Lsl Property Services Stock

Hello, and welcome to LSL's half year results presentation. Thank you for joining us. I'm Adam Castleton, Group Chief Executive. I'm joined by David Tilak, our Group CFO. I'll start by taking you through the key highlights from the first half. David will then take you through the financial performance in more detail before I come back to talk about the opportunities ahead.

So let's start with the highlights. I think there are 3 things to take from our first half results. Firstly, we delivered further profit and margin growth. And importantly, this was achieved in markets which developed broadly as we expected. They were not particularly strong, but nor have we seen the deterioration that some of the wider market commentary might suggest. Against that backdrop, the group has continued to perform well.

Secondly, we launched our group-wide transformation program focused initially on finance and procurement. We expect this to deliver at least GBP 5 million of annualized benefits with the benefits building through 2027. Transformation will continue to be an important part of how we strengthen LSL. Looking ahead, technology is likely to become an increasingly important focus as we consider how we can use it more effectively to simplify processes, improve how we work and support our businesses.

We make these changes from a position of strength. It is more than cost reduction. It is about creating a simpler, more effective LSL, making better use of our scale and capabilities and providing a stronger platform for future growth. And thirdly, we remain on track for the full year. Trading since the period end has developed as anticipated, and our expectations for 2026 remain unchanged. So overall, a good first half, further financial progress, a significant transformation program now underway and confidence in our expectations for the year.

What I think is important on this slide is not any of these numbers, it's the combination. Profits are growing, margins are expanding, cash conversion remains high and our return on capital employed has increased again to 36%, around twice the historic level for LSL. That reflects the very different shape of the group today. We are capital-light. We have structurally stronger margins and the business generates significant cash. And importantly, our revenue mix is much more resilient than many people might assume. The majority of group income is not directly dependent on residential property transactions, given our significant income streams from lettings, remortgaging, platform fees and other recurring or repeatable revenue streams.

Our resilient model means we can continue to invest selectively, where we see attractive returns, while at the same time, returning capital to shareholders. In the first half, we returned more than GBP 12 million through dividends and share buybacks, while maintaining a strong balance sheet. And we still see further opportunity. Our group margin is now 17% compared with 16% in the first half last year. Our transformation program supports our ambition to move that above 20%. So for me, this is increasingly a high-return, cash-generative and resilient business with further opportunity to improve its economics. That is a very attractive combination.

Turning briefly to our markets. Overall, they developed broadly as we expected during the first half. The residential sales market was slightly smaller year-on-year as expected, largely because of the Stamp Duty-related pull forward in the comparative period. Purchase transactions remaining around long-term averages with some softness in London, where our exposure is relatively limited. The mortgage market continued to recover and remortgaging was particularly strong as significant volumes of fixed rate products reach maturity.

That is important for LSL because remortgaging supports activity across both financial services and surveying. Lettings also remain resilient. We have successfully supported the implementation of the Renters' Rights changes across our network. Contrary to some of the more negative commentary, we've not seen evidence of significant landlord withdrawal. So overall, fairly ordinary markets, broadly as we expected and a backdrop against which we have continued to perform.

Alongside the financial performance, we've remained very active commercially across the group. In surveying, we have renewed important lender contracts, acquired further allocation wins and continue to develop our AVM proposition. In estate agency franchising, we've expanded the network, acquired letting books, added recurring income and invested further in areas such as conveyancing. We've also completed selective bolt-on acquisitions, also in financial services, where they improve our capabilities or strengthen our market position.

And Pivotal Growth has continued to grow profitably, building scale through further acquisitions and self-financing. The common theme is discipline. We are investing where we can strengthen our businesses, deepen our relationships and generate attractive returns. So even fairly ordinary markets, there has been a lot of meaningful commercial progress across LSL. We've also been changing how LSL operates. The transformation program is the most visible example. It is about simplifying the way we work, making better use of great capabilities, group capabilities and reducing unnecessary duplication. But there's a broader change taking place as well. We're working more collaboratively across businesses, which historically operated independently.

We've strengthened management and expertise. We are improving communication across the group and continuing to develop a more accountable and connected culture. We've also worked hard to improve how LSL is understood externally. The business has changed significantly over recent years, but market understanding had not always kept pace. We've increased engagement with both existing and prospective investors, and we are seeing much greater interest in the group and in the opportunity ahead. So there's a lot happening beneath the headline financial performance commercially, organizationally and in how we operate as one group.

I'll now hand over to David. David joined us at the beginning of the year and has settled into the business extremely quickly. His experience in transformation is already proving valuable with measurable benefits. He'll now take you through the financial performance in more detail, including the economics of the transformation program. David?

Thank you, Adam. I will now take you through the group's financial performance and the results from each of our divisions. I'll then cover the transformation program, cash generation, capital allocation and our outlook for the full year. Let me begin with the group's headline financial results. The group delivered well in the first half. Revenue increased by 3% to GBP 92.3 million. Our underlying operating profit increased by 11% to GBP 15.9 million.

Profit grew materially ahead of revenue, lifting our underlying operating margin by 130 basis points to just over 17%. This is our highest first half margin for more than 15 years. The group also remains highly cash generative with operating cash conversion of 91% over the last 12 months. Return on capital employed increased from 31% to a record 36%, demonstrating the attractive returns generated by our capital-light business model.

Adjusted diluted earnings per share increased by 14% to 11.7p, benefiting from higher profit after tax and our share buybacks. Taken together, these results show that stronger margins and disciplined capital allocation are translating into improved shareholder returns. I will now explain the principal movements in our underlying operating profit. We started with underlying operating profit of GBP 14.4 million in the first half of '25 and delivered GBP 15.9 million this year. That represents an increase of GBP 1.5 million or 11%.

Changes in our underlying markets contributed GBP 0.7 million with stronger remortgaging and product transfers more than offsetting lower housing transactions. Improved performance across our businesses contributed a further GBP 1.7 million over and above the market impact, and I'll explain these drivers as I take you through the divisions. Salary inflation and higher National Insurance combined with GBP 2 million of costs. We also invested a further GBP 0.9 million, principally in the financial services technology platform. Cost management actions contributed GBP 1.9 million, including a further GBP 0.5 million reduction in our central costs. The key point is that our operating actions absorb both wage inflation and investment, allowing us to deliver double-digit profit growth and significant margin expansion.

I will now turn to the divisional performance, starting with Surveying & Valuation. Surveying & Valuation comprises 3 closely aligned businesses. These are our core B2B valuations operations, our B2C survey business and Asset Management, which provides property recovery and specialist receivership services to lenders. The division delivered another strong performance. Revenue increased by 6%, underlying operating profit increased by 11% and margins improved to approximately 23%.

Within B2B valuations, we successfully renewed every contract during the period and secured additional allocations from 2 major lenders. The B2C survey business also continued to grow with strong customer satisfaction reflected in its 4.8 Trustpilot score. Asset Management was a standout performer with revenue increasing by approximately 44% to GBP 3.7 million and an operating margin of more than 50%.

Although it remains relatively small within the division today, is already highly profitable and has clear potential for further growth. Alongside our proprietary data and automated valuation capabilities, it also gives the division several routes to further profitable growth. I will now turn to Financial Services. Mortgage lending performed well in the first half with revenues increasing by 8%, keeping pace with the market and maintaining or increasing our share across our principal mortgage channels.

Adviser productivity also improved and overall revenue per adviser increased by 12%, although product mix reduced the average fee per completion. Revenue reduced by 3% and underlying operating profit reduced by GBP 0.9 million, principally reflecting the investment in the new CRM and lower adviser numbers, including the departure of protection-only firms last year. There are clear areas for improvement, including increasing protection penetration and driving adviser productivity. With around 12% of all U.K. mortgages flowing through our adviser network, we have genuine scale and reach. At its core, this is a very good business, and our priority is to translate that position into stronger growth and returns.

Turning now to estate agency franchising. This division delivered an excellent set of results. U.K. housing transactions were 4% lower in the period versus the prior year, which had benefited from the Stamp Duty changes in April '25. Against that stronger comparator, divisional revenue increased by 2% to GBP 13.2 million. Underlying operating profit increased by 24%, with the margin expanding approximately 6 percentage points to a record first half level of 30%. This demonstrates significant resilience and operating leverage. The managed lettings portfolio increased by 4%, while average income per managed property increased by 3%, strengthening the division's recurring revenue base. We are also investing selectively for future growth. 6 new branches and 7 supported letting book acquisitions expanded the network, while the purchase of the National Search Service and investment in Collaborative Conveyancing strengthened the conveyancing proposition.

Having covered the 3 divisions, I will now turn to the group transformation program. When I look across LSL, I see a great deal of capability, but also a clear opportunity to bring the group closer together to make it work more effectively. Transformation is a key underpin of delivering One LSL, a simpler, more connected and more profitable organization. My immediate priority is our support functions, which have historically operated independently within each of the businesses. We are redesigning the underlying processes, removing duplication and creating better broader roles for our colleagues.

I am confident in our ability to deliver this. We have put together an experienced team that combines a deep understanding of LSL with specialist transformation expertise, and we remain on track to deliver GBP 5 million of annualized savings progressively through 2027. Over the medium to long term, I believe there is a wider opportunity to use technology across our front office operations to improve productivity and bring us closer to our customers. We will pursue that opportunity with discipline and invest where we are confident that returns will be compelling.

I will now turn to the group's cash generation. The group remains highly cash generative with operating cash conversion of 91% over the last 12 months. We began the period with net cash of GBP 27.8 million, and cash from operations contributed just over GBP 17 million. We invested GBP 9 million in acquisitions and capital expenditure. Working capital and depreciation movements represented a further GBP 6.4 million of outflow.

The next line on the bridge combines the GBP 10 million repayment of loan notes with GBP 1.9 million of exceptional expenditure and GBP 3.4 million of taxes paid. Together, these items produced a net cash inflow of GBP 4.7 million, taking our cash before shareholder distributions to GBP 34.2 million. We then returned just over GBP 12 million to our shareholders. After these investments and distributions, we ended the period with a net cash of GBP 22 million.

That cash generation and balance sheet strength support the capital allocation framework I will cover next. Our capital allocation framework remains unchanged. Our first priority is organic investment that can improve the performance and long-term value of our existing businesses. This includes investment in technology, capabilities and the transformation program. Our second priority is selective or inorganic investment through acquisitions and related opportunities that expand our existing businesses or add capabilities.

Alongside investment for growth, we maintain an attractive and sustainable dividend. Our dividend policy is based on 30% of underlying operating profit. We have maintained the interim dividend at 4p per share. We also continue to return capital through share buybacks. We completed the previous GBP 7 million program in January and immediately commenced a new program of up to GBP 12 million, which remains on track to be completed by January '27.

The balance between investing in the future of the group and returning capital to shareholders will reflect the opportunities available rather than a fixed allocation formula. We will continue to assess each use of capital against its expected return, while preserving the balance sheet strength that gives us the capacity to act when an attractive opportunity arises. I will finish with our outlook for the year.

Our businesses continue to perform in line with expectations. For '26, we expect increased revenue and another year of profit growth. This would represent the group's fourth consecutive year of profit growth. We continue to expect operating cash conversion between 75% and 100% together with capital expenditure between GBP 3 million and GBP 5 million. The group has strong market positions, high cash generation and a clear route to further margin improvement. These characteristics underpin our confidence in the outlook and our ability to generate attractive long-term returns.

With that, I hand you back to Adam and for the strategic and operational update.

Thank you, David. What you've heard is a business that continues to deliver financially with strong cash generation and high returns and where we've now launched a transformation program that will improve the economics and capabilities of the group. But I want to finish on why I remain excited about the opportunity ahead. LSL has a very distinct position across the U.K. residential property mortgage ecosystem. We work with lenders, mortgage brokers, state agencies, landlords, buyers, sellers and homeowners. We have strong relationships and capabilities across each of those areas.

Historically, those businesses have been run independently. One LSL is about connecting them much more effectively, making better use of our relationships, our expertise, our data and technology across the group. We've already started that journey. The transformation program is part of it, but it is broader than that. It is about getting more value from the strengths we already have.

So to finish, we've delivered another good first half. We remain on track for the year, and we are continuing to improve the quality and economics of the group. We have strong businesses, a highly cash-generative model and a growing opportunity to create more value by bringing those strengths together. My conviction in the opportunity for LSL remains very high. Thank you.

We have just played out the prerecorded results presentation, and we'll shortly be moving to a live Q&A session. [Operator Instructions] I'll now hand over to Adam to say a few words before starting the Q&A.

Good afternoon, everybody. Thank you very much for coming to this call. For those of you who haven't already seen the video, I hope you found that informative. I'm looking forward to answering your questions. First thing I want to say it's very important this meeting for us in the last year, I put an increasing amount of effort into getting the story of LSL across more widely into the market and more understood. We're already seeing the benefit of that. And the retail video conference we have now is a very, very important part of our IR strategy. So thank you. I'm looking forward to now moving to your Q&A.

Thank you, Adam. Let's start with a question on our marketplaces. So what's your view of the market so far?

Well, the markets, there's a lot of press and press in the U.K. can be quite doom and gloom. The reality is the markets have been pretty resilient. If we look back to our budget that we set for ourselves internally, what we expected the market to be, and we said that last October. The market has pretty much been what we expected, notwithstanding all of the bumps along the way, whether it would be unfortunately, war declared, change of Prime Ministers, interest rates heading in the opposite direction to what people expected.

But the markets have actually been pretty resilient through the year, and we expect the markets to finish flattish for the year, a little bit down in residential exchange, a little bit up in lending and pretty much what we expected, so resilient. So the important thing about that is that we're not relying on market help -- we wish there would be some. It'd be nice to have some help behind us. But actually, it's not been particularly supportive, and we're moving on with resilient markets, and we probably expect the same next year as well. So not particularly helpful, but extremely resilient at the same time.

Thank you. Can you provide more detail on the transformation plan you've just announced in the interims? Could it materially change LSL's earnings over the next few years? And what do you think it could do to margins?

Yes. I think the first and most important thing is we've announced a transformation program. One of the questions, I think that we picked up is someone saying another transformation program. I think this is an interesting one because we've -- off the back of a very strong base and from a position of strength, we've decided to change the way that we operate as a group. That's important. We're not doing this from a position of weakness. We're not doing this from a position of crisis.

So we've set out to change the way we operate by bringing together the strengths of this group by leveraging the strengths of this group by operating in a much more efficient way. So #1, that will allow us to reduce costs, and we just announced GBP 5 million. But secondly, it will mean that going forward, the group will be much more effective to deliver both what we do today, but also new propositions in the future. So I'll pass over to David, perhaps he'll give a little bit of further detail for you on the transformation program that we've announced and some of the things that we may be looking at next.

Yes. Thank you, Adam. So look, I mean, answering the question, there are -- we have 3 very strong divisions, each with market leadership positions, each highly cash generative, strong margins today. But we do -- but they have been operated as 3 individual businesses throughout their time with us. We're now looking at how do we bring them together, not just for cost efficiency, but for the effectiveness across LSL as a group.

So yes, there is a cost-out element to it, but there's also incremental opportunities that we see bringing them closer together. So that's one. We said at the prelims that our first milestone will be to push through 20% and we still -- we're tracking very well against that. And over the last 6 months, we've built the transformation team. We had great engagement across LSL, the talent within LSL are part of that transformation program and look forward to giving you more details as we execute through the first GBP 5 million.

Thank you. Another question here. Do you think lettings could become a significantly bigger part of the group over time?

I think we'll see lettings steadily increasing. It's a very stable market. We haven't seen the large outflows certainly within our book of landlords coming out of the market. So it's very stable. We expect to steadily grow our lettings presence with what we call assisted lettings purchases where we help franchisees to purchase lettings books, which then become part of their business and then become part of our royalty stream. So I think you'll expect to see us continue that program, which will steadily show that we're increasing the number of properties under management for this company.

Great. Thank you. Next question Mortgage revenue increased -- mortgage revenue per adviser increased by 12%. What's driving that? And how much further can adviser productivity improve?

Mortgage productivity increased. We've maintained our position in the mortgage market extremely well. We maintained our market share, and we grew in line or just above the market. I think that will be a good performance compared to anybody out there. The productivity increased mainly because some of the less productive advisers in a slightly slower market would have exited. So we keep our more productive advisers within the network.

I think that's a very nice thing to have. But I think over time, we should be increasing the productivity by increasing the number of products per adviser and getting better penetration, for example, of protection.

Thank you. Next question, perhaps for David. With GBP 22 million of net cash and strong cash generation, what's the best use of cash surplus from here? And can you describe your capital allocation policy?

Certainly. So I mean, first of all, LSL is highly cash generative, and that's not by accident. That's by design. We are structurally capital-light, and you see that in the 36% return on capital employed in the first half. We have a capital allocation policy. It's a 4-step policy, and they are prioritized. So the first is we will always invest in organic capital allocation. That's our #1. And that means scaling our existing operations, making them more profitable. So that could be small bolt-ons that could be investing in transformation, for example.

Then secondly, we have inorganic, and we have strict hurdle rates. We have a history of delivering very well against those small M&A acquisitions. And we'll continue to scout for good opportunities, but they will be manageable. And then we get into the second half of the capital allocation, which is the returns to shareholders. And we have a dividend policy, which is 30% operating profit after tax and finance charges. And we've been paying at slightly higher rates. And even at the interims, we're still above our 30% threshold, and we'll continue that. It's maintainable. It's a sustainable level of dividend.

And then finally, we look to give back surplus cash via at this moment, share buybacks, and we increased that from GBP 7 million to GBP 12 million this year. And we'll continue to look at the right balance. And you would have seen in the first half, it was fairly balanced between investing in the company, 1 and 2 and give back being 3 and 4. That's not formulaic, but it's a balancing act that we'll continue to strive to achieve.

Thank you. Just picking up your point on M&A, perhaps this is a broader question here. What's the view or strategy on M&A for the group?

M&A for the group. This year, we've demonstrated, David mentioned small bolt-ons. We've demonstrated our desire to bring in smaller acquisitions where they make sense and where they either are easy bolt-ons or where they enhance our strategic ambitions or our proposition. So a couple of those examples this year. We brought into the estate agency franchising fold, a small 7-firm network on the South Coast. We're delighted to bring that brand in. The owner is very keen to be part of the LSL story, and that will be an example of a bolt-on.

We've also this year invested in a digital conveyancing firm, which will both help our existing proposition to our franchisees, but also give us the opportunity to improve the proposition further to potentially monetize it across the group. So in terms of smaller bolt-ons or tactical, we continue to do those. We're delighted. The returns are very high because obviously, at those levels, the pricing pressure is lower.

We always look at larger acquisitions. Part of the reason that we hold a degree of surplus cash is if ever any opportunistic medium-sized acquisitions come along, we're able to do that out of cash, more rare, and we'll be very, very careful about those because most larger deals do come potentially at a premium. And when it comes to much larger deals, again, I'm aware of those in the market. We'll always be very careful about those. We never say never, but they'll be looked at each time on their own basis. But our main focus is smaller, what I call either infill strategic or infill proposition or bolt-ons where we can take on a firm in what we do and move on. Other acquisitions we look at selectively on their own basis.

Thank you. Another broader question. LSL ultimately benefits from people moving house, taking out mortgages and having properties valued. What do you think of the current regulatory environment? And how is that affecting the business?

Thank you. First thing I think I would say is that regulation as a large business with know-how within its people, within its processes, it is our friend. So regulation is our friend. One of the examples of that this year was the Renters' Rights Bill that came in, very, very complicated. A lot of provisions were brought in at the very last minute when we received the detail at about 5 minutes, 2 minutes or 5 minutes past midnight, I can't remember which, on the [ eve ] basically of when that became legislation.

And we were able with our knowledge and expertise to bring all of our franchisees along on the journey with something that's quite complicated. That incidentally brings in opportunities for independent owners of lettings properties, who are now more attracted to the proposition that we can give with all the expertise and know-how we have. So that's been actually something that's gone very well. We haven't seen disruption. We've heard of some potentially in London, but we haven't seen the disruption that we've read about sometimes in the press.

Secondly, this year, and we just heard the final view from the FCA. We have the interim review of the protection review and now the final one, which sets out that in the U.K., we are underprotected, I think 58% underprotected. We've got the opportunity there to drive our penetration to increase the productivity, as I mentioned earlier. So generally, the environment is helpful for a larger player like us who's got the expertise.

The final point, which is to come is the government would like the buying and selling process to be more efficient, and we certainly support that. I think that's a long journey, but our combination of data about our property, data about the end customers and the mortgage customers, I think will be very helpful in terms of bringing together upfront information that allows the process to be much quicker. So all in all, we're a business well set up for the regulatory changes and broadly, they're supportive of a company like ours.

Thank you. Next question is on AVMs. So what's your view on AVMs? And how do you think the progression will be going forward?

So AVMs, I'm sure everybody knows Automated Valuation Model. This is one of the 3 types of products that are provided for valuations, physical, remote and AVM. AVM has existed now since round about the global financial crisis in any meaningful way. And it's slowly been increasing. So now it's been and has been for a little while, around about 30% of the total mortgage approval market. It's growing slowly. We haven't seen any discontinuity at the moment.

And 2 years ago, we started and successfully tested, trialed and launched our own AVM with one lender, and we're trialing it with others as well. We think the combination of physical, remote and AVMs, which we provide lenders is a winning strategy.

Thank you. There are no more questions at this time. Unless there are any last-minute questions. Perhaps I'll hand over to you, Adam, for some final words.

Thank you. Listen, I'm delighted to have the opportunity to speak to you. Obviously, it's an anonymous call. We're always delighted to meet people face-to-face. If you have further questions, you can contact our IR department, who would just set up anew to really push and drive the story into the market and a story which will be increasingly well understood for LSL and the opportunities we have ahead of us.

So thank you very much for your time. David and I thank you all for your interest and for your support, and we look forward to speaking to you again soon. Thank you.

Thank you to the management team for joining us today. That concludes the LSL investor presentation. Please take a moment to complete a short survey following this event. The recording of this presentation will be made available on Engage Investor. I hope you enjoyed today's webinar.

Welcome to LSL's preliminary results presentation. Thank you for joining us today. I'll start by talking through the key highlights. David will then take you through the financial results in more detail. I'll then come back and talk about the opportunities ahead and how we see the next phase of growth for LSL. Last year, I set out clear priorities: performance, technology and data, aligning the collective strengths of the group and empowering an accountable culture. In 2025, we have delivered strong progress against those priorities.

We also continue to build for the future. Having spent a year in the role, my conviction in the opportunity for LSL has only increased. Today, I want to demonstrate 2 things to you: strong delivery and a platform for future growth. In 2025, we delivered on our promises with profit growth of 17% to GBP 32.6 million. This was a broad-based performance with profit up in all 3 divisions. There was margin expansion up to a record 18%, which brings in sight our next milestone of 20%.

With focused cost discipline, we also reduced our central costs. And with 90% cash conversion, bringing 35% return on capital employed and increased absolute returns to shareholders. Our markets improved in 2025, although they remain slightly below long-term averages. We performed well, and we maintained our strong market positions. You'll see the graphs on the slide. The first one is about residential sales. Residential sales in the market were up 10%. And you can see the pull forward in Q1 due to the stamp duty changes and H2 was normalized.

We outperformed the market with our residential revenue up 12% and our residential pipelines were strong at the end of the year against bursting pipelines the year before in the lead up to the stamp duty changes. Mortgage approvals were up 10% as was surveying revenue. And in the second graph, you can see approvals by quarter for 2022, the averages for recent years and 2025. Whilst the market remains around 4% below long-term average, our surveying income per day is at record levels, supported by contract and allocation wins and B2C growth.

The mix of product transfers to remortgage is slowly recovering back to norms, which is very helpful for us. Mortgage lending was up 19%, and we delivered an increase of 23%, driving our mortgage market share up to 12%, which is 1 in 8 residential mortgages in the U.K. Our markets were resilient, all in all, given the uncertainties throughout the year, such as tariffs that were introduced over the Atlantic and the lead up to the U.K. autumn budget. It looks like London property markets may have been adversely affected in Q4 compared to the rest of the country. LSL is not exposed to the London market in our estate agency franchise business.

It is my pleasure now to introduce David Tilak, who joined us in January and is already making a very positive impact on the business. David comes with incredible experience of delivering transformation and turning strategy into performance. Anybody who's been on the finance leadership program created by Jack Welch of General Electric has my vote. Over to you, David.

Thanks, Adam, and good morning, everyone, and thank you for the warm welcome. It's been a real pleasure joining LSL and working with you over the past few months. Since joining in January, I spent a lot of time getting under the skin of the business, meeting customers, lender partners and teams across the group. That's given me a valuable perspective on how the business operates day-to-day, where we create value, where we have further opportunities to improve our returns. I've been particularly impressed by the capability and commitment across the organization and by the wealth of opportunities we have to continue building on the strengths of the business.

My focus as CFO is to ensure that operational strength consistently translates into high-quality earnings, strong cash conversion and disciplined capital allocation. The results we're presenting today reflect the progress we're making. Now I'll turn to Page 8. Before examining the drivers of performance, it's worth briefly stepping back to reflect on the progress the group has made over the past few years. 2023 market conditions were clearly different, and LSL was a different business. 2025 represents the second full year of results since the transformation of the business.

Since the franchising of the Estate Agency business, we've continued quietly to strengthen LSL. The group now operates with lower capital intensity, stronger cash generation and is more resilient. Against that backdrop, 2025 represents another year of strong progress. Compared to '24, revenue grew by 6%, underlying operating profit increased by 17% and margins reaching 18%, the highest level we have achieved in over 15 years. Importantly, we view this margin level as a solid foundation rather than the ceiling. There remains meaningful opportunities to improve productivity, streamline operations and strengthen our commercial execution.

Exiting '25, we have momentum. Second half revenues grew compared to the first half in every division, whilst group operating profit was up 20%. Looking forward, our first milestone realizing just some of the available opportunities is to push our margins through 20%. Turning to Page 9. I'll now provide a walk of the key drivers of what was a year of strong profit delivery. Underlying operational performance improved by GBP 5 million, reflecting a combination of improved market conditions and operational execution. Markets were more active in '25, providing the opportunity to grow volumes, and we executed on those opportunities.

Further, we grew market share in surveying and to a lesser extent, in the Financial Services division. In addition to scaling volumes, we're able to realize GBP 1.1 million of pricing benefit. This reflects the value our lenders place on the relationship as well as us realizing post-integration commercial opportunities. Such a strong underlying performance enabled us to continue to invest in technology and capabilities.

We invested GBP 3.6 million to advance our core platform technology, including the development of our broker operation platform in financial services and the AVM in surveying as well as strengthening a number of our teams. So in summary, volume, share and pricing drivers contributed GBP 8.7 million of benefit, and we invested GBP 3.6 million. In terms of cost reduction, we delivered GBP 1.9 million of cost efficiencies across the group, primarily through reduced professional fees, streamlining IT and some targeted headcount reductions. There are clearly more opportunities to drive meaningful efficiencies across the group, and it's an area I'm keenly focused on.

Turning to Pivotal. Our joint venture contributed GBP 1.7 million of profit growth year-on-year, and it's pleasing to see them scale. Finally, we absorbed 2 headwinds. Changes to national insurance increased costs by around GBP 1.5 million. And following our previously announced decision to exit protection-only firms, we absorbed a year-on-year profit headwind of GBP 2.2 million. Taking these elements together, the group delivered a 17% increase in underlying profit.

Let me now turn to the performance of the individual divisions. For those of you following online, that's Page 10. Starting with Surveying and Valuation. The division delivered 10% revenue growth, benefiting from both increased mortgage market activity with overall mortgage approvals up 10% as well as by growing share by 100 basis points. Importantly, volume growth was achieved as a result of excellent execution, winning new contracts as well as increasing allocations with existing customers. The B2C channel grew by 16% during the year. Historically, this channel has helped us level load surveying capacity. And during the year, we took a further step forward, scaling the business by continuing to invest in the underlying capabilities.

Margins were slightly lower than prior year for 2 reasons. First, as previously advised, in '24, we benefited from unusually low levels of variable compensation, particularly in the first quarter. Secondly, during '25, the division absorbed targeted investment in the development and launch of our AVM platform, along with the expansion of data science capabilities. In support of margin improvement, operational productivity notably improved during the year with jobs per surveyor increasing by 8%. This was the result of a program of time optimization across the surveying workforce and the development and embedding of new productivity tools.

To summarize the year, the division delivered strong revenue growth, launched and commercialized the AVM whilst meaningfully driving productivity. Turning to Financial Services. The mortgage market strengthened during the year with total mortgage lending increasing by around 19% to GBP 291 billion. The division continues to focus on the quality of the network, concentrating on small and medium composite advisory firms, which represents around 80% of the adviser market. While the total number of advisers reduced 6% during the year, this was impacted by the loss of protection-only advisers.

The underlying adviser base was still down, although in a flat market. A focus on improving adviser productivity enabled us to grow mortgage fees by 19%, along with slightly growing our market share. General Insurance revenues further increased by around 9%, supported by stronger purchase and remortgage activity during the year, whilst protection revenue was clearly impacted by the exit from protection-only firms.

In summary, total revenues grew 1% year-on-year, whilst underlying profit increased by 28%, with margin expanding by around 470 basis points. This, however, includes our share of the JV. Excluding the contribution, operating profit grew by around 8%, with operating margin increasing by around 120 basis points despite continued investment.

Finally, Estate Agency delivered a resilient performance overall. Whilst divisional revenue was down 2%, underlying profits grew 6%. In residential sales, market volumes increased by 10%, whilst the division outperformed, growing revenues by 12%. In lettings, the market remained largely flat to slightly down, and our divisional revenues were broadly similar year-on-year. Within the division, land and new homes created a GBP 1 million revenue headwind following the loss of a major MOD contract, along with a slight downturn in the general sales activity.

As a result of a targeted restructuring, the division was able to offset this headwind, increasing its total margin by around 2 percentage points to 31%. A key focus for the division is growing lettings royalty income, which we see as low risk and annuity-like in nature. During the year, we supported the acquisition of 10 letting books, representing around 1,400 properties. It is our intent to continue to build that recurring income base over time.

Turning to Page 11. As you can see from the cash walk, LSL is highly and consistently cash generative. The group delivered GBP 33.5 million of cash flow from operations with a cash conversion of around 90%, comfortably within our stated range of 75% to 100%. Working capital saw a modest outflow of around GBP 1.7 million, largely reflecting the timing of trade payables. Looking ahead, we see opportunities to further strengthen our working capital discipline, including embedding clearer working capital metrics across the group to help drive stronger cash performance. Loan notes to the JV Pivotal was subsequently repaid just after year-end.

Adjusting for that, net cash would have been GBP 37.8 million. It's important to note that we do not expect to provide any further funding for the JV now that they have sourced external debt. Capital expenditures during the year was GBP 4.3 million, primarily related to the investment in technology, whilst a further GBP 2.7 million was invested to secure the 10 letting books.

Turning to shareholder returns. Our dividend remained in line with previous years, and we elected to introduce an enhanced share buyback program. Taken together, dividends and share buybacks represented just under 50% of cash flow from operations during the year, while still allowing us to meaningfully invest in the business.

Turning to Page 12. We have a strong proven track record of achieving attractive returns on our investments with our return on capital employed growing to 35%. We have a clear capital allocation policy that helps guide our decisions. Alongside organic investment, we remain open to selective inorganic opportunities, assessed against a clear return threshold and governed by disciplined due diligence. Assuming dividends continue at prior year levels, taken together with the recently announced share buyback program, this would represent a cash return yield of over 9% based on our market capitalization at the beginning of the year.

Overall, our focus remains on deploying capital where it best generates attractive long-term returns for our shareholders. Turning to Page 13. Finally, a few comments on our outlook for 2026. Trends so far this year gives us confidence in the performance of the business, although we recognize that the broader macroeconomic environment remains uncertain. Based on current conditions, we expect to deliver performance in line with current market expectations for the year. From a cash perspective, we expect cash conversion to remain towards the mid- to upper end of our stated range. As in previous years, performance is expected to be weighted towards the second half, reflecting the normal pattern of activity in our markets. With that, I'll hand you back to Adam to continue the presentation.

Thank you, David. So it's a strong financial delivery across the group and opportunities to take us forward. In 2025, we've been building the foundation for LSL's next phase. We've strengthened the platform of the business. We built scale and deepened market positions. We've improved collaboration across the group. We've invested in technology and data, and we've strengthened the culture and leadership. These foundations position us for the next phase of growth.

In the next phase, we expect to take advantage of changing markets, further leverage our strengths, all with our priority to drive higher returns. Before talking about the next phase, it's worth reminding ourselves of the strengths we start from at LSL. We are capital-light. We're a highly cash-generative model with strong market positions across the housing and mortgage ecosystem. We have long-standing relationships with our partners. The question now is how we build from that platform to drive the next phase of performance.

Structural changes are taking place across our markets. Customer expectations are evolving. There's demand for integrated advice, partners are seeking scale and trusted relationships. Technology and AI are transforming the journey and regulation is increasingly complex. These structural changes play to our strengths, further our competitive advantage and create opportunities we are already beginning to realize.

To convert the opportunities into performance, we will leverage our strengths. Commercially, we will build on group specialisms, for example, later life, buy-to-let and land and new homes. We will increase product penetration and further develop cross-sell across the group, for example, in conveyancing and home surveys. We will drive efficiency by leveraging group scale and capability and driving productivity through data and digital tools.

This is about turning platform strength into growth, productivity and higher returns. It's been a good start to the year. In commercial activity, we've already acquired and completed on 4 lettings books, 2 branch openings, 1 bolt-on acquisition and the financial services broker platform rollout is gathering pace. Trading currently supports our market expectations for the year. We do remain mindful of macro uncertainty, and we track metrics daily. We expect further profit growth this year with a strong cash conversion. We are focused on converting our scale and capability into sustained growth and returns. I repeat my conviction in the opportunity for LSL has only increased. Thank you.