Trading Update and New Banking Facility

                                 24 February 2021

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

Update on current trading, new banking facility and revised publication date for 2020 financial results

Current Trading

Following the confirmation of strong financial performance in 2020 as detailed in its announcement on 15 January 2021 LSL has continued to deliver strong financial performance throughout the first seven weeks of 2021, building on the positive trading in 2020.  Each of the three principal trading Divisions reported growth in underlying operating profits in January 2021. Highlights include:

Financial Services:

Mortgage and Protection completions in PRIMIS have strengthened as 2021 has progressed, with particularly strong year on year performance in the early weeks of February.

Following 8% growth during 2020, total financial advisors increased further in January to a total of 2,613 (31 December 2020: 2,585). The pipeline of new advisors also grew during the month of January.

Financial Services Division profit for January was ahead of comparative periods in 2019 and 2020.

Surveying

Surveying Division profit in January was ahead of comparative periods in 2019 and 2020, benefitting from higher income per job and cost restructuring undertaken during H2 2019 and in early 2020.

Estate Agency

Exchange income is very strong as the record year-end pipelines move through to completion. This trend is expected to continue throughout the first quarter. At the end of January, LSL's residential sales exchange pipeline remained over 50% ahead of the prior year. There is currently no indication of a material increase in residential fall-through trends. Whilst instructions have slowed across the market during the latest lockdown, encouragingly, LSL has increased its share of instructions in the areas in which its branches operate.

Estate Agency Division profit in January was ahead of both 2019 and 2020, benefiting from the reshaping of the branch network in February 2019, as well as exchanges from the record pipeline.   

Acquisitions of Direct Life & Pension Services and Mortgage Gym completed

On 11 February, LSL announced the acquisition of a 60% stake in Direct Life Quote Holdings Limited for £1.8m, and the acquisition of the entire business and assets of Mortgage Gym Limited ("Mortgage Gym") for £2.4m, as part of its digital strategy to drive growth in Financial Services. Integration of both businesses is going well with immediate steps taken to leverage the competitive advantage afforded by Mortgage Gym technology to enhance LSL's distribution and productivity through Embrace Financial Services. 

New Revolving Credit Facility

LSL is pleased to announce a new banking facility, which will give the Group long-term balance sheet flexibility to take advantage of a number of attractive opportunities, particularly in financial services. A £90 million committed revolving credit facility, with a maturity date of May 2024, arranged on competitive terms, will replace the previous £100m facility that was due to mature in May 2022.

LSL is highly cash generative, converting over 100% of Group Underlying Operating Profit to cash flow from operations. Net Banking Debt at 31 December 2020 was a historic low of £1.6m (2019: £41.9m). In extending the facility, the Board has taken the opportunity to review the Group's borrowing requirements in light of its strong cash generation, reducing the size of the committed facility and therefore the costs associated with the new facility.

To provide further flexibility to support growth, the facility includes a £30m accordion, to be requested by LSL at any time, subject to bank approval.

The new facility has been provided by Barclays Bank PLC and Santander UK Plc, who are two long-standing banking partners, alongside NatWest Bank plc who we welcome to the banking syndicate. LSL already has a strong and long-standing relationship with NatWest Bank plc through its Financial Services and Surveying Divisions.

Full Year Trading Update 15 January 2021

The Board issued a Full Year Trading Update on 15 January 2021, advising the market of stronger than anticipated trading in December 2020, and a resultant uplift in expected 2020 Group Underlying Operating Profit (after adjustment for Covid-19 related net costs). A full copy of this update can be found at https://www.lslps.co.uk/investor-relations/regulatory-news. Highlights for 2020 include strong Underlying Operating Profit as shown below:

Reflecting the continued growth of its Financial Services businesses, LSL completed £32.6bn of mortgages in 2020, an increase of 3% compared to 2019, representing approximately 9% of the total purchase and remortgage market.  The Group had 2,585 financial advisers at 31 December 2020, an increase of 8% year on year, with a strong pipeline of new advisors.

New Date for FY 2020 Results Announcement in Order to Reinstate Guidance

The outlook for the UK economy remains difficult to predict with confidence, as the country starts to emerge from the latest lockdown and the impact of the extraordinary measures taken by the Government since the initial onset of the Covid-19 virus become clearer. Speculation continues as to whether there will be any significant impact of the ending of the Stamp Duty Land Tax holiday, due to end on 31 March 2021.

In light of this, the Board considers it prudent to observe a longer period of trading prior to reinstating guidance. LSL will release its full year results before the end of April, by which time the Board intends to reinstate guidance and provide a more detailed strategic update, and in particular its plans to capitalise further on its significant opportunities in financial services. A further announcement regarding the date of LSL's 2020 final results will be made in due course.

Notes on LSL

LSL is one of the largest providers of services to mortgage intermediaries and mortgage & protection advice to estate agency customers, completing £32.6bn of mortgages in 2020. It represents approximately 9% of the total purchase and remortgage market with around 2,600 financial advisers. It was named Mortgage Network of the Year by both Moneyfacts and Mortgage Introducer in their 2020 awards, as well as Best Network 300+ ARs by Mortgage Strategy.

e.surv is one of the UK's largest provider of surveying and valuation services, supplying seven out of the ten largest lenders in the UK, employing over 500 operational surveyors, and performing over 500,000 valuation and surveys per annum for key lender clients. It was named Best Surveyor/Valuer at the 2020 Mortgage Strategy awards.

LSL operates a network of 226 owned and 130 franchised estate agency branches, with brands that include Your Move, Reeds Rains and Marsh & Parsons.

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

Notes to update:

1. Group Underlying Operating Profit is before exceptional costs, contingent consideration, amortisation of intangible assets, share-based payments and includes circa £16m of amounts receivable pursuant to the Coronavirus Job Retention Scheme and utilised to pay employee salaries for those placed on furlough.

2. Covid-19 related net costs include property and other asset costs incurred while the lockdown was in place during 2020, and other costs including redundancy, holiday pay accruals and are net of property grants. This treatment was highlighted at the LSL Interim results.

For further information, please contact:

Forward Looking Statement

This announcement contains certain statements that are forward-looking statements. They appear in a number of places throughout this announcement and include statements regarding LSL's intentions, beliefs or current expectations and those of its officers, directors and employees concerning, amongst other things, LSL's results of operations, financial condition, liquidity, prospects, growth, strategies and the business it operates. By their nature, these statements involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this update and, unless otherwise required by applicable law, LSL undertakes no obligation to update or revise these forward-looking statements. Nothing in this update should be construed as a profit forecast. LSL and its Directors accept no liability to third parties in respect of this update save as would arise under English law.

Any forward-looking statements in this announcement speak only at the date of this announcement and LSL undertakes no obligation to update publicly or review any forward-looking statement to reflect new information or events, circumstances or developments after the date of this update.