Interim Results

RNS Number : 4768H

LSL Property Services PLC

04 August 2021

4 August 2021

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

HALF YEAR RESULTS TO 30 JUNE 2021

STRONG H1 PERFORMANCE AND PROGRESS IN IMPLEMENTING STRATEGY. OUTLOOK CONFIRMED AND INTERIM DIVIDEND DECLARED

H1	2021	2020	change
Group Revenue (£m)	166.5	114.9	45%
Group Underlying Operating Profit¹ (£m) (post COVID-19 costs)	27.3	9.7	180%
Group Underlying Operating margin (%) (post COVID-19 costs)	16%	8%	+790bps
Exceptional Gains (£m)	4.3	-	-
Exceptional Costs (£m)	(1.7)	(4.4)	63%
Group operating profit (£m)	26.7	3.6	647%
Profit before tax (£m)	25.5	2.0	1166%
Basic Earnings per share² (pence)	21.8	1.2	1717%
Adjusted Basic Earnings per share² (pence)	20.9	9.4	122%
Net Cash / (Net Bank Debt)³ at 30 June (£m)	17.0	(12.7)	nm
Interim Dividend (pence)	4.0	nil	nm
nm: not meaningful

Notes:

2 Refer to Note 7 of the Financial Statements for the calculation

3 Refer to Note 15 to the Financial Statements for the calculation

HIGHLIGHTS

Record Group H1 Revenue, and Group Underlying Operating Profit with increasing balance sheet strength, enabling further investment to deliver the Group's ambitious growth strategy

· Group Revenue in H1 2021 of £166.5m, 45% higher than 2020 (H1 2020: £114.9m)

· Group Underlying Operating Profit¹ of £27.3m, significantly ahead of 2020 (H1 2020: £9.7m)

· In H1 2020 COVID-19 costs of £2.8m were recognised in Group Underlying Operating Profit. Stated before COVID-19 costs, Group Underlying Operating Profit in H1 2020 was £12.5m

· Profit before tax increased to £25.5m (H1 2020: £2.0m)

· Very strong balance sheet, and the first time LSL has reported a Net Cash position since IPO in 2006, with Net Cash² of £17.0m (30 June 2020: Net Debt £12.7m)

Group Underlying Operating Profit driven by continuing Financial Services growth, supported by increasing market share in Estate Agency and significant increase in Surveying in very strong housing market

· Financial Services Division Underlying Operating Profit¹ of £7.8m, increased by 68% with underlying operating margin rising to 20%. In H1 2020, COVID-19 costs of £0.3m were recognised in the Financial Services Division. Stated before COVID-19 costs, Underlying Operating Profit in H1 2020 was £4.9m and Underlying Operating Profit growth in H1 2021 was 59%

· LSL mortgage completion lending increased to £19.3bn, representing 9% of market³

· Financial adviser numbers increased 13% year-on-year to 30 June 2021. The pipeline of advisers also grew over the significant pipeline brought forward at 31 December 2020

· Surveying and Valuation Services Division Underlying Operating Profit¹ of £11.4m, increased by 179% (H1 2020: £4.1m). In H1 2020, COVID-19 costs of £0.7m were recognised in the Surveying Division. Stated before COVID-19 costs, Underlying Operating Profit in H1 2020 was £4.9m

· Surveying Underlying Operating Margin strengthened considerably to 24.7% (H1 2020: 13.1% post COVID-19 costs), benefiting from operational efficiency and improved income per job

· LSL Estate Agency Division increased its residential market share in its core catchment areas to take full advantage of favourable market conditions.

· Estate Agency Underlying Operating Profit¹ was £12.5m (H1 2020: £2.4m). In H1 2020, COVID-19 costs of £1.7m were recognised in the Estate Agency Division. Stated before COVID-19 costs, Underlying Operating Profit in H1 2020 was £4.1m

Continued progress in executing the Group's growth strategy, supported by strong balance sheet

· On 8 July 2021 and 26 May 2021 LSL announced the sale of investments in non-core businesses to simplify the Group structure. The sales generated £41m of capital to deploy into new opportunities and accelerate the Group's growth strategy, in particular Financial Services

· Announcement on 27 April 2021 of agreement to provide mortgage and protection advice services to The Property Franchise Group's network of over 400 franchisee estate agency offices

· On 23 April 2021, LSL announced the creation of £200m Pivotal Growth joint venture with Pollen Street Capital, to create a "buy-and-build" mortgage broker which is now established and in position to make its first acquisitions

· Announcement on 11 February 2021 of the acquisitions of the business and assets of Mortgage Gym Limited and a 60% stake in Direct Life Quote Holdings Limited ("Direct Life") as part of LSL's digital strategy to drive significant growth in mortgage and protection business

· Investment being made in Mortgage Gym technology and the infrastructure required to deliver the strategic partnership with The Property Franchise Group ("TPFG"). The Board is confident these initiatives will deliver significant value to shareholders over the medium term

· Further senior appointments made to improve management bench strength

July trading in line with the Board's expectations, following the tapering down of the Stamp Duty holiday on 30 June 2021

· In line with the Board's expectations, expected activity in LSL's markets has slowed since the 30 June Stamp Duty deadline, meaning that LSL's Mortgage and Protection completion volumes, Surveying Revenue and instructions, and residential exchange activity have naturally reduced following the record market levels experienced in June

· LSL retains a strong Residential Sales exchange pipeline as at 31 July 2021, at around 20% more than 2020 at the comparable date, and in-line with the large pipeline reported at 31 December 2020. Fall-throughs are at normal levels

The Board is encouraged by the significant steps taken to deliver its Financial Services led growth strategy and by the strong financial performance of its Estate Agency and Surveying divisions. The Board is confident that the Group will deliver a full year 2021 Group Underlying Operating Profit in line with its expectations and declares an interim dividend of 4 pence per share

· At the 2020 Prelims, LSL restarted guidance with an improved growth profile, with Financial Services at the forefront. The Board confirms that LSL is on track to deliver its short and longer-term strategic and financial targets

· Trading in the first half of 2021 was assisted by favourable housing market conditions. However, the Group's increasingly diversified revenue streams, and in particular the significant growth opportunities previously identified and on which management has started to execute, mean the Group is less dependent on housing market activity levels to drive medium term growth

· Following the reinstatement of the dividend policy at the 2020 Prelims, the Board has declared an Interim dividend of 4.0 pence per share (H1 2020: Nil)

Commenting on today's announcement, David Stewart, Group Chief Executive, said:

"LSL performed strongly in the first half of 2021, as we took advantage of favourable market conditions whilst making significant progress in executing our strategy, which places Financial Services at the forefront, as described at the time of publishing our 2020 results.

"The investments we are making in technology and Financial Services will deliver tangible benefits from 2022 and we are confident they will generate substantial value for shareholders in the medium term. The opportunities for new value-add services in Surveying and Valuation Services further underpin our future growth, while we continue to perform well and take market share in Estate Agency.

"Our strategic progress also included the disposal of our non-core investments in LMS (May 2021) and TM Group (July 2021), for a combined £41m, as we focus both management time and capital on activities offering the best long-term return to shareholders. These successful divestments mean we have a very strong balance sheet, including cash resources of around £43m at 31 July 2021, positioning us to make further investments to secure our strategy. We continue to add depth to the management team and have made a number of senior appointments. This will support our strategic delivery and our ability to drive performance improvements from the business.

"The Group's results in the first half position us well for meeting the Board's expectations for 2021, and we look forward to delivering further organic and acquisitive growth in the coming years."

Notes:

1 Group Underlying Operating Profit is before exceptional costs, contingent consideration, amortisation of intangible assets and share-based payments (as set out in Note 6 of the financial statements). Divisional Underlying Operating Profit is stated on the same basis as Group Underlying Operating profit

2 Refer to Note 15 to the Financial Statements for the calculation

3 Market share excludes Product Transfers - 2021 based on May YTD

4 Refer to Note 7 of the Financial Statements for the calculation

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
Buchanan	0207 466 5000 / LSL@buchanan.uk.com

Notes on LSL

LSL is one of the largest providers of services to mortgage intermediaries and mortgage and 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 2,700 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 providers 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 valuations 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 228 owned and 127 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

PRIMIS is the trading style of First Complete Limited, Personal Touch Financial Services Limited and Advance Mortgage Funding Limited which are all authorised and regulated by the Financial Conduct Authority.

Group Chief Executive's Review

I am pleased to report on a period of strong trading and continued progress in strategic execution. Underlying Operating Profit increased by 180% to £27.3m (H1 2020: £9.7m), reflecting strong growth across all divisions. The implementation of the strategy we outlined with our 2020 results is on track, with several important initiatives announced during the first half. We have achieved these results while continuing to focus on protecting the health and wellbeing of our colleagues and customers during the ongoing COVID-19 pandemic.

Financial Services is at the centre of our strategy. PRIMIS's network of financial advisers grew year-on-year by 13% to 2,744 and we have a robust pipeline of applications to join us. This growth contributed to an increase of 68% in the division's Underlying Operating Profit to £7.8m (H1 2020: £4.6m).

The strong performance of Surveying and Valuation Services division is noteworthy. Underlying Operating Profit increased to £11.4m (H1 2020: £4.1m). This is a testament to the work put in to increase surveyor utilisation.

Our Estate Agency colleagues took full advantage of the increase in housing transactions, benefitting from the steps taken to improve our operational effectiveness. Pleasingly, this helped us to increase market share across our core catchment areas. The lettings market was generally softer, although the level of recurring income in this business underpinned Lettings revenue performance, highlighting how Estate Agency is not wholly dependent on transaction volumes. Underlying Operating Profit for the division was £12.5m, an increase of £10.1m from £2.4m in H1 2020.

Financial Services was substantially less affected than Estate Agency and Surveying and Valuation Services by the emergence of the COVID-19 virus in 2020 and although still significant its year-on-year growth was therefore less marked.

We continue to see significant long-term growth potential in Financial Services. We made good progress implementing our plans to take advantage of some of the opportunities identified, including announcing the acquisition of Mortgage Gym technology and the launch of our Pivotal Growth joint venture with Pollen Street Capital. We also secured an important contract with the UK's largest estate agency franchisor, The Property Franchise Group (TPFG), to provide mortgage and protection advice services to its franchisees.

Each of these initiatives is in the investment phase, as we build our capability and infrastructure, and we incurred additional associated costs of around £1.7m in the first half, with further investment planned over the next 12 months. We expect to see the benefits of these investments in 2022 and beyond and are confident they will deliver substantial value to shareholders in the medium-term.

Our strategic progress also included the disposal of our non-core investments in LMS (May 2021) and TM Group (July 2021), for a combined £41m, as we focus both management time and capital on activities offering the best long-term return to shareholders. These businesses contributed £1.4m to our Underlying Operating Profit in 2020. The successful sales mean we have a very strong balance sheet, including cash resources of around £43m at 31 July 2021, positioning us to make further investments to secure our strategy.

At the same time, we have continued to invest in the management team, to support delivery of our strategy, provide long-term bench strength and further improve our operational effectiveness. David Akinluyi has joined us as Group Chief Operating Officer, to drive forward our IT strategy and transformation programme.

Tom Adorian is to join the Group in October to lead our Financial Services Customer Direct operation, including responsibility for our relationship with TPFG. Tom has significant experience in the mortgage and protection market, as well as partnerships, gained over his time at HSBC (UK and Group) and Bank of Ireland UK.

Stuart Whittle will join the Group as CFO of the Financial Services division and brings a wealth of senior-level experience in the sector. Stuart's predecessor, Raj Raichura, will then move to support our Chief Strategy Officer Andy Deeks, with his remit including potential M&A activity.

Dividend

Alongside our 2020 results, we announced our intention to resume dividend payments in 2021 with a policy to pay out 30% of Underlying Operating Profit after finance and normalised tax charges, with an approximate 1:2 ratio between the interim and final dividends. The Board has declared an interim dividend of 4.0 pence per share in line with this policy.

The ex-dividend date for the interim dividend is 12 August 2021, with a record date of 13 August 2021 and a payment date of 17 September 2021. Shareholders can elect to reinvest their cash dividend and purchase existing shares in LSL through a dividend reinvestment plan. The election date is 26 August 2021.

Outlook

July trading was in line with the Board's expectations, following the tapering down of the Stamp Duty holiday on 30 June 2021.

We have previously noted the difficulty in predicting the level of housing market activity and this remains the case for the second half of 2021. Whilst there is a likelihood of a reduction in activity in H2 below the recent record peaks, performance in the first half was slightly ahead of our expectations, and t he Board is encouraged by the strategic progress and financial performance of the Group's businesses and is confident that the Group will deliver a full year 2021 Group Underlying Operating Profit in line with its expectations. The unusual market conditions in H1 mean that the split of H1:H2 Underlying Operating Profit in 2021 is expected to be substantially more H1 weighted than in previous years. We would expect to revert to a more typical split in 2022.

Looking ahead

Given the level of activity so far this year, housing market transactions in 2022 are expected to be below 2021. Growth in profits in 2022 will therefore need to come from further underlying performance improvement. The trajectory in Financial Services and the opportunities we have identified in Surveying and Valuation Services will continue to offer opportunities for growth in 2022 and beyond and we remain confident that our plans remain on track.

David Stewart
Group Chief Executive Officer
3 August 2021

Notes:

1 Intermediary Mortgage Lenders Association's ("IMLA) current estimate of gross new lending for 2021 - January 2021

Business Reviews

Group Summary

Group Financials Summary	H1
Group Financials Summary	2021	2020	Var
P&L (£m)
Revenue	166.5	114.9	45%
Group Underlying Operating Profit¹ (post COVID-19 costs)	27.3	9.7	180%
Group Underlying Operating margin (post COVID-19 costs)	16%	8%	790bps
Group Underlying Operating Profit¹ (pre COVID-19 costs)	27.3	12.5	117%
Group Underlying Operating margin (pre COVID-19 costs)	16%	11%	550bps

Divisional Underlying Operating Profit¹ (post COVID-19 costs)
Financial Services	7.8	4.6	68%
Surveying and Valuation Services	11.4	4.1	179%
Estate Agency	12.5	2.4	422%
Unallocated Central Costs	(4.5)	(1.4)	(215)%
Group Underlying Operating Profit¹ (post COVID-19 costs)	27.3	9.7	180%

Divisional Underlying Operating Profit¹ (pre COVID-19 costs)
Financial Services	7.8	4.9	59%
Surveying and Valuation Services	11.4	4.9	135%
Estate Agency	12.5	4.1	202%
Unallocated Central Costs	(4.5)	(1.4)	(224)%
Group Underlying Operating Profit¹ (pre COVID-19 costs)	27.3	12.5	117%

Notes:

1 Group Underlying Operating Profit is before exceptional costs, contingent consideration, amortisation of intangible assets and share-based payments (as set out in Note 6 of the Financial Statements). Divisional Underlying Operating Profit is stated on the same basis as Group Underlying Operating profit. Group Underlying Operating Profit for 2020 is shown pre COVID-19 costs

LSL traded well in favourable markets, with Group Revenue in H1 2021 of £166.5m, 45% higher than 2020 (H1 2020: £114.9m). Group Underlying Operating Profit of £27.3m was significantly greater than 2020 (H1 2020: £9.7m; £12.5m excluding £2.8m of COVID-19 costs). Group Underlying Operating margin of 16.4% was strong and grew materially in each Division. Profit before tax increased significantly to £25.5m (H1 2020: £2.0m).

LSL's profit turns into cash at a high rate, with cash conversion of profit to underlying operating cash-flow¹ of 100% in H1. The Group finished the first half with a very strong balance sheet, reporting Net Cash for the first time of £17.0m (30 June 2020: Net Debt £12.7m).

Each of LSL's Operating Divisions reported an Underlying Operating Profit materially higher than the comparable period in 2020. Whilst the Surveying and Valuation Services and Estate Agency Divisions' performances are strongly linked to the favourable housing market, the increase in the Financial Services Division's Underlying Operating Profit of 68% highlights the consistent growth in financial adviser numbers in recent years, the Group's focus on Financial Services and updated commercial arrangements between Embrace Financial Services ("EFS"), First2Protect and the Estate Agency Division as set out later. Unallocated Central Costs increased, as the Group invested in key strategic management hires and other project costs to support the development of the new strategy.

Notes:

1 Underlying operating cash-flow is after adjusting for the payment In H1 2021 of deferred HMRC payments from 2020, and as converted from Group Underlying Operating Profit

Financial Services Division

Financial Services: Financials Summary	H1
Financial Services: Financials Summary	2021	2020	Var
P&L (£m)
Total revenue	39.1	28.1	39%
Underlying Operating Profit¹ (post COVID-19 costs)	7.8	4.6	68%
Underlying Operating margin (post COVID-19 costs)	20%	17%	350bps
Underlying Operating Profit¹ (pre COVID-19 costs)	7.8	4.9	59%
Underlying Operating margin (pre COVID-19 costs)	20%	18%	250bps

KPIs
LSL Mortgage Completion Lending² (£bn)	19.3	14.6	32%
LSL Market Share³	9%	9%	-
Annualised Premium Income (API) (£m)	32.5	25.6	27%
Total advisers	2,744	2,431	13%
Number of AR firms	952	896	6%
FCA capital requirement⁴	5.0	5.2	(4)%
Excess capital⁴	14.6	10.6	38%
Lapse provision	5.0	4.8	3%

Notes:

1 Underlying Operating Profit is stated on the same basis as Group Underlying Operating profit (as set out in Note 6 of the Financial Statements)

2 LSL mortgage completions lending quoted includes product transfers

3 Market share excludes Product Transfers - 2021 based on May YTD

4 2021 Q1 FCA capital requirement and excess capital

Performance Summary

The Financial Services Division traded well in favourable markets, with Revenue in H1 2021 of £39.1m, 39% higher than H1 2020 (H1 2020: £28.1m). Q1 Revenue was up 18% year on year, whilst Q2 was up 69% against the COVID-19 impacted comparable period in 2020. Underlying Operating Profit of £7.8m was 68% more than 2020 (H1 2020: £4.6m), with an improved Underlying Operating Margin of 20%, which includes the impact of commercial terms in 2021 with the Estate Agency Division which have been set in line with market norms, as set out later in this section.

In H1 2020, COVID-19 costs of £0.3m were recognised in the Financial Services Division. Stated before COVID-19 costs, Underlying Operating Profit in H1 2020 was £4.9m and Underlying Operating Profit growth in H1 2021 was 59%.

LSL is a leading player in the provision of mortgage brokerage. LSL's total gross purchase and remortgage completions increased by 41% to £13.7bn (H1 2020: £9.7bn), giving LSL approximately 9% of the total purchase and remortgage market. These figures do not include the increasingly important activity of advising customers switching mortgage schemes with their existing lender (product transfers). LSL's product transfers increased by 14% to £5.5bn (H1 2020: £4.9bn). LSL's total gross mortgage completions (including product transfers) increased by 32% to £19.3bn (H1 2020: £14.6bn).

The mix of mortgage applications between purchase and refinance (including both remortgages and product transfers), has continued to move towards more typical levels during H1 2021. LSL cases were heavily skewed to refinance during H1 2020, at c.60%, with a more normal 50/50 split for most of H2 2020. The proportion of LSL mortgage refinance applications in H1 2021 has reduced even further to around 44%, as the market has been focused on new purchase applications as a result of the market activity levels.

LSL's total Direct-to-Consumer revenue grew by 30%. In the Estate Agency channel, Revenue grew 37%, benefiting from generally buoyant market conditions in H1 2021, the phased return of EFS advisers to the estate agency branches following social distancing requirements and the updated commercial arrangement with Estate Agency division. Investments in MortgageGym and Direct Life are also now included in the results following acquisition in H1 2021. Revenue in the New Build Home channel increased by 12% year-on-year, recovering more slowly, as builders returned to sites and the mortgage market went through a period of considerable change, with the conclusion of the previous Help-to-Buy scheme and its replacement with new initiatives to support purchasers with smaller deposits.

LSL is a leading player in the provision of general and protection insurance, generating an increase of 27% of annualised premiums to £32.5m in H1 2021 (H1 2020: £25.6m).

The Division's revenue mix by product highlights the significance of LSL's insurance business and its success in arranging protection products, both on a standalone basis as well as when needed at the time of a mortgage being arranged.

The split of revenue by type is as follows:

Total Group Financial Services Revenue Mix by Type (%) - H1
	2021	2020
Mortgage Fees	39%	41%
Life & General Insurance fees	46%	46%
Other fees	15%	13%
Total Revenue	100%	100%

Strategic and operational developments to support growth

The importance of Financial Services to the Group continues to increase, reflecting the Board's strategy to develop broader and less volatile income streams in sectors in which it has significant experience. The Financial Services Division has enhanced its profit consistently over recent years, demonstrating resilience and the capacity to grow across a wide range of market conditions.

During the first half, several significant strategic developments were announced, and LSL further increased its investment in technology and business development. The Financial Services Division will be strengthened with key senior hires to join in H2, to support the Group's significant growth ambitions.

During H1 2021, a strategic partnership was announced with TPFG, to provide mortgage and insurance advice to the customers of TPFG and their franchisees. Franchisees can choose to refer customers to EFS, LSL's in-house mortgage advice team or become an Appointed Representative (AR) of PRIMIS and take on their own adviser. Since launch, LSL has been working with TPFG to engage with each franchisee and determine the best solution for each business. The first mortgage leads were received at the end of June, in line with plan.

The acquisition of 60% of Direct Life completed in H1 2021. The integration of this business post acquisition has been effective, and the Direct Life proposition will be promoted to PRIMIS and TMA firms during H2.

The technology assets of Mortgage Gym were acquired in H1 2021, and work is underway to develop further and deploy this software to LSL's direct distribution, both in the New Homes mortgage channel and in EFS.

PRIMIS has continued to invest in the Toolbox platform during H1, to deliver benefits to advisers and create further efficiencies and in training, support and coaching for advisers. High levels of engagement are a key feature of the PRIMIS culture, and this continued throughout lockdown and the COVID-19 restrictions. A new, updated Training & Competence scheme was launched in H1, to help ensure that advisers are fully able to provide the most appropriate advice to customers.

As part of LSL's focus on the growth of Financial Services, the management of LSL's Home Insurance brokerage business, First2Protect, transferred into the Financial Services Division on 1 January 2021. We expect this to increase the Home Insurance cross-sale opportunities for Group customers and to leverage the size of the PRIMIS/TMA distribution by increasing referrals to First2Protect.

A full strategic and operational review of EFS took place in H1, which led to the strengthening of the management team, identification of further technology enhancements and planned improvement of the customer journey for specific customer segments. These new processes will be embedded during H2 alongside further technology enhancements and are expected to deliver an improvement in EFS adviser productivity and profitability in future years.

Focus on network growth

LSL continued to be successful in attracting new appointed representative firms to its PRIMIS network. In the year to 30 June 2021, the number of appointed representative firms increased by 6% to 952, and the number of advisers by 13% to 2,744. The pipeline of advisers has also increased further over the significant pipeline at 31 December 2021. Further recruitment of new firms and advisers is expected to support ongoing profitable growth for PRIMIS.

The launch of Pivotal Growth and the further expansion of the Group's mortgage and protection advice service to estate agency customers provide additional opportunities for growth in the number of PRIMIS advisers, underpinning the Group's leading position in this sector.

Intra Group commercial terms

Total Financial Services Revenue reported by the Group in H1 2021 was £42.3m, with £39.1m being reported in the Financial Services Division and £3.2m in the Estate Agency Division. The latter represents a variable commission payment from Embrace Financial Services Ltd (EFS), a subsidiary within LSL's Financial Services Division, reflecting the Estate Agency Division's role in introducing customers to Embrace advisers. LSL accounts for its revenue in its Intermediary Network on a net revenue basis, which reflects the commission retained by PRIMIS.

As communicated at the 2020 Preliminary Results, the arrangements between the Estate Agency Division and Embrace have been reviewed to align them more closely with market rates, based on an arm's length relationship. This has resulted in lower payments from Embrace to Estate Agency, and a move in profits from the Estate Agency Division to the Financial Services Division. Around £1m of profit in H1 2021 has been recognised in the Financial Services Division, which would have been recognised in the Estate Agency Division under the previous commercial arrangement. A review of commercial terms will be made at the end of each financial year, to ensure terms reflect market norms. Not including the benefit of the new commercials, Underlying Operating Profit increased by c.48%.

Surveying and Valuation Services Division

Surveying and Valuation Services: Financials Summary	H1
Surveying and Valuation Services: Financials Summary	2021	2020	Var
P&L (£m)
Total revenue	46.2	31.1	48%
Underlying Operating Profit ¹ (post COVID-19 costs)	11.4	4.1	179%
Underlying Operating margin (post COVID-19 costs)	25%	13%	1160bps
Underlying Operating Profit ¹ (pre COVID-19 costs)	11.4	4.9	135%
Underlying Operating margin (pre COVID-19 costs)	25%	16%	910bps

KPIs
Jobs performed (000's)	267	197	36%
Revenue from Private Surveys (£m)	1.1	0.5	130%
Income per job (£)	173	158	9%
Operational Surveyors Employed (FTE²)	497	507	(2)%
Balance Sheet (£m)
PI Costs Provision	(5.5)	(7.6)	28%

Notes:

1 Underlying Operating Profit is stated on the same basis as Group Underlying Operating profit (as set out in Note 6 of the Financial Statements)

2 Full Time Equivalent (FTE)

Financial summary

The Surveying and Valuation Services Division's strong performance in H1 2021 was built on a core capability to deliver high-quality, large volume valuation and survey work to the UK's leading banks, building societies and specialist lenders. In H1 2021, LSL estimates that it increased its market share while maintaining operational resilience and providing high-quality of service in a very busy market.

Surveying and Valuation Services Division Revenue in H1 2021 of £46.2m was 48% higher than H1 2020 (H1 2020: £31.1m). Q1 Revenue was up 5% year on year, whilst Q2 increased 132% against the same period in 2020, which was significantly impacted by COVID-19. Underlying Operating Profit of £11.4m was 179% more than 2020 (H1 2020: £4.1m). In H1 2020, COVID-19 costs of £0.7m were recognised in the Surveying and Valuation Services Division. Stated before COVID-19 costs, Underlying Operating Profit in H1 2020 was £4.9m.

The Surveying and Valuation Services Division's underlying operating margin of 25% was strong, benefiting from improved utilisation, higher income per job and cost restructuring undertaken in Q1 2020.

Income per job in H1 2021 increased to £173 (H1 2020: £158), reflecting an improved lender mix and a slightly lower proportion of remote valuations in H1 2021 of 20%, compared to the COVID-19 impacted period in 2020 during which remote valuations made up 22% of the total. Remote valuations take less surveyor time to complete than physical valuations, bringing capacity advantages to mitigate the lower income per job.

During H1 2021, just over 71% of the Surveying and Valuation Services Division's revenues derived from its top five customers. This is broadly consistent with the concentration of mortgage lending in the UK, where it is estimated that the six largest lenders collectively account for around 70% of the market. The total number of jobs performed during the period was 267k, which was 36% greater than H1 2020.

At 30 June 2021, the total provision for professional indemnity (PI) costs was £5.5m (31 December 2020: £7.0m). In H1 2021, the Group continued to make positive progress in addressing historic PI claims and there was a net £1.1m exceptional gain in the period.

Strategic and operational developments to support growth

The recruitment, development and retention of surveyors remains a high priority. In a competitive recruitment market, the number of operational surveyors employed (FTE) at 30 June 2021 remained broadly flat at 497 (30 June 2020: 507). The Division is continuing to focus on its recognised and successful graduate programme, to alleviate the impact of capacity constraints in the market. In addition, the business continues to recognise other industry bodies to increase the pool of surveyors, supporting trainees with its established mentoring programme.

The Surveying and Valuation Services Division plans to continue to supplement its contractually secured valuation work over the next two years with the introduction of margin-enhancing specialist services, including the opportunity to commercialise valuable data gathered as part of the valuation process. The response from lenders has been encouraging.

Estate Agency Division

Estate Agency: Financials Summary	H1
Estate Agency: Financials Summary	2021	2020	vs 2020
P&L (£m)
Residential Sales Exchange Income	40.4	18.6	117%
Lettings Income	30.1	27.4	9%
Financial Services Income	3.2	4.5	(29)%
Franchise income	1.4	0.7	93%
Conveyancing & Other¹	4.4	2.5	79%
Asset Management	1.7	2.0	(15)%
Total revenue	81.2	55.7	46%
Underlying Operating Profit ² (post COVID-19 costs)	12.5	2.4	422%
Underlying Operating margin (post COVID-19 costs)	15%	4%	1110bps
Underlying Operating Profit ² (pre COVID-19 costs)	12.5	4.1	202%
Underlying Operating margin (pre COVID-19 costs)	15%	7%	800bps

KPIs
Exchange units	10,158	4,985	104%
Managed Properties	24,474	24,815	(1)%
Average Residential Sales Exchange Fee per unit (£)	3,980	3,730	7%

Notes:

1 'Other income' includes conveyancing services, EPCs, Home Reports, utilities and other products and services to clients of the branch network.

2 Underlying Operating Profit is stated on the same basis as Group Underlying Operating profit (as set out in Note 6 of the Financial Statements)

Financial summary

Total Estate Agency Division revenue in H1 was £81.2m, 46% higher than the COVID-19 impacted H1 2020. The strong sales pipelines coming into 2021 and favourable market conditions contributed to the strong residential sales exchange income performance in H1 2021. H1 2021 Underlying Operating Profit of £12.5m was very significantly higher than H1 2020 (H1 2020: £2.4m), benefiting from good trading in favourable markets, with market share gains achieved by LSL.

In H1 2020, COVID-19 costs of £1.7m were recognised in the Estate Agency Division. Stated before COVID-19 costs, Underlying Operating Profit in H1 2020 was £4.1m with Underlying Operating Profit growth in H1 2021 of 202%.

Strategic and operational developments to support growth

The LSL brands have invested in additional marketing and in lead management systems to capture new instructions more effectively and take advantage of the more favourable market. In H1 2021 the Division grew market share versus 2020 in the catchments in which we compete. LSL has also expanded the Homefast Property Services conveyancing proposition to franchisees.

H1 market

Residential sales exchanges started strongly in Q1 2021, as very strong pipelines converted. The number of new sales instructions coming to market at the start of the year was below 2020, when the market was buoyed by greater buyer confidence post the Brexit deal being agreed and before the impact of the pandemic at the end of Q1 2020. However, the announcement on 3 March 2021 of the Stamp Duty holiday extension, combined with improved availability of higher LTV mortgages, gave the market a boost. The number of instructions coming to market then slowed in the latter part of H1.

It is common in a fast-moving sales market for available stock to be constrained, and this was the case in H1. From March to June, properties sold quickly, and June, LSL saw record activity across its estate agency brands.

The substantial increase in the number of house sales over the last 12 months gave rise to sizeable pressures throughout the housing chain, notably a market-wide shortage in conveyancing capacity. This resulted in the average time taken to exchange and complete on agreed sales being higher than previous years during H2 2020 and generally throughout H1 2021, with a notable increase in pipeline conversion in June 2021, ahead of the tapering of Stamp Duty relief on 30 June 2021.

The lettings market exhibited differences between London and the rest of the UK. In London, the market has suffered from a lack of demand from overseas tenants (students and workers) and an increase in supply, as short-term lets entered the long-term rental market due to the decline in tourism, impacting the average value of each rental transaction.

Residential Sales

Residential Sales exchange income increased by 117% to £40.4m (H1 2020: £18.6m). The number of exchange units increased by 104% on the prior year. This is ahead of the overall market trend on a national level, reflecting the increase in market share in the locations traded by LSL.

Residential Sales exchange income was up by 66% in Q1 2021, with high exchange volumes in the lead up to the anticipated Stamp Duty holiday ending in March. The subsequent Stamp Duty extension, combined with a low base in 2020, saw Q2 2021 up 198% against Q2 2020.

Notwithstanding the high level of exchanges in June, the Residential Sales pipeline at 30 June 2021 is 41% up compared to the same date in 2020. There has been no evidence of any material increase in Residential Sales fall-through trends due to transactions not completing before the Stamp Duty deadline.

Average residential sales exchange fees per unit increased by 7% to £3,980 (H1 2020: £3,730), reflecting house price increases, and sales skewed to higher value properties towards the end of the higher Stamp Duty tapering at 30 June 2021.

Lettings

Total Lettings income of £30.1m increased by 9% over 2020 which was affected in Q2 by the severity of the first national lockdown and social distancing restrictions. The total number of managed properties at 30 June 2021 was 24,474, maintained broadly in line with the same date in 2020.

Financial Services Income

The Estate Agency Division receives an arm's length variable commission payment from EFS and First2Protect, subsidiaries within LSL's Financial Services Division, reflecting its role in introducing customers to EFS and First2Protect advisers. Financial Services income of £3.2m was down compared to 2020 (H1 2020: £4.5m), reflecting a review of the commercial arrangements, to align them more closely with market rates, based on an arm's length relationship and objective market data.

Around £1m of profit in H1 2021 has been recognised in the Financial Services Division, which would have been recognised in the Estate Agency Division under the previous commercial arrangement. We will review commercial terms annually at the end of each financial year to ensure terms reflect market norms.

Franchise income

Franchise income of £1.4m was 93% higher than 2020. This reflects LSL's share of increased franchisee revenues, which benefited from the more favourable market activity in H1 2021.

Conveyancing and other income

Conveyancing and other income of £3.2m was 48% more than the comparable period in 2020, with the increased residential exchange activity resulting in more demand for conveyancing services.

Asset Management

Asset Management revenues of £1.7m reduced by 15% compared to 2020, as lenders exercised forbearance to protect customers whose personal and financial situation was impacted by COVID-19. This was reinforced strongly in the FCA's COVID-19 guidance, in effect since 19 March 2020, that lenders should not enforce repossessions before 1 April 2021, except in exceptional circumstances.

Marsh & Parsons

H1 2021 Total revenue of £17.7m increased by 46% compared to the same period last year (H1 2020 £12.1m) and H1 2021 Underlying Operating Profit increasing significantly compared to the same period last year.

Branch numbers

LSL owns one of the largest combined estate agencies in the UK. It operates a network of 228 owned and 127 franchised estate agency branches, with brands that include Your Move, Reeds Rains and Marsh & Parsons. The total number of Estate Agency branches reduced by one in H1 2021, following two new office openings in Marsh & Parsons, and the closure of three franchise branches in the Your Move and LSLi estates to address less-productive branches.

Breakdown of LSL's Estate Agency branches as at 30 June 2021 and 31 December 2020:

	Owned	Franchise	Total: 30 June 2021	Total: 31 Dec 2020
Your Move	89	77	166	168
Reeds Rains	56	49	105	105
Sub total	145	128	273	273
LSLi	51	1	52	53
Marsh & Parsons	32	0	32	30
Total	228	127	355	356

Financial Review

Income Statement

Group Operating Profit

On a statutory basis, Group operating profit increased 647% to £26.7m (H1 2020: £3.6m).

Group Underlying Operating Profit¹

Group Underlying Operating Profit of £27.3m was 181% above 2020 (£9.7m). In H1 2020, COVID-19 costs of £2.8m were recognised in Group Underlying Operating Profit. Stated before these COVID-19 costs, Group Underlying Operating Profit in H1 2020 was £12.5m. The Group has not claimed any Coronavirus Job Retention Scheme Funds in 2021.

Other operating income

Other operating income, relating to rental income, was £0.5m (H1 2020: £0.3m).

Gain on sale of property, plant, and equipment

A gain on sale of £0.3m (H1 2020: £0.02m) resulted from the disposal of two commercial properties, for consideration of £0.4m.

Income from joint ventures and associates

Income from joint ventures and associates was £0.9m, an improved performance compared to H1 2020 (H1 2020: loss £0.2m), as a result of stronger performances by LMS and TM Group in favourable markets, and LSL's share of losses in the Mortgage Gym associate in H1 2020.

Share-based payments

The share-based payment charge of £0.5m (H1 2020: £0.7m credit, as a result of scheme lapses) consists of a charge in the period of £0.8m, offset by the lapse of the 2017 SAYE scheme and adjustments for leavers and options exercised in the period.

Amortisation of intangible assets

The amortisation charge for H1 2021 was £2.7m (H1 2020: £2.9m). The year-on-year decrease was the result, of lettings books, reaching full amortisation during 2020.

Exceptional items

The exceptional gain of £4.3m (H1 2020: £nil) relates to the gain on disposal of the Group's joint venture holding in LMS of £3.2m and a release in the PI Costs provision of £1.1m.

The exceptional cost of £1.65m (H1 2020: £4.4m) relates to a Shareholder circular published on 5 July 2021 and general meeting held on 22 July 2021 (£0.9m) and restructuring costs in EFS (£0.7m).

Contingent consideration

The charge to the income statement in H1 2021 of £0.04m (H1 2020: credit £0.5m), mainly relates to reassessment of the contingent consideration liability for RSC, due to be paid in 2023.

Net financial costs

Net financial costs amounted to £1.3m (H1 2020: £1.6m) and related principally to unwinding of the IFRS 16 lease liability of £0.7m (H1 2020: £0.8m) and interest and fees on the RCF of £0.5m (H1 2020: £0.6m)

Profit before tax

Profit before tax increased to £25.5m (H1 2020: £2.0m). This increase was largely driven by the increase in Group Operating Profit and gain on the sale of the investment in the LMS joint venture.

Taxation

The tax charge of £2.9m (H1 2020: £0.8m credit) gives an effective tax rate of 11.5%, lower than the headline UK tax rate of 19%, mainly due to profits on the sale of joint venture investments not being subject to corporation tax. Deferred tax assets and liabilities are revalued to 25% (H1 2020: 19%), the tax rate effective from 1 April 2023.

Basic and Adjusted Basic Earnings Per Share²

The Basic Earnings Per Share was 21.8 pence (H1 2020: 1.2 pence). The Adjusted Basic Earnings Per Share was 20.9 pence (H1 2020: 9.4 pence), an increase of 122%.

Balance sheet

Goodwill

The carrying value of goodwill is £160.9m (31 December 2020: £159.9m), with £1.0m added due to the acquisition of Direct Life. No indicators of impairment have been identified at 30 June 2021.

Mortgage Gym

In February 2021, the Group acquired the trade and assets of Mortgage Gym Limited, a former associate of the Group, for £2.4m. The loan notes valued at £2.24m at 31 December 2020 were offset against the consideration for the purchase from the administrators, reducing the balance of these loan notes to nil.

Financial assets

LSL holds financial assets of £7.7m (31 December 2020: £9.6m) comprising investment in equity instruments. The decrease in the year was substantially due to the impact of the settlement of secured loan notes, as consideration for the purchase of the trade and assets of Mortgage Gym Limited.

LSL holds a small number of investments in unlisted companies. The largest investment is an 8.8% shareholding in Yopa Property Limited, a UK-based online hybrid estate agent. The carrying value of this investment has been assessed, including a review of its latest financial performance, which is positive, with the valuation remaining unchanged from 31 December 2020 at £6.5m.

Joint ventures

The Group had two joint ventures at 30 June 2021: 32.3% (31 December 2020: 33.3%) interest in TM Group, whose principal activity is to provide property searches, and a 47.8% (31 December 2020: Nil) interest in Pivotal Growth which is equity accounted and is held on the balance sheet at £0.3m at 30 June 2021, representing initial equity investment less LSL's share of costs for the period.

In July 2021, the Group disposed of its entire holding in TM Group for proceeds of £29.3m. At 30 June 2021, the equity accounted carrying value of TM Group of £3.0m has been classified as held for sale.

Deferred and contingent consideration

At 30 June 2021, LSL reports £Nil (31 December 2020: £0.1m) deferred consideration and £5.8m (31 December 2020: £5.4m) of contingent consideration. The contingent consideration relates primarily to the cost of acquiring the remaining shares in Group First (£1.5m for the remaining 5%) and RSC (£3.8m for the remaining 40%, with an increase reflecting an update to RSC forecasts), with additions in the period due to the acquisition of Direct Life (£0.6m).

Professional indemnity (PI) claim provision

At 30 June 2021, the total provision for historic PI Costs was £5.5m (31 December 2020: £7.0m). In 2021, the Group continued to make progress in addressing historic claims with a £1.1m exceptional release in the period.

Regulatory Capital

LSL has a regulatory capital requirement amounting to 2.5% of regulated financial services revenue. At 31 March 2021, this regulatory capital requirement was £5.0m (31 March 2020: £5.2m). LSL held a surplus of £14.6m over this requirement (31 March 2020: £10.6m).

Statement of Cash-flows

The Group generated cash from operations of £20.3m (H1 2020: £39.1m) After adjusting for payments made in H1 2021 for tax payment deferrals agreed with HMRC relating to 2020, the cash-flow conversion rate³ in H1 2021 was 100% (H1 2020: 50%). Before this adjustment, the cash-flow conversion rate was 68%.

International Financial Reporting Standards (IFRS)

The Interim Condensed Consolidated Group Financial Statements for the period ended 30 June 2021 have been prepared in accordance with UK-adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the UK's Financial Conduct Authority.

1 Group Underlying Operating Profit is before exceptional costs, contingent consideration, amortisation of intangible assets and share-based payments (as set out in Note 6 of the financial statements

2 Refer to Note 7 of the Financial Statements for the calculation

3 Cash-flow conversion defined as cash-flow from operations (pre PI and exceptionals) divided by Group Underlying Operating Profit

Principal Risks and Uncertainties

The principal risks and uncertainties relating to the Group's operations remain consistent with those disclosed on pages 37 to 41 of the Group's Annual Report and Accounts 2020. The Annual Report and Accounts 2020 can be accessed on the Group's website: www.lslps.co.uk. Having reconsidered these principal risks and uncertainties which are summarised below, the Board has concluded that the principal risks and uncertainties of the Group remain the same as those included within the Annual Report and Accounts 2020.

· COVID-19 virus

· UK housing market and mortgage lending

· Market disruption

· Execution of growth strategy

· Professional services

· Client contracts

· Business infrastructure (including technology)

· Information security (including data protection)

· Regulatory and compliance

· Environmental, social and governance (ESG)

· Employee resources and talent

Forward-Looking Statements

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

Definitions

Definitions for words and expressions referred to and included in this statement which are not expressly defined within, can be found in LSL's Annual Report and Accounts 2020 (a copy of which is available on LSL's website at: www.lslps.co.uk). All references to 'note(s)' in this statement are, unless expressly stated otherwise, references to the 'Notes to the Interim Condensed Group Financial Statements' included in this statement.

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 2021 have been prepared in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the UK's Financial Conduct Authority;

· 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

3 August 2021 3 August 2021

Interim Group Income Statement

for the six months ended 30 June 2021

		Unaudited Six Months Ended		Audited Year Ended
		30 June 2021	30 June 2020	31 December 2020
Continuing Operations	Note	£'000	£'000	£'000

Revenue	4,5	166,456	114,921	266,742

Operating expenses:
Employee and subcontractor costs		(100,493)	(71,113)	(162,455)
Establishment costs		(4,684)	(4,036)	(9,528)
Depreciation on property, plant and equipment		(6,303)	(7,184)	(13,929)
Other operating costs		(29,418)	(22,929)	(46,938)
		(140,898)	(105,262)	(232,850)

Other operating income		496	274	783
Gain on sale of property, plant and equipment		280	16	15
Income / (loss) from joint ventures and associates		934	(224)	493
Share-based payments		(454)	673	(18)
Amortisation of intangible assets		(2,677)	(2,899)	(5,395)
Exceptional gains	8	4,311	-	674
Exceptional costs	8	(1,656)	(4,422)	(7,076)
Contingent consideration		(44)	504	544
Group operating profit		26,748	3,581	23,912

Finance income		-	9	144
Finance costs		(1,286)	(1,579)	(3,134)
Net finance costs		(1,286)	(1,570)	(2,990)

Profit before tax		25,462	2,011	20,922

Taxation charge	10	(2,917)	(764)	(4,596)

Profit for the period/year		22,545	1,247	16,326
Attributable to:
Owners of the parent		22,566	1,247	16,326
Non-controlling interest		(21)	-	-

Earnings per share expressed in pence per share:
Basic	7	21.8	1.2	15.9
Diluted	7	21.4	1.2	15.7

Interim Group Statement of Comprehensive Income

for the six months ended 30 June 2021

		Unaudited Six Months Ended		Audited Year Ended
		30 June 2021	30 June 2020	31 December 2020
		£'000	£'000	£'000

Profit for the period		22,545	1,247	16,326
Items not to be reclassified to profit and loss in subsequent periods:
Revaluation of financial assets not recycled through income statement	11	443	-	-
Income tax effect		(119)	-	-
Net other comprehensive income		324	-	-

Total comprehensive income, net of tax		22,869	1,247	16,326

Interim Group Balance Sheet

as at 30 June 2021

		Unaudited Six Months Ended		Audited Year Ended
		30 June 2021	30 June 2020	31 December 2020
	Note	£'000	£'000	£'000

Non-current assets
Goodwill	3	160,865	159,863	159,863
Other intangible assets		29,908	28,584	27,894
Property, plant and equipment		40,551	44,944	42,741
Financial assets	11	7,737	9,324	9,561
Investments in joint ventures and associates	16	268	12,521	11,406
Contract assets		836	559	433
Total non-current assets		240,165	255,795	251,898

Current assets
Trade and other receivables		38,449	30,024	28,438
Contract assets		424	253	253
Current tax asset		1,673	-	184
Cash and cash equivalents		17,039	19,263	11,443
Total current assets		57,585	49,540	40,318
Non current assets held for sale	16	3,016	-	-
Total assets		300,766	305,335	292,216

Current liabilities
Financial liabilities	13	(11,083)	(13,699)	(12,466)
Trade and other payables		(73,918)	(79,705)	(72,936)
Current tax liabilities		-	(1,097)	-
Provisions for liabilities	14	(2,908)	(2,721)	(2,998)
Total current liabilities		(87,909)	(97,222)	(88,400)

Non-current liabilities
Financial liabilities	13	(25,678)	(59,147)	(40,060)
Deferred tax liability		(1,916)	(1,834)	(1,822)
Provisions for liabilities	14	(2,694)	(5,195)	(4,180)
Total non-current liabilities		(30,288)	(66,176)	(46,062)
Total Liabilities		(118,197)	(163,398)	(134,462)

Net assets		182,569	141,937	157,754

Equity
Share capital		210	208	210
Share premium account		5,629	5,629	5,629
Share-based payment reserve		4,483	3,369	3,942
Shares held by EBT		(4,165)	(5,021)	(5,012)
Fair value reserve		(13,260)	(13,584)	(13,584)
Retained earnings		189,135	151,336	166,569
Equity attributable to the owners of the parent		182,032	141,937	157,754
Non-controlling interest		537	-	-
Total Equity		182,569	141,937	157,754

Interim Group Cash Flow Statement

for the six months ended 30 June 2021

		Unaudited Six Months Ended		Audited Year Ended
		30 June 2021	30 June 2020	31 December 2020
	Note	£'000	£'000	£'000
Profit before tax		25,462	2,011	20,922
Adjustments for:
Exceptional operating items and contingent consideration		(2,612)	3,918	5,857
Depreciation of tangible assets		6,303	7,184	13,929
Amortisation of intangible assets		2,677	2,899	5,395
Share-based payments		454	(673)	18
(Profit) on disposal of fixed assets		(280)	(16)	(15)
(Profit) / loss from joint ventures		(934)	224	(493)
Finance income		-	(9)	(144)
Finance costs		1,286	1,579	3,134
Operating cash flows before movements in working capital		32,356	17,117	48,603
Movements in working capital
(Increase) / decrease in trade and other receivables		(9,779)	4,708	8,553
Increase in trade and other payables		1,327	19,080	13,606
Decrease in provisions		(1,576)	(737)	(1,474)
		(10,028)	23,051	20,685

Cash generated from operations		22,328	40,168	69,288

Interest paid		(1,215)	(1,411)	(2,581)
Income taxes paid		(4,451)	(937)	(6,093)
Exceptional costs paid		(2,466)	(3,952)	(7,311)
Net cash generated from operating activities		14,196	33,868	53,303

Cash flows used in investing activities
Cash acquired on acquisition of subsidiary		1,070	-	-
Acquisitions of subsidiaries and other businesses		(1,800)	(212)	(293)
Payment of contingent consideration	13	(302)	(55)	(169)
Investment in joint venture		(765)	-	-
Investment in financial assets	11	(4)	(8)	(418)
Dividend received from joint venture		1,178	-	-
Cash received on sale of joint venture		12,000	-	-
Purchase of property, plant and equipment and intangible assets		(2,957)	(1,656)	(4,050)
Proceeds from sale of property, plant and equipment		431	130	138
Net cash generated / (expended) on investing activities		8,851	(1,801)	(4,792)

Repayment of loans	15	(13,000)	(9,883)	(28,883)
Payment of deferred consideration		(92)	-	(80)
Receipt of lease Income		26	19	23
Proceeds from the exercise of share options		429	147	176
Payments of lease liabilities		(4,814)	(3,087)	(8,304)
Dividends paid		-	-	-
Net cash expended in financing activities		(17,451)	(12,804)	(37,068)

Net increase in cash and cash equivalents		5,596	19,263	11,443

Cash and cash equivalents at the end of the period / year		17,039	19,263	11,443

Interim Group Statement of changes in equity

Unaudited - for the six months ended 30 June 2021

	Share capital	Share premium account	Share- based payment reserve	Shares held by EBT	Fair value Reserve	Retained earnings	Non- controlling interest	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2021	210	5,629	3,942	(5,012)	(13,584)	166,569	-	157,754
Other comprehensive income for the period
Revaluation of financial assets	-	-	-	-	324	-	-	324
Profit for the period	-	-	-	-	-	22,566	(21)	22,545
Total comprehensive income for the period	-	-	-	-	324	22,566	(21)	22,869
Acquisition of subsidiary	-	-	-	-	-	-	558	558
Exercise of options	-	-	(418)	847	-	-	-	429
Share-based payments	-	-	454	-	-	-	-	454
Tax on share based payments	-	-	505	-	-	-	-	505
At 30 June 2021	210	5,629	4,483	(4,165)	(13,260)	189,135	537	182,569

During the six month period to 30 June 2021 a total of 241,476 share options were exercised relating to LSL's various share option schemes resulting in the shares being sold by the

Trust. LSL received £429,000 on exercise of these options.

Interim Group Statement of changes in equity

Unaudited - for the six months ended 30 June 2020

	Share capital	Share premium account	Share- based payment reserve	Shares held by EBT	Fair value Reserve	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2020	208	5,629	4,429	(5,224)	(13,584)	149,758	141,216
Profit for the period	-	-	-	-	-	1,247	1,247
Total comprehensive income for the period	-	-	-	-	-	1,247	1,247
Exercise of options	-	-	(77)	203	-	21	147
Share-based payments	-	-	(983)	-	-	310	(673)
At 30 June 2020	208	5,629	3,369	(5,021)	(13,584)	151,336	141,937

During the six month period to 30 June 2020 a total of 57,649 share options were exercised relating to LSL's various share option schemes resulting in the shares being sold by the

Trust. LSL received £147,000 on exercise of these options.

Interim Group Statement of changes in equity

Audited - for the year ended 31 December 2020

	Share capital	Share premium account	Share- based payment reserve	Shares held by EBT	Fair value reserve	Retained earnings	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2020	208	5,629	4,429	(5,224)	(13,584)	149,758	141,216
Profit for the year	-	-	-	-	-	16,326	16,326
Total comprehensive income for the year	-	-	-	-	-	16,326	16,326
Issued share capital in the year	2	-	-	-	-	-	2
Exercise of options	-	-	(80)	212	-	44	176
Share-based payments	-	-	(423)	-	-	441	18
Tax on share based payments	-	-	16	-	-	-	16
At 31 December 2020	210	5,629	3,942	(5,012)	(13,584)	166,569	157,754

During the year ended 31 December 2020, the Trust acquired 167,083 LSL Shares. During the period, 60,565 share options were exercised relating to LSL's various share option schemes resulting in the Shares being sold by the Trust. LSL received £176,000 on exercise of these options.

Notes to the Interim Condensed Consolidated Group Financial Statements

The Interim Condensed Consolidated Group Financial Statements for the period ended 30 June 2021 were approved by the LSL Board on 3 August 2021. The interim Financial Statements are not the statutory accounts. The financial information for the year ended 31 December 2020 is extracted from the audited statutory accounts for the year ended 31 December 2020, which have been filed with the Registrar of Companies. The auditor's report was unqualified and did not contain an emphasis of matter paragraph, and did not make a statement under section 498 (2) or (3) of the Companies Act 2006.

1. Basis of preparation

The Interim Condensed Consolidated Group Financial Statements for the period ended 30 June 2021 have been prepared in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority, and should be read in conjunction with the Group's annual Financial Statements as at 31 December 2020 which are included in LSL's Annual Report and Accounts 2020. The Group's annual Financial Statements for the year ending 31 December 2021 will be prepared in accordance with UK adopted IFRSs.

The Interim Condensed Consolidated Group Financial Statements do not include all the information and disclosures required for a complete set of IFRS Financial Statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual Financial Statements.

Going Concern

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 a revolving credit facility. The Group announced a new banking facility in February 2021, a £90 million committed revolving credit facility with a maturity date of May 2024. As shown in Note 15 to these interim condensed consolidated Group Financial Statements, the Group has not currently utilised the facility leaving £90 million of available undrawn committed borrowing facilities in respect of which all conditions precedent had been met.

LSL has continued to run a variety of scenario models throughout H1 to help the ongoing assessment of risks and opportunities. A severe downside scenario has been modelled as part of the Going Concern assessment, which includes the pessimistic assumption that there is a significant reduction in market transaction volumes reducing close to the low point experienced during the Global Financial Crisis. The scenario modelling includes further prudent assumptions, for example, such as cost mitigations that could be applied in a severe scenario and we have not applied them in this model. Underpinned by LSL's strong balance sheet and diverse business revenue streams, the severe downside financial scenario modelling confirmed that the Group's current liquidity position would enable the Group to operate under this scenario to 31 December 2022 within the terms of its current facilities with no breach of banking covenants and therefore it is appropriate to use the Going Concern basis of preparation for this financial information.

Having due regard to these matters 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 31 December 2022. The Board have therefore continued to adopt the Going Concern basis in preparing the Interim Condensed consolidated Financial Statements.

2. Changes in significant accounting policies

The accounting policies adopted in the preparation of the Interim Condensed Consolidated Group Financial Statements are consistent with those followed in the preparation of the Group's annual Financial Statements for the year ended 31 December 2020.

3. Judgements and estimates

The preparation of financial information in conformity with UK adopted IFRS and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority requires management to make judgements, estimates and assumptions that affect the application of policies and reporting amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next six months are the same as those as at 31 December 2020, with the exception of valuations in acquisitions, which is a key assumption for 2021. The assumptions are discussed in detail in the Group's Annual Report and Accounts 2020. The assumptions discussed are as follows:

Judgements

Areas of judgement that have the most significant effect on the amounts recognised in the consolidated Financial Statements are:

· Deferred tax

· Exceptional items

Estimates

The key assumptions affected by future uncertainty that have significant risks of causing material adjustment to the carrying value of assets and liabilities within the next financial year are:

· Professional Indemnity (PI) claims

· Lapse Provision

· Valuation of financial assets

· Impairment of intangible assets

· Contingent consideration

· Income tax

Valuations in acquisitions

The measurement of intangible assets other than goodwill on a business combination involves the estimation of future cash-flows and other inputs relevant to the valuation model being applied. Brands are valued using the royalty relief method. The internally generated software from the acquisitions of Direct Life and Pension Services and Mortgage Gym were valued using a discounted cash-flow model.

Goodwill

At the year ended 31 December 2020 the Management Team undertook sensitivity analysis to determine the effect of changes in assumptions on the 2020 impairment reviews. Marsh & Parsons had headroom of £12.8m and in this instance a reasonable possible change in either the financial budgets in the three year plan or the discount rate applied could lead to impairment. A reduction in each of the 3 years of cash-flow forecast by 15%, or an increase to the discount factor applied from 11.68% to 13.39% would lead to an impairment. Although a reasonably possible change in assumptions used in the 2020 impairment review would lead to an impairment for Marsh & Parsons, management do not consider there to be any impairment indicators for the Marsh & Parsons goodwill at 30 June 2021.

4. Revenue

The Group's operations and main revenue streams are those described in the latest Annual Financial Statements.

Disaggregation of Revenue

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

Unaudited - Six Months ended 30 June 2021
	Financial Services £'000	Surveying and Valuation Services '000	Residential Sales exchange £'000	Lettings £'000	Asset Management £'000	Other £'000	Total '000
Timing of revenue recognition
Services transferred at a point in time	42,340	46,159	40,425	16,132	1,071	5,792	151,919
Services transferred over time	-	-	-	13,948	589	-	14,537
Total revenue from contracts with customers	42,340	46,159	40,425	30,080	1,660	5,792	166,456

Unaudited - Six Months ended 30 June 2020
	Financial Services £'000	Surveying and Valuation Services '000	Residential Sales exchange £'000	Lettings £'000	Asset Management £'000	Other £'000	Total '000
Timing of revenue recognition
Services transferred at a point in time	32,611	31,095	18,595	12,640	1,463	3,151	99,555
Services transferred over time	-	-	-	14,874	492	-	15,366
Total revenue from contracts with customers	32,611	31,095	18,595	27,514	1,955	3,151	114,921

Audited - Year ended 31 December 2020
	Financial Services £'000	Surveying and Valuation Services '000	Residential Sales exchange £'000	Lettings £'000	Asset Management £'000	Other £'000	Total '000
Timing of revenue recognition
Services transferred at a point in time	70,845	77,125	48,821	29,211	2,602	7,592	236,196
Services transferred over time	-	-	-	29,390	1,156	-	30,546
Total revenue from contracts with customers	70,845	77,125	48,821	58,601	3,758	7,592	266,742

5 . Segment analysis of revenue and operating profit

LSL reports three segments: Financial Services, Surveying and Valuation Services, and Estate Agency:

· The Financial Services segment arranges mortgages for a number of lenders and arranges pure protection and general insurance policies for a panel of insurance companies. Embrace Financial Services and First2Protect, subsidiaries within the Financial Services Division, make a commercially agreed introducers fee to the Estate Agency Division;

· The Surveying and Valuation Services segment provides a valuations and professional surveying service of residential properties to various lenders and individual customers;

· The Estate Agency segment provides services related to the sale and letting of residential properties. It operates a network of high street branches. As part of this process, the Estate Agency Division also provides marketing and arranges conveyancing services. In addition, it provides repossession and asset management services to a range of lenders. Embrace Financial Services and First2Protect, subsidiaries within the Financial Services Division, make a commercially agreed introducers fee to the Estate Agency Division.

The Management Team monitors the operating results of its business units 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.

Operating segments

The following tables presents revenue and profit information regarding the Group's operating segments for the six months ended 30 June 2021, for the six months ended 30 June 2020 and for the year ended 31 December 2020.

Unaudited - Six months ended 30 June 2021

Income statement information	Financial Services £'000	Surveying and Valuation Services £'000	Estate Agency £'000	Unallocated £'000	Total £'000

Revenue from external customers	42,340	46,159	77,957	-	166,456
Introducers fee	(3,232)	-	3,232	-	-
Total revenue	39,108	46,159	81,189	-	166,456

Segmental result:
Group Underlying Operating Profit	7,823	11,419	12,527	(4,501)	27,268
Operating profit	3,928	12,352	15,504	(5,036)	26,748

Finance income					-
Finance costs					(1,286)
Profit before tax					25,462
Taxation					(2,917)
Profit for the period					22,545

Group Underlying Operating Profit is as defined in note 6 to these condensed financial statements

	Financial Services	Surveying and Valuation Services	Estate Agency	Unallocated	Total
	£'000	£'000	£'000	£'000	£'000
Balance sheet information
Segment assets - intangible	18,834	11,051	158,634	2,254	190,773
Segment assets - other	10,890	14,956	59,275	24,872	109,993
Total Segment assets	29,724	26,007	217,909	27,126	300,766
Total Segment liabilities	(25,513)	(24,489)	(62,131)	(6,064)	(118,197)
Net assets	4,211	1,518	155,778	21,062	182,569

The joint venture interests of the Group are recorded in the Financial Services and Estate Agency segments.

Unallocated net assets comprise other intangibles £2,253,000, assets held for sale £3,016,000, cash £17,039,000, other assets £3,138,000, other taxes £(182,000), accruals £(3,912,000), payables £(266,000), deferred and current tax £(24,000).

Unaudited - Six months ended 30 June 2020

Income statement information	Financial Services £'000	Surveying and Valuation Services £'000	Estate Agency £'000	Unallocated £'000	Total £'000

Revenue from external customers	32,611	31,095	51,215	-	114,921
Intersegment revenue	(4,533)	-	4,533	-	-
Total revenue	28,078	31,095	55,748	-	114,921

Segmental result:
Group Underlying Operating Profit	4,932	4,850	4,147	(1,385)	12,544
Operating profit / (loss)	3,953	2,468	(1,567)	(1,273)	3,581

Finance income					9
Finance costs					(1,579)
Profit before tax					2,011
Taxation					(764)
Profit for the period					1,247

	Financial Services	Surveying and Valuation Services	Estate Agency	Unallocated	Total
	£'000	£'000	£'000	£'000	£'000
Balance sheet information
Segment assets - intangible	17,671	11,509	159,267		188,447
Segment assets - other	9,361	11,752	73,695	22,080	116,888
Total Segment assets	27,032	23,261	232,962	22,080	305,335
Total Segment liabilities	(28,252)	(28,311)	(69,066)	(37,769)	(163,398)
Net assets/(liabilities)	(1,220)	(5,050)	163,896	(15,689)	141,937

The joint venture interests of the Group are recorded in the Estate Agency segment, with the associate interest recorded in the Financial Services.

Unallocated net liabilities comprise plant and equipment £14,000, IFRS 16 plant and equipment £5,000, other assets £2,802,000, cash £19,263,000 other taxes £118,000, accruals £(2,376,000), Other payables £(499,000), IFRS 16 financial liabilities £(2,000), deferred and current tax £(3,014,000), and revolving credit facility overdraft £(32,000,000).

Audited - Year ended 31 December 2020

	Financial Services	Surveying and Valuation Services	Estate Agency	Unallocated	Total
Income Statement information	£'000	£'000	£'000	£'000	£'000

Revenue from external customers	70,845	77,125	118,772	-	266,742
Introducers fee	(9,889)	-	9,889	-	-
Total revenue	60,956	77,125	128,661	-	266,742

Segmental result:
Group Underlying Operating Profit - pre COVID -19 costs	13,451	17,871	15,554	(5,335)	41,541
Group Underlying Operating Profit - post COVID -19 costs	12,287	16,193	12,071	(5,368)	35,183
Operating profit / (loss)	10,679	14,680	3,802	(5,249)	23,912

Finance Income					144
Finance costs					(3,134)
Profit before tax					20,922
Taxation					(4,596)
Profit for the year					16,326

Balance sheet information

Segment assets - intangible	17,109	11,280	159,367	-	187,756
Segment assets - other	7,935	13,571	68,993	13,961	104,460
Total Segment assets	25,044	24,851	228,360	13,961	292,216
Total Segment liabilities	(26,010)	(27,398)	(63,640)	(17,414)	(134,462)

Net assets / (liabilities)	(966)	(2,547)	164,720	(3,453)	157,754

The joint venture interests of the Group are recorded in the Estate Agency and Related Services segment, with the associate interest recorded in the Financial Services.

Unallocated net liabilities comprise plant and equipment £13,000, other assets £2,505,000, cash £11,443,000, accruals and other payables £(2,532,000), current and deferred tax liabilities £(1,882,000), and revolving credit facility overdraft £(13,000,000). Unallocated result comprises costs relating to the Parent Company.

6. Adjusted performance measures

In addition to the various performance measures defined under IFRS, the Group reports a number of alternative performance measures that are designed to assist with the understanding of the underlying performance of the Group. The Group seeks to present a measure of underlying performance which is not impacted by the inconsistency in profile of exceptional gains and exceptional costs, contingent consideration, amortisation of intangible assets and, share-based payments. Share based payments are excluded from the underlying performance due to the fluctuations that can impact the charge, such as lapses and the level of annual grants.

In the prior year, costs relating to COVID-19 were separately identified and excluded from Group Underlying Operating Profit as the Directors considered that these adjusted measures shown give a better and more consistent indication of the Group's underlying performance. The most significant areas of costs relating to COVID-19 were employee costs and property and related asset costs. In 2021, the group has not incurred separately identifiable costs related to COVID-19 and has not excluded any from Group underlying operating profit.

The four adjusted measures reported by the Group are:

· Group Underlying Operating Profit

· Adjusted Basic EPS

· Adjusted diluted EPS

· Group Adjusted EBITDA

The amortisation of intangible assets is not representative of the underlying costs of the business, and is therefore excluded from adjusted earnings.

The Directors consider that these adjusted measures shown above give a better and more consistent indication of the Group's underlying performance. These measures form part of Management's internal financial review and are contained within the monthly management information reports reviewed by the Board.

The calculations of adjusted basic and adjusted diluted EPS are given in Note 7 to these Interim Condensed Consolidated Group Financial Statements and a reconciliation of Group Underlying Operating Profit is shown below:

	Unaudited Six months ended 30 June		Audited Year ended 31 December
	2021	2020	2020
	£'000	£'000	£'000

Group operating profit	26,748	3,581	23,912
Share-based payments	454	(673)	18
Amortisation of intangible assets	2,677	2,899	5,395
Exceptional gains	(4,311)	-	(674)
Exceptional costs	1,656	4,422	7,076
Contingent consideration charge / (credit)	44	(504)	(544)
Total COVID-19 related costs	-	2,819	6,358
Group Underlying Operating Profit	27,268	12,544	41,541
Depreciation on property, plant and equipment	6,303	5,538	7,571
Group Adjusted EBITDA	33,571	18,082	49,112

7. Earnings per share (EPS)

Basic EPS amounts are calculated by dividing net profit for the period attributable to ordinary equity holders of the parent by the weighted average number of Ordinary Shares outstanding during the period.

Diluted EPS amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

Unaudited - Six months ended 30 June

	Profit after tax £'000	Weighted average number of shares	2021 Per share amount Pence	Profit after tax £'000	Weighted average number of shares	2020 Per share amount Pence

Basic EPS	22,566	103,691,129	21.8	1,247	102,726,654	1.2
Effect of dilutive share options		1,737,509			363,335
Diluted EPS	22,566	105,428,638	21.4	1,247	103,089,989	1.2

Audited - Year ended 31 December 2020

	Profit after tax £'000	Weighted average number of shares	2020 Per share amount Pence

Basic EPS	16,326	102,939,680	15.9
Effect of dilutive share options		947,704
Diluted EPS	16,326	103,887,384	15.7

Adjusted basic and diluted EPS

The Directors consider that the adjusted earnings shown below give a better and more consistent indication of the Group's underlying performance:

	Unaudited Six months ended		Audited Year Ended
	30 June 2021 £'000	30 June 2020 £'000	31 December 2020 £'000
Group underlying operating profit	27,268	12,544	41,541
Loss attributable to non controlling interest	21	-	-
Net finance costs (excluding exceptional items, contingent consideration items and discounting on lease liabilities)	(511)	(625)	(1,062)
Normalised taxation (tax rate 19%)	(5,084)	(2,265)	(7,691)
Adjusted profit after tax before exceptional items, share-based payments and amortisation	21,694	9,654	32,788

Unaudited - Six months ended 30 June

	Adjusted profit after tax £'000	Weighted average number of shares	2021 Per share amount Pence	Adjusted profit after tax £'000	Weighted average number of shares	2020 Per share amount Pence

Adjusted basic EPS	21,694	103,691,129	20.9	9,654	102,726,654	9.4
Effect of dilutive share options		1,737,509			363,335
Adjusted diluted EPS	21,694	105,428,638	20.6	9,654	103,089,989	9.4

Audited - Year ended 31 December 2020

	Adjusted profit after tax £'000	Weighted average number of shares	2020 Per share amount Pence

Adjusted basic EPS	32,788	102,939,680	31.9
Effect of dilutive share options		947,704
Adjusted diluted EPS	32,788	103,887,384	31.6

This represents adjusted profit after tax attributable to equity holders of the parent. Tax has been adjusted to exclude the prior year tax adjustments, and the tax impact of exceptional items, amortisation, share-based payments and costs related to COVID 19. The effective tax rate used is 19.00% (30 June 2020: 19.00% and 31 December 2020: 19.00%)

8. Exceptional items

	Unaudited Six months ended		Audited Year Ended
	30 June 2021	30 June 2020	31 December 2020
	£'000	£'000	£'000
Exceptional costs:
Shareholder circular and general meeting	943	-	-
Embrace Financial Services Limited restructuring project	713	-	-
Branch / centre closure and restructuring costs including redundancy costs	-	1,667	2,312
Aborted merger deal costs	-	2,403	2,350
Impairment of investment in associate	-	-	1,992
Other	-	352	422
	1,656	4,422	7,076
Exceptional gains:
Exceptional gain in relation to historic PI costs	(1,131)	-	(674)
Exceptional gain in relation to sale of joint venture	(3,180)	-	-
	(4,311)	-	(674)

Exceptional costs

Shareholder circular and general meeting

There were £0.9m (2020: nil) of non recurring and material exceptional costs relating to the shareholder circular published on 5 July 2021 and the general meeting held on 22 July 2021.

Embrace Financial Services Limited restructuring project

There were £0.7m (2020: nil) of non recurring and material exceptional costs relating to the planned restructure of Embrace Financial Services Limited. No further costs are expected in relation to this.

Exceptional Gains

Provision for professional indemnity (PI) claims and insurance claim notification

Previous exceptional gains relate to the settling of historic PI claims. There has been a gain of £1.1m in the first half of 2021 (June 2020: £nil and December 2020: £0.7m).

Disposal of interest in associate

In May 2021, the Group disposed of its 49.6% interest in Cybele Solutions Holdings Limited ("LMS") for consideration of £12m. The net gain recognised on sale of LMS was £3.2m.

9. Dividends paid and declared

No final dividend in respect of the year ended 31 December 2020 (December 2019: £Nil) was paid in the period ended 30 June 2021. An interim dividend has been announced amounting to 4.0 pence per share (June 2020: £Nil). Interim dividends are recognised when paid.

10. Taxation

The major components of income tax charge in the interim Group income statements are:

	Unaudited Six Months Ended		Audited Year Ended
	30 June 2021	30 June 2020	31 December 2020
	£'000	£'000	£'000
UK corporation tax:
- current year credit / (charge)	3,008	802	5,111
- adjustment in respect of prior years	(1)	-	(409)
	3,007	802	4,702
Deferred tax:
Origination and reversal of temporary differences	(214)	38	(597)
Adjustment in respect of prior year	1	-	248
Changes in tax rates	123	-	243
	(90)	38	(106)

Total tax charge in the income statement	2,917	764	4,596

In March 2021, the 2021 Budget included an announcement to increase the standard rate of corporation tax rate from 19% to 25% from 1 April 2023. This was substantively enacted during Summer 2021

The headline UK rate of corporation tax for the period is therefore 19% (2020: 19%), and the rate at which deferred tax has been provided is 25% (2020: 19%). The expected impact on deferred tax balances of the rate increase is estimated to be £246,000

Deferred tax charged directly to other comprehensive income relating to the revaluation of financial assets is £119,000. In the six months ended 30 June 2020 £Nil and year ended 31 December 2020 £Nil.

11. Financial assets

	Unaudited Six Months Ended		Audited Year Ended
	30 June 2021	30 June 2020	31 December 2020
	£'000	£'000	£'000
Convertible loan notes - at fair value
Secured convertible loan notes - 5%	-	2,000	2,240
Secured convertible loan notes - interest free	-	-	10
	-	2,000	2,250
Investment in equity instruments - at fair value
Unquoted shares at fair value	7,417	6,960	6,961

IFRS 16 lessor financial assets	320	364	350

Total Financial Assets	7,737	9,324	9,561

Opening balance	9,561	9,326	9,326
Additions	14	8	418
Fair value adjustment	443	-	-
Disposals	(2,281)	(10)	(183)
Closing balance	7,737	9,324	9,561

Non-current assets	7,737	9,324	9,561
Current assets	-	-	-
	7,737	9,324	9,561

Convertible loan notes at fair value

In 2020 LSL held secured loan notes of £2,240,000 with Mortgage Gym Limited, in February 2021 these loan notes were settled as consideration for the acquisition of the trade and assets of Mortgage Gym.

Investment in equity instruments

The financial assets include unlisted equity instruments which are carried at fair value. Fair value is judgemental given the assumptions required and have been valued using a level 3 valuation techniques (see Note 32 to the December 2020 Group Financial Statements).

Vibrant Energy Matters Limited (VEM)

The carrying value of the Group's investment in VEM at 30 June 2021 has been assessed as £729,000 (June 2020: £287,000 and December 2020: £287,000), following a share transaction between third party share holders which valued LSLs holding at £729,000.

NBC Property Master Limited

The carrying value of the Group's investment at 30 June 2021 has been assessed as £78,000 (June 2020: £78,000 and December 2020: £78,000).

Global Property Ventures Limited

On 6 January 2020, LSL acquired 76,000 additional shares in Global Property Ventures Limited, for a consideration of £8,275.

The carrying value of the Group's investment in Global Property Ventures Limited at 30 June 2021 has been assessed as £115,000 (June 2020: £101,000 and December 2020: £101,000).

Yopa Property Limited

The carrying value of the Group's investment in Yopa at 30 June 2021 has been assessed as £6,495,000 (June 2020: £6,495,000 and December 2020: £6,495,000).

12. Trade and other payables

	Unaudited Six Months Ended		Audited Year Ended 31 December 2020
	30 June 2021	30 June 2020	Audited Year Ended 31 December 2020
	£'000	£'000	£'000
Current
Trade payables	9,568	12,388	11,733
Other taxes and social security payable	19,664	33,662	24,971
Other payables	3,852	2,890	2,291
Accruals	35,873	25,969	29,412
Lapse provision	4,961	4,796	4,529
	73,918	79,705	72,936

Lapse Provision

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. The lapse provision is recognised as a reduction in revenue which is based on historic lapses which have occurred. The provision is managements best estimate of future clawed back commission on life assurance policies, taking into account historic lapse rates in each subsidiary.

13. Financial liabilities

	Unaudited Six Months Ended		Audited Year Ended
	30 June 2021	30 June 2020	31 December 2020
	£'000	£'000	£'000
Current
IFRS 16 lessee financial liabilities	9,583	11,621	10,550
Deferred consideration	30	80	122
Contingent consideration	1,470	1,998	1,794
	11,083	13,699	12,466
Non-current
Bank loans - revolving credit facility (RCF)	-	32,000	13,000
IFRS 16 lessee financial liabilities	21,313	23,710	23,407
Contingent consideration	4,365	3,437	3,653
	25,678	59,147	40,060

Bank loans - RCF and overdraft

The bank loan totalling £nil (June 2020: £32.0m and December 2020: £13.0m) is secured via cross guarantees issued from the following Group companies: LSL Property Services plc, Your-move.co.uk Limited, Reeds Rains Limited, e.surv Limited, Lending Solutions Holdings Limited, First Complete Limited, New Daffodil Limited, St Trinity Limited, LSL Corporate Client Services Limited, Advance Mortgage Funding Limited, Marsh & Parsons Limited, Marsh & Parsons (Holdings) Limited, LSLi Limited, Davis Tate Limited, Lauristons Limited, David Frosts Estate Agents Limited, ICIEA Limited, GFEA Limited, JNP Estate Agents Limited, Vitalhandy Enterprises Limited, Mortgages First Limited, Insurance First Brokers Limited, Group First Limited, Personal Touch Financial Services Limited, Personal Touch Administration Services Limited, Embrace Financial Services Limited.

The utilisation of the RCF may vary each month as long as this does not exceed the maximum £90.0m facility (2020: £100.0m). The Group's overdraft is also secured on the same facility, and the combined overdraft and RCF cannot exceed £90.0m (2020: £100.0m). The banking facility is repayable when funds permit or by May 2024.

Interest and fees payable on the RCF amounted to £0.5m (June 2020: £0.6m and December 2020: £1.2m). The interest rate applicable to the facility is LIBOR plus a margin rate; the margin rate is linked to the leverage ratio of the Group and the margin rate is reviewed at six monthly intervals.

Contingent consideration -

	Unaudited Six Months Ended		Audited Year Ended
	30 June 2021	30 June 2020	31 December 2020
	£'000	£'000	£'000

LSLi contingent consideration	-	342	302
Group First	1,470	1,392	1,470
RSC	3,786	3,437	3,653
DLPS	579	-	-
Other	-	264	22
	5,835	5,435	5,447

Opening balance	5,447	5,804	5,804
Cash paid	(302)	(55)	(171)
Acquisition	579	23	23
Amounts recorded though income statement	111	(337)	(209)
Closing balance	5,835	5,435	5,447

There was £Nil (June 2020: £342,000 and December 2020: £302,000) contingent consideration relating to amounts owed to third parties in relation to the acquisition of LSLi and certain of its subsidiaries between 2012 and 2016. This is typically payable between three and five years after the acquisition dates depending on the profitability of those subsidiaries in the relevant years.

£1,470,000 of contingent consideration relates to Group First (June 2020: £1,392,000 and December 2020: £1,470,000) which is due for payment in 2021. The additional consideration is calculated using earnings multiples of between five and six times EBITA (plus excess cash in the business) and has been capped at a maximum of £25.0m.

£3,786,000 of contingent consideration relates to RSC New Homes (June 2020: £3,437,000 and December 2020: £3,653,000). The additional consideration will be calculated using earnings multiples of between five and six times EBITA (plus excess cash in the business) and has been capped at a maximum of £7,500,000.

£579,000 of contingent consideration relates to Direct Life and Pension Services Limited, acquired in January 2021. The additional consideration will be calculated using earnings multiples of between five and six times EBITA

In the period ending 30 June 2021 £302,000 (June 2020: £55,000 and December 2020: £171,000) of contingent consideration was paid to former shareholders.

The table below shows the allocation of the contingent consideration balance and income charge between the various categories:

	Unaudited Six Months Ended		Audited Year Ended
Contingent consideration balances relating to amounts accounted for as:	30 June 2021	30 June 2020	31 December 2020
	£'000	£'000	£'000

Arrangement under IFRS 3	44	(504)	(544)
Unwinding of discount on contingent consideration	67	167	335
Charge / (credit)	111	(337)	(209)

The contingent consideration charged to the Income Statement in the period excluding the unwinding of discount relates to both new and previous acquisitions and relates to the acquisition of: LSLi charge of nil (June 2020: £4,000 and December 2020: £4,000); Mortgage First charge of nil (June 2020: credit £175,000 and December 2020: credit £146,000); RSC New Homes charge of £44,000 (June 2020: credit £313,000 and December 2020: credit £216,000).

14. Provisions for liabilities

Unaudited - Six months ended 30 June:

	2021			2020
	Professional indemnity claim provision	Onerous leases	Total	Professional indemnity claim provision	Onerous leases	Total
	£'000	£'000	£'000	£'000	£'000	£'000

Balance at 1 January	7,042	136	7,178	8,212	440	8,652
Amount utilised	(632)	(46)	(678)	(1,069)	(124)	(1,193)
Amount released	(1,131)	-	(1,131)	(4)	-	(4)
Unwinding of discount	-	-	-	1	-	1
Provided in the period	233	-	233	460		460
Balance at 30 June	5,512	90	5,602	7,600	316	7,916

Current	2,854	54	2,908	2,545	176	2,721
Non-current	2,658	36	2,694	5,055	140	5,195
	5,512	90	5,602	7,600	316	7,916

Audited - Year ended 31 December 2020

	Professional indemnity claim provision	Onerous leases	Total
	£'000	£'000	£'000

Balance at 1 January	8,212	440	8,652
Amount utilised	(1,707)	-	(1,707)
Amount released	(679)	(304)	(983)
Unwinding of discount	2	-	2
Provided in financial year	1,214	-	1,214
Balance at 31 December	7,042	136	7,178

Current	2,926	72	2,998
Non-current	4,116	64	4,180
	7,042	136	7,178

The PI Cost provision is to cover the costs of claims relating to valuation services for clients. The PI Costs provision includes amounts for claims already received from clients, claims yet to be received and any other amounts which may be payable as a result of legal disputes associated with provision of valuation services.

The provision is the Directors' best estimate of the likely outcome of such claims, taking account of the incidence of such claims and the size of the loss that may be borne by the claimant, after taking account of actions that can be taken to mitigate losses. The provision will be utilised as individual claims are settled and the settlement amount may vary from the amount provided depending on the outcome of each claim. It is not possible to estimate the timing of payment of all claims and therefore a significant proportion of the provision has been classified as non-current.

At 30 June 2021 the total provision for PI Costs was £5.5m (June 2020: £7.6m and December 2020: £7.0m). The Directors have considered the sensitivity analysis on the key risks and uncertainties discussed above.

Cost per claim

A substantial element of the PI Cost provision relates to specific claims where disputes are on-going. These specific cases have been separately assessed and specific provisions have been made. The average cost per claim has been used to calculate the IBNR. Should the costs to settle and resolve these claims and future claims increase by 10%, an additional £0.9m would be required.

Rate of claim

The IBNR assumes that the rate of claim for the high-risk lending period in particular reduces over time. Should the rate of reduction be lower than anticipated and the duration extend, further costs may arise. An increase of 30% in notifications in excess of that assumed in the IBNR calculations would increase the required provision by £0.1m.

Notifications

The Group has received a number of notifications which have not deteriorated into claims or loss. Should the rate of deterioration increase by 50%, an additional provision of less than £0.1m would be required.

Onerous leases

The provision for lease obligations relates to obligations under leases on vacant properties. The final outcome depends upon the ability of the Group to sublet or assign the lease over the related properties.

15. Analysis of Net cash

	Unaudited Six Months Ended		Audited Year Ended
	30 June 2021	30 June 2020	31 December 2020
	£'000	£'000	£'000
Interest bearing loans and borrowings (including loan notes, overdraft, IFRS16 lease liabilities, contingent and deferred consideration
- Current	11,083	13,699	12,466
- Non-current	25,678	59,147	40,060
	36,761	72,846	52,526

Less: cash and short-term deposits	(17,039)	(19,263)	(11,443)
IFRS 16 Lessee financial liabilities	(30,896)	(35,331)	(33,957)
Less: deferred and contingent consideration	(5,865)	(5,515)	(5,569)
Net (cash) / Bank Debt at the end of the period	(17,039)	12,737	1,557

16. Investments in Joint Ventures and associates

	30 June 2021	31 December 2020
	£'000	£'000
Investment in joint ventures and associates	268	11,406

Investment in joint ventures

Opening balance (1 January)	11,406	10,305
Income / (loss) from joint ventures	934	1,314
Shareholder service charge not equity accounted	(394)	(213)
Investment in Pivotal	765	-
Dividend received from LMS	(1,178)	-
Disposal of LMS	(8,249)	-
Transfer of TM group to non current assets held for sale	(3,016)	-
Closing balance	268	11,406

The Group holds a 32.34% (2020: 33.33%) interest in TM Group (UK) limited (TM Group), a joint venture whose principal activity is to provide searches. The principal place of business of TM Group is the United Kingdom. On 8 July 2021, the Group announced the sale of its holding in TM Group, details of which are included in Note 20. The processes of the transaction were ongoing at 30 June 2021, and so the carrying value of the Groups investment in TM Group was classified as held for sale, and recognised as such on the Group balance sheet.

In May 2021, the Group sold its 50% (2020: 50%) interest in LMS, a joint venture whose principal activity is to provide conveyancing panel management services. The carrying value of LMS at the time of disposal was £8,249,000. LSL received £12,000,000 as consideration for its share of LMS.

Claims indemnity provision and contingency

Included in the sale agreement of LMS was a claims indemnity of £2,000,000, for which the group has provided £571,000, which it considers to be the most likely outcome. Further cases exist and are considered possible, not probable, therefore no further provision has been made for these cases in the interim financial statements. Should these claims succeed the estimated further cost would be £1,429,000.

In April 2021, the group formed Pivotal Growth Limited (Pivotal) a joint venture whose principal activity is to become a national mortgage broker. The Group acquired a 47.80% holding in Pivotal for initial investment of £765,000.

Investment in associate

The Group had a 45.20% holding in Mortgage Gym at the end of 2020, a digital mortgage business. The carrying value at December 2020 was nil. In February 2021, LSL acquired the trade and assets of mortgage gym from administrators, details of the acquisition can be found in note 19.

17. Financial instruments - risk management

The financial risks the Group faces and the methods used to manage these risks have not changed since 31 December 2020. Further details of the risk management policies of the Group are disclosed in Note 32 of the Group's Financial Statements for the year ended 31 December 2020.

The business is cash generative with a low level of maintenance capital expenditure requirement. In addition, the Group's other main priority is to generate cash to support its operations and to fund any strategic acquisitions.

18. Fair values of financial assets and financial liabilities

There is no difference in the book amounts and fair values of all the Group's financial instruments that are carried in these interim condensed consolidated Group Financial Statements

Fair value hierarchy

As at 30 June 2021, the Group held the following financial instruments measured at fair value. The Group uses the following hierarchy for determining and disclosing the fair value of the financial instruments by valuation technique:

· Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

· Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and

· Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

Unaudited - 30 June 2021	Total	Level 1	Level 2	Level 3
	£'000	£'000	£'000	£'000
Assets measured at fair value
Financial assets	7,417	-	729	6,688
Liabilities measured at fair value
Contingent consideration	5,835	-	-	5,835

Unaudited - 30 June 2020	Total	Level 1	Level 2	Level 3
	£'000	£'000	£'000	£'000
Assets measured at fair value
Financial assets	9,324	-	-	9,324
Liabilities measured at fair value
Contingent consideration	5,435	-	-	5,435

Audited - 31 December 2020	Total	Level 1	Level 2	Level 3
	£'000	£'000	£'000	£'000
Assets measured at fair value
Financial assets	9,561	-	-	9,561
Liabilities measured at fair value
Contingent consideration	5,447	-	-	5,447

Of the investments totalling £7,417,000, £6,688,000 are valued using Level 3 valuation techniques. The Directors reviewed the fair value of the financial assets at 30 June 2021. The underlying value of the investments will be driven by the profitability of these businesses. If this was to drop by 10%, the implied valuation is likely to also drop by around 10%, approximately £0.7m.

The contingent consideration relates to amounts payable in the future on acquisitions. The amounts payable are based on the amounts agreed in the contracts and based on the future profitability of each entity acquired. In valuing each provision, estimates have been made as to when the options are likely to be exercised and the future profitability of the entity at this date. Further details of these provisions are shown in Note 13.

19. Acquisitions during the period

Direct Life and Pension Services Limited

On 22 January 2021, the Group acquired 60% of the issued share capital of Direct Life and Quote Holdings Limited and its subsidiary company, Direct Life and Pensions Services Limited. Direct Life and Pension Services Limited is a financial intermediary providing systems and services that enable consumer brands and intermediaries to market, sell and transact protection insurance. Direct Life and Pension Services Limited is authorised by the Financial Conduct Authority (FCA).

The consideration for the initial investment was £2,379,000 with £1,800,000 paid on completion and a present value contingent consideration on £579,000 in 2021. The contingent consideration is due for repayment in January 2024.

The purchase price allocations for the acquisition are disclosed below:

	Fair value
	£'000
Intangible assets	1,641
Property, plant and equipment	102
Investments	1
Trade and other receivables	511
Cash and cash equivalents	1,070
Current tax assets	207
Trade and other payables	(749)
Provision for liabilities	(438)
Deferred tax liabilities	(410)
Total identifiable net assets acquired	1,935
Purchase consideration	2,379
Non Controlling interest	558
Goodwill	1,002

Purchase consideration discharged by:	£'000
Cash	1,800
Present value contingent consideration (Note 13)	579
	2,379

On acquisition of Direct Life and Quote Holdings Limited and Direct Life and Pension Services Limited, intangible assets were valued at £1,641,000. The intangible assets valued relate to customer contracts and in-house developed software. On recognition of the intangible assets, deferred tax liabilities of £410,000 were created. The goodwill represents expected synergies and intangible assets that do not qualify for separate recognition.

The non controlling interest has been measured at fair value at the date of acquisition.

From the date of acquisition, Direct Life and Pension Services Limited has contributed £1,786,000 of revenue and £112,000 loss to the continuing operations of the Group. If the acquisition had taken place at the beginning of the year, revenue from continuing operations would have been £1,805,000 and the loss from operations would have been £116,000.

The Group has recognised costs of £30,000 relating to the acquisition.

Mortgage Gym Limited

In February 2021, the Group acquired the trade and assets of Mortgage Gym Limited from administrators. Mortgage Gym Limited research, develop and deliver an online technology platform that matches mortgage borrowers with mortgage lenders in a digital marketplace. Mortgage Gym Limited is an appointed representative of PRIMIS Mortgage Network, a trading name for First Complete Limited, which is authorised and regulated by the Financial Conduct Authority (FCA).

Prior to February 2021, Mortgage Gym Limited was an associate of the Group, with the Group holding an interest of 34.69%.

The consideration paid for the trade and assets of Mortgage Gym Limited, considered to be entirely attributable to the intangible asset, was £2,384,000, which was settled by offsetting LSL as a secured creditor. The fair value of the secured loan notes at the date of acquisition was £2,240,000 with accrued interest of £144,000.

From the date of acquisition, Mortgage Gym Limited has contributed £333,000 of revenue and £603,000 loss before tax to the continuing operations of the Group.

The Group has recognised costs of £150,000 relating to the acquisition.

20. Events after the reporting period

On 8 July 2021, the Group sold its investment in TM Group (UK) Limited, a provider of property searches and services, to Dye & Durham (UK) Limited. The cash consideration for the disposal of the Group's shares was 29,300,000. The Group's carrying value and share of net assets of the TM Group investment as at 30 June 2021 was 3.0m.

INDEPENDENT REVIEW REPORT TO LSL PROPERTY SERVICES PLC

Conclusion

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2021 which comprises the Interim Group Income Statement, the Interim Group Statement of Comprehensive Income, the Interim Group Balance Sheet, the Interim Group Cash Flow Statement, the Interim Group Statement of Changes in Equity and the relates Notes 1 to 20. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2021 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Basis for Conclusion

We conducted our review in accordance with International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 1, the annual financial statements of the Group will be prepared in accordance with UK adopted IFRSs. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting".

Responsibilities of the directors

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority

Auditor's Responsibilities for the review of the financial information

In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, is based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

Use of our report

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Ernst & Young LLP

Leeds

3 August 2021

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IR FFFIITAIVIIL