Slide 1: Foxtons Interim results presentation
Foxtons Interim results presentation For the period ended 30 June 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 £51.1m and EBITDA £0.1m (pre-IFRS 16 impact) (H1 2018: £0.1m) • Lettings revenue flat at £31.7m. Includes the first month impact of tenant fee ban • Sales revenue £15.4m (- 10%). Volume levels flat with revenue decline driven by reduction in avera
Slide 5: Market Update - Lettings
MARKET UPDATE - LETTINGS Average London rental prices (1)(2) London available rental stock levels (Indexed) (3) 480 140 470 130 Indexed (jan-17 = 100) Average weekly rent 460 120 110 450 100 440 90 430 80 Monthly rent 420 70 2016-H119 avg. 410 60 Jun-19 Jul-16 Jul-17 Jul-18 Apr-16 Apr-17 Apr-18 Apr-
Slide 6: Market Update - Sales
MARKET UPDATE - SALES Residential property sales transaction volumes (1) Average residential property sales price (2) London England & Wales (LHS) (RHS) 500,000 England & Wales annual transaction volumes 130,000 1,000,000 London 475,000 900,000 England & Wales 120,000 450,000 London annual transacti
Slide 7: Financial Review
Financial Review Richard Harris, Chief Financial Officer 7
Slide 8: Income Statement
INCOME STATEMENT £m H1 19 H1 18 Change Revenue 51.1 53.0 (3.5%) Operating cost reduction attributable to: Operating costs (45.7) (52.9) 13.7% • £5.5m IFRS 16 impact. Rental expense replaced with depreciation and finance costs (both excluded from Adj. EBITDA (1) 5.4 0.1 Adjusted EBITDA) • £1.7m savin
Slide 9: Business Performance: Lettings
BUSINESS PERFORMANCE: LETTINGS H1 19 H1 18 Movement Revenue Lettings units 9,265 9,430 (2%) Revenue per unit £3,423 £3,365 2% Total lettings revenue £31.7m £31.7m Less: direct costs (£8.9m) (£8.8m) Lettings contribution £22.8m £22.9m - Contribution margin 72% 72% Revenue mix of total group 62% 60% %
Slide 10: Business Performance: Sales
BUSINESS PERFORMANCE: SALES H1 19 H1 18 Movement Revenue Sales units 1,194 1,188 1% Revenue per unit £12,934 £14,450 (11%) Total sales revenue £15.4m £17.2m (10%) Less: direct costs (£7.5m) (£8.4m) Sales contribution £7.9m £8.8m (10%) Contribution margin 51% 51% Revenue mix of total group 30% 32% Av
Slide 11: Business Performance: Mortgage Broking
BUSINESS PERFORMANCE: MORTGAGE BROKING H1 19 H1 18 Movement Revenue Mortgage broking units 2,099 2,120 (1%) Revenue per unit £1,899 £1,929 (2%) Total mortgage broking revenue £4.0m £4.1m (3%) Less: direct costs (£2.1m) (£2.2m) Mortgage broking contribution £1.9m £1.9m - Contribution margin 47% 47% R
Slide 12: 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 01 January 2019) • New right of use asset £61.0m • New lease liability (£62.4m) • Impact on ne
Slide 13: Balance Sheet
BALANCE SHEET £m H1 19 H1 18 Goodwill & intangibles 110.6 120.4 Property, plant & equipment 72.9 22.1 Investment in associate 1.3 1.0 Net working capital 3.1 4.6 Deferred tax (15.4) (16.1) Provisions and deferred revenue (6.8) (6.0) Cash 14.5 11.8 Lease liabilities (59.0) - Net assets 121.1 137.8 •
Slide 14: Cash Flow
CASH FLOW • Minimal cash needed to run the business in current market conditions Opening cash EBITDA Repayment of Working Cash cost of Net capex Closing cash lease liabilities capital prior year adj. items • Seasonal working capital outflow in the half due to higher revenue in June vs. seasonal low
Slide 15: Financial Summary
FINANCIAL SUMMARY BALANCED BUSINESS BUILT TO WITHSTAND THE CYCLE • Lettings revenue resilient in the period • Cost actions taken in prior years has protected profitability • Sales volumes flat in declining market, with decrease in revenue caused by mix of properties sold POSITIONING BUSINESS FOR FUT
Slide 16: Group Strategy and Outlook
Group Strategy and Outlook Nic Budden, Chief Executive Officer 16
Slide 17: Foxtons Strategy: Prioritise Lettings and Manage for Market Conditions
FOXTONS STRATEGY: PRIORITISE LETTINGS AND MANAGE FOR MARKET CONDITIONS Focus on lettings markets • Continue to operate in high value London markets with attractive • Prioritise resource allocation to lettings fundamentals • Maintain lettings fees to win market share following tenant fee ban • Strong
Slide 18: Our Customer Proposition
OUR CUSTOMER PROPOSITION DELIVER EXCEPTIONAL SERVICE Mission REACH • Most recognised estate agency brand in London with number 1 position in listings across sales and lettings • Network of over 60 interconnected branches covering 85% of London • Over 30% of transactions occur in a different area tha
Slide 19: 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 • Market-leading tech and digital offering continues to delive
Slide 20: Appendices
Appendices 20
Slide 21: 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 22: 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
Slide 23: Foxtons Mid Market Sales Position Mirrors London
FOXTONS MID MARKET SALES POSITION MIRRORS LONDON London and Foxtons sales distribution by price (2018) 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% 23 1) Source: Land Registry, Foxtons research
Slide 24: Impact of IFRS 16 Lease Accounting on Balance Sheet
IMPACT OF IFRS 16 LEASE ACCOUNTING ON BALANCE SHEET Net assets at 30 New right of Recognise lease Derecognise Derecognise Finance lease IFRS 16 impact Net assets at 30 June 2019 pre- use asset liabilities pre-payments rent free period adj. in relation on Adjusted June 2019 as IFRS 16 and rent accrua
Slide 25: Earnings Per Share
EARNINGS PER SHARE H1 2019 H1 2018 Weighted average number of shares * 274.9m 274.9m Basic earnings (£3.0m) (£2.9m) Basic earnings per share (1.1p) (1.1p) Adjusted earnings (£2.7m) (£2.9m) Adjusted earnings per share (1.0p) (1.1p) * Number of shares used for EPS calculation purposes excludes shares
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 PRIORITIES • Return excess cash to shareholders CORE DIVIDEND • Return 35% - 40% of profit after tax as an ordinary dividend POLICY • No interim dividend; in line wi