Business Review
Directors’ Report and Business Review
Principal Risk and Uncertainty Mitigation
• The continued volatility and economic uncertainty within the UK. In The Board regularly focuses on counter cyclical income streams to ensure that
particular, within the UK housing market, transaction volumes (both house the growth in income in Lettings and Asset Management set off the impact of
purchase and remortgage) and house prices may adversely affect the reduced transaction numbers.
profitability and cash flow of all our key brands and businesses.
• The current economic uncertainty especially in the financial sector (both The Board regularly reviews trends in market volumes and decides whether any
within the Eurozone and the UK) could also impact on lender behaviour and actions such as cost base reduction measures are required.
the availability of mortgage credit which will have a consequential impact on
the housing market by impacting mortgage availability.
• LSL has an exposure to the Central London property market via Marsh Marsh & Parsons is a well managed business with a diversified strategy. It operates
& Parsons. While historically the London market has been more robust in all key segments of the London market. The Board closely monitors the
compared to the rest of the UK, there is a risk that the London market fails to company’s performance. Further, regular reviews of trends in market volumes are
grow or that LSL fails to maximise the potential growth. undertaken and decisions made on any cost base reduction measures.
• Loss of key surveying or corporate services clients or contracts at their There has been an increased investment in customer services to retain existing
renewal date or significant reduction in volumes combined with pressure on clients and attract new ones. In addition, we are continuing to develop our
fees, either as a result of adverse market conditions, market consolidation, private survey proposition to provide an alternative income stream.
competition or inadequate service delivery.
• Liability for inaccurate professional services advice to clients (e.g. inaccurate Monitoring arrangements include oversight by the Board (including regular
valuations) together with the risk that LSL fails to maintain appropriate risk review of the PI provision) and appropriate quality controls and Internal Audit
management arrangements. reviews of services provided on a sample basis. There are also specific operational
controls implemented within the Surveying Division which include a risk based
criteria for the identification of transactions to be reviewed by on-site specialists.
• Failure to effectively deliver and manage the market share and fee growth Regular monitoring by the Board is undertaken on the Division’s progress.
initiatives for Estate Agency.
• Failure to comply with existing legislation/regulation or changes to LSL business units are supported by the Compliance and Legal Services teams
legislation/regulation and/or Government policy which may impact on who closely monitor existing business practices and any reform proposals.
business results or the UK housing market in general. Where appropriate Government departments and/or trade bodies are engaged
in a dialogue.
• In response to the financial crisis, significant changes to financial services The Board is monitoring the impacts of these changes and assessing what
regulations, including the mortgage market review and retail distribution changes to business practices may be required to ensure compliance with new
review are underway. legislation.
• Failure or interruptions of information technology services on which the Dedicated in house IT departments with specialist staffing. Maintenance
Group is reliant for operational performance and financial information. of a formalised business continuity infrastructure and contingency plans
in the event of a system failure. Regular monitoring by subsidiary company
management, external specialists and Internal Audit, with any system issues
highlighted to the Board.
• Loss of senior management who are key to delivering the future growth The Remuneration Committee reviews the remuneration policies of the Group
strategy of the Group. on an annual basis to ensure staff are appropriately incentivised. In addition,
the Nomination Committee considers succession planning for key staff on a
regular basis.
Approved by and signed on behalf of the Board of
Directors on 28th February 2013.
Steve cooke Simon Embley
Group Finance Director Group Chief Executive Officer
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