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 continued 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 two 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 three 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. 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. In the second graph, you can see approvals by quarter for 2022, the averages for recent years, and 2025. While 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 one in eight 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 at General Electric has my vote. Over to you, David.
Thanks, Adam, and good morning, everyone. 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 eight.
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 2024, 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 2025, we have momentum. Second half revenues grew compared to the first half in every division while 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 nine. 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 2025, 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 operating platform in financial services and the AVM in surveying, as well as strengthening a number of our teams. 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 two headwinds. Changes to National Insurance increased costs by around GBP 1.5 million. Following our previously announced decision to exit protection-only firms, we absorbed a year-on-year profit headwinds 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 two reasons. First, as previously advised, in 2024, we benefited from unusually low levels of variable compensation, particularly in the first quarter. Secondly, during 2025, 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 while 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 advisor market. While the total number of advisors reduced 6% during the year, this was impacted by the loss of protection-only advisors. The underlying advisor base was still down, although in a flat market.
A focus on improving advisor 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. While protection revenue was clearly impacted by the exit from protection-only firms. In summary, total revenues grew 1% year-over-year, while underlying profit increased by 28% with margin expanding by around 470 basis points. This, however, includes our share of the JV. Excluding their 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. While divisional revenue was down 2%, underlying profits grew 6%.
In residential sales, market volumes increased by 10%, while 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 incurred 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 eleven. 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%-100%. Working capital saw a modest outflow 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 were 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 expenditure during the year was GBP 4.3 million, primarily related to the investment in technology, while 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. Trading 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. 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 & 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 four lettings books, two branch openings, one 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.