects of the Group's businesses. Therefore, the Board has declared a final dividend of 7.4 pence per share (2023: 7.4 pence), making a total dividend of 11.4 pence per share (2023: 11.4 pence). The Group's dividend policy continues to be a pay-out of 30% of Group Underlying Operating Profit after finance and normalised tax charges3.

The ex-dividend date for the final dividend is 8 May 2025, with a record date of 9 May 2025 and a payment date of 27 June 2025. Shareholders can elect to reinvest their cash dividend and purchase additional shares in LSL through a dividend reinvestment plan. The election date is 23 May 2025.

Share buyback

The Board's approach to capital allocation remains unchanged. We will continue to deploy share buybacks in a measured way and there are no plans to allocate cash reserved for the buyback into other Group activities. To date, £1.3m of the share buyback programme announced on 25 April 2024 has been deployed. The current buyback programme has been extended to the date of the 2025 AGM.

Change of auditor

As highlighted in the 2024 Interim results announced in September 2024, an audit tender exercise had been concluded in advance of the Group's current auditor's (Ernst & Young LLP (EY)) tenure reaching its maximum term limit. This resulted in a recommendation from the Audit & Risk Committee, which has now been endorsed by the Board, that Grant Thornton UK LLP be appointed as the Group's auditor for the year ending 31 December 2025.

Accordingly, it is our expectation that, following the completion of the audit of the Group's 2024 financial statements, EY will resign as auditor of the Company creating a casual vacancy. In accordance with the Companies Act 2006, Grant Thornton UK LLP will be appointed by the Directors to fill that casual vacancy and to audit the financial statements of the Group for the year ending 31 December 2025 and subsequent financial periods. EY will not therefore stand for reappointment at the 2025 Annual General Meeting (AGM), and a resolution to ratify Grant Thornton's appointment will be put to Shareholders for approval instead.

Appointment of Group Chief Executive Officer Designate

As announced on 30 January 2025, Adam Castleton, previously Group CFO, has been appointed as CEO Designate, following my notification to the Board of my intention to retire from my Executive role and the LSL Board.

Adam will formally take up the CEO position on 1 May 2025, following a transition and handover period. The Nominations Committee has agreed a process to identify and appoint a new CFO, and will make a further announcement in due course. In addition, and subject to FCA approval, I am pleased that I will remain with LSL as a non‐executive director of our Financial Services business and that I will also continue as LSL's nominated director for Pivotal Growth.

Living Responsibly and ESG

In 2021 we established our 'Living Responsibly' programme focused on creating a positive impact across the communities we serve. In 2024 we introduced paid volunteering days, which resulted in our colleagues collectively contributing 534 days to support various causes.

By listening and taking action, we further strengthened this commitment through apprenticeships, improved colleague benefits and learning and development opportunities. This was reflected in our most recent colleague engagement survey with a record high participation rate of 84%.

Addressing the impact we have on the environment remains central to Living Responsibly, and during 2024 we have taken steps to better understand this and our pathway to Net Zero 2040.

Reflecting on our progress affords us the time to look forward and plan the next steps for Living Responsibly; at the start of 2025 we welcomed in new colleagues from across the Group, who will ensure our Living Responsibly programme continues to have a positive impact and aligns with the needs of all our stakeholders.

Current trading and outlook

We have made a positive start to the year with trading in line with expectations. Our end markets have been operating broadly in line with our assumptions.

We continue to expect the Group to deliver a further increase in profits in 2025. The Board remain positive about the Group's short and medium-term prospects and fully supports the programme of investment across each of its businesses to take advantage of the value accretive growth opportunities ahead.

David Stewart

Group Chief Executive Officer

25 March 2025

Notes:

1 Group (and Divisional) Underlying Operating Profit is before exceptional items, contingent consideration assets & liabilities, amortisation of intangible assets and share-based payments. Refer to note 5 to the Financial Statements for reconciliation of Group and Divisional Underlying Operating Profit to statutory operating profit/(loss) for continuing, discontinued and total operations

2 Mortgage lending excluding product transfers - New mortgage lending by purpose of loan, UK Finance (Bank of England) - Table MM23 (30 January 2025)

3 Refer to note 12 to the Financial Statements for the calculation of Group Underlying Operating Profit after finance and normalised tax charges 

Notes:

1 Refer to note 4 to the Financial Statements

2 Following the conversion of the entire owned estate agency network to franchises in 2023, the previously owned network was classified as a discontinued operation and is presented as such in the Financial Statements. Refer to note 6 to the Financial Statements

3 Group (and Divisional) Underlying Operating Profit is before exceptional items, contingent consideration assets & liabilities, amortisation of intangible assets and share-based payments. Refer to note 5 to the Financial Statements for reconciliation of Group and Divisional Underlying Operating Profit to statutory operating profit/(loss) for continuing, discontinued and total operations

FINANCIAL & DIVISIONAL REVIEWS

Group Income Statement Review1

Group Revenue increased 20% to £173.2m (2023: £144.4m). After adjusting for disposals in 2023 and for the purchase of TenetLime in H1 2024, revenue was 23%2 above prior year in a total lending market that was broadly flat and housing market that increased by 7%. The increase was primarily in the Surveying & Valuation Division with a 36% increase compared to prior year, driven by 2023 contract enhancements and a 21% increase in total BoE mortgage approvals, and a 29% increase in Estate Agency Franchising due to 12 months' trading in 2024 compared to only eight months in 2023 of the wholly franchise model. After adjusting for businesses disposed of during 2023, Financial Services Division revenue was up 3%2, with total Divisional revenue of £48.4m (2023: £47.0m).

Group Underlying Operating Profit3 recovered strongly to £27.7m (2023: £10.3m), with a year-on-year increase in each Division. Group Underlying Operating margin of 16% was the highest margin for over 15 years, particularly reflecting high utilisation in Surveying & Valuation and the benefits of the franchising model in Estate Agency Franchising for the whole period. Group Underlying Operating Profit from total operations was £27.3m (2023: £9.3m4).

Group Operating Profit increased to £21.9m (2023: £3.7m), resulting from the improved trading performance in the period, offset by £2.4m net exceptional costs in 2024 (2023: £4.4m).

Adjusted operating expenditure5, comprises employee costs, Other operating costs, and Depreciation and totalled £146.0m in 2024, 9% higher than prior year (2023: £133.5m), with the movement comprising the net effect of the following factors:

- Reduction of c.£7m due to disposed businesses during H1 2023.

- After adjusting for disposed businesses, costs were £1.0m higher in Financial Services in line with revenue.

- Increased variable costs in Surveying & Valuation arising from 36% increase in revenues.

- The increased costs in Estate Agency Franchising reflect a full year of franchise operations compared to the prior part year of operations.

- Central costs of £11.0m (2023: £7.7m) with the increase primarily due to strategic investment, Board changes and additional audit fees incurred in 2024 in respect of the prior period reflecting the accounting treatment for the Group transformation in 2023.

This is broadly in line with expectations in comparison to the historical operating expenditure levels of c.£280m4, and the targeted annualised total operations cost reduction of c.£140m following the restructuring of the Group in 2023.

Other gains

Total other operating gains were £0.5m (2023: losses of £0.2m). This primarily included both a part sale of shares held in an unlisted investment in H2 2024 (£0.1m) and the movement in the fair value of the remaining holding, having been reassessed at 31 December 2024 as £0.4m (31 December 2023: £nil).

Share of losses from joint venture

Our equity share of Pivotal Growth results improved to broadly break-even (2024: £6k loss, 2023: £0.4m loss), reflecting increased trading EBITDA, before acquisition transaction fees, which more than doubled in comparison to the prior period reflecting the benefit from ongoing acquisitions.

Share-based payments

The share-based payment charge of £0.9m in 2024 (2023: credit of £0.2m) comprises, a charge in the period of £3.1m for LTIP, SAYE and BAYE schemes granted in 2021 to 2024, offset by a credit of £2.2m reflecting lapses and leavers. The prior year included a similar charge of £3.0m, offset by higher lapse and leaver adjustments largely as result of the significant restructuring across the Group in 2023.

Amortisation of intangible assets6

Amortisation charge of £3.0m (2023: £2.3m), relates to amortisation of intangible software investment, franchise agreements and relationship assets. The year-on-year movement comprises mainly of amortisation for the newly established franchise intangibles and acquired TenetLime intangible assets offset by a reduction in both lettings books and certain software intangibles as they have been fully amortised.

Exceptional items7

The exceptional gain of £1.7m in 2024 (2023: £9.3m) relates primarily to the increase in contingent consideration receivable on the disposal of RSC (£1.7m). The gain on disposal in 2023 related to the disposal of the Embrace and First2Protect businesses to Pivotal Growth.

Exceptional costs of £4.1m in the period (2023: £13.8m), are primarily due to the charge relating to the decrease in contingent consideration receivable on the disposal of Group First and Embrace Financial Services (£1.5m), Financial Services protection related appointed representative costs (£1.9m) and costs incurred as a result of the administration of TenetLime's seller, Tenet Group Limited (£0.5m). The prior year costs of £13.8m related to restructuring activity and corporate transaction costs of £5.8m, the reduction in deferred consideration receivable for businesses sold to Pivotal in H1 2023 (£4.1m), the net loss on disposals of Group First, RSC and Marsh & Parsons of £1.7m, and intangible asset impairment (£2.2m).

Contingent consideration credit to the income statement of £0.4m (2023: charge of £0.03m), relates to the reduction of the contingent consideration liability for TenetLime, based on advisers retained.

Finance income remained in line with prior year at £2.9m (2023: £2.8m) mainly from increased interest received of £1.8m on funds held on deposit (2023: £1.5m) offset by the reduction in the unwind of discounting on contingent consideration receivable balances of £0.7m (2023: £1.0m).

Finance costs of £1.7m (2023: £1.7m) are related principally to the unwinding of discount on lease liabilities of £0.5m (2023: £0.5m), commitment and non-utilisation fees on the revolving credit facility of £0.6m (2023: £0.7m), unwinding of discount on contingent consideration payable of £0.1m (2023: £nil), fair value adjustment to loans receivable of £0.3m (2023: £0.3m) and £0.2m for the unwinding of discount on dilapidations provisions (2023: £0.1m).

Profit before tax

Profit before tax was £23.0m (2023: £4.9m). The year-on-year movement is primarily due to the materially higher Group Underlying Operating Profit in 2024, offset by net exceptional costs in 2024 of £2.4m (2023: £4.4m).

Taxation

The tax charge of £5.2m (2023: credit of £3.2m) represents an effective tax rate of 22.8% (2023: 65.2%), which is slightly lower than the headline UK tax rate of 25.0% primarily because of a prior year adjustment of £0.2m for overpayment relief claims. Deferred tax assets and liabilities are measured at 25.0% (2023: 25.0%), the tax rate that came into effect from 1 April 2023.

Discontinued operations1 loss of £0.4m (net of tax) in relation to an increase in the restructuring and administrative costs associated with the previously owned Estate Agency branch network (2023: loss of £46.1m). The prior period reflects the discontinued operations in Estate Agency Franchising which included exceptional restructuring costs of £16.5m and write down of associated disposed goodwill (£38.1m), offset in part by the exceptional gain on recognition of intangible franchise agreements of £10.7m.

Earnings per share8

Business Reviews

Surveying & Valuation Division

Surveying revenue increased significantly to £92.5m, an increase of 36% on 2023 (£67.8m), reflecting both the 26% increase in jobs performed and the 8% increase in income per job on the comparative period. The increase in jobs performed resulted in the market share of valuations instructions increasing to c.38% in 2024 (2023: c.37%). Growth in D2C in recent years has continued in the period, with 2024 revenue of £6.8m representing a 87% increase on 2023.

Surveying Underlying Operating Profit3 increased materially to £20.2m (2023: £5.4m), benefiting from the strong revenue growth and the surveyor capacity retention and self-help cost measures taken in 2023.

The Group's asset management business was transferred from Estate Agency Franchising to Surveying & Valuation following changes in management responsibilities from 1 January 2024. Management deemed the Group's asset management operations, including the class of customer for its services, are more closely aligned to the Surveying & Valuation Division.

Asset Management revenues grew by 31% to £5.3m in the year, reflecting the moderately more active market. However, the market still remains below long-run trend levels. The profit3 for the year was £2.3m (2023: £1.3m).

Total Surveying & Valuation Division revenue of £97.8m in the year was an increase of £26.0m compared to 2023 (£71.9m). Underlying Operating Profit3 increased materially to £22.5m (2023: £6.7m) reflecting the benefit of the revenue increases in both the e.surv and asset management businesses. On a statutory basis, operating profit was £22.1m (2023: £3.4m).

Financial Services Division

Our Financial Services Division is reported in two business lines: our core Financial Services Network business comprising PRIMIS and TMA mortgage club, and our share of profit after tax of Pivotal Growth.

Total revenue was £48.4m (2023: £51.7m). After adjusting for businesses disposed of during H1 2023, revenue was up 3%2. We increased our share of the purchase and remortgage and of the product transfer markets, with a record share of the purchase and remortgage (11.8% up from 10.6%) and the product transfer markets (6.9% up from 6.1%). After adjusting for disposals, Network protection revenue was 4% lower than 2023.

Network Underlying Operating Profit3 was £8.7m (2023: £7.4m), which was marginally ahead of 2023 on an organic basis, in what was a flat market, whilst also absorbing the cost of an extended governance framework and restructuring costs.

Our share of losses after tax in our joint venture Pivotal Growth was £0.0m (2023: loss of £0.4m). The trading EBITDA of Pivotal (before transactional acquisition costs) was materially ahead of last year.

Exceptional costs of £2.4m were recognised primarily relating to the exit of a large protection only firm (£1.9m) and costs associated with the administration of the sellers of TenetLime (£0.5m).

Total Financial Services Division Underlying Operating Profit3 was £8.7m (2023: £7.0m, £7.4m after adjusting for disposed businesses). On a statutory basis, operating profit was £4.7m (2023: £5.0m).

The Financial Services Network business has a regulatory capital requirement which represents 2.5% of its regulated revenues. The regulatory capital requirement was £6.4m at 31 December 2024 (31 December 2023: £6.1m), with a surplus of £27.6m (31 December 2023: £24.7m).

Estate Agency Franchising Division

Estate Agency Franchising business revenue was £27.0m (2023: £20.9m), with the increase primarily reflecting the wholesale franchising of the Division only part way through H1 2023.

The Division continued to support the growth of its franchisees, including the provision of loans to facilitate lettings acquisitions, adding c.700 properties to the franchisee portfolios during 2024. The average lettings income per managed property was up c.+2% with total number of properties in line with the prior year.

The Estate Agency Franchise business delivered a robust residential sales performance, with the total number of exchange units 10% above 2024 in a market which was 8% ahead.

Underlying Operating Profit1,3 of £7.6m was delivered in 2024 (2023: £4.3m) at a 28% operating margin (2023: 20%). On a statutory basis, operating profit was £6.5m (2023: £3.0m).

Group Balance Sheet Review

Goodwill - 31 December 2024: £16.9m (31 December 2023: £16.9m)

The carrying value of Goodwill relates to previous acquisitions in the Surveying & Valuation Division of £9.9m and Financial Services Division of £7.0m.

Other intangible assets6 - 31 December 2024: £29.9m (31 December 2023: £21.5m)

Intangible relationship assets of £9.3m were recognised during the period upon the purchase of TenetLime, with further additional investments in Financial Services and Surveying of £2.1m. Total amortisation of £3.0m was charged in the year (2023: £2.3m). The carrying value of all franchise agreements was £10.9m at 31 December 2024 (31 December 2023: £11.7m), the acquired relationship assets was £8.5m (2023: £nil) and software assets of £3.6m (2023: £2.8m). Brand intangibles of £6.9m remained unchanged during the year.

Property, plant and equipment (PPE) and right-of-use assets (RoU assets) - 31 December 2024: £6.4m (31 December 2023: £6.9m)

Capital expenditure on owned PPE in the year amounted to £0.9m (2023: £0.7m), primarily reflecting ongoing IT investment across all divisions. Total depreciation of £1.2m was charged in the year (2023: £1.7m).

Financial assets (total current and non-current) - 31 December 2024: £6.5m (31 December 2023: £5.5m)

Contingent consideration receivable

31 December 2024: £5.8m (31 December 2023: £5.1m)

During H1 2023 the Group disposed of Group First, RSC and Embrace B2C brokerage businesses to Pivotal Growth, with contingent consideration receivable in the first half of 2025 based on 7x 2024 EBITDA performance. As at 31 December 2024, this asset is recorded at £5.7m (31 December 2023: £4.8m).

The Group also has contingent consideration receivable in relation to disposed lettings books, which are due to be fully repaid by November 2025. As at 31 December 2024, this asset is recorded at £0.1m (31 December 2023: £0.3m).

Equity instruments in unlisted companies

31 December 2024: £0.8m (31 December 2023: £0.4m)

There was no change in the fair value of units held in The Openwork Partnership LLP of £0.4m at 31 December 2024 (31 December 2023: £0.4m). The fair value has been reassessed as £0.4m at 31 December 2024, with our valuation based on an estimated strike price which has been calculated using the strike price from most recently executed trading windows.

The fair value of shares held in Twenty7tec Group Limited was reassessed at 31 December 2024 as £0.4m (31 December 2023: £nil). Part of the interest held in Twenty7tec was sold in H2 2024 for consideration of £0.1m. Twenty7tec is a provider of technology to mortgage advisers and lenders.

Loans to joint venture - 31 December 2024: £7.6m (31 December 2023: £nil)

In December 2024, the Group provided funding of £7.6m to its joint venture Pivotal Growth in the form of 10% unsecured loan notes. The loan notes are redeemable in H1 2025 and no repayments were made in 2024.

Investment in joint venture - 31 December 2024: £11.6m (31 December 2023: £9.4m)

Our 46.5% share of the Pivotal Growth joint venture is accounted for using the equity method with the change in value resulting from our equity investment in Pivotal Growth during the period (£2.2m), and our share of profit after tax for the period (£6k loss).

Investment in subleases (total current and non-current) - 31 December 2024: £0.8m (31 December 2023: £3.3m)

This reflects the situation whereby the Group is an intermediate lessor, following the Estate Agency conversion to a wholly franchised model. As part of the franchising transition, some of the leases held by the Group in respect of the previously owned network have been transferred to the franchisees, resulting in a reduction in both the investment in sublease balance by £1.5m and a similar reduction in IFRS 16 lease financial liabilities. The balancing movement reflects payments made by franchisees during the period.

Loans to franchisees and appointed representatives (Network firms) - 31 December 2024: £1.8m (31 December 2023: £2.1m)

Various sized working capital loan facility agreements are in place with several franchisees of the Estate Agency Franchising Division which have availability over a range of periods from 31 December 2024 to 31 December 2025, are repayable in full within 24 months from the respective period end and bear fixed rate interest at 8.5%. At 31 December 2024, £1.4m in principal loan amounts were drawn down (31 December 2023: £0.8m).

Loans to FS appointed representatives are granted in certain circumstances to support brokers upon joining the PRIMIS network and were £0.5m as at 31 December 2024 (31 December 2023: £1.3m).

Financial liabilities (total current and non-current) - 31 December 2024: £9.1m (31 December 2023: £8.4m)

Contingent consideration liabilities - 31 December 2024: £3.3m (31 December 2023: £0.07m)

Contingent consideration liabilities relate solely to the cost of acquiring the intangible relationship assets in TenetLime in February 2024, with the consideration of £3.3m payable in H1 2025 adjusted at 31 December 2024 for the latest update of retained advisers and discounting.

IFRS 16 lease financial liabilities - 31 December 2024: £5.8m (31 December 2023: £8.3m)

The movement in the period reflects payment of lease liabilities of £3.4m and disposals on assignment to franchisees of £1.5m, offset by new lease additions of £1.9m and unwinding of discounting of £0.5m.

Provision for liabilities (total current and non-current) - 31 December 2024: £10.2m (31 December 2023: £11.6m)

PI claim provisions of £2.3m (31 December 2023: £3.2m) include the Surveying & Valuation PI provision of £1.9m (31 December 2023: £2.3m) and the Financial Services PI provision of £0.4m (31 December 2023: £0.9m). The Group has recognised an asset of £0.3m against received claims in other debtors at 31 December 2024 (31 December 2023: £0.6m).

Dilapidations and restructuring provisions relating to the Estate Agency Franchising Division following the wholesale franchising in 2023, totalled £6.0m at 31 December 2024 (31 December 2023: £7.8m). The movement in the year relates mainly to a release of £1.5m in the dilapidations provisions and £1.3m of payments made relating to the restructuring provision.

A claims indemnity included in the sale agreement of LMS remains unchanged at £0.6m at the period end (31 December 2023: £0.6m). A provision of £1.2m has been recognised during the period relating to one of the Group's former protection only appointed representatives (2023: £nil).

Group Statement of Cash flows - 31 December 2024: Net Cash10 £32.4m (31 December 2023: Net Cash £35.0m)

Operating cashflows before movements in working capital were £30.3m (2023: £14.9m) reflecting the higher underlying operating profits generated in 2024. The business is highly cash generative and ordinarily achieves a cash flow conversion rate10 of 75% to 100%. The ratio in 2024 was 114% reflecting the materially higher Underlying Operating Profit, with a ratio of (2)% achieved in 2023.

Movements in working capital during the period were an inflow of £2.7m (2023: outflow of £11.0m). The higher outflow in 2023 reflected the significant change in structure in the Group during that year, especially in Estate Agency Franchising. The operating cycle of working capital continues to settle following the completion of significant restructuring and transformation programmes during 2023.

The movements in the year also included:

· the initial consideration of £5.7m for the purchase of TenetLime assets

· a total of £9.8m investment into our joint venture Pivotal Growth (£2.2m equity/£7.6m loan notes, 2023: £4.7m equity)

· capital expenditure on PPE and intangibles of £3.0m (2023: £2.9m)

· exceptional costs paid in relation to divisional restructure and transformation programmes first executed in 2023 of £3.1m (2023: £10.4m)

· payment of the 2023 final and 2024 interim dividends of £11.8m (2023: £11.7m) and the repurchase of shares under the share buyback programme of £0.8m (2023: £nil)

· corporation tax paid in 2024 of £1.8m as the Group returns to more normalised taxable profits (2023: £nil)

Bank facilities

In January 2025, LSL agreed an amendment and restatement of our banking facility, with an unchanged £60m committed revolving credit facility, and a maturity date of January 2030, which replaced the previous £60m facility due to mature in May 2026. The terms of the facility have remained materially the same as the previous facility. The facility is provided by the same syndicate members as before, namely Barclays Bank UK plc, NatWest Bank plc and Santander UK plc.

In arranging the banking facility, the Board took the opportunity to review the Group's borrowing requirements, considering our strong cash position, our strategy and the Group's capital allocation policy. To provide further flexibility to support growth, the facility retains a £30m accordion, to be requested by LSL at any time, subject to bank approval.

International Accounting Standards (IAS)

The Financial Statements for the period ended 31 December 2024 have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and UK-adopted IAS.

1 Based on continuing operations unless otherwise stated. Following the conversion of the entire owned Estate Agency network to franchisees in 2023, this was classified as a discontinued operation and is now presented as such in the Financial Statements. Refer to note 6 to the Financial Statements

2 Revenue: £170.5m in FY 2024 with statutory revenue of £173.2m less £2.7m revenue due to acquisitions in 2024, as compared to £138.3m in FY 2023 with statutory revenue of £144.4m less £6.1m revenue from businesses disposed in 2023. FS Revenue of £48.4m in FY 2024, as compared to £47.0m in FY 2023 with statutory revenue of £51.7m less £4.7m revenue from businesses disposed in 2023

3 Group (and Divisional) Underlying Operating Profit is before exceptional items, contingent consideration assets & liabilities, amortisation of intangible assets and share-based payments. Refer to note 5 to the Financial Statements for reconciliation of Group and Divisional Underlying Operating Profit to statutory operating profit/(loss) for continuing, discontinued and total operations

4 Stated on total operations basis

5 Refer to note 34 to the Financial Statements

6 Refer to note 2 and 17 to the Financial Statements

7 Refer to note 9 to the Financial Statements

8 Refer to note 12 to the Financial Statements

9 Mortgage lending excluding product transfers - new mortgage lending by purpose of loan, UK (BOE) - Table MM23 (February 2025)

10 Refer to note 34 to the Financial Statements

Principal risks and uncertainties

Our principal risks and uncertainties, that the Board has assessed as being the most significant risks that may adversely affect our business strategy, financial position or future performance, are set out in the Group's Annual Report and Accounts. 

In summary, these are linked to the impact on the Group of:

1. The cyclicality of the UK housing market and fluctuations in the lending market.

2. Exposure to competitive pressures from market participants.

3. Execution of strategic initiatives and associated capital allocations.

4. Claims arising from systemic lapses in the delivery of professional services.

5. Significant falls in business volume.

6. Information security.

7. Regulatory compliance and responding to regulatory changes.

8. Environmental, social and governance matters.

9. Colleague resources, talent and expertise.

10. Credit risk.

Group Income Statement

for the year ended 31 December 2024

Group Statement of Comprehensive Income

for the year ended 31 December 2024

Group Balance Sheet

as at 31 December 2024

Group Statement of Cash Flows

for the year ended 31 December 2024

Group Statement of Changes in Equity

for the year ended 31 December 2024

During the period, 383,216 share options were exercised relating to LSL's various share option schemes resulting in the shares being sold by the Employee Benefit Trust. LSL received £0.2m on exercise of these options.

Group Statement of Changes in Equity

for the year ended 31 December 2023

During the period, 567,665 share options were exercised relating to LSL's various share option schemes resulting in the shares being sold by the Employee Benefit Trust. LSL received £nil on exercise of these options.

Notes to the Group Financial Statements

For the year ended 31 December 2024

1. General information

The above results and the accompanying notes do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006.

Statutory Financial Statements for this year will be filed following the 2025 AGM and will be available on LSL's website: lslps.co.uk. The auditors have reported on these Financial Statements. Their report was unqualified and did not contain a statement under section 498 (2), (3) or (4) of the Companies Act 2006.

2. Accounting policies, judgements and estimates

2.1 Basis of preparation

The accounting policies which follow set out material information about the accounting policies which apply in preparing the Financial Statements for the year ended 31 December 2024. The policies have been applied consistently to all years presented. The Group's Financial Statements are presented in pound sterling and all values are rounded to the nearest thousand pounds (£'000) except when otherwise indicated.

These Financial Statements have been prepared in accordance with UK-adopted International Accounting Standards. The Group Financial Statements have been prepared on a going concern basis under the historical cost convention and on a historical cost basis, except for certain debt and equity financial assets that have been measured at fair value.

In preparing the Financial Statements management has considered the impact of climate change, which is described in detail in our TCFD and CFD Statement. The Group has assessed climate-related risks, covering both physical risks and transition risks. In the short (0-3 years) to medium term (4-9 years). Climate-related matters have a relatively low impact on LSL's strategy and business model, and therefore there is a high degree of resilience. However, there are number of risks that may result in increased costs and have an impact on operations that, whilst unlikely to have a significant impact, are factored into our business and financial planning. Over the long term (beyond 10 years), there could be physical risks, such as severe weather, flooding events, increase in temperature and rising sea levels, as well as transition risks such as policy and regulation changes. The risk to the Group's own premises as a result of climate change is considered low, the majority of our property portfolio is leased, and we would not expect significant climate-related costs during the remainder of our current lease terms. The impact of climate change in the medium to long term is likely to be localised and have varying degrees of impact on the areas where we work and our revenue profile. This could have an impact on the carrying value of goodwill and investments.

2.2 Basis of consolidation

The consolidated Financial Statements comprise the Financial Statements of the Company and its subsidiaries as at 31 December 2024. The financial year represents the year from 1 January 2024 to 31 December 2024.

Subsidiaries

Subsidiaries are consolidated from the date that control commences until the date control ceases. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

Interest in joint venture

The Group's share of the results of joint venture is included in the Group Income Statement using the equity method of accounting. Investment in joint ventures are carried in the Group Balance Sheet at cost plus post-acquisition changes in the Group's share of the net assets of the entity, less any impairment in value. Goodwill relating to the joint venture is included in the carrying amount of the investment and is not tested for impairment individually. Unrealised gains and losses resulting from transactions between the Group and the joint venture are eliminated to the extent of the interest in the joint venture.

In addition, when there has been a change recognised directly in the equity of the joint venture, the Group recognises its share of any changes, when applicable, in the statement of changes in equity.

The Financial Statements of the joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

2.3 Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Financial and Divisional Reviews section (page 14) of the Strategic Report in our Annual Report and Accounts 2024. The financial position of the Group, its cash flows, liquidity position and policy for treasury and risk management are described in the Financial Review section of the Strategic Report (page 14) in our Annual Report and Accounts 2024. Details of the Group's borrowing facilities are set out in note 31. The Group's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments, and its exposures to credit risk and liquidity risk are also set out in note 31. A description of the Group's principal risks and uncertainties and arrangements to manage these risks can be found in the Principal Risks and Uncertainties section of the Strategic Report on page 34 in our Annual Report and Accounts 2024.

The UK Corporate Governance Code requires the Board to assess and report on the prospects of the Group and whether the business is a Going Concern. In considering this requirement, the Directors have taken into account the Group's forecast cash flows, liquidity, borrowing facilities and related covenant requirements and the expected operational activities of the Group.

The Group expects to continue to meet its day-to-day working capital requirements through cashflows generated by its trading activities and available cash resources (31 December 2024: £32.4m). The Group's banking facility, a £60.0m committed revolving credit facility has a maturity date of January 2030. The Group have not currently utilised the facility leaving £60.0m of available undrawn committed borrowing facilities in respect of which all conditions precedent had been met. The facility agreement contains financial covenants, including minimum net debt to EBITDA ratio, which mean that, under downside scenarios, the full facility would not be available in the going concern period. In January 2025, LSL amended and restated the previous RCF facility that had a maturity date of May 2026. The renewed facility now matures in January 2030 with the same limit of £60.0m on materially the same basis, including covenants.

The Directors have continued to run a variety of scenario models throughout the year to help the ongoing assessment of risks and opportunities covering the period to 30 June 2026 ("the going concern period"). In the scenarios, the Directors considered both current trading and external industry data. In developing a base case forecast the Directors have assumed inflation and interest rates of 2.4% and 4.25%, respectively, by the end of 2025 and 2.0% and 3.5%, respectively, for 2026.

The Directors have performed a reverse stress test to determine the events and circumstances which would need to arise in order to threaten the Group's ability to continue as a going concern. Such scenarios would require a significant reduction in market transaction volumes below the low point experienced during the Global Financial Crisis and in turn reduce Group revenue by c.25% compared to current performance. Under such a scenario, all available cash balances would be utilised and the facility would be unavailable due to financial covenants. If severe downside scenarios arose, there are cost mitigations that could be applied, as well as cash conservation action such as pausing dividend payments and planned investments. The Directors have concluded that the likelihood of such a severe scenario arising is remote and have concluded that there are no plausible threats to the Group's ability to continue through the going concern period. Therefore, the financial information has been prepared under the going concern basis of preparation. 

In reaching its conclusion on the going concern assessment, the Board considered the findings of the work performed to support the Group's long-term viability statement. As noted in the Viability Statement, which is included in the Principal Risks and Opportunities section of the Annual Report and Accounts 2024 (page 39), this included assessing forecasts of severe but plausible downside scenarios related to our principal risks, notably the extent to which a severe downturn in the UK lending and housing markets, close to levels seen during the financial crisis in 2008, would affect the Group's base forecasts.

Having due regard to the scenarios above and after making appropriate enquiries, the Directors have a reasonable expectation that the Group and the Company have adequate resources to remain in operation to 30 June 2026. The Board have therefore continued to adopt the Going Concern basis in preparing the Annual Report and Accounts 2024.

2.4 Revenue recognition

Revenue is recognised under IFRS 15. The standard is based on a single model that distinguishes between promises to a customer that are satisfied at a point in time and those that are satisfied over time. Revenue is recognised when performance obligations are fulfilled.

Financial Services Division

Revenue is earned on mortgage procuration fees and insurance commissions from brokering of protection and general insurance policies. Revenue from mortgage procuration fees is recognised by reference to the completion date of the mortgage/remortgage on the housing transaction and revenue from insurance commissions is recognised by reference to the date that the policy goes on risk. The commission refund liability associated with insurance commissions is recognised as a reduction in revenue which is calculated with reference to historical refunds which have occurred, commission refund liabilities are recorded within trade and other payables.

The Group acts as both a principal and agent depending on its arrangements with the lenders and broker firms. In scenarios where the Group determines that it has control of the service before it is provided to a client, the Group recognises revenue as the gross amount of consideration expected to be received following satisfaction of the performance obligation. In scenarios where the Group concludes that it does not control the service before it is provided to a client, the Group recognises revenue on a net basis, being gross consideration less any fee or commission due to a counterparty.

Estate Agency Franchising Division

In 2023, the Group transitioned to a fully franchised business model for its principal estate agent businesses and the revenue from the formerly owned operations has been presented as discontinued, see note 2.7 for further details. The accounting policies for both franchise and residential services which includes lettings, new build residential sales and conveyancing services, are set out below.

Franchise services:

Revenue represents the value of commissions, charges for services and fixed fees due to the Group under franchise agreements. The Group earns a percentage of all sales and lettings income generated by the franchisees. Revenue in respect of commissions due on house sales is recognised at the point of the relevant property sale where the contracts are exchanged, in which the franchisee acts as estate agent. Revenue in respect of commissions due on lettings, property management and ancillary products is recognised at the point at which the underlying performance obligation has been delivered by the franchisee. Revenue for services provided by the Group to franchisees is recognised at a point in time when the service has been performed, reflecting the completion of the Group's performance obligation. The franchise agreements include fixed fees which are charged per branch on a monthly basis for the term of the franchise agreement and are recognised over time.

Residential services:

New build residential sales:

Revenue earned by the Group's new build residential sales business is recognised by reference to the legal exchange date of the housing transaction.

Conveyancing services:

Where the Group provides conveyancing packaging services, the revenue is recognised by reference to the legal exchange date of the housing transaction.

Surveying & Valuation Division

Surveying & Valuation:

Revenue from the supply of surveying and valuation services is recognised upon the completion of the professional survey or valuation by the surveyor, and therefore at a point in time.

Asset management:

Revenue earned from the repossessions asset management business is recognised by reference to the legal exchange date of the housing transaction.

Interest income from client monies balances

Revenue is recognised at a point in time as interest accrues (using the effective interest method - that is the rate that discounts estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset).

2.5 Segment reporting

An operating segment is a distinguishable segment of an entity that engages in business activities from which it may earn revenues and incur expenses and whose operating results are reviewed regularly by the Board. The Board reviews the Group's operations and financial position as Financial Services, Surveying & Valuation and Estate Agency Franchising, and therefore considers that it has three operating segments. During 2023, the Group made the strategic decision to convert the entire owned estate agency branch network into franchises, in doing so the Estate Agency Franchising operating segment became mainly a provider of franchise services.

Within the Estate Agency Franchising operating segment, the only remaining owned operations relate to the Group's new build residential sales and conveyancing packaging businesses which are LSL Land & New Homes Ltd and Homefast Property Services Limited, representing less than 10% of the Group's total revenue.

The Group's asset management business was transferred from Estate Agency Franchising to Surveying & Valuation following changes in management responsibilities from 1 January 2024. Management deemed the Group's asset management operations, including the class of customer for its services, are more closely aligned to the Surveying & Valuation Division after the Estate Agency Division's transformation into a franchise model. Internally, the Chief Operating Decision Maker ("CODM") has begun monitoring the performance of the asset management businesses as part of the Surveying & Valuation segment from 1 January 2024. As a result, the Group's operating segment disclosure in note 4 for the year ended 31 December 2023 has been restated to reflect this change.

The information presented to the Directors directly reflects the Group Underlying Operating Profit as defined in the alternate performance measures (APM) in note 5 to these Financial Statements and they review the performance of the Group by reference to the results of the operating segments against budget.

2.6 Alternative Performance Measures (APMs)

In reporting financial information, the Group presents a number of APMs that are designed to assist with the understanding of underlying Group performance. The Group believes that the presentation of APMs provides stakeholders with additional helpful information on the performance of the business. APMs are also used to help enhance comparability of information between reporting periods. The Group does not consider APMs to be a substitute for or superior to IFRS measures and the Group's APMs are defined, explained and reconciled to the nearest statutory measure in notes 5, 12 and 34.

2.7 Discontinued operations

The Group has classified its previously owned network of estate agency branches as a discontinued operation for the reporting periods ending 31 December 2023 and 31 December 2024. The Group operated a network of both owned and franchised branches prior to disposing of its entire owned network in 2023. The owned network was determined to be a separate major line of business because it made up the majority of the branch network, its revenue, costs and risk profile was significantly different to that of franchise and its cash flows could be clearly distinguished.

Discontinued operations are presented in the Group Income Statement as a single line, which comprises the post-tax profit or loss of the discontinued operation along with the post-tax gain or loss recognised on the re-measurement to fair value less costs to sell on disposal of the assets or disposal groups constituting discontinued operations.

2.8 Exceptional items

Exceptional items are those which are material by size and are both non-recurring and unusual in nature. These items are presented within their relevant income statement category but highlighted separately on the face of the income statement. Items that management considers fall into this category are also disclosed within the notes to the Financial Statements (see notes 6 and 9).

Due to the nature and expected infrequency of these items, separate presentation helps provide a better indication of the Group's underlying business performance. This allows shareholders to better understand the elements of financial performance in the year, so as to facilitate comparison with prior periods and to better assess trends in financial performance.

2.9 Income taxes

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the balance sheet date. Management periodically evaluates positions taken in the tax returns with respect to the situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Financial Statements, with the following exceptions:

- where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects either accounting nor taxable profit or loss;

- in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and

- deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available, against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised.

Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting period and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are offset, only if a legally enforceable right exists to offset current tax assets against current tax liabilities, the deferred income taxes relate to the same taxation authority and that authority permits the Group to make a single net payment. Income tax is charged or credited directly to other comprehensive income (OCI) or equity, if it relates to items that are charged or credited in the current or prior periods to OCI or equity respectively. Otherwise, income tax is recognised in the income statement.

2.10 Share-based payment transactions

The equity share option programme allows Group employees to acquire LSL shares. The fair value of the options granted is recognised as an employee expense with a corresponding increase in equity in the case of equity-settled schemes. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of employee share option plans, which are all equity-settled, is calculated at the grant date using the Black Scholes model. The resulting cost is charged to the Group Income Statement over the vesting period. The value of the charge is adjusted to reflect expected and actual levels of vesting.

No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-market vested condition is satisfied, provided that all other performance and/or service conditions are satisfied.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. Further details are given in note 12 to these Financial Statements.

2.11 Business combinations and goodwill

The Group accounts for business combinations using the acquisition method of accounting when control is transferred to the Group. On acquisition, the assets, liabilities, and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the net assets acquired is recognised as goodwill.

Deferred and contingent consideration payable, resulting from business combinations is valued at fair value at the acquisition date, and is subsequently reassessed at each reporting date. The determination of the fair value for deferred and contingent consideration payable is based on discounted cash flows and is included within financial liabilities on the balance sheet. 

After the initial recognition, goodwill is measured at cost less accumulated impairment losses, for the purposes of impairment testing, goodwill acquired in a business combination is allocated to each of the Group's cash generating units (CGU) that are expected to benefit from the combination. Where goodwill has been allocated to a CGU and part of the operations within that unit are disposed of, the goodwill associated with the disposed operation is included in the carrying amount when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the CGU retained.

2.12 Intangible assets

Intangible assets such as brand names, franchise agreements, customer relationships, appointed representative relationships, and in-house software are measured at cost less accumulated amortisation and impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in the profit or loss in the period in which the expenditure is incurred.

Intangible assets acquired in a business combination are deemed to have a cost to the Group of the asset's fair value at the acquisition date. The fair value of an intangible asset reflects market expectations about the profitability that the future economic benefits embodied in the asset will flow up to the Group. 

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.

The useful lives of intangible assets are assessed as either finite or indefinite.

Brand names are not amortised as the Directors are of the opinion that they each have an indefinite useful life based on the expectation that there is no foreseeable limit to the period over which each of the assets are expected to generate net cash inflows to the businesses. The Directors are confident that trademark registration renewals will be filed at the appropriate time and sufficient investment will be made in terms of marketing and communication to maintain the value inherent in the brands, without incurring significant cost. All brands recognised have been in existence for a number of years and are not considered to be at risk of obsolescence from technical, technological nor commercial change. Whilst operating in competitive markets they have demonstrated that they can continue to operate in the face of such competition and that there is expected to remain an underlying market demand for the services offered. The lives of these brands are not dependent on the useful lives of other assets of the entity.

Franchise agreements entered into by the Group (as franchisor) as part of contractual arrangements concerning the disposal of previously owned branches are recognised as intangible assets. Franchise intangible assets are initially recognised at fair value and subsequently amortised on a straight-line basis over their useful economic lives, being the term of the agreement. The franchise intangible assets are being written off over a remaining life of 15 years as based on the agreements, this is the most likely minimum term. The life of the relationship is assessed annually.

All other intangible assets are amortised on a straight-line basis over their useful economic lives of two years for customer contacts, twelve years for appointed representative relationships and between three and five years for in-house software.

2.13 Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Property, plant and equipment is depreciated on a straight-line basis to its residual value over its anticipated useful economic life:

An item of property, plant and equipment is derecognised upon disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised. These assets' residual values, useful lives and methods of depreciation are reviewed at each financial year end, and adjusted prospectively, if appropriate.

2.14 Financial instruments

Financial assets and financial liabilities are recognised in the Group's Balance Sheet when the Group becomes a party to the contractual provisions of the instrument. When financial assets are recognised initially, they are measured at fair value, being the transaction price plus, in the case of financial assets not at fair value through the income statement, directly attributable transaction costs. Financial assets are derecognised when the Group no longer has the rights to cash flows, the risks and rewards of ownership or control of the asset. Financial liabilities are derecognised when the obligation under the liability is discharged, cancelled or expired. The subsequent measurement of financial assets depends on their classification.

The Group's accounting policy for each category of financial instruments is as follows:

Financial assets designated at fair value through OCI (equity instruments)

Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under IFRS 9 Financial Instruments and are not held for trading. The classification is determined on an instrument-by-instrument basis. Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the Group income statement when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.

Financial assets designated at fair value through the income statement

Gains and losses arising from the changes in the fair value of equity investments are recorded in the income statement.

Cash and cash equivalents

Cash and cash equivalents include cash in hand and on demand deposits and fixed-term deposits with original maturities of three months or less with the Group's relationship banks. Bank overdrafts which are repayable on demand are included in cash and cash equivalents only when there is a legal right to offset and an intention to settle net, otherwise these amounts are classified separately as liabilities on the balance sheet. For the purposes of the statement of cash flow, bank overdrafts are a component of cash and cash equivalents as they are repayable on demand and form an integral part of the Group's cash management.

Trade receivables

Trade receivables do not carry any interest and are stated at their original invoiced value as reduced by appropriate allowances for estimated irrecoverable amounts. The expected credit loss model under IFRS 9 is applied to trade and other receivables. The chosen method of recognising the expected credit loss across the Group is the simplified approach allowing a provision matrix to be used, which is based on the expected life of trade receivables and historic default rates, default being defined as when impaired debts are assessed as uncollectable. The carrying amount of the receivables is reduced through use of an allowance account and impaired debts are derecognised when they are assessed as uncollectable.

Trade payables

Trade payables are stated on the balance sheet at their original invoice value.

2.15 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. For the purposes of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash generating units (CGUs). An assets or CGU's recoverable amount is the higher of its fair value less costs to sell (FVLCTS) and value-in-use (VIU). Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing an asset's VIU, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are recognised in the income statement in those expense categories consistent with the function of the impaired asset.

For assets excluding goodwill and brand, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the assets or CGU's recoverable amount.

2.16 Loans to franchisees and appointed representatives

The Group issues loans to its franchisees and appointed representatives, the Group's objective is to hold these loans to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their issue and are subsequently carried at amortised cost, less provision for impairment.

Loans to appointed representatives are made in the normal course of business and on standard terms, the duration is typically three years and the loans are offered on an interest-free basis. The Group calculates the difference between the par value and fair value on recognition using a market rate of interest and charges this amount to finance costs in the Group Income Statement, the residual loan amount is recorded as a financial asset at amortised cost.

Impairment provisions against loans to franchisees and appointed representatives are recognised based on an expected credit loss model. The methodology used to determine the amount of provision is based on whether there has been a significant increase in credit risk since initial recognition of these financial assets and is calculated by considering the cash shortfalls that would be incurred and probability of these cash shortfalls using the Group's model. Where a significant increase in credit risk is identified, lifetime expected credit losses are recognised; alternatively, if there has not been a significant increase in credit risk, a 12-month expected credit loss is recognised. Such provisions are recorded in a separate allowance account with the loss being recognised within operating expenses in the Group Income Statement. On confirmation that a loan will not be collectable, the gross carrying value of the asset is written off against the associated provision.

2.17 Loans to joint venture

The Group issued loan notes to its joint venture in 2024. The Group's objective is to hold these loans to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their issue and are subsequently carried at amortised cost, less provision for impairment. The loan notes are redeemable in June 2025.

2.18 Provisions

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

2.19 Leases

Leases are defined as a contract which gives the right to use an asset for a period of time in exchange for consideration. As a lessee, the Group recognises three classes of leases on this basis:

- Property leases

- Motor vehicle leases

- Other leases

Property leases and motor vehicle leases have been recognised on the Group Balance Sheet, in financial liabilities, by recognising the future cash flows of the lease obligation, discounted using the incremental borrowing rate of the Group, adjusted for factors such as swap rates available and the credit risk of the entity entering into the lease.

Corresponding right-of-use assets have been recognised on the Group Balance Sheet under property, plant and equipment and have been measured as being equal to the discounted lease liability plus any lease payments made at or before the inception of the lease and initial direct costs, less any lease incentives received. Cash flows from these leases have been recognised by including the principal portion of the lease payments in cash flows from financing activities and the interest portion of the lease payment recognised through operating activities.

Other leases are leases for low value items or leases whose contract term is less than 12 months. The practical expedient not to recognise right-of-use assets and lease liabilities for these leases has been utilised by the Group. A charge for these leases has been recognised through the income statement as an operating expense. The cash flows relating to low value and short-term leases have been recognised in net cash flows from operating activities. No leases where the Group is a lessee, or a lessor contain variable lease payments.

In scenarios where the Group is an intermediate lessor, the sublease is classified as a finance lease if substantially all of the risk and rewards incidental to the ownership of the leased asset have transferred to the sublessee, otherwise the sublease is classified as an operating lease. The Group accounts for finance subleases by derecognising the existing right-of-use asset at the effective date of the sublease and recognising a receivable for the Group's net investment in the sublease, with any resultant gain/(loss) recognised in the income statement. The net investment in the leases equals remaining fixed payments, discounted at the interest rate implicit in the lease. After initial recognition, the Group recognises finance income over the remaining lease using the amortised cost method. The net investment in sublease is subsequently reviewed for impairment under IFRS 9 (further details are given in note 26 to these Financial Statements).

Rental income including the effect of lease incentives from sublet properties and vehicles are recognised over time on a straight-line basis, throughout the lease term for operating leases or by recognising in the balance sheet a lease receivable equal to the investment in the lease for finance leases. Subleases are assessed as finance leases or operating leases in reference to the right-of-use asset the lease generates.

2.20 Shares held by employee benefit trust (EBT) and share incentive plan (SIP)

The Group has an employee share scheme (ESOT) for the granting of LSL shares to Executive Directors and selected senior employees; and an employee share incentive plan. Shares in LSL held by the ESOT and the trusts are treated as treasury shares and presented in the balance sheet as a deduction from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the Group's own equity instruments. The finance costs and administration costs relating to the ESOT and the trusts are charged to the income statement. Dividends earned on shares held in the ESOT and the trusts have been waived. The ESOT and trust shares are ignored for the purposes of calculating the Group's earnings per share (EPS).

2.21 Treasury shares

Where the Group repurchases shares from existing shareholders, they are held as treasury shares and are presented as a deduction from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the Group's own equity instruments. Treasury shares are ignored for the purposes of calculating the Group's EPS and adjusted EPS.

2.22 Dividends

Equity dividends are recognised when they become legally payable. In the case of interim dividends to shareholders, this is when paid. In the case of final dividends, this is when approved by shareholders at each AGM.

The Group operates a defined contribution pension scheme for employees of all Group companies. The assets of the scheme are invested and managed independently of the finances of the Group. The pension cost charge represents contributions payable in the year.

2.24 Critical accounting judgements and estimates

The preparation of the Group's Financial Statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Financial Statements and the reported amounts of revenue and expenses during the year. These estimates and judgements are based on Management's best knowledge of the amount, event or actions and actual results ultimately may differ from those estimates. Group Management believe that the estimates and assumptions listed below have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities.

Carrying value of goodwill and intangible assets (estimate)

The Group carries out impairment reviews of intangible assets when there is an indication that the carrying value may not be recoverable and tests the carrying value of goodwill and indefinite life intangibles at least annually, each of the Group's three segments hold goodwill or indefinite life intangible assets and therefore an annual impairment review is required.

The Group's goodwill of £16.9m includes Surveying & Valuation (£9.6m), Estate Agency Franchising (£0.3m) and Financial Services (£7.0m). At 31 December 2024, the Group held £29.9m of intangible assets on the balance sheet (2023: £21.4m), of which £6.9m are indefinite life intangible assets relating to brand (2023: £6.9m), the remaining balance of £23.0m is split between relationship asset £8.5m (2023: £nil), franchise intangibles £10.9m (2023: £11.7m) and software £3.6m (2023: £2.8m).

In 2023, the Estate Agency segment disposed of £38.1m of goodwill associated with the owned network, and a franchise asset of £11.7m was recognised in the new franchise operation (Estate Agency Franchising), the value of brand was transferred from Estate Agency to Estate Agency Franchising. Surveying & Valuation and Financial Services have always previously had high levels of headroom and have therefore typically not been sensitive.

The impairment tests are carried out by CGU and reflect the latest Group budgets and forecasts approved by the Board. The budgets and forecasts are based on various assumptions relating to the Group's business including assumptions relating to market outlook, observable trends, and profitability. A pre-tax discount rate has been used to discount the CGU cash flows:

· Financial Services Division - 16.3%

· Surveying & Valuation Division - 17.3%

· Estate Agency Franchising Division - 15.9%

 A terminal value is also applied using a long-term growth rate of 2.0%. A sensitivity analysis has been performed allowing for possible changes to the assumptions in the impairment model, see note 17 for details.

Commission refund liability (estimate)

Certain subsidiaries sell life assurance products which are cancellable without a notice period, and if cancelled within a set period require that a portion of the commission earned must be repaid. This also includes commission refund liabilities for sales by leaver firms which would ordinarily have been recoverable from them when they had previously been part of the Network. The commission refund liability is recognised as a reduction in revenue which is calculated with reference to historic refunds which have occurred. Details of the assumptions applied to commission refund liability and the impact of changes in average lapse rates are shown in note 23. 

Professional Indemnity (PI) claims (estimate)

A provision is made for professional indemnity claims and potential claims that arise during the normal course of business in the Financial Services Division and in relation to valuations performed by the Surveying & Valuation Division. This includes an estimate for the settlement of claims already received as well as claims incurred but not yet reported (IBNR). Details of the assumptions applied to PI claims areas are disclosed in note 25 to these Financial Statements. A sensitivity analysis which illustrates the impact of different assumptions on the required PI costs provision is also included in note 25.

2.25 New standards and interpretations not applied

IFRS 18 "'Presentation and Disclosure in Financial Statements" was issued by the International Accounting Standards Board (IASB) on 09 April 2024. Subjected to UK endorsement, the new standard is effective for the Group's accounting periods beginning on or after 1 January 2027.

New requirements under IFRS 18 are expected to have an impact on the Group Financial Statements, key changes include:

• Mandatory subtotals and categories of income and expense in the income statement, as well as new requirements for the disclosure of operating expenses,

• Disclosures about management-defined performance measures in the financial statements,

• Enhanced requirements for the aggregation and location of information presented in the primary financial statements and disclosed in the notes as well as guidance on providing informative labels.

Management are continuing to assess the impact of the accounting changes that will arise under IFRS 18.

There have been no other new relevant standards that have been published and are mandatory for the Group's accounting periods beginning on or after 1 January 2024. Amendments to existing standards do not have a material impact on the Financial Statements.

3. Disaggregation of revenue

Set out below is the disaggregation of the Group's revenue from contracts with customers:

During the year 19% (2023: 14%) of the Group's revenue was generated from a single large customer within the Surveying & Valuation division. The revenue recorded within continuing operations in relation to this customer during the year was £33.1m (2023: £19.9m).

4. Segment analysis

For the year ended 31 December 2024 LSL has reported three operating segments: Financial Services, Surveying & Valuation, and Estate Agency Franchising.

The Estate Agency segment previously included the Group's owned network, pre-existing franchise network, residential sales exchange, conveyancing services, lettings and asset management businesses. The Estate Agency segment was replaced by Estate Agency Franchising on 4 May 2023 which includes the Group's franchise operations, residential sales exchange, and conveyancing services.

From 1 January 2024, the Group's asset management business was transferred from Estate Agency Franchising to Surveying & Valuation following changes in management responsibilities, see note 2.5 for further detail.

Operating segments

The Chief Operating Decision Maker ("CODM") monitors the operating results of its segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects, as explained in the table below, is measured differently from operating profit or loss in the Group Financial Statements. Head office costs, Group financing (including finance costs and finance income) and income taxes are managed on a Group basis and are not allocated to operating segments.

Reportable segments

The following table presents revenue and profit information regarding the Group's reportable segments for the financial year ended 31 December 2024 and financial year ended 31 December 2023 respectively.

Year ended 31 December 2024

*Formerly named "Unallocated"

Central net assets comprise intangible assets and plant and equipment £0.7m, other assets £5.6m, cash £60.7m, accruals and other payables £1.2m, deferred tax liabilities £1.6m, overdraft of £28.3m. Central result comprises costs relating to the Parent Company.

Year ended 31 December 2023 (restated)