Foxtons Group Plc · LSE:FOXT
Foxtons — Investor Day (June 2021)
59 slides from Foxtons's investor day presentation, Jun 3, 2021
Slide 1: Foxtons Group plc Virtual Capital Markets Day Presentation
Foxtons Group plc Virtual Capital Markets Day Presentation 03 June 2021
Slide 2: Important information
Important information This presentation includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believe”, “estimates”, “plans”, “projects”, “anticipates”, “e
Slide 3: Agenda
Agenda 1. Introduction Ian Barlow 2. Positioned for Growth Nic Budden 3. Customer and Market Opportunity 4. Foxtons Strategy Sales Nic Budden Lettings Ed Phillips and Sarah Tonkinson Technology and Data Science Patrick Franco and Steve Rodgers Culture of Sales and Service Intensity Sarah Mason 5. De
Slide 4: Presentation team
Presentation team Ian Barlow Nic Budden Richard Harris Patrick Franco Chairman Chief Executive Officer Chief Financial Officer Chief Operating Officer Ed Phillips Sarah Mason Sarah Tonkinson Steve Rodgers Chief Sales Officer - Chief People Officer Managing Director - Marketing Director Lettings Inst
Slide 5: Introduction
| | L \ | . ah in \ : 2 j Introduction lan Barlow
Slide 6: Introduction to Foxtons
Introduction to Foxtons 6
Slide 7: Positioned for growth
Positioned for growth Nic Budden 7
Slide 8: Positioned for growth
40 years of Foxtons Iconic Positioned Expansion Optimisation brand for growth 8
Slide 9: Foxtons is different
Foxtons is different Competitive advantages Key outcomes Premium customer service Brand and reach and customer results Technology and Customer loyalty and advocacy data science Sales and Business results service intensity 9
Slide 10: Giving us a strong foundation to build from
Giving us a strong foundation to build from (1) (2) (3) Leading brand Strong value proposition Sector leading service #1 8% 4% Brand awareness in London property Rental yield premium Sales price premium Customer loyalty Technology platform Data science 86% 77% Single 1.6bn Landlords All customers Pl
Slide 11: And a unique market positioning
And a unique market positioning (1) Average agency sales fee High 2.4% Online Multi- 1.2% branch Property Sales transactions and mass- market Foxtons UK average (2) Average agency lettings fee Prime 11.0% focus 7.0% Small independent Low agents Foxtons UK average Discount Premium Sales fee Market po
Slide 12: Customer and market opportunity
Customer and market opportunity Nic Budden 12
Slide 13: Customer and sector dynamics present a compelling opportunity
Customer and sector dynamics present a compelling opportunity Customer needs Sector • High quality service • Highly fragmented sector, few brands with little differentiation • Responsiveness (3) • 2,600 agents in London, 10,600 UK-wide • Expert market knowledge • Low transaction frequency • Great UX
Slide 14: London is a uniquely attractive residential property market
London is a uniquely attractive residential property market The UK’s only true global city with a huge concentration of property value 13% of UK population 33% UK sales 33% of UK sales by value 38% UK lettings 38% of UK lettings by value 84% Strong fundamentals for growth Brand awareness 5 year fore
Slide 15: With opportunities in urban markets outside London
With opportunities in urban markets outside London SE England and next largest 15 urban areas of the UK represent a similar market size opportunity to London 41% of UK population 31% UK sales 31% of UK sales by value 35% UK lettings 35% of UK lettings by value 36% Strong growth forecasts Brand aware
Slide 16: Potential for sales market upturn
Potential for sales market upturn Annual sales transaction Growth scenarios The last five years have been the most turbulent in 2.0m the UK’s modern history, with 3 general elections, UK excluding London Brexit and Covid-19 1.5m 2014 volumes +31% fee pool 1.0m • Impacted London severely: 2019 volume
Slide 17: Lettings market is at an inflection point
Lettings market is at an inflection point Sector is rapidly professionalising, driven by: • New regulatory and compliance requirements for landlords • New regulatory and compliance requirements for agents • Entry of institutional landlords providing a more professional tenant experience • Landlords
Slide 18: Strategy
Strategy Nic Budden 18
Slide 19: Strategic objectives
Strategic objectives Market Diversify Profit leadership revenues growth 19
Slide 20: Strategic levers
Strategic levers Market Diversify Profit leadership revenues growth Data science and Productivity Sales technology to drive New sales channels growth share growth Leverage proposition Growth in new Profit contribution from Lettings to deliver growth Build to Rent Sector lettings acquisitions The bes
Slide 21: Sales
Sales Nic Budden 21
Slide 22: Positioned for growth
Positioned for growth Segment: Value Core Rare Prime Foxtons fee: 2.5% 2.5% 2.5% 1.5%-2.5% Bespoke Share of comms. pool: 6.3% 7.2% 5.6% 4.4% 4.5% Cumulative value of London sales commission pool (%) Total value of London sales commission pool (£m) 350 100% 90% 300 80% 250 70% 60% 200 50% 150 40% 100
Slide 23: Strategic levers
Strategic levers Market Diversify Profit leadership revenues growth Data science and Productivity Sales technology to drive New sales channels growth share growth Leverage proposition Growth in new Profit contribution from Lettings to deliver growth Build to Rent Sector lettings acquisitions The bes
Slide 24: Growth through data science and technology
Market Diversify Profit Growth through data science and technology leadership revenues growth • Estate agents handle large numbers of buyer and seller leads, with the majority having little likelihood to transact • Agents manually identify prospects likely to transact and nurture these for long peri
Slide 25: Diversifying revenues
Market Diversify Profit Diversifying revenues leadership revenues growth National sales channels International sales channels Target SE England and top 15 urban China and Hong Kong sales desk 36% areas in UK via asset-light model, (1) partnered with largest China agents Brand awareness utilising hig
Slide 26: Lettings
Lettings Ed Phillips and Sarah Tonkinson 26
Slide 27: Positioned for growth
Positioned for growth (2) Customer segments Highest market share of new lettings deals in London Portfolio % (1) 10% Foxtons fee 5% 5% Institutional Bespoke 0% 9% Premier 9%-10% (3) (10-100 properties) 10% And growing YoY 5% Multi property 9%-11% 0% 17% (2-10 properties) (4) Growing landlord repeat
Slide 28: Strategic levers
Strategic levers Market Diversify Profit leadership revenues growth Data science and Productivity Sales technology to drive New sales channels growth share growth Leverage proposition Growth in new Profit contribution from Lettings to deliver growth Build to Rent Sector lettings acquisitions Expansi
Slide 29: Unique proposition for landlords and tenants
Market Diversify Profit Unique proposition for landlords and tenants leadership revenues growth Customer service Results for customers • 360 service from bespoke teams Matching more people with more property: • London-wide marketing and proactive selling • 8% rental yield premium • Database of vette
Slide 30: Leverage unique proposition to deliver organic growth
Market Diversify Profit Leverage unique proposition to deliver organic growth leadership revenues growth New customer Landlord and tenant Asset Management Increasing landlord and acquisition retention approach to lettings tenant spend Segmented Customer customer Data science to Product retention and
Slide 31: Drive M&A profitability through Foxtons infrastructure
Market Diversify Profit Drive M&A profitability through Foxtons infrastructure leadership revenues growth Technology platform Centralised functions London coverage Supports rapid integration of Integrate non-sales functions at low Leading brand and branch coverage acquired portfolios and drives agen
Slide 32: Acquisition case studies
Market Diversify Profit Acquisition case studies leadership revenues growth Acquisition criteria 3 acquisitions in 2020: 1,600 tenancies Business Suitability Financial Impact £2.6m annualised revenue £4.6m acquisition price Foxtons “winning” territory Revenue profile Fully integrated into Foxtons op
Slide 33: Build to Rent sector is a growing market
Market Diversify Profit Build to Rent sector is a growing market leadership revenues growth (2) Build to Rent sector projected growth to 2025 Foxtons is ranked no. 1 by market share in BTR (units) (1) 23,000 Foxtons 4% Agent 2 8% 22% 12,000 9% Agent 3 Agent 4 17,000 12% Agent 5 19% Agent 6 13% Agent
Slide 34: Unique proposition in the Build to Rent sector
Market Diversify Profit Unique proposition in the Build to Rent sector leadership revenues growth Customer service Results for customers • Advised by expert BTR team No. 1 agent in London BTR: • Supported by London-wide sales network • Support premium tenant experience and rents • Bespoke services p
Slide 35: We work with the largest BTR developers & operators
Market Diversify Profit We work with the largest BTR developers & operators leadership revenues growth 35
Slide 36: Technology and data science
Technology and data science Patrick Franco and Steve Rodgers 36
Slide 37: Most technologically advanced estate agent in UK
Most technologically advanced estate agent in UK Single tech stack, database and automated workflows for agents, combined with gamification Market and real-time MI to drive staff productivity leadership End-to-end consumer property platform (MyFoxtons) Data science programme to predict customer beha
Slide 38: Single tech stack underpins Foxtons operations
Aggregators Single tech stack underpins Website optimisation Property information Foxtons operations Payment processing Telephone Cross-sell Branches Cyber security Web Chat Social Media BOS Paid search and SEO Compliance Email Performance CDP and management Data science My Foxtons portal Automated
Slide 39: Technology investments
Technology investments (1) 39
Slide 40: Technology demonstration
Technology demonstration 40
Slide 41: Data science
Data science Objectives Programmes Detail Completed phase 1 of our data science programme Lead scoring Identify customers likely to transact by implementing the Marketing Use insights to drive Customer Data Platform. PRODUCTIVITY automation down CPA Creates a single customer view and allows Personal
Slide 42: Data science “always-on” machine
Data science Proprietary data model Transaction history Last transaction date uses transactional, Property enquiries Last transaction price Current status Number bedrooms behavioural and 3rd Location Tenure PROPERTY party data to inform the Viewings TRANSACTIONAL Size Valuations ATTRIBUTES Market co
Slide 43: Culture of sales and service intensity
Culture of sales and service intensity Sarah Mason 43
Slide 44: Market leadership through our people
Market leadership through our people Culture & Sales intensity Professionalism engagement 44
Slide 45: Market leadership through our people
Sales Culture & Market leadership through our people intensity engagement Professional Performance, earnings and incentives transparency Real-time MI Move Consultant Leader Board Negotiator car and bonus targets Mobile BOS performance tracking (MTD average) 45
Slide 46: Market leadership through our people
Sales Culture & Market leadership through our people intensity engagement Professional Workforce diversity mirrors London’s demographics Highest level of employee engagement Gender diversity Ethnic diversity 84 77 Femal BAME Male e 35% 53% 47% White 65% 58 47 Culture of fun, recognition and rewards
Slide 47: Market leadership through our people
Sales Culture & Market leadership through our people intensity engagement Professional High levels of experience and expertise Blended approach to continuous learning Directors Formal Informal On the job Tenure 17.4 yrs Branch Managers Tenure 10.1 yrs “Discover” Continuous OpenBlend reviews training
Slide 48: Delivering strong financial returns
Delivering strong financial returns Richard Harris 48
Slide 49: Delivering strong financial results
Delivering strong financial results Lead, diversify and grow strategy presents significant opportunity for revenue growth over the medium term Substantial cost savings made in the last 5 years have mitigated downturn in the residential sales market A more efficient and more resilient business High o
Slide 50: Lead, diversify & grow strategy presents significant opportunity
Lead, diversify & grow strategy presents significant opportunity From the 2019 base, there is significant potential for revenue growth over the medium term: Lettings – impact on revenue Sales – impact on revenue (1) (1) 50 bps market share growth £4m 100 bps market share growth £5m (2) (2) 5% increa
Slide 51: Tight cost management
Tight cost management Savings delivered Investments Cost of customer acquisition reduced by 23% Development of My Foxtons customer platform Technology enabled efficiency projects have reduced New applications to enable data science programmes headcount requirement in back office roles Continued inve
Slide 52: Resilient revenue streams
Resilient revenue streams Recurring revenue characteristics underpins lettings And provides stability in mortgage broking 75% commissions from resilient revenue streams Feeds future recurring Semi-recurring revenue Feeds future >80% re-let rate recurring revenue Recurring Recurring Property Renewals
Slide 53: Significant contribution from incremental revenues
Significant contribution from incremental revenues Organic revenue growth Lettings acquisitions Bolt on acquisitions – improved profitability • Centralised operating model under Foxtons ownership • Single technology platform 2.6 • Reach of branch network 1.1 1.7 • Skilled and incentivised workforce
Slide 54: Strong cash fundamentals
Strong cash fundamentals No external borrowings Strong conversion Asset light model of operating profit into Only maintenance capex required in London branch free cash flow network Continue to invest in areas of competitive advantage through operating expenses 90% Best cash collection cycle in the i
Slide 55: Capital allocation framework
Capital allocation framework 1. Ensure sufficient liquidity available to manage business operational requirements Fund investment in the future development of the business: Free cash 2. Continued investment in people and technology flow Acquisition of high quality lettings businesses priorities 3. M
Slide 56: Delivering strong financial results
Delivering strong financial results Significant opportunity for revenue growth Tight management of costs Continue to invest in areas of competitive advantage (1) Resilient lettings and mortgage broking segments account for 70% of Group revenues Significant profit contribution from incremental revenu
Slide 57: Summary
Summary Nic Budden i 1? ae ee eM on
Slide 58: Foxtons has huge potential
Foxtons has huge potential Insert picture Business resilience proven in most challenging of conditions Foxtons is now leaner, more capable and highly scalable Sector and customer dynamics favour our business and have informed our investment decisions and strategy Our proposition is unique, well inve
Slide 59: Thank you
Thank you