The financial services network business of LSL delivered £4.3m in underlying operating profit for the first six months of 2024 and widened its market share.
The division saw its market share for the UK’s purchase and remortgage market increased from 10.5% to a record 11.1%.
LSL said its advisers continued to “adapt effectively” to changes in the mortgage market, as they increased product transfer completions by a fifth. The group said this resulted in an “substantially increased” share in the product transfer market, which came to 7.2% in H1, up from 5.8% the year before.
The protection revenue generated by LSL’s financial services network increased by 3% to £5.6m.
Meanwhile, the number of network firms rose from 986 in the first half of 2023 to 1,146 this year, including 151 TenetLime firms.
LSL said network firms remained “cautious” about adviser levels because of challenging market conditions. Still, its number of advisers increased from 2,718 last year to 2,847 this year, including 255 TenetLime advisers.
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The total revenue generated by its financial services division came to £23.6m, down from £28m. However, adjusting for the businesses disposed during the first half of 2023, this was 1% higher, LSL said.
LSL’s total financial services division reported an underlying profit of £3.9m, up from £3.6m or £4m when adjusted for disposed businesses. On a statutory basis, its operating profit fell from £10.3m to £2.9m.
Outside of the reporting period, LSL’s Primis network served notice to one of its protection-only appointed representative (AR) firms, which was made up of two trading entities.
LSL said it was responsible for the future reimbursements of commissions received from product providers in the event that policies are cancelled during an indemnity period, which is a maximum of four years.
LSL has an agreement with AR firms and certain advisers to recover their contractual liability, but due to the trading positions of the AR firms when they were served a notice, the group said it was unlikely to recover all future reimbursement of commissions incurred.
It estimated that the maximum cancellable commissions sold by these AR firms was £3.4m, saying this potential exposure would “reduce materially over time” as active policies go beyond the indemnity period along with a “significant reduction” in activity in the latter months of the firms trading.
Its financial services division’s share of losses after tax in its joint venture with Pivotal Growth was £400,000, compared to a loss of £200,000 last year. It said this reflected higher transaction costs.
Pivotal Growth sees rise in adviser numbers
LSL’s joint venture with Pivotal Growth now has more than 450 advisers, including 150 mortgage and protection advisers from John Charcol.
It has acquired five businesses so far this year bringing its total number of acquisitions to 14, which LSL said made it one of the largest mortgage and protection brokers in the UK.
LSL said this would give Pivotal Growth the ability to “leverage its scale to attract deals and drive revenue synergies and profitability”.
Its underlying financial performance also “steadily improved” during the period as it increased in scale and moved out of the establishment phase.
LSL has invested £13m in Pivotal since 2021 and said it continued to closely monitor its performance to maximise returns for shareholders.
It said its view was to build the business and exit over a three-to-six-year period after launch.
Following the reporting period in July this year, LSL invested an additional £2.2m in Pivotal Growth to support its buy and build strategy.
LSL profits nearly double
During H1, LSL reported a profit before tax of £13.8m, up from £7.4m last year. It put this down to “materially higher” underlying operating profit.
The group revenue came to £85.4m, up from £72.5m last year.
David Stewart, group chief executive of LSL, said: “Following a period of significant strategic transformation, we have delivered a robust financial performance in the first half of 2024 during a period in which our end markets have been fairly muted.
“Each of our businesses has achieved strong market share whilst focusing on delivering against our strategic priorities and putting in place a solid platform for future growth.”
He added: “Today, LSL is a more streamlined, agile group comprising three strong businesses, each with attractive organic growth opportunities that are well positioned to capitalise from any further improvement in the housing and mortgage markets.
“Our focus is on maximising the performance of our businesses to deliver value to shareholders.”
