LSL saw a 3% decline in protection and insurance fee income in 2022, swung to a near £60m pre-tax loss over the year and noted its Pivotal Growth joint venture had not completed as many acquisitions as expected.
According to results for the year ended 31 December 2022, the group posted a pre-tax loss of £59.1m compared with £69.9m profit in 2021, largely driven by reducing the value of goodwill in the company by £87.2m.
“This is a non-cash item reflecting the impact of more conservative mid-term housing market assumptions, higher discount rates and the disposal of non-core businesses,” the firm said.
“In 2021, the statutory operating profit was boosted by a £29.4m gain on the disposal of interests in joint ventures, which was also part of our strategy to exit from non-core businesses,” it added.
The split of revenue by product type was £36.5m for mortgage fees (2021: £33.7m), £34.2m for protection and insurance fees (2021: £35.2m) and £10.9m in other fees (2021: £9.6m).
Overall the property and financial services group, which includes advice network Primis, saw total revenue drop by 1.6% to £321.7m from £326.8m in the previous year. It also reported net cash of £40.1m at 31 December 2022 compared with £48.5m in 2021.
LSL’s number of advisers increased marginally to 2,867 from 2,858 over the period with gross revenue per average adviser in 2022 rising to £93,900, up from £90,100.
“Whilst appointed representative (AR) firms in the network have been understandably cautious about growing adviser numbers in the midst of the economic and political uncertainty, and as a result the financial services network business saw modest growth in adviser numbers, this indicates that through the turnover of advisers, there is a net improvement in the most productive,” LSL said.
Pivotal Growth slower momentum
Pivotal Growth, the joint venture between LSL and Pollen Street Capital launched in 2021, reported a net loss in 2022 of £0.5m after acquisition costs and overheads.
The group added the “slower than expected momentum in acquisitions means it is still in the investment phase”, with a positive financial contribution expected in 2023.
Pivotal Growth has now acquired eight businesses, comprising around 330 advisers, including the Group First and RSC, and Embrace Financial Services and First2Protect from LSL Property Services which were announced earlier this week.
The consideration for RSC, Group First and Embrace Financial Services will be based on their financial performance in 2024. The consideration for F2P is payable at completion of the deal.
Looking ahead, the group said it expected market conditions to remain challenging during H1 but to then improve in H2, supported by a strong re-mortgage market, and further improvements in consumer confidence and transaction levels assisted by recent reductions in mortgage rates.
LSL group CEO David Stewart said: “I am pleased to report that LSL is in good shape.
“In 2022, the group traded well in challenging market conditions, while making substantial progress in the execution of our strategy to grow and to become a B2B financial services provider.
“As a result, we remain well-placed to deliver on our strategy and capitalise on the significant opportunities we see available.”