18 September 2024

 

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

HALF YEAR RESULTS TO 30 JUNE 2024

 

LSL reports its results for the six months ended 30 June 2024 with Group Underlying Operating Profit of £14.4m (H1 2023: £3.2m). Results are in line with upgraded expectations as announced with the Preliminary results in April, and materially ahead of prior year. The Board's expectations for the full year remain unchanged.

David Stewart, Group Chief Executive commented:

"Following a period of significant strategic transformation, we have delivered a robust financial performance in the first half of 2024 during a period in which our end markets have been fairly muted. Each of our businesses has achieved strong market share whilst focusing on delivering against our strategic priorities and putting in place a solid platform for future growth.

 

"Today, LSL is a more streamlined, agile Group comprising three strong businesses, each with attractive organic growth opportunities that are well positioned to capitalise from any further improvement in the housing and mortgage markets. Our focus is on maximising the performance of our businesses to deliver value to shareholders."

 

STRATEGIC AND OPERATIONAL HIGHLIGHTS

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

·    Strong market share across all divisions with Financial Services enhanced by the purchase of TenetLime. Our Surveying business delivered a slight increase on its already very strong position, whilst our Estate Agency franchisees have maintained their national market share

·    Annualised total operating costs reduction of c.£140m following the restructuring of the Group in 2023

·    Surveying B2C revenue 60% above H1 2023 with investment continuing to drive future growth

·    Renewal and improvement in terms of two main lender contracts in Surveying in H1 2024 with further contractual gains and increased allocations from other lenders

·    TenetLime performance in line with management expectations with high levels of appointed representative (AR) firm and adviser retention boosting our share of the mortgage market

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

·      Acquisition during 2024 of five businesses by our Pivotal Growth JV, with advisers increasing to over 450 (c.50% increase on H1 2023)

·      Interim dividend maintained at 4p per share

·      Adrian Collins appointed as Chair and Michael Stoop as Non-Executive Director

 

FINANCIAL HIGHLIGHTS

 

H1 financial metrics1	2024	Restated2 2023	Var
Group Revenue (£m)	85.4	72.5	18%
Group Underlying Operating Profit from total operations3 (£m)	14.4	3.2	354%
Group Underlying Operating margin (%)	17%	3%	+1390bps
Group Underlying Operating Profit3 (£m)	14.4	4.2	247%
Exceptional Gains (£m)	0.4	9.0	(96)%
Exceptional Costs (£m)	(0.5)	(4.3)	89%
Group operating profit (£m)	13.0	7.6	72%
Profit before tax (£m)	13.8	7.4	85%
Loss from discontinued operations4 (£m)	(0.2)	(42.9)	99%
Basic Earnings per Share (pence)	9.9	5.3	87%
Adjusted Basic Earnings per Share5 (pence)	11.0	2.6	323%
Net Cash5 at 30 June (£m)	32.5	36.3	(11)%
Interim Dividend per share (pence)	4.0	4.0	-

 

·    Group Revenue¹ was £85.4m (H1 2023: £72.5m). After adjusting for disposals, revenue was 27%⁶ above prior year in a market in which total mortgage lending was flat and house sales were 1% higher

·    Group Underlying Operating Profit was £14.4m (H1 2023: £3.2m from total operations^1,3, £4.2m from continuing operations^1,3), significantly ahead of the prior year, with particularly strong recovery in the Surveying & Valuations Division

·    Material improvement in Group operating margin to 17% (H1 2023: 3%)

·    Net Exceptional costs⁷ of £0.1m (H1 2023: net gains £4.7m)

·    Group operating profit was £13.0m (H1 2023: £7.6m)

·    Net Cash⁸ of £32.5m at 30 June 2024 (31 December 2023: £35.0m, 30 June 2023: £36.3m), with a cash flow conversion rate⁸ of 81% (H1 2023: (220)%)

 

DIVISIONAL PERFORMANCE

Surveying & Valuation Division

·    Surveying & Valuation performance included benefits from improving market conditions and contract extensions with improved terms and allocations with Underlying Operating Profit³ increasing to £12.9m (H1 2023: £3.7m)

·    Mortgage approvals⁹ in H1 were 14% above H1 2023, driven by higher purchase approvals (up 23%) with remortgage and other approvals broadly flat

·    We estimate that our market share of physical and remote valuation instructions⁹ increased marginally to 40% (H1 2023: 39%)

·    Long-term contract extension with Lloyds Banking Group, underpinning the Group's leading market position. Furthermore, 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

·    Developing B2C revenue, survey and valuation work performed for the end consumer, is a strategic objective and in the first half of 2024 it increased by 60% to £2.8m (H1 2023: £1.8m)

·    Investments made to support B2C/Home Buyer activities, with acceleration of marketing activity, and also data and model development initiatives. These investments will increase further in the second half of the year to support the Group's strategy to grow new income lines in future years

 

Financial Services Division

·    Financial Services Network business traded resiliently in soft market conditions, reporting Underlying Operating Profit³ of £4.3m (H1 2023: £3.8m)

·    After adjusting for businesses disposed of during H1 2023, revenue was up 1%. Total revenue was £23.6m (H1 2023: £28.0m)

·    Increased market share of the UK purchase and remortgage market¹⁰ of 11.1% (H1 2023: 10.5%)

·    LSL advisers continue to adapt effectively to changes in the mortgage market, increasing product transfer mortgage completions by 20%, resulting in a substantially increased share of the product transfer market to 7.2% (H1 2023: 5.8%)

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

·      Network protection revenue increased by 3% to £5.7m (2023: £5.6m) after adjusting for disposals

·    The number of Network firms increased to 1,146 as at 30 June 2024 (H1 2023: 986), including 151 TenetLime firms. Network firms remained cautious on adviser levels due to challenging market conditions, advisers increased to 2,847 as at 30 June (30 June 2023: 2,718) including 255 TenetLime advisers

 

Estate Agency Franchising Division

·    Benefits of new business model are reflected in an Underlying Operating Profit³ of £3.1m (H1 2023: loss from total operations of £0.7m) in the first half of the year, achieved in a flat housing market, with an underlying operating margin of 24%

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

·    The number of properties under management reduced marginally to 36,987 (30 June 2023: 37,960)

·    Continued to support the growth of franchisees, including the first loans granted to facilitate territory expansion and lettings book acquisitions completed in August, adding over 600 properties to the lettings portfolio

 

Pivotal Growth Joint Venture

 

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

·    Pivotal Growth now has over 450 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 underlying financial performance has steadily improved as it has increased in scale and moved out of its establishment phase

·    Following trading EBITDA growth before transaction costs in H1 2024 compared to prior year, our share of Pivotal profit/loss after tax is expected to continue to improve in future periods

 

ECONOMIC AND MARKET ENVIRONMENT

·    The market remains supressed compared to the long-term average, with new lending 10% below the 10-year average¹⁰ and housing transactions¹¹ 14% below. Sticky inflation and delays to interest rate reductions impacted consumer confidence in H1

·    Although markets remained muted, front-end activity in the mortgage and housing markets has improved, with mortgage approvals 14% ahead of H1 2023 and sales agreed 15% ahead. These trends will support the performance of our Financial Services and Estate Agency Franchising businesses in the second half of the year

·    The mortgage lending market¹⁰ in H1 2024 was around 2% smaller than H1 2023. Purchase lending increased by 9%, and remortgage lending decreased by 8% whilst product transfer lending reduced by 5%

·    Total lending arranged by LSL was 12% higher than H1 2023, with an increased share in each of the purchase, remortgage and in particular product transfer markets, and more heavily weighted than previously to product transfers. LSL's share of the total purchase and remortgage market increased to 11.1%¹⁰ (H1 2023: 10.5%). LSL's market share of product transfers increased to 7.2% (H1 2023: 5.8%)

·    Bank of England mortgage approvals⁹ were 14% higher than H1 2023 driven by purchase approvals being 23% higher with remortgage and other mortgage approvals broadly flat. The more specialist Buy-to-Let and Equity Release markets remain subdued as a result of higher interest rates. Total jobs performed by the Surveying & Valuation Division increased by 18%, above the market as a whole, reflecting a small increase in market share¹⁰

·    Total UK HMRC recorded residential transactions¹¹ were 1% higher in H1 2024 at 488k (H1 2023: 483k)

 

CURRENT TRADING AND OUTLOOK

The first half of the year showed a significant improvement in trading with some improvement in sentiment and, more recently, lower mortgage rates which are starting to drive more activity across our core markets. We have seen an increase in mortgage approvals which will be reflected in future housing transactions and the start of a normalisation in product mix in our mortgage business. In the first half of 2024, these conditions particularly benefited our Surveying & Valuation business, where there has been a very substantial increase in activity and profits.

The improved trading reflects better market conditions but also the benefits of the new Estate Agency franchise model, improved lender contracts, and our decision to retain surplus capacity throughout the second half of 2023. The Board remains confident that the Group will deliver a full year Underlying Operating Profit in line with its prior expectations and significantly above 2023.

 

For further information, please contact:

 

David Stewart, Group Chief Executive Officer
Adam Castleton, Group Chief Financial Officer
LSL Property Services plc	investorrelations@lslps.co.uk
Helen Tarbet
Sophie Wills
George Beale
Burson Buchanan	0207 466 5000 / LSL@buchanan.uk.com

 

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 now presented as such in the Financial Statements. Refer to note 6 to the Financial Statements

2          Refer to note 14 to the Financial Statements for details regarding the restatement

3          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

4          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 now presented as such in the Financial Statements. Refer to note 6 to the Financial Statements

5          Refer to note 5 to the Financial Statements for the calculation 

6          Revenue: £84.5m in H1 2024 with statutory revenue of £85.4m less £0.9m revenue due to acquisitions in 2024, as compared to £66.4m in H1 2023 with statutory revenue of £72.5m less £6.1m revenue from businesses disposed in 2023

7          Refer to note 7 to the Financial Statements

8          Refer to note 5 to the Financial Statements for the calculation 

9          Number of approvals for lending secured on dwellings, BoE via UK Finance (Jul 2024)

10        Mortgage lending excluding product transfers - new mortgage lending by purpose of loan, UK (BOE) - Table MM23 (Jul 2024)

11        Number of residential property transaction completions with value £40,000 or above, HMRC (Jul 2024)

nm       Not meaningful

 

Notes on LSL

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

 

Over 2,800 advisers representing around 11% of the total purchase and remortgage market.

 

Its 61 estate agency franchisees operate in 308 territories.

 

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

 

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

 

 

 

 

 

GROUP CHIEF EXECUTIVE'S REVIEW

 

I am pleased to report the Group has delivered a robust performance in the first half of 2024 as we focused on the execution of our growth plans across our three market leading businesses. Although we have been subject to less of a headwind than in 2023, the markets in which we operate remain muted. The significant growth in profitability highlights the benefits of the strategic transformation undertaken last year. More broadly, because of the work we have done, LSL is now well-positioned to drive greater shareholder value and to perform more consistently through market cycles, supported by a strong balance sheet.

 

With the benefit of the restructuring and transformation programmes complete, management is focused on maximising the operational potential in each of our businesses and ensuring that this potential is appropriately reflected in the wider perceptions of LSL. The Board continues to focus on driving shareholder value, including delivering on our return on investment criteria and maintaining the appropriate capital structure.

 

Our financial and operational progress has been delivered against what is still a relatively sluggish market backdrop, with some signs of green shoots in the mortgage and housing markets as mortgage rates started to come down.

 

I would like to thank all my colleagues for their continued hard work and exceptional support in the transformation of the Group.

 

Review of H1 2024 Performance

 

The Group's performance benefitted strongly from a recovery in demand and contract wins for our Surveying & Valuation Division as well as the structural benefit of moving to a franchise operating model for our Estate Agency Division. Our Financial Services Division traded resiliently in the soft market conditions, gaining share in each of the mortgage market segments and executing effectively its acquisition of Tenet advisers.

 

Group Revenue¹ was £85.4m (H1 2023: £72.5m). After adjusting for disposals, revenue was 27%² higher than prior year in a total lending market that reduced by 2% by value and was broadly flat in terms of housing transactions.

 

Group Underlying Operating Profit from continuing operations^1,3 was £14.4m (H1 2023: £3.2m from total operations^1,3, £4.2m from continuing operations^1,3).

Strategic priorities and development

 

The Group has made substantial progress in implementing its strategy to simplify the business, reduce earnings volatility, and focus investment in high growth areas. 

Following this restructuring we now have a strong platform across all three of our divisions to further develop the strategic priorities for each business and leverage our market leading positions as lending and housing activity recovers from a difficult market in 2023.

Surveying & Valuation contract renewals and investment in growth

We delivered a significant increase in profit in the Surveying & Valuation Division, driven by several contract extensions, including that of Lloyds Banking Group. The benefit of our decision to retain our surveying capacity in the difficult conditions we faced in 2023 was demonstrated as the market improved and with cost efficiency initiatives we saw a 29% increase in surveyor revenue per day.

During the half, we have continued to invest in new business opportunities in data and direct-to-consumer services. We increased our marketing activity to support our D2C business, with encouraging results, and added senior headcount into our data and model development teams. We continue to see exciting opportunities from becoming the leading provider of the full range of valuation methodologies our clients use.

The Surveying & Valuation Division has driven a culture of continuous improvement and efficiency gains, including the introduction of a Robotic Process Automation (RPA) platform in 2021, with over 50 Robots implemented. The platform is responsible for driving automation across all business processes to improve efficiencies, quality, compliance and service levels all whilst supporting product development.

Increasing scale in the Financial Services Network

We completed the purchase of the TenetLime mortgage and protection network on 2 February 2024, adding more than 250 advisers across 151 firms and building on our share of over 10% of the UK house purchase and remortgage markets. We have been working hard to integrate TenetLime into our PRIMIS business and are pleased with the way in which we have executed our plans. The transaction will be earnings enhancing in 2024. Our total share of the purchase and remortgage market in H1 2024 was a record at 11.1%⁴.

Across the PRIMIS network trading performance was resilient, as PRIMIS advisers increased their share of each of the purchase, remortgage and product transfer segments.

Building for the future in Financial Services

Our focus is now firmly fixed on putting in place the foundations for medium-term growth. We continue to recognise the long-term potential opportunities in our network business and will make the investment needed to realise this potential.

Over the past 12 months we have recruited a new senior management team and absorbed the Mortgage Gym and DLPS technology businesses into the PRIMIS network. Our protection "e-sub" service is in test with PRIMIS members with a view to a more extensive roll out during the second half of the year. The use of this new quoting system will deliver benefits to members and incremental revenue to PRIMIS in 2025.

The provision of compliance services is one of the main reasons why mortgage and protection brokers join networks, and LSL's size means we are well placed to continue to make the investment needed to provide this support as regulatory expectations increase in our markets. During 2023, we established a new governance framework for our regulated financial services entities, including the appointment of a divisional non-executive Chair and two other experienced non-executive directors.

 

The team has also undertaken significant work to better understand our members' needs and align our proposition with those services that deliver most value to our members. We have worked with third party experts to review our offering and have identified the potential from enhanced broker and central office IT systems, to improve our service, increase efficiency of both advisers and central operations and facilitate greater sales of related products. We are finalising our plans in this area.

Focus on B2B in Financial Services

Over the last 18 months, we have simplified our Financial Services Division, reducing both costs and earnings volatility with a focus on B2B services. Our joint venture Pivotal Growth provides exposure to B2C market segments.

Estate Agency Franchising model

The strength of our new operating model in Estate Agency was demonstrated by the financial performance over the first half of the year. We are ahead of the plans we set for reducing costs and increasing margin.

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 has supported the acquisition of 2 lettings books by franchisees in 2024, providing total funding of £0.5m (in August) and adding over 600 properties to the existing portfolio of 36,987. This deal will deliver returns in excess of Group cost of capital. We see scope for further similar deals within the Estate Agency Franchise business.

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.

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.

 

Pivotal has now acquired 14 businesses, including five acquisitions made in 2024 (three in the first half). With over 450 advisers, Pivotal is now one of the UK's largest mortgage and protection brokers.

 

We have invested £13m in Pivotal since 2021 and we continue to closely monitor Pivotal's performance to maximise returns for shareholders and it remains on track to deliver returns ahead of the Group's WACC.

 

Dividend

 

The improvement in performance in H1 2024 underpins the Board's confidence in the underlying fundamentals and prospects of the Group's businesses and therefore the Board has declared an interim dividend payment amounting to 4.0 pence per share (H1 2023: 4.0 pence). The Groups dividend policy continues to be a pay-out of 30% of Group Underlying Operating Profit after finance and normalised tax charges.

The ex-dividend date for the interim dividend is 26 September 2024, with a record date of 27 September 2024 and a payment date of 8 November 2024. Shareholders can elect to reinvest their cash dividend and purchase additional shares in LSL through a dividend reinvestment plan. The election date is 11 October 2024.

Share buyback

The Board's approach to capital allocation remains unchanged, as set out in the Preliminary results announced on 25 April 2024. We will continue to deploy the share buyback in a measured way and there are no plans to allocate cash reserved for the buyback into other Group activities. To date, £0.3m of the share buyback programme announced on 25 April 2024 has been deployed.

Change of auditor

As highlighted in the Audit & Risk Committee Report in the Annual Report and Accounts 2023, an audit tender exercise had commenced in advance of the Group's current auditor's (Ernst & Young LLP ("EY")) tenure reaching its maximum term limit. We have now completed the comprehensive formal tender process for our group audit, overseen by the Audit & Risk Committee, which carefully evaluated the offering of each participant. This has resulted in a recommendation from the Audit & Risk Committee, which has now been endorsed by the Board, that a resolution be put to shareholders for approval at the 2025 Annual General Meeting (AGM), appointing Grant Thornton UK LLP as the Group's auditor for the year ending 31 December 2025.

EY will continue in the role until that time and will therefore undertake the group audit for the year ended 31 December 2024. EY will cease to hold office as the Group's auditor at the conclusion of the Company's 2025 AGM.

Current trading and outlook

The first half of the year showed a significant improvement in trading with some improvement in sentiment and, more recently, lower mortgage rates which are starting to drive more activity across our core markets. We have seen an increase in mortgage approvals which will be reflected in future housing transactions and the start of a normalisation in product mix in our mortgage business. In the first half of 2024, these conditions particularly benefited our Surveying & Valuation business, where there has been a very substantial increase in activity and profits.

The improved trading reflects better market conditions but also the benefits of the new Estate Agency franchise model, improved lender contracts, and our decision to retain surplus capacity throughout the second half of 2023. The Board remains confident that the Group will deliver a full year Underlying Operating Profit in line with its prior expectations and significantly above 2023.

David Stewart

Group Chief Executive Officer

17 September 2024

 

Notes:

1          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 now presented as such in the Financial Statements. Refer to note 6 to the Financial Statements

2          Revenue: £84.5m in H1 2024 with statutory revenue of £85.4m less £0.9m revenue due to acquisitions in 2024, as compared to £66.4m in H1 2023 with statutory revenue of £72.5m less £6.1m 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          Mortgage lending excluding product transfers - new mortgage lending by purpose of loan, UK (BOE) - Table MM23 (Jul 2024)

5          Refer to note 5 to the Financial Statements for the calculation

 

 

 

H1 P&L (£m)	2024	Restated1 2023	Var
Divisional Group Revenue2
Financial Services	23.6	28.0	(16)%
Surveying & Valuation	48.9	37.2	31%
Estate Agency Franchising	12.9	7.2	79%
Group Revenue	85.4	72.5	18%
Estate Agency - discontinued operations	0.0	32.3	(100)%
Group Revenue (incl. discontinued operations)	85.4	104.8	(19)%
Divisional Underlying Operating Profit/(Loss)2,3
Financial Services Network	4.3	3.8	14%
Pivotal joint venture	(0.4)	(0.2)	(126)%
Financial Services	3.9	3.6	9%
Surveying & Valuation	12.9	3.7	249%
Estate Agency Franchising	3.1	0.3	939%
Unallocated Central Costs	(5.5)	(3.5)	(60)%
Group Underlying Operating Profit from continuing operations	14.4	4.2	247%
Estate Agency - discontinued operations	0.0	(1.0)	100%
Group Underlying Operating Profit from total operations	14.4	3.2	354%
Divisional operating profit/(loss)2,3
Financial Services	2.9	10.3	(72)%
Surveying & Valuation	12.9	1.6	693%
Estate Agency Franchising	2.6	(0.6)	526%
Unallocated Central Costs	(5.3)	(3.7)	(42)%
Group operating profit/(loss) from continuing operations	13.0	7.6	72%
Estate Agency - discontinued operations	(0.3)	(41.5)	99%
Group Operating Profit / (Loss) from total operations	12.7	(33.9)	138%

Notes:

1          Refer to note 4 and 14 to the Financial Statements

2          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 now 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 was £85.4m (H1 2023: £72.5m). After adjusting for disposals and for the purchase of TenetLime in H1 2024, revenue was 27%² above prior year in a total lending market that reduced by 2% by value and a broadly flat housing market. The increase was primarily in the Surveying & Valuation Division with a 31% increase compared to prior year, driven by 2023 contract wins and a 14% increase in total BoE mortgage approvals, and a 79% increase in Estate Agency Franchising due to 6 months' trading in 2024 compared to only 2 months in H1 2023. After adjusting for businesses disposed of during H1 2023, Financial Services Division revenue was up 1%, with total Divisional revenue of £23.6m (H1 2023: £28.0m).

 

Group Underlying Operating Profit³ recovered strongly to £14.4m (H1 2023: £3.2m⁴), with a year on year increase in each Division. Group Underlying Operating margin of 17% was the highest first half margin for over 15 years, particularly reflecting high utilisation in Surveying and the benefits of the franchising model in Estate Agency for the whole period. Group Underlying Operating Profit from continuing operations was £14.4m (H1 2023: £4.2m).

Group Operating Profit increased to £13.0m (H1 2023: £7.6m), resulting from the improved trading performance in the period, offset by £0.1m net exceptional costs in H1 2024 (H1 2023: Net Exceptional Gain: £4.7m).

Adjusted operating expenditure⁵, comprising Employee costs, Other operating costs, and Depreciation totalled £70.9m in H1 2024, 4% higher than prior year (H1 2023: £68.4m), 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 flat in Financial Services in line with revenue

-      Increased variable costs in Surveying & Valuation arising from 31% increase in revenues

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

-      Central (unallocated) costs of £5.5m (H1 2023: £3.5m) with the increase primarily due to strategic investment, Board changes and additional audit fees incurred 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 H1 operating expenditure levels of c.£140m, 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 £0.3m (H1 2023: £0.3m). This reflected the movement in the fair value of shares held in an unlisted investment having been reassessed at 30 June 2024 as £0.3m (31 December 2023: £nil).

 

Share of losses from joint venture

Losses from our equity share of Pivotal Growth increased to £0.4m (H1 2023: £0.2m loss), reflecting increased acquisition transaction fees in comparison to the prior period. Trading EBITDA before transaction costs has grown in H1 2024 compared to prior year.

 

Share-based payments

The share-based payment credit of £0.1m in 2023 (H1 2023: charge of £0.4m) comprises, a charge in the period of £1.9m for LTIP, SAYE and BAYE schemes granted in 2021 to 2024, offset by a credit of £2.0m reflecting lapses. The prior year included a lower charge of £1.5m, offset by lower lapse and leaver adjustments.

 

Amortisation of intangible assets^6,7

Amortisation charge of £1.4m (H1 2023: £0.9m⁷), relates to amortisation of intangible software investment, franchise agreements and relationship assets. The year-on-year movement comprises a reduction in both lettings books and certain software intangibles as they have been fully amortised, a full half period in H1 2024 of amortisation for the newly established franchise intangibles and acquired TenetLime intangible assets.

 

Exceptional items⁸

The exceptional gain of £0.4m (H1 2023: £9.0m) relates primarily to the increase in contingent consideration receivable on the disposal of Group First (£0.3m) and release of dilapidation provision (£0.1m). The gain on disposal during H1 2023 related to the disposal of the Embrace and First2Protect businesses to Pivotal Growth.

 

Exceptional costs of £0.5m (H1 2023: £4.3m), is primarily a decrease in contingent consideration receivable on the disposal of RSC and EFS (£0.3m) and corporate transaction costs. The prior year costs of £4.3m related to restructuring activity and corporate transaction costs of £2.9m and the net loss on disposals of Group First, RSC and Marsh & Parsons of £1.4m.

 

Finance income increased to £1.4m (H1 2023: £0.8m) resulting mainly from increased interest received of £0.9m on funds held on deposit (H1 2023: £0.7m) and the unwind of discounting on contingent consideration receivable balances of £0.4m (H1 2023: £nil).

 

Finance costs of £0.7m (H1 2023: £0.9m) are related principally to the unwinding of discount on lease liabilities of £0.2m (H1 2023: £0.1m), commitment and non-utilisation fees on the revolving credit facility of £0.3m (H1 2023: £0.5m), unwinding of discount on contingent consideration payable of £0.1m (H1 2023: £0.3m) and £0.1m for the unwinding of discount on dilapidations provisions (H1 2023: £nil).

 

Profit before tax

Profit before tax was £13.8m (H1 2023: £7.4m). The year-on-year movement is primarily due to the materially higher Group Underlying Operating Profit in H1 2024, offset by the year on year movement in net exceptional gains in H1 2023 of £4.7m to a net exceptional cost in H1 2024 of £0.1m.

 

Taxation

The tax charge of £3.6m (H1 2023: £2.1m) represents an effective tax rate of 26.0% (H1 2023: 27.8%), which is slightly higher than the headline UK tax rate of 25.0% primarily because of non-deductible expenditure and contingent consideration, offset in part by the movement on deferred tax not recognised. 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 £0.2m (net of tax) in relation to an increase in the restructuring costs in the previously owned Estate Agency branch network (H1 2023: loss of £42.9m). The prior period reflects the discontinued operations in Estate Agency Franchising which included exceptional restructuring costs of £12.7m 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 Share⁵

 

	H1 2024				H1 2023
Earnings per Share (pence)	Basic	Diluted	Adjusted basic	Adjusted basic diluted	Basic	Diluted	Adjusted basic	Adjusted basic diluted
Continuing	9.9	9.8			5.3	5.2
Discontinued	(0.2)	(0.2)			(41.6)	(41.1)
Total operations	9.7	9.6	11.0	10.9	(36.4)	(35.9)	2.6	2.5

 

Business Reviews

 

Surveying & Valuation Division

To reflect the change in the structure of the Group our asset management business which provides repossession services to corporate clients is now reported within the Surveying & Valuation Division, as the key commercial relationships for this business are with major lenders.

Surveying revenue increased significantly to £46.3m in the period, an increase of 30% on H1 2023 (£35.5m), reflecting both the 18% increase in jobs performed and the 11% increase in income per job on the comparative period. The increase in jobs performed resulted in the market share of valuations instructions increasing to 40.3% in H1 2024 (H1 2023: 38.6%). Growth in D2C in recent years has continued in the period, with H1 2024 revenue of £2.8m representing a 60% increase on H1 2023.

Surveying Underlying Operating Profit³ increased materially to £11.7m (H1 2023: £3.4m), benefitting from the strong revenue growth and the self-help cost measures taken in 2023.

Asset Management revenues grew by 49% to £2.6m in the period, reflecting the moderately more active market. However, the market remains below long-run trend levels. The profit generated by this business was £1.2m in H1 2024 (H1 2023: £0.3m).

Total Division revenue of £48.9m in the period was an increase of £11.7m compared to H1 2023 (£37.2m). Underlying Operating Profit³ increased materially to £12.9m (H1 2023: £3.7m) reflecting the benefit of the revenue increases in both the e.surv and asset management businesses. On a statutory basis, operating profit was £12.9m (H1 2023: £1.6m).

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 £23.6m (H1 2023: £28.0m). After adjusting for businesses disposed of during H1 2023, revenue was up 1%. We increased our share of the purchase and remortgage and of the product transfer markets, with a record share of the purchase and remortgage (11.1%⁹ up from 10.5%) and the product transfer markets (7.2% up from 5.8%). Protection performance was also robust, with Network protection revenue increasing by 3% after adjusting for disposed businesses.

 

Network Underlying Operating Profit³ was £4.3m (H1 2023: £3.8m), which was marginally ahead of H1 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 £0.4m (H1 2023: loss of £0.2m), reflecting the higher transaction costs. The trading EBITDA of Pivotal was £0.2m ahead of the same period last year.

 

Total Financial Services Division Underlying Operating Profit³ was £3.9m (H1 2023: £3.6m, £4.0m after adjusting for disposed businesses). On a statutory basis, operating profit was £2.9m (H1 2023: £10.3m).

 

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 30 June 2024 (31 December 2023: £5.9m, H1 2023: £6.1m), with a surplus of £22.9m (31 December 2023: £24.7m, H1 2023: £24.4m).

 

Estate Agency Franchising Division

Estate Agency Franchising business revenue was £12.9m (H1 2023: £7.2m), with the increase primarily reflecting the wholesale franchising of the division only part way through H1 2023.

Underlying Operating Profit^1,3 of £3.1m was delivered in H1 2024 (H1 2023: £0.3m) at a 24% operating margin. The greater consistency of the franchising model was demonstrated at the start of 2024 when the Division reported a profit in January for only the second time in its history. On a statutory basis, operating profit was £2.6m (H1 2023: loss of £0.6m).

Group Balance Sheet Review

 

Goodwill - 30 June 2024: £16.9m (31 December 2023: £16.9m, 30 June 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 assets^6,7 - 30 June 2024: £30.2m (31 December 2023: £21.5m, 30 June 2023: £23.9m)

Intangible relationship assets of £9.3m were recognised during the period upon the purchase of TenetLime, with further additional investment in Financial Services and Surveying of £0.8m. Total amortisation of £1.4m was charged in the year (H1 2023: £0.9m). The carrying value of all franchise agreements was £11.3m at 30 June 2024 (31 December 2023: £11.7m, H1 2023: £12.2m) and the carrying value of the acquired relationship assets was £9.0m at 30 June 2024 (31 December 2023: £nil, H1 2023: £nil).

 

For the year ended 31 December 2023, the Group revisited its accounting policy in relation to customisation costs incurred in implementing Software as a Service (SaaS) arrangements. The net impact of this restatement of results to the income statement for H1 2023 was £0.4m credit and £0.4m to intangible assets as at 30 June 2023, which was not cash adjusting.

 

Property, plant and equipment (PPE) and right-of-use assets (RoU assets) - 30 June 2024: £6.3m (31 December 2023: £6.9m, 30 June 2023: £6.3m)

Capital expenditure on owned PPE in the year amounted to £0.3m (H1 2023: £0.5m), primarily reflecting ongoing investment in Financial Services and Surveying & Valuation, and the year on year reduction due to the Estate Agency Franchising operating model transformation in 2023. Total depreciation of £1.6m was charged in the year (H1 2023: £1.6m).

 

Financial assets - 30 June 2024: £6.0m (31 December 2023: £5.5m, H1 2023: £8.5m)

Contingent consideration receivable

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 30 June 2024, this asset is recorded at £5.1m (31 December 2023: £4.8m, H1 2023: £8.0m).

 

The Group also has contingent consideration receivable in relation to disposed lettings books, which are due in December 2024 and November 2025. As at 30 June 2024, this asset is recorded at £0.2m (31 December 2023: £0.3m, H1 2023: £nil).

 

Equity instruments in unlisted companies

No change in the fair value of units held in The Openwork Partnership LLP of £0.4m at 30 June 2024 (31 December 2023: £0.4m, 30 June 2023: £0.5m). The fair value had been reassessed down to £0.4m at 31 December 2023, with our valuation based on an estimated strike price which has been calculated using the average strike price from most recently executed trading windows.

 

The fair value of shares held in Twenty7tec Group Limited was reassessed at 30 June 2024 as £0.3m (31 December 2023: £nil, H1 2023: £nil). Twenty7tec is a provider of technology to mortgage advisers and lenders.

 

Investment in joint ventures - 30 June 2024: £9.0m (31 December 2023: £9.4m, 30 June 2023: £9.6m)

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 share of losses after tax for the period.

 

Investment in sublease (total current and non-current) - 30 June 2024: £1.9m (31 December 2023: £3.3m, 30 June 2023: £4.4m)

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 £1.0m and a similar reduction in IFRS 16 lease financial liabilities. The balancing movement reflects payments made by franchisees.

 

Loans to franchisees and appointed representatives (Network firms) - 30 June 2024: £1.5m (31 December 2023: £2.1m, 30 June 2023: £1.3m)

Various sized working capital loan facility agreements (largest of £1m) are in place with several EA franchisees up to a cumulative maximum of £5.4m. At 30 June 2024, £0.9m was drawn down (31 December 2023: £0.8m, H1 2023: £1.3m).

Loans to FS appointed representatives are granted in certain circumstances to support brokers upon joining the PRIMIS network and were £0.6m as at 30 June 2024 (31 December 2023: £1.3m, 30 June 2023: £nil - having previously been included in trade and other receivables).

 

Financial liabilities (total current and non-current) - 30 June 2024: £10.2m (31 December 2023: £8.4m, 30 June 2023: £8.4m)

Contingent consideration liabilities - 30 June 2024: £3.7m (31 December 2023: £0.07m, 30 June 2023: £0.03m)

Contingent consideration liabilities relate solely to the cost of acquiring the intangible relationship assets in TenetLime in February 2024, with the potential cash consideration of £4.6m payable in 2025 adjusted at 30 June 2024 for latest estimated forecast and discounting.

The remaining shares in Direct Life Quote Holdings Limited of £0.07m as at 31 December 2023 were subsequently acquired and paid in February 2024.

 

IFRS 16 lease financial liabilities - 30 June 2024: £6.5m (31 December 2023: £8.3m, 30 June 2023: £8.4m)

The movement in the period reflects payment of lease liabilities of £1.9m and disposals on assignment to franchisees of £0.9m, offset by new lease additions and unwinding of discounting of £0.8m.

 

Provision for liabilities (total current and non-current) - 30 June 2024: £11.7m (31 December 2023: £11.6m, 30 June 2023: £10.9m)

PI claim provisions of £3.0m (31 December 2023: £3.2m, 30 June 2023: £2.5m) include the Surveying & Valuation PI provision of £2.3m (31 December 2023: £2.3m, 30 June 2023: £2.5m) and the Financial Services PI provision of £0.7m (31 December 2023: £0.9m, 30 June 2023: £nil). The Group has recognised an asset of £0.5m against received claims in other debtors at 30 June 2024 (31 December 2023: £0.6m, 30 June 2023: £nil).

Dilapidations and restructuring provisions primarily relating to the Estate Agency Franchising Division following the wholesale franchising in 2023, totalled £8.1m at 30 June 2024, the movement in the period relating to an increase in the original provisions recognised in discontinued operations (31 December 2023: £7.8m, 30 June 2023: £8.4m).

A claims indemnity included in the sale agreement of LMS remains unchanged at £0.6m at the period end (31 December 2023: £0.6m, 30 June 2023: £nil).

 

Group Statement of Cash flows - 30 June 2024: Net Cash⁵ £32.5m (31 December 2023: Net Cash £35.0m, 30 June 2023: £36.3m)

Operating cashflows before movements in working capital were £16.2m (H1 2023: £6.5m) reflecting the higher underlying operating profits generated in H1 2024. The business is highly cash generative and ordinarily achieves a cash flow conversion rate⁵ of 75% to 100%. The ratio in H1 2024 was 81% reflecting the materially higher Underlying Operating Profit, with a ratio of (220)% achieved in H1 2023.

 

Movements in working capital were an outflow of £2.8m (H1 2023: outflow of £13.6m). The outflow in H1 2024 reflected higher Surveying billing in the last months of H1 2024 compared to the end of 2023. The higher outflow in H1 2023 reflected the significant change in structure in the Group during that period, 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 first half of the year also included:

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

·      capital expenditure on PPE and intangibles of £1.2m (H1 2023: £1.4m). The transformation of the Group in 2023 has resulted in a less capital-intensive business, with total capital expenditure expected to be lower than in previous years, reflecting the franchise model in Estate Agency

·      exceptional costs paid in relation to divisional restructure and transformation programmes of £1.5m (H1 2023: £3.8m)

·      payment of the 2023 final dividend of £7.6m (H1 2023: £7.6m) and the repurchase of shares under the share buyback programme of £0.3m

·      With the prior year losses brought forward, and previous payments on account, there was no corporation tax paid in H1 2024 (H1 2023: £nil)

 

International Accounting Standards (IAS)

The Interim Condensed Consolidated Group Financial Statements for the period ended 30 June 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 H1 2023, this was classified as a discontinued operation and is now presented as such in the Financial Statements. Refer to 6 to the Financial Statements

2          Revenue: £84.5m in H1 2024 with statutory revenue of £85.4m less £0.9m revenue due to acquisitions in 2024, as compared to £66.4m in H1 2023 with statutory revenue of £72.5m less £6.1m 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 5 to the Financial Statements

6          Refer to note 3 and 10 to the Financial Statements

7          Refer to note 14 to the Financial Statements

8          Refer to note 7 to the Financial Statements

9          Mortgage lending excluding product transfers - new mortgage lending by purpose of loan, UK (BOE) - Table MM23 (Jul 2024)

 

Principal Risks and Uncertainties

The principal risks and uncertainties relating to the Group's operations remain consistent with those disclosed on pages 29 to 33 of the Group's Annual Report and Accounts 2023 (which can be accessed on the Group's website: www.lslps.co.uk). Having reconsidered these principal risks and uncertainties, the Board has concluded that these remain the same as those included within the Annual Report and Accounts 2023.

Responsibility statement of the Directors in respect of the half-yearly financial report

We confirm that to the best of our knowledge:

·    The Interim Condensed Consolidated Group Financial Statements for the period ended 30 June 2024 have been prepared in accordance with UK adopted International Accounting Standard 34;

 

·    The interim management report includes a fair review of the information required by:

 

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related-party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related-party transactions described in the last annual report that could do so.

 

By order of the Board

David Stewart                                                                                                    Adam Castleton

Director, Group Chief Executive Officer                                                                 Director, Group Chief Financial Officer

17 September 2024                                                                                         17 September 2024

 

Interim Group Income Statement

for the six months ended 30 June 2024

		Unaudited   Six months ended
		30 June 2024	Restated* 30 June 2023
Continuing operations:	Note	£'000	£'000
Revenue	4	85,394	72,494
Operating expenses:
Employee costs		(50,639)	(51,534)
Depreciation on property, plant and equipment and right-of-use assets		(1,600)	(1,644)
Other operating costs		(18,657)	(15,256)
Other gains		325	264
Share of post-tax loss from joint venture		(377)	(167)
Share-based payments		57	(377)
Amortisation of intangible assets		(1,357)	(941)
Exceptional gains	7	367	9,040
Exceptional costs	7	(482)	(4,317)
Contingent consideration payable		-	1
Group operating profit		13,031	7,563
Finance income		1,434	752
Finance cost		(707)	(884)
Net finance income/(cost)		727	(132)
Profit before tax from continuing operations		13,758	7,431
Taxation charge	9	(3,574)	(2,063)
Profit for the period from continuing operations		10,184	5,368
Discontinued operations
Loss for period from discontinued operations	6	(227)	(42,865)
Profit/(loss) for the period		9,957	(37,497)
Attributable to:
Owners of the parent		9,945	(37,421)
Non-controlling interest		12	(76)
		9,957	(37,497)
Earnings/(loss) per share from total operations (expressed as pence per share):
Basic		9.7	(36.4)
Diluted		9.6	(35.9)
Earnings per share from continuing operations (expressed as pence per share):
Basic		9.9	5.3
Diluted		9.8	5.2

*See note 14 for details regarding the restatement.

Interim Group Statement of Comprehensive Income

for the six months ended 30 June 2024

 

		Unaudited  Six Months Ended
		30 June  2024	Restated* 30 June  2023
		£'000	£'000
Profit/(loss) for the period		9,957	(37,497)
Items that will not be reclassified to profit and loss in subsequent periods:
Revaluation of financial assets not recycled through income statement		-	(116)
Tax on revaluation		-	(1)
		-	(117)
Total comprehensive income/(loss), net of tax		9,957	(37,614)
Attributable to:
Owners of the parent		9,945	(37,538)
Non-controlling interest		12	(76)
		9,957	(37,614)

*See note 14 for details regarding the restatement.

 

Interim Group Balance Sheet

as at 30 June 2024

		Unaudited	Audited
		30 June 2024	31 December 2023
	Note	£'000	£'000
Non-current assets
Goodwill		16,855	16,855
Other intangible assets	10	30,212	21,461
Property, plant and equipment and right-of-use assets		6,305	6,917
Financial assets	11	758	5,407
Deferred tax asset		-	166
Investment in sublease	11	1,106	1,756
Investment in joint venture		8,982	9,359
Contract assets		203	329
Loans to franchisees and appointed representatives	11	873	1,655
Total non-current assets		65,294	63,905
Current assets
Trade and other receivables		27,261	23,206
Financial assets	11	5,276	54
Contract assets		111	40
Investment in sublease	11	773	1,582
Current tax asset		-	2,183
Loans to franchisees and appointed representatives	11	654	444
Cash and cash equivalents	12	71,165	58,110
Total current assets		105,240	85,619
Total assets		170,534	149,524
Current liabilities
Financial liabilities	13	(5,740)	(3,320)
Trade and other payables		(30,947)	(30,485)
Bank overdrafts	12	(38,700)	(23,139)
Current tax liabilities		(102)	-
Provisions for liabilities		(5,759)	(5,903)
Total current liabilities		(81,248)	(62,847)
Non-current liabilities
Financial liabilities	13	(4,439)	(5,085)
Deferred tax liability		(885)	-
Provisions for liabilities		(5,951)	(5,647)
Total non-current liabilities		(11,275)	(10,732)
Total liabilities		(92,523)	(73,579)
Net assets		78,011	75,945
Equity
Share capital		210	210
Share premium account		5,629	5,629
Share-based payment reserve		2,382	3,564
Shares held by employee benefit trust and share incentive plan		(1,885)	(2,871)
Treasury shares		(4,319)	(3,983)
Fair value reserve		(385)	(385)
Retained earnings		76,673	74,087
Equity attributable to the owners of the parent		78,305	76,251
Non-controlling interest		(294)	(306)
Total Equity		78,011	75,945

*See note 14 for details regarding the restatement.

 

Interim Group Statement of Cash Flows

for the six months ended 30 June 2024

 

		Unaudited
		Six Months Ended
	Note	30 June 2024	Restated* 30 June  2023
Profit before tax from continuing operations		13,758	7,431
Loss before tax from discontinued operations		(317)	(41,572)
Profit /(loss) before tax		13,441	(34,141)
Adjustments for:
Exceptional costs	6,7	799	44,422
Exceptional gains	7	(367)	(9,040)
Contingent consideration payable		-	(1)
Depreciation of tangible assets		1,600	2,794
Amortisation of intangible assets		1,357	1,268
Share-based payments		(57)	432
Loss on disposal of property, plant and equipment and right-of-use assets		-	(2)
Loss from joint venture		377	167
Revaluation of investments at fair value through the income statement	11	(325)	180
Decrease in contract assets		55	151
Finance income		(1,434)	(752)
Finance costs		707	994
Operating cash flows before movements in working capital		16,153	6,472
Movements in working capital
(Increase) in trade and other receivables		(3,758)	(7,066)
Increase / (decrease) in trade and other payables		1,655	(6,663)
(Decrease) / increase in provisions		(732)	158
		(2,835)	(13,571)
Cash generated from/(expended in) operations		13,318	(7,099)
Interest paid (leases)		(215)	(244)
Interest received (leases)		61	-
Exceptional costs paid		(1,540)	(3,780)
Net cash generated/(expended) from operating activities		11,624	(11,123)
Cash flows used in investing activities
Interest received		953	-
Disposal of businesses, net of cash disposed		-	26,537
Payment of contingent consideration	13	(65)	(2,280)
Receipt of contingent consideration	11	115	-
Investment in joint venture		-	(4,681)
Proceeds from sale of financial assets		-	206
Franchisees and appointed representatives loans granted	11	(433)	(1,335)
Franchisees and appointed representatives loan repayments	11	909	-
Receipt of lease income		463	116
Purchase of property, plant and equipment and intangible assets		(1,165)	(1,418)
Cash acquired on acquisition of subsidiary	10	503	-
Acquisition of subsidiary	10	(5,695)	-
Net cash (expended)/generated on investing activities		(4,415)	17,145
Cash flows used in financing activities
Repurchase of treasury shares		(336)	-
Proceeds from exercise of share options		-	20
Payment of lease liabilities		(1,733)	(2,250)
Dividends paid		(7,646)	(7,601)
Net cash expended in financing activities		(9,715)	(9,831)
Net decrease in cash and cash equivalents		(2,506)	(3,809)
Cash and cash equivalents at the beginning of the period		34,971	40,109
Cash and cash equivalents at the end of the period	12	32,465	36,300

*See note 14 for details regarding restatements.