Slide 1: Preliminary results presentation
Foxtons Preliminary results presentation For the year ended December 2016
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 GROUP PERFORMANCE • Group revenue in the year £132.7m delivering £24.6m EBITDA • Lettings and mortgage broking remained resilient whilst sales reflected challenging London market • Number 1 market position in both sales and lettings listings(1) • 67 branches covering 80% of London HIG
Slide 5: Sales Market Update
SALES MARKET UPDATE Residential property sales transaction volumes Foxtons volumes tracked London market (monthly sales volumes as % of long term average)(1)(2) (1 year sales transaction volume change)(1) 160% London Central London 80% 70% London 140% 60% Foxtons 50% 120% 40% 100% 30% 20% 80% 10% 60
Slide 6: Lettings Market Update
LETTINGS MARKET UPDATE Change in rental property supply and prices Number of privately rented homes in London (1 year change)(1) (Number of households)(2) 1,100,000 25% Available stock 1,000,000 20% Average rent 900,000 15% 800,000 10% 700,000 CAGR 7.5% 5% 600,000 500,000 0% 400,000 -5% 300,000 -10%
Slide 7: Financial review
Financial review Mark Berry, Chief Financial Officer 7
Slide 8: A Balanced Business Built to Withstand the Cycle
Revenue split A BALANCED BUSINESS BUILT TO FY14 47% Lettings WITHSTAND THE CYCLE FY15 FY16 46% Lettings 51% Lettings Sales Lettings 23% Revenue decrease 1% Revenue decrease 28% Volume decrease - Portfolio size broadly flat 5% Revenue per deal increase 1% Revenue per tenancy decrease • Revenue: £55.5
Slide 9: 2016 – A Challenging Year After a Record Q1
2016 – A CHALLENGING YEAR AFTER A RECORD Q1 Income statement • Record Q1 revenue, up 16% vs. 2015, with c.£7m pull- forward ahead of stamp duty changes £m H1 16 H2 16 FY 16 FY 15 Change • £14.6m of £17.0m y-o-y revenue decrease occurred in sales in H2. H2 sales revenue £24m Revenue 68.8 63.9 132.7 1
Slide 10: Strong Operating Cash Conversion
Cash conversion FY14 84% STRONG OPERATING CASH CONVERSION FY15 FY16 87% 94% EBITDA to free cash flow conversion Uses of cash flow Operating cash flow: £23.1m / 94% conversion ratio £5.1m £24.6m Opening cash £25.6m £(6.6m) Free cash flow £16.8m £16.8m Dividends paid £(21.7m) £(6.3m) Share buy-back £(
Slide 11: £91m Cash Returned Since September 2013 IPO
Cumulative cash returned since IPO(1) £91M CASH RETURNED SINCE 2014 £28m SEPTEMBER 2013 IPO 2015 2016 £57m £91m Dividend policy • 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% - 4
Slide 12: Financial Summary
FINANCIAL SUMMARY BALANCED BUSINESS BUILT TO WITHSTAND THE CYCLE • Resilient lettings performance • Subdued sales volumes in London FOCUS ON EFFICIENCY • Strong cost control post-Brexit vote. Ongoing review of cost base to align with market conditions • Selective investments in tools to maximise pro
Slide 13: Strategic and operating review
Strategic and operating review Nic Budden, Chief Executive Officer 13
Slide 14: Key Strategic Priorities
KEY STRATEGIC PRIORITIES • Delivering premium customer service and results Exceptional service, • No 1 market position in listings in sales and lettings while maintaining commission rates(1)(2) premium offering • 92% customer rating. 130 awards won in the last 5 years(3) Focus on markets with • Oper
Slide 15: Operational Progress
OPERATIONAL PROGRESS Deepening relationships with existing landlords to increase retention Good early stage progress in new institutional PRS offering OUR LESS CYCLICAL LETTINGS BUSINESS Selective acquisitions of high quality portfolios at reasonable prices We have the tech and processes in place in
Slide 16: MyFoxtons Portal
MYFOXTONS PORTAL High touch service and technology 24/7 Book a valuation and instruct online Check property status, web traffic and activity Instant viewing feedback Instant message your Foxtons agent Accept, reject offers Upload, e-sign and store documents and compliance checks 1) Improves customer
Slide 17: 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 Operatio
Slide 18: Using Data & Digital Marketing Channels
USING DATA & DIGITAL MARKETING CHANNELS Traditional Digital DIRECT MAIL TARGETING ENGAGEMENT AGGREGATORS OUTBOUND CALLS VIA CRM SYSTEM Using data and new digital channels to enhance customers’ experience: • Teams established in data analytics, digital marketing and social media • Increased granulari
Slide 19: Low Risk Organic Expansion Programme
LOW RISK ORGANIC EXPANSION PROGRAMME Key Mature branch New branch 19 Note: Mature branches defined as those opened before 2011
Slide 20: Current Trading and Summary
CURRENT TRADING AND SUMMARY CURRENT TRADING • Early Q1 trading reflects a continuation of the trends we saw in Q4 • Sales market remains subdued, especially in Central London • It is too early to assess the impact of the government’s proposed ban on tenants’ fees. More detailed proposals are expecte
Slide 21: Appendices
Foxtons Appendices 21
Slide 22: Strong Balance Sheet – Net Cash and No Debt
STRONG BALANCE SHEET – NET CASH AND NO DEBT 2016 2015 Goodwill & intangibles 119.3 118.7 Property, plant & equipment 28.0 27.0 Net working capital 1.0 3.6 Low working capital requirements Deferred tax liabilities (16.4) (17.5) Provisions and deferred revenue (4.8) (4.8) Net cash position with £10m R
Slide 23: Segmental EBITDA and KPIs
SEGMENTAL EBITDA AND KPIs H1 16 H2 16 FY 16 H1 15 H2 15 FY 15 Sales revenue (£m) 31.5 24.0 55.5 33.8 38.7 72.5 Sales EBITDA (£m) 5.3 1.7 7.0 10.2 13.6 23.8 Sales units 2,314 1,712 4,026 2,578 2,980 5,558 Lettings revenue (£m) 32.7 35.6 68.3 33.6 35.4 69.0 Lettings EBITDA (£m) 7.1 9.1 16.2 9.8 11.1 2
Slide 24: Earnings Per Share and Effective Tax Rate
EARNINGS PER SHARE AND EFFECTIVE TAX RATE 2016 2015 v% Basic earnings £15.7m £34.6m (54.5%) Weighted average number of shares* 275.2m 281.7m Basic earnings per share 5.7 12.3 (53.7%) *Number of shares used for basic EPS calculation purposes excludes shares held in Treasury Taxation Effective tax rat
Slide 25: The Scale and Scope of Our Business
THE SCALE AND SCOPE OF OUR BUSINESS 2016 STATISTICS 40,000 VIEWINGS EACH MONTH 96% ASKING PRICE ACHIEVED 6 million WEBSITE VIEWS 260,000 APPLICANTS REGISTERED £2.3 billion PROPERTY SOLD £0.5 billion RENT COLLECTED 1 PROPERTY LET EVERY 23 MINUTES, 1 PROPERTY SOLD EVERY HOUR 25