Slide 1: Foxtons Preliminary results presentation
Foxtons Preliminary results presentation For the year ended 31 December 2019
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: Overview
Overview Nic Budden, Chief Executive Officer 3
Slide 4: Group Overview
GROUP OVERVIEW FINANCIAL PERFORMANCE • Group revenue £106.9m and Adj. EBITDA £13.4m • Adj. EBITDA pre-IFRS 16 impact £2.5m (2018: £3.6m) • Decline in revenue driven by impact of the tenants fee ban in lettings and lower sales revenue. Profitability protected through continued cost action • Lettings
Slide 5: Lettings Market Update
LETTINGS MARKET UPDATE London available rental stock levels (Indexed) (1) Average London rental prices (2)(3) 150 490 Annual average weekly rent 140 2017 480 2018 Weekly rent 130 Indexed (Jan-17 = 100) Average weekly rent 2019 470 120 460 110 450 100 440 90 80 430 70 420 60 410 Jul-16 Jul-17 Jul-18
Slide 6: Sales Market Update
SALES MARKET UPDATE Residential property sales transaction volumes(1)(2) Affordability key driver of low volumes (House price / earnings ratio)(3) London England & Wales 130,000 1,000,000 15.0 England & Wales annual transaction volumes (LHS) (RHS) 900,000 14.0 London annual transaction volumes 120,0
Slide 7: Financial review
Financial review Richard Harris, Chief Financial Officer 7
Slide 8: Income Statement
INCOME STATEMENT Ongoing cost management has minimised the impact on profitability from the decline in sales volumes £m FY 19 FY 18(1) Change Revenue 106.9 111.5 (4%) Operating cost reduction attributable to: Operating costs (93.5) (107.9) 13% • £3.1m cost savings realised in 2019 as part of ongoing
Slide 9: Business Performance: Lettings
BUSINESS PERFORMANCE: LETTINGS Underlying growth in volumes and revenue from landlords has largely offset the impact of the tenant fee ban FY 19 FY 18 Change Revenue Lettings units 19,844 19,621 1% Revenue per unit £3,313 £3,415 (3%) Total lettings revenue £65.7m £67.0m (2%) Less: direct costs (£19.
Slide 10: Business Performance: Sales
BUSINESS PERFORMANCE: SALES Focus on driving productivity across our network delivered market share growth in a market where volumes declined around 11% (1) FY 19 FY 18 Change Revenue Sales units 2,423 2,529 (4%) Revenue per unit £13,463 £14,324 (6%) Total sales revenue £32.6m £36.2m (10%) Less: dir
Slide 11: Business Performance: Mortgage Broking
BUSINESS PERFORMANCE: MORTGAGE BROKING Strong performance on re-mortgage growth, more than offset the decline in new mortgage deals. FY 19 FY 18 Change Revenue Mortgage broking units 4,442 4,318 3% Revenue per unit £1,921 £1,915 - Total mortgage broking revenue £8.5m £8.3m 2% Less: direct costs (£4.
Slide 12: Ongoing Cost Management Programme
ONGOING COST MANAGEMENT PROGRAMME Significant savings have been made since the decline in market volumes commenced in 2016. Further savings planned in 2020 FY16 cost Cost savings Inflation FY18 FY18 cost Cost savings Inflation and FY19 cost base run rate FY16-FY18 FY16-FY18 investments base FY19 inv
Slide 13: Balance Sheet
BALANCE SHEET Balance sheet remains strong with a healthy cash balance £m FY 19 FY 18 Goodwill & intangibles 110.3 110.8 Property, plant & equipment 64.4 17.2 Investment in associate 1.3 1.3 Net working capital 3.3 0.2 Deferred tax (14.8) (15.5) Provisions and net contract liabilities (8.4) (8.6) Ca
Slide 14: Cash Flow
CASH FLOW Tight control of cash has continued through 2019 and we retain a healthy cash balance that supports future investment Opening EBITDA Repayment Working Net capex Cash cost of Other items Closing cash cash of lease capital Adj. items liabilities (inc. prior year) • Capital expenditure has be
Slide 15: Key Points of Financial Guidance for 2020
KEY POINTS OF FINANCIAL GUIDANCE FOR 2020 We continue to manage the business tightly whilst ensuring we invest in the future development of the business: • Tenant fee ban impacts lettings revenue by £1.7m in 2020 • Cash operating expenses are expected to be broadly flat (excluding the impact of mate
Slide 16: Financial Summary
FINANCIAL SUMMARY BALANCED BUSINESS BUILT TO WITHSTAND THE CYCLE • Ongoing cost management has minimised the impact on profitability from the decline in sales volumes • Underlying growth in volumes and revenue from landlords has largely offset the impact of the tenant fee ban • Focus on driving prod
Slide 17: Strategy and outlook
Strategy and outlook Nic Budden, Chief Executive Officer 17
Slide 18: Delivering Exceptional Service to Support Our Premium Position in London
DELIVERING EXCEPTIONAL SERVICE TO SUPPORT OUR PREMIUM POSITION IN LONDON People and Single brand culture Foxtons competitive Business advantage Data and centralisation technology Integrated service LEVERAGE OUR BALANCED BUSINESS MODEL TO CREATE SHAREHOLDER VALUE THROUGH THE PROPERTY CYCLE 18
Slide 19: Leveraging Our Competitive Advantage
LEVERAGING OUR COMPETITIVE ADVANTAGE Area of focus 2019 progress • Highest brand awareness in London estate agency supported by an innovative digital marketing strategy that has delivered improved lead conversion and acquisition costs: SINGLE BRAND • +9% digital enquiries, (24%) cost per digital enq
Slide 20: Summary and Outlook
SUMMARY AND OUTLOOK LONDON’S LEADING AGENT • Strong single brand, clear proposition and exceptional service continues to drive listings • Highly motivated, experienced estate agents renowned for delivering exceptional results for clients • Number 1 market position and brand awareness in London estat
Slide 21: Appendices
Appendices 21
Slide 22: Foxtons Mid-Market Sales Position Mirrors London
FOXTONS MID-MARKET SALES POSITION MIRRORS LONDON London and Foxtons sales distribution by price (2019) London Foxtons Volumes (%) Volumes (%) 36% 34% 33% 32% 13% 14% 6% 6% 4% 3% 3% 3% 2% 2% 3% 1% 1% 1% 1% 1% 1% 0% 22 Source: Land Registry, Foxtons research
Slide 23: Earnings Per Share
EARNINGS PER SHARE 2019 2018 Weighted average number of shares * 274.9m 274.9m Basic earnings (£7.8m) (£17.2m) Basic earnings per share (2.8p) (6.3p) Adjusted earnings (£3.1m) (£2.1m) Adjusted earnings per share (1.1p) (0.8p) * Number of shares used for EPS calculation purposes excludes shares held
Slide 24: Adj. EBITDA to Adj. Operating Profit Reconciliation
ADJ. EBITDA TO ADJ. OPERATING PROFIT RECONCILIATION • The implementation of IFRS 16 has had a material effect on the Group’s Alternative Profit Measure (APM) ‘Adjusted EBITDA’. Prior to the implementation of IFRS 16, Adjusted EBITDA served as a good proxy for cash flow, but this is no-longer the cas
Slide 25: Impact of IFRS 16 Lease Accounting
IMPACT OF IFRS 16 LEASE ACCOUNTING • No impact on how we run the business • No impact on cash position or cash flows of the Group • But does change the look of our financial statements Balance sheet (as at 1 January 2019) • New right of use asset £61.0m • New lease liability (£62.4m) Income statemen
Slide 26: Free Cash Flow Priorities
FREE CASH FLOW PRIORITIES • Fund investment in the future development of the business FREE CASH FLOW • Maintain a strong balance sheet PRIORITES • Return excess cash to shareholders • Return 35% - 40% of profit after tax as an ordinary dividend CORE DIVIDEND • No final dividend to be paid for 2019 P
Slide 27: Best in the Sector Technology Platform
BEST IN THE SECTOR TECHNOLOGY PLATFORM Foxtons unique technology underpins every aspect of the business and provides a significant competitive advantage Leading database Internally integrated and Delivering outcomes and CRM system externally connected to drive growth Single digital platform Internal