Slide 1: Preliminary results presentation
Foxtons Preliminary results presentation For the year ended December 2017
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 in the year £117.6m delivering £15.1m EBITDA • Lettings revenue £66.3m (-3%). Volumes flat offset by decline in rental rates. Remains a resilient, recurring revenue stream • Sales revenue £42.6m (- 23%). Decline a result of continued market weakne
Slide 5: Lettings market update
LETTINGS MARKET UPDATE Number of privately rented homes in London Change in rental prices (Number of households)(1) (1 year change)(2) 1,100,000 8% 1,000,000 6% 900,000 4% 800,000 2% 700,000 CAGR 7.4% 0% 600,000 -2% 500,000 -4% 400,000 -6% 300,000 -8% 200,000 Jul-16 Jul-17 Jan-16 Feb-16 Mar-16 Apr-1
Slide 6: Sales market update
SALES MARKET UPDATE Residential property sales transaction volumes(1) Affordability key driver of low volumes (House price / earnings ratio)(2) London England & Wales (ex. London) 130,000 900,000 15.0 England & Wales annual transaction volumes (LHS) (RHS) 800,000 14.0 120,000 London annual transacti
Slide 7: Financial review
Financial review Mark Berry, Chief Financial Officer 7
Slide 8: A balanced business through the cycle
A BALANCED BUSINESS THROUGH THE CYCLE Sales Lettings 23% Revenue decrease 3% Revenue decrease 26% Volume decrease - Volumes flat 4% Revenue per unit increase 3% Revenue per tenancy decrease • Revenue: £42.6m (2016: £55.5m) • Revenues resilient at £66.3m (2016: £68.3m) • Contribution margin 59% pre-
Slide 9: Income statement
INCOME STATEMENT Income statement £m 2017 2016 Change • £13m of revenue decrease resulted from sales business • Lettings revenue £2m lower driven by 3% reduction in rental prices. Volumes Revenue 117.6 132.7 (11%) in line with prior year Operating costs (102.5) (108.1) 5% • Delivered operating cost
Slide 10: Consistently cash generative with no debt
CONSISTENTLY CASH GENERATIVE WITH NO DEBT FY16 94% EBITDA to free cash flow conversion Uses of cash flow Operating cash flow: £13.8m / 92% conversion ratio Opening cash £9.5m £0.8m £15.1m Free cash flow £11.3m (£2.1m) £11.3m Dividends paid (£2.1m) (£2.1m) (£0.4m) Other (£0.1m) Increase in cash £9.1m
Slide 11: 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 • 0.27pps proposed final dividend. Full y
Slide 12: Financial summary
FINANCIAL SUMMARY BALANCED BUSINESS BUILT TO WITHSTAND THE CYCLE • Resilient lettings performance • Subdued sales volumes throughout the year FOCUS ON EFFICIENCY • Strong cost control achieved in 2017 and continue to review and align cost base with market conditions • Current infrastructure is integ
Slide 13: Strategy and operational update
Strategy and operational update Nic Budden, Chief Executive Officer 13
Slide 14: Key strategic priorities
KEY STRATEGIC PRIORITIES Objectives: Detail Results • Deepening relationships with existing Maintained deal volumes in a challenging market FOCUS ON LESS CYCLICAL landlords to increase retention with an increasing number of agents switching focus LETTINGS BUSINESS to lettings • Continue to grow inst
Slide 15: Investing for future growth
INVESTING FOR FUTURE GROWTH 1 • Contingent fee model – customers only pay on successful outcomes Superior service • New account management for our largest landlords and Foxtons Prime offering for HNW buyers and sellers and outcomes • 9.2/10 TrustPilot review score. Outperform rivals by achieving ave
Slide 16: Summary and outlook
SUMMARY AND OUTLOOK LONDON’S LEADING AGENT • Tech-enabled, centralised business with strong single brand and culture of exceptional service and results for all our customers • Number 1 market position and brand awareness in London estate agency • Well positioned in current environment – highly cash
Slide 17: Appendices
Foxtons Appendices 17
Slide 18: Strong balance sheet – net cash and no debt
STRONG BALANCE SHEET – NET CASH AND NO DEBT 2017 2016 Goodwill & intangibles 120.1 119.3 Property, plant & equipment 24.0 28.0 Net working capital (0.2) 1.0 Low working capital requirements Net deferred tax (15.8) (16.4) Provisions and deferred revenue (5.8) (4.8) Net cash position with £10m Revolvi
Slide 19: Segmental EBITDA and KPIs
SEGMENTAL EBITDA AND KPIs H1 17 H2 17 FY 17 H1 16 H2 16 FY 16 Sales revenue (£m) 22.3 20.3 42.6 31.5 24.0 55.5 Sales EBITDA (£m) 1.4 (0.2) 1.2 5.3 1.7 7.0 Sales units 1,544 1,418 2,962 2,314 1,712 4,026 Lettings revenue (£m) 32.1 34.2 66.3 32.7 35.6 68.3 Lettings EBITDA (£m) 4.9 7.2 12.1 7.1 9.1 16.
Slide 20: Earnings per share and effective tax rate
EARNINGS PER SHARE AND EFFECTIVE TAX RATE 2017 2016 Basic earnings £5.3m £15.7m Weighted average number of shares* 274.8 275.2m Basic earnings per share 1.9p 5.7p Earnings excluding Adjusted items £7.3m £15.7m Adjusted earnings per share 2.6p 5.7p *Number of shares used for EPS calculation purposes
Slide 21: Foxtons market leading outcomes drive #1 listings position
FOXTONS MARKET LEADING OUTCOMES DRIVE #1 LISTINGS POSITION Foxtons and competitor sales price achieved for average Sales instructions Foxtons house sale (1) (2017)(2) +9.4% £580,000 £570,000 £560,000 £550,000 £540,000 £530,000 £520,000 Lettings instructions (2017)(2) £510,000 £500,000 Foxtons Top 20
Slide 22: Foxtons mid market sales position mirrors London
FOXTONS MID MARKET SALES POSITION MIRRORS LONDON London and Foxtons sales distribution by price (2017) London Foxtons Volumes (%) Volumes (%) 36% 34% 32% 31% 16% 13% 6% 6% 4% 3% 3% 3% 2% 2% 2% 1% 1% 1% 1% 1% 1% 1% 22 1) Source: Land Registry, Foxtons research
Slide 23: The scale and scope of our business
THE SCALE AND SCOPE OF OUR BUSINESS 2017 STATISTICS 33,600 VIEWINGS EACH MONTH PRICE ACHIEVED +9.4% VS. COMPETITORS 4.8 million WEBSITE VIEWS 250,000 APPLICANTS REGISTERED £1.7 billion PROPERTY SOLD £0.5 billion RENT COLLECTED 1 PROPERTY LET EVERY 16 MINUTES, 1 PROPERTY SOLD EVERY HOUR 23
Slide 24: We operate a unique centralised estate agency model
WE OPERATE A UNIQUE CENTRALISED ESTATE AGENCY MODEL SINGLE BRAND BRANCH NETWORK FOCUSED SOLELY ON SALES & CUSTOMER SERVICE New business & lead generation team Lettings management team Web, Portal & IT development teams OUR SCALEABLE CENTRE IS A KEY Support services DIFFERENTIATOR Marketing Protograp
Slide 25: 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