Slide 1: Foxtons - Preliminary Results Presentation
Foxtons - Preliminary Results Presentation For the year ended 31 December 2013 0
Slide 2: Disclaimer
Disclaimer 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”, “expects”, “i
Slide 3: Introduction
Introduction Garry Watts, Chairman. 2
Slide 4: Highlights and Market Update
Highlights and Market Update Michael Brown, Chief Executive Officer. 3
Slide 5: Highlights
Highlights • A strong set of results Group Revenue (£m) £139.2m - Revenues up 16.0% to £139.2m and Adj. EBTIDA up 29.6% to £49.6m. +16.0% - Well balanced financial contribution from sales and lettings businesses. - Revenue growth across all business segments. - Sales +22.5% - Lettings +6.7% - Mortga
Slide 6: Market Update: Sales and Mortgages
Market Update Sales and Mortgages Monthly property sales Mortgage approvals for property purchases (M25 region) (UK) 2000-6 Number of purchase mortgage approvals LTM average monthly sales transaction average 100% 2013 average 65% (67%) Peak to trough 2008-12 average 55% • London property sales trans
Slide 7: Market Update: Lettings
Market Update Lettings Private renters Private rented stock as % of dwelling stock (England) (England 2012-13) 2013 average 1981-2000 3.9m Average 1.7m A long term structural shift in tenure preferences has created a highly valuable lettings market. • In the 80’s and 90’s the number of English house
Slide 8: Financial Results
Financial Results Gerard Nieslony, Chief Financial Officer. 7
Slide 9: Summary group financial performance
Summary group financial performance • Strong revenue growth. 2013 2012 Growth P&L (£m) (£m) (%) • Increasing profitability reflecting increasing volumes in Revenue 139.2 120.0 16.0% both more mature and newer branches. Adjusted EBITDA 49.6 38.3 29.6% • 2013 exceptional item relates to costs of IPO.
Slide 10: Continued growth in Adjusted EBITDA
Continued growth in Adjusted EBITDA Adjusted EBITDA reconciliation 2013 2012 (£m) (£m) Operating profit before exceptional items 46.1 33.0 Adjust for: Depreciation 3.7 3.6 Profit on disposal of property plant and equipment - (0.1) Debt repayment incentive scheme (0.2) 1.8 Adjusted EBITDA 49.6 38.3 S
Slide 11: Key performance indicators
Key performance indicators Revenue + KPIs 2013 2012 (%) Sales Revenue (£m) 67.4 53.1 27.0% Volume 5,525 4,512 22.5% Average revenue (£) 12,202 11,765 3.7% Lettings Revenue (£m) 66.4 63.1 5.2% Volume 20,538 19,242 6.7% Average revenue (£) 3,231 3,279 -1.5% Mortgage broking Revenue (£m) 4.9 3.5 42.0%
Slide 12: Profit and Loss
Profit and Loss 2013 2012 (%) • Increases in costs relate primarily to expansion. Profit and Loss £'000 £'000 - New branch rents. Revenue Sales 67,416 53,084 27.0% - Branch sales and lettings salary costs. Lettings 66,360 63,089 5.2% • Revenue to profit conversion of 68%. Mortgage broking 4,938 3,47
Slide 13: Cash flow
Cash flow 2013 2012 • Highly cash generative. Cash flow £'000 £'000 • Minimal working capital requirement. Adjusted EBITDA 49,631 38,301 • 2013 exceptional cost is the full cash cost of the IPO to the company. Movement in working capital (1,444) 1,384 Income taxes paid (6,161) (7,074) • 2013 capital
Slide 14: Balance sheet
Balance sheet 2013 2012 Balance sheet £'000 £'000 Non-current assets Goodwill 19,168 19,168 Other intangible assets 99,000 99,000 Property, plant and equipment 21,337 18,131 Deferred tax assets 666 537 140,171 136,836 Current assets Receivables and prepayments 19,499 17,345 Cash 23,352 9,774 42,851
Slide 15: Dividend
Dividend • Policy - Target dividend between 35% to 40% of the Group’s annual reported profits after tax. - Interim dividend and final dividend to be paid in the approximate proportions of one-third and two-thirds, respectively, of the total expected annual dividend. - Potential for special dividends
Slide 16: Financial Summary
Financial Summary Record revenues, profits and margin. Excellent operational performance. Strong balance sheet : debt free with sufficient cash flow to fund expansion. High cash generation leading to early special dividend. 15
Slide 17: Strategy
Strategy Nic Budden, Chief Operating Officer. 16
Slide 18: Strategy: Attractive market fundamentals
Strategy Attractive market fundamentals Focussed on London property markets which are disproportionately valuable. • High levels of mobility and a young population create rapid transaction velocity. • Strong population growth, foreign buyers, planning restrictions and limited supply create systemic
Slide 19: Strategy: Organic expansion
Strategy Organic expansion 51 A long and successful track record of organic expansion. 44 • Significant opportunity to double branch numbers in London markets with similar economics as current ones. • Currently expect to open 5-10 new branches each year. • 7 in 2014, bringing total to 51 by year end
Slide 20: Strategy: Business model
Strategy Business model Significant and sustainable competitive advantage. • Single brand - A powerful brand supported by 30 years of significant marketing expenditure. - Leading property website receiving around 700,000 unique visitors each month. - Distinctive branch design and branded Mini fleet
Slide 21: Strategy: Service excellence
Strategy Service excellence Premium service dedicated to maximising value for 8 til 8 38% Clients and substantiate our premium pricing 362 DAYS 45,700 EVENING & WEEKEND • Long track record of service leadership, responsible for selling PER YEAR VIEWINGS VIEWINGS over £10bn of property over last five
Slide 22: Summary and Conclusions
Summary and Conclusions Michael Brown, Chief Executive Officer. 21
Slide 23: Summary and Conclusions
Summary and Conclusions Strong financial 16% revenue growth, 29.6% Adj. EBITDA growth, significant cash generation, early special dividend. performance Effective execution of Organic rollout strategy and centralised business model delivers improving margins as we expand. strategy Well positioned to
Slide 24: Questions?
Foxtons | Questions? 23