Foxtons Group (LSE:FOXT) — Investor Presentation

0:00 Good afternoon, and welcome to the FOXTONS GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question received in the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand over to Guy Gittens, CEO. Good afternoon, sir.

0:31 Good afternoon, and thank you everyone for joining today's presentation. We're very excited to be able to explain about, our journey and what we have ahead for us here at FOXTONS. I've had the privilege of being able to say that I'm CEO of this fantastic business for the last seven months, and it really has been a privilege to be able to come back and and to to join the business where I actually started my career twenty years ago. And and I familiar tell that story to many of our new starters that having started my career here just as the business was really the original disruptor of the property market here in London and to have enjoyed the rise through the ranks of becoming the top salesperson and then running one of their largest, or if not the largest office in South Kensington, really did define the rest of my career just as FOXTONS was really defining how London property would be operated for the next twenty years.

1:29 And and and it's been a fantastic journey. And and having cut my teeth, having left university, I came to London, and had this wonderful experience for four or five years, where I gained a huge amount of experience, and and really did understand from an operational standpoint what made FOXTONS so different to everybody else, on the, on the in the ground here in in London. And during that journey, I when I left FOXTONS, I I I moved to, have some experience working overseas for a property entrepreneur called Peter de Savray. I worked in The Caribbean for four years as his sales director selling mixed use developments all across the Caribbean chain, which was an enormous an enormous benefit to my long term career, huge experience, and also enabled me then to come back to London where I worked for, representing Walheim Park and Candy in Candy in Knightsbridge where they were building the most expensive development in the world.

2:28 And then after that, I joined a business called Chesterton's, originally starting as a sales manager and then working my way up through to to being the CEO of that business. And actually, when I took over that business four and a half years ago, Chesterton's were in a very similar situation to FOXTONS was seven years ago where we'd actually, you know, there were a number of cultural issues. The operational machine had, I suppose, really not been optimized for delivering growth. And within that four year time frame, I took a business that was producing a loss shortly before I took it over to producing consecutive years of revenue and profit growth for the business. And I was proud to have left that business in a in a in a in a much better state than when we started And then had the enormous privilege of coming back to FOXTONS.

3:15 And I'll tell you a little bit more about that operational review as we get into the presentation. But as you can see, I'm also joined here by Chris Huff, our Chief Financial Operating Officer. And Chris has had a distinguished career, not only here at at FOXTONS where he was before becoming CFO, was, working for Deloitte as a director, but also he also come through the ranks at FOXTONS and having previously been the director of finance as well. So I feel very privileged to be working alongside Chris. He's been a great help for me really understanding the business very, very quickly and helping me make some very strategic, strong decisions early on. And some of the results of that we can share with you over the next few slides.

4:01 Thank you very much. Throughout this presentation, I hope that we can really highlight the opportunity that we have here at FOXTONS and and also share some of the genuine enthusiasm and excitement that we share for what the future looks like. And and having returned back to this business to see these opportunities for me is is is really what what has brought me back and and and really what I'm so excited about. And to give you an overview, if you've never heard of FOXTONS or if don't really quite understand our operating model, FOXTONS is a full service residential property agent operating across London, with with plus three offices just outside of London going as far as Guildford. Within that full service, we include, lettings, we include sales, and financial services through our financial services firm called Alexander Hall, where we, distribute mortgages using the leads that we create from the front offices from sales.

5:00 And then we obviously have the re the remortgaging business as well, which becomes noncyclical and reoccurring revenue for that part of the business. And then going up to the top, which is our lettings business, this has transformed the business. And certainly, there's been a big move not only within the industry, but certainly here at FOXTONS for that change in focus, moving from what was very, very heavily focused on, being a sales machine. And and that sales revenue was a much larger part of of group revenue even just going back six or seven years to today, where we are proud to say that 62% of our revenue comes from this high quality reoccurring revenue stream that we develop in in lettings. And, of course, because of the nature of lettings, not only is it is it high quality, but but it's very, very sticky. And we often find that the life cycle of of some of our lettings landlords is enormous.

5:54 And the amount of value that we get both sides is is is very, very important. So it is a very large part of our focus moving forward is to continue to turbocharge, that group revenue in nettings, so that we can complement and make the business much more resilient. And I think we only have to look at what's happened in the London market or in the global market coming out of the back of the pandemic. Our resilience within the business, but the resilience of that lettings income was incredible. And and while I hasten to I don't really want to call anything recession proof. It's almost as good as and very much as this this high quality earnings that we're focused on. Lettings is a very a very manual process, from when we, onboard, half a million tenants a year. We have to then register them. We have to carry out physical viewings. We then once we've agreed the price, we then got a whole process that follows thereafter that previously has been very, very, very hands on. And and our, medium term focus now is to revolutionize that process and really digitalize that as much as we possibly can do, which is, a very exciting journey both within the industry, particularly for FOXTONS because we will be at the forefront of that with some of our developments that we'll be bringing to market over the next twelve months.

7:15 Sales, of course, sales is originally the cornerstone of FOXTONS. It's what really we gained our reputation for delivering the best kind of results for sales, for our clients when they were selling their properties.

7:29 And really, we continue that March. But we have lost market share, particularly in sales over the last seven years, which we'll share with you on a future slide. That represents 31% of our group revenue. And there's obviously very, very good cross selling into lettings. Once we've sold an investment unit, we can hand that over to lettings as a new long term lettings unit. We also obviously are creating these financial service referrals, which feeds the Alexander Hall business. We're we're approximately 1,250 employees. We are a growing business at the moment. We operate across 60 offices. And as I've said, three of those are outside of London and that the rest are spread geographically across London, wherever we see volume and value opportunities and very much our future growth, which is which is focused primarily on driving organic growth, particularly in the nettings opportunity, adding into that with with acquisitions and then also growing that that sticky revenue within our financial services. And we'll we'll cover a little bit of that, on the following slides.

8:38 So, highlights for 2022. It was a solid year of progress, really, and we do identify significant unfulfilled potential within the group. But we are pleased that there has been a continued move forward with profit, albeit from a low base. But we do have absolute aspirations in the medium term of delivering this business back to circa GBP 25,000,000 to 30,000,000 of operating profit. I don't really ask what medium term is. We think that's within achievable within the next four years. And the spread of that operational target for profit really is depending upon what the sales market is doing moving up and down. But we are absolutely building that reoccurring lettings revenue to really underpin the business and make us very resilient moving into future markets.

9:30 And our strategic priorities have absolutely been

9:34 focused on delivering this growth, and as I said numerous times, on that lettings revenue and that lettings business for us. And I'm going to go into the next slide, which talks about the operational review, which is the key issues that we've identified and talking about that rebuild. Before we do that, I'll hand over to Chris to talk about the numbers. Yes. Thank you, Guy. Good afternoon, everyone. On Slide six, I've set out some of the key financial metrics from the 2022 results. I'm hoping these will provide some context for today's presentation and also demonstrate, as Guy mentioned, the financial progress we have been making. So starting with revenue. Revenue in 2022 grew by GBP 13,800,000. That's around 11% growth.

10:20 That growth was predominantly driven by the lettings business where revenues grew by 12,600,000 or 17% year on year. And that increase in lettings revenue was predominantly driven by two things. Firstly, 7,600,000 of revenue growth from growth in the organic lettings portfolio and GBP 5,000,000 of incremental revenues from the acquisitions we completed in 2021 and 2022. Guy will talk to the acquisition strategy a little bit more later on. We've got a good level of operating leverage in the business, which meant revenue growth dropped through to a healthy profit. And that's even after making various cost investments we made in 2022 to enhance our capabilities. Some of those in cost investments were focused on getting the right headcount into the business, driving marketing activity in the right areas and also overhauling the remuneration structures for our fee owners.

11:19 So with that in mind, adjusted operating profit increased by 56% to 13,900,000, and adjusted operating profit margin increased to around 10%. In 2022, the operating leverage in the business was circa five times, and that demonstrates the outsized returns which business can enjoy from top line revenue growth. And finally, on the P and L, PBT grew by 115% to $11,900,000 Cash generation in 2022 was strong. We delivered $7,700,000 of net free cash flow. And these results overall supported a good level of shareholder cash returns. Firstly, we have the full year dividend that was declared at 0.9p per share. That's double what we had in 2021.

12:11 And we also returned a further 4,900,000 through share buybacks. If there's any other questions on the financials, I'm very happy to take those later on in the session. Back to you, Glenn. Thank you, Chris. So our investment case, we are a highly resilient business with a significant upside potential from the operational improvements that we're making and have been making since my arrival seven months ago. Primarily, we operate in highly valuable markets. And, of course, being a state agent, if you operate in the highest value markets, you will command, some of the highest fees. And and London is absolutely a prime example of this, with our average price in London, being circa £600,000. Not only, is that fee opportunity very exciting for us, the volume of transactions that we see in London is extremely interesting for both sales and lettings.

13:02 And we're also very proud of, of the fee level that we're able to command here at FOXTONS, which really is a USP of of commanding that incredibly high premium fee that we're that we're able to hold right across the market and be with that with that fee also the highest volume market for for bringing properties to sale and nettings to, to the market through, through our business. The resilience of the business model I touched on earlier, the noncyclical reoccurring revenues, that we find in nettings, really do remove that, that up and down part of of the sales mic market and, is is very, very attractive for us as a business moving forward. Ultimately, coming back to the business, as I've had the opportunity to do and to carry out my review and to to spot the operational improvement opportunities has been enormous.

13:54 Without exception, every every department I've sat with and looked at their you know, the exact operation of that of that machine, we've been able to find many, many efficiencies and new ways of operating, particularly looking at tech and data, which we'll share in the short. The operational leverage, Chris has touched on in the previous slide, once we've started to build our revenue, that will absolutely outstrip profit growth. And I think that last year is actually a good indicator of that. But we now just really need to focus on building that revenue for the business, particularly with the buy and build opportunity that we see ourselves to be able to go and make acquisitions of the very highly fragmented market that we operate within London. And of course, the market has been very subdued since really since 2018.

14:42 We've seen consecutive years of market decline for sales. There is a significant opportunity of any upside on that sales market recovery, which we haven't baked into the plan, but it's there absolutely as an upside. You can see our sad demise from the heady days of 2016 when FOXTONS was was circa 180p a share. Following the decline of our businesses market share and and ultimately, the revenues and therefore, the profit that this business has been delivering. We've seen that sad decline, which gave me the opportunity to come back to the business midway through last year. We do see that revenues and profit, you know, this year has given us a level that we've not seen since 2019.

15:28 That isn't reflected in the share price. And that, again, we believe, is underpinning the opportunity that hopefully presents itself to you today. So my operational review. I I've been very, very involved in every department of this business. I've sat with every office. I've visited every office and spoke to pretty much every agent and every person who works in this business. And and I'm proud to report that actually the fundamentals that once made FOXTONS unbeatable in the early naughties are still absolutely within this business. We've just got to evolve and modernize ourselves and perhaps evolve and and get back to being the innovators within the industry that we were once renowned for in order to deliver and get back to that leading that leading position. If we look at a group particular operation, we think that there was very little investment in these growth drivers. You know, we should have started acquisitions five years ago like some of our competitors did. We would have been in a very different place if that if that hadn't been the case. We were cutting costs in the wrong areas. For example, over the last five or six years, we continued each year to cut the number of fee owners in the front offices, and that has really led that market share decline. If you don't have the fee owners on the ground, you can't deliver market share growth and and and you can't deliver results for clients. So certainly something that's been very, very apparent to me coming in. Over the last seven months, we've also removed circa £2,500,000

16:58 of of cost at senior management level. At the c suite level of this business, We've removed £2,500,000, which has been reinvested back into those into those fee earning opportunities on the ground. And that's already started to make an enormous improvement to the number of viewings that we're carrying out and therefore the growth of our market share there therefore as well, which we're we're we're very, very encouraged by. This business was built upon being the leaders of industry in terms of technology. We were the first agents in The UK to develop and have a completely in house built CRM, which was an end to end platform created by this business twenty years ago at huge expense. And that really was the start of the secret sauce that that that that gave and drove the market share for FOXTONS in those early days. And we've been collecting data for twenty years, which is probably at least ten years longer than our closest competitors.

17:55 And our database here, our proprietary database at FOXTONS is enormous. The reality is we've been doing very, very little with it, that again is going to be a very poor a very important part of that innovation, and certainly that value being driven out of that historic database is extremely important. We need to begin to get back to being the innovators within the industry, and and we've got some some some highly sophisticated innovation that we're bringing to the industry over the next six months that we're very excited about, particularly focused on lettings processes and therefore, growing that reoccurring revenue. So big upsides on that for us. Moving into lettings,

18:41 Shocked to have discovered that really over the last four years, this business on an organic portfolio growth. If you look at the number of units that we had within our portfolio, it's only grown organically by 1% per year, which is I'm sure you'll agree is an underwhelming number. We've got to get back to focusing on that organic growth. And I believe that that organic growth can completely come from our historic enormous database,

19:12 of past transactions in history that we dealt with, nearly half the people in London, which is very, very exciting. Organic growth is difficult to deliver in lettings, but absolutely, given the power of what we have within our our our CRM and our database, I'm very, very positive that we can we can turbocharge that, organic growth, and get back to where we need to be. We talked about acquisitions. FOXTONS have only started bolting on lettings books and lettings businesses in 2020 circa five years or three years or four

19:43 years, five years after some of our competitors here in London. We would have been in a very different situation if we just started it earlier. Instead of doing cold start offices in new locations, which is what the business was how the business was expanding. And, course, that's become much more challenging as we didn't have the same volume of lettings buy to lettings being purchased from the sales side and then being handed over to lettings book. Now we're really focused on growing that that that business for us, which is which is a a massive part of our efforts,

20:13 and we'll deliver this this uplift for us almost entirely on its own. Sales, we've been talking about diluting what once made FOXTONS GROUP and that dilution both in cutting costs, but also not continuing to lead that innovation and cutting headcount in front offices. We've seen the market share decline from 4.5% in 2016 all the way down to 3.4% in 2022. Now we're still always market leaders at 3.4%, but that decline in market share doesn't actually

20:45 tell the whole story because during that period of time, we've also lost a disproportionate amount of our market share within the prime market. We've gone almost completely disappeared from the prime markets in the different areas where we operate. You might want to say that that for for FOXTONS is probably properties above a million pounds. We're very strong below, but we really need to now start to build our way and earn our way back into those higher value properties just as we used to be fifteen years ago when I was still

21:15 instructing properties at at two and a half 3% as a as a as an office manager, albeit we we do earned our way into that prime market, and that really is a focus for the business. But that's a long term goal. That is not something that we can click our fingers and we'll be instantly back in there. We that would be a result of getting everything right over the next three years, whether it be the marketing, the people we employ, the training, the headcount, etcetera, etcetera. It's all got to be right for us to learn our way back in there. But what we can do, we feel very strongly, is grow that market share rapidly in the market, the volume market where we already own and operate within and dominate within many markets. And then we talk about our financial services machine.

22:00 Obviously, with with throwing off high volumes of financial services referrals from the sales side of the business, it was a surprise to me that actually the number of fee earners within Alexander Hall have been continued to be cut just as head fee earners have been cut

22:15 in their other parts of the business. And what that had meant was that we were actually throwing off too many financial services referrals for the for Alexander Hall to be able to process and deliver a very nice problem. I'm sure you'll agree to have that many many financial services firms would would would could only dream of. And we're now building back the headcount for financial services. We're building back the headcount to nettings, and we're doing the same in sales. And, of course, this means that there there is a there is a lag because many of these fee earners sales

22:45 is a great example and and financial services. When we onboard somebody who's never done the job before, realistically, it's a six to nine month process to get that person up to speed so that we've trained them enough to become a consistent fear. So very much while we're growing our our headcount this year, Chris and I have been balancing very carefully to make sure that we can still grow and deliver the profit levels that we've discussed, which we're very confident in for for for this year.

23:13 So strategic priorities. You've heard me talk about, obviously, lettings being at the top here. This organic growth for lettings is very important. I believe given our database, given our renewed fresh approach to how we're going to marketing, making sure that we're the most visible agents back on the streets of London again, combined with delivering and growing in house the best agents, that organic growth should be charged with being between 3% to 5%, on an annualized growth. That's a high growth, target, but but if we get everything right, I'm

23:44 I'm I'm confident that we can achieve it. And then we're also growing through acquisitions. You may, have heard we're very proud to have announced just before we announced our results, this month. We'd actually made, concluded on the acquisition of Atkins and McLeod, which was a full branch, offering, full branch lettings focus estate agency, in East London. A fantastic business, very well operated. And like many of these smaller independents across London, of which there are 3,600 of these independent businesses. And they're coming to the point where the owners have owned them for for for fifteen to twenty years. They've had a fantastic lifestyle out of them. The changing nature of the lettings industry is making people decide that now might be a good time to to to to to sell a new one to pass as new, which is a fantastic opportunity for us. And and and actually, Atkinson MacLeod was identified, engaged, and closed entirely in house here at FOXTONS using our acquisitions team. No external agents. No external

24:49 interaction. And we held the hand of the of the owners of that business all the way through, and we'll be over the next few months integrating them. In fact, actually, tomorrow, I'm going down to meet all of the team where we have all of the the the the the employees within the team coming to meet us and my team from FOXTONS as we then integrate them into the rest of the business. So hugely exciting, but the returns on those types of opportunities are in excess of 20%. Some of our more recent acquisitions have actually been closer to 20% to

25:19 30%, which is which is obviously been aided by some price growth within lettings. And then we talk about sales, the improvements within prep sales. Our strategic priority is to grow that market share back to the 2016 levels of 4.5%. In the medium term, we've got to slowly and carefully always have that target of getting back into the higher value markets, but while retaining and protecting our premium fees within the market, which obviously delivers a

25:49 much, much better margin than a lot of our competitors do on their sales businesses. And finally, financial services, we would like to target a revenue growth of circa seven to 10% per annum. We really believe that we can do that given the volume of opportunity that I see that's being given off from the sales side of this business, which is very exciting. Now for for financial services, much in a growth year this year while we're growing that headcount in the in the medium term future. All of that means that we're very proud to put onto paper for the

26:20 first time, I think, in recent memory for FOXTONS. We're setting the store out today to say that we are aiming for 25,000,000 to £30,000,000 of operating profit at a 15 plus profit margin in the medium term in the next four years, both double more or less where where we are today.

26:42 Okay. Ultimately, I believe passionately about the opportunity that we have in front of us. I can only say from firsthand experience that coming back to this business after a fifteen year hiatus has been incredibly exciting for me individually because I can see the opportunity that we've had. Knowing the journey that I've taken other businesses on, the opportunity to do that here, albeit on a slightly larger scale, is hugely exciting. The team that I'm supported by, without a doubt, are the best individuals and the best in their departments across the industry. We have people who've worked in this business for twenty years plus who are at the absolutely at the top of the industry. And I believe that given now this new focus on operation improvement, given now a new strategic priority set that we can absolutely deliver this medium term great ambition as a base case. And, actually, we're looking forward to hopefully being able to show you that over the next year or so that we've been able to over deliver on this

27:45 on this promising year in the overpass. We look forward to answering your questions, some of which I know have been coming in through through the through the online portal. And very much appreciate all of your time listening into today's presentation. Guy, Chris, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen. Just But for the company, take a few moments to review those questions submitted today. I'd like to remind you that recording of this presentation along with a copy of the slides and

28:15 the published q and a can be accessed via your investor dashboard. As you can see, we've a number of questions throughout today's presentation, and thank you to all the investors for submitting those. Mohammed, could I just ask you to read out the questions where appropriate to do so, and then I'll pick up from you at the end. Thank you. First question. Any plans to expand outside of London? Well, thank you for that question, Ian. At the moment, there is such a huge opportunity for us still within the m '25. As I said, that very fragmented nature of the market means that there are high quality lettings books that we could be bolting straight into this machine in order to be able to, you know, grow the reoccurring revenue, which is a which is a primary focus of ours. However, I absolutely recognize that there are high value, high volume locations, particularly within the commuter belts

29:07 of of of London where there's where where there are absolutely opportunities. These expansions into new areas will absolutely be led by acquisitions. So it will be a case of finding and engaging with the correct leading lettings agents to buy that lettings portfolio day one and then bolt into it all of the efficiencies that we can build and bring through our highly efficient machine that has been developed. So I think absolutely, you we are already in Guildford and some of those surrounding areas, we've and identified other lead

29:38 commuter belt locations that could be complementary to that. But our primary focus is really filling in those high volume, high value areas within that within the m '25 where we we know you were those 3,600 independent agents, many of whom we're we're we're on an ongoing dialect basis with in order to to to fall into our FOXTONS machine, which is highly profitable, and we'll deliver that that very real that very valuable reoccurring income in the medium term. Couple of questions on acquisitions. The first one, do we have any more acquisitions in the pipeline for 2023?

30:13 We are always talking to potential sellers. As I said, we have an external we have an internal team who solely focus on the list focusing on my list of those 3,600. We've got them ranked in in order of the number of properties that they bring to market in nettings, and we're out there talking and engaging with them. Obviously, there's some sensitive information surrounding that, but the the better. We have a a very good reputation within the London estate agency world for for holding independent

30:44 owners' hands through what is actually a very complicated transaction and and being good to our word that paying a fair price, but but but a price that we that we believe in is fair for the market value. So, yeah, we're we're out there talking to people all the time. And the third question around should we be paying for acquisitions and shares? How do you avoid a country wide type situation? Yes. It's a good question. In terms of how we structure these deals, historically, we've funded the deals through free cash generation. The question may have been linked to does offering shares, offering paper, get better buy in from the sellers. Actually, when I look at these businesses, the most important people to retain in those businesses are those who are customer facing rather than the company directors.

31:31 And it's actually those people who are customer facing who we ensure we retain, we retain them through appropriate retention bonuses, and really to get that continuity of service for the landlords, which is so, so critical

31:43 for us. The other way we structure it is through retention money. So typically twelve months deferred based upon compliance of the business report, but also performance, revenue performance of that business. So that that allows us to ensure that when we are paying for these business with cash, then we we we get the right right amount of buy in from those who are critical for business. But we

32:07 we would also look at other structures such as such as shares if it were appropriate. In terms of the countrywide comment, I think one one I'm not gonna comment particularly on countrywide, but we've got to remember what what we're buying, our business which heavily focused on lettings, it's highly sticky revenue, reoccurring contractual revenue when some historical deals that buy other players in the market focus on more transactional sales businesses. Good example would be apps in the cloud. That was a 90% nettings business, so it's very, very different. So we really are buying some really resilient revenue there, and make retaining the right people in the business. And that's how we get those 20% plus returns you you mentioned earlier. Do you see regulation as a positive driver for your lettings business? Thank you, Chris, for that question. There are there are absolutely some regulations that we welcome, and that should be in place.

33:00 Some regulation that we've seen over the last year or two has actually been an opportunity for FOXTONS. A good example of this is changing EICR regulations for landlords fuse boxes and and electrical

33:12 certificates that come with it. FOXTONS made circa £750,000 of additional feeds that year because of this change in regulation that required many of our landlords to have a new certificate and even actually fit new fuse boards. Now, obviously, on the horizon, we've got a number of changes that that that that are possibly being murmured, changes and improvements to the energy performance of of lettings properties. And also changes within the industry of regulation and also making sure that perhaps we're continuing to become more professional as an outfit. And I think if you look at at Fox in particular, we are highly professional operation. And I think some of those changes will only play into our hands, particularly when we're looking at that acquisition strategy as smaller independent agents really struggle with that huge burden of regulation. Now it's fine for Fox because we've got 10 people sitting downstairs making sure that we are compliant, and making sure that we're, you know, that we're doing everything right. A small independent just cannot afford the manpower to be able to do that. And that for us is another reason why we're seeing this, why we're seeing this amalgamation, going going on within the industry.

34:20 What part does technology and data have in the delivery of the strategy? Chris. Chris, thanks a lot. I I mean, fundamentally, I am a data driven leader. Everything that we operate, everything we do has got to be led by data. That was one of the most exciting opportunities about coming back to FOXTONS was knowing from my time here twenty years ago, the size of this database. I mean, there is no doubt that it is not just a little bit bigger than our closest competitors. It's in a different postcode altogether. And that opportunity to do the right things with that database prevents presents huge opportunity. Now when I first came, back to London, having led a data transformation of my previous business, I was I was excited, I said, great, guys. You know, send me the logins for all of the live dashboards. I can't wait to get into the data.

35:10 I I never really looked at me like I had two heads. And I what I was sent was basically old school, Excel spreadsheets that most of the time didn't actually mirror up anyway. So the last six months, my data team downstairs have been creating and building an entirely new data platform that the business is now using in order to be able to spot opportunities, spot under and over performance, and ultimately realign ourselves with understanding what parts of our business that we should be operating and and optimizing in order to deliver the right types of results. And that's without them. The next stage of this is is starting to apply, data science on the millions of transactional data history that we have locked within our our CRM downstairs so that we can then start to machine learn the the various processes to give us lead scoring on, as one example, the half a million lettings tenant leads that we receive each year. It's simply too many for any agent to be able to process. But actually, when using that historical transactional data with data science and some some very, very smart algorithms, we can then start to identify within the half a million who are the 50,000 that we absolutely know could do a deal today based on their transactional history and all the other thousands of data points that we can gather on them. So, yeah, certainly very interesting, and it will be a primary part of our progress moving forward about getting us back on that data journey. Good example of that, Chris, is that we've just spent a relatively small amount of money building

36:42 an entirely new data suite and and a data data infrastructure. Within the next two months, we're very proud to be able to say that we will have delivered a data link for the business, something that the CRM team have been asking for for about five or six years, just never been given the budget for it. So very excited because once we do that, not only will we be able to ingest and analyze our own data internally, but we'll also be able to look at the thousands of external sources that we can cross reference to then generate more opportunities moving forward. One for Chris. Whilst dividends and share buybacks are beneficial, you don't need capital to grow the business, but organically or inorganically. How will you balance this and what takes preference? That's from James. Yes. Thanks, James. I think, Arsene, you're absolutely right. Organic growth, I think, just set out in the plans, is absolutely critical.

37:32 So we've got a well established capital allocation policy. First one is obviously to maintain enough strength in the balance sheet. We have we are debt free today. We maintain a a good strong balance sheet. So that's obviously the number one priority. Number two is then to have sufficient capital and prioritize it in organic growth. So some of the areas guys talked about earlier today. Number three is all about the dividend, and then we've got the dividend policy, 35% to 40% of profit after tax, and we look to maintain that dividend at an appropriate level. And fourthly is the lettings acquisitions. So identifying and targeting those high quality lettings books integrates them into our business and ultimately returning those returns on investments of 20% plus we talked about earlier.

38:19 And then fifthly, it's the excess capital. If there is an excess capital in in the business, that's returned to shareholders in in an appropriate form. Historically, that's been via buyback. So hopefully, I'll give you a bit of color. Organic growth is absolutely up there, and and it is it is the highest priority for us. And one from Andy. What can FOXTONS do to turbocharge the growth in nettings? And do we have an organic target growth rate? Well, the biggest weapon that we have in our organic growth is is well, we've got two fantastic weapons. Number one is the people and the culture and the focus of what we're asking the business to do. The second part of that is obviously, as I explained before, the opportunity that is buried within our database is is bigger than any other agent has within London. And if you think about trying to make sure that you are having the opportunity for lettings listing, you have to stay in contact with that landlord who, let's say, is let by another agent. You've got to stay in contact with that landlord all the way through that that tenancy, and you just have to make sure that within that two month period that that that that that current tenant might be moving out then that that property may be coming back to the market. You've also got to make sure that you're on the phone engaging with that landlord in an intelligent way and adding value to the conversation.

39:37 That's not that's there's no easy there's no easy formula for that. But, obviously, using our data learning and and a lot of those external sources, we know we can give ourselves a much higher priority chance of speaking to people at the right time within that journey. So that's very, very exciting for us. Another part of this was really within this business. There was no focus on on volume. And when I arrived here six or seven months ago, I had managers of lettings businesses and lettings offices and the area directors and even the head of lettings coming up and almost self congratulating themselves in front of me because they'd grown the their their revenue by 20%. And, of course, we saw 20% uplift in the in the lettings values last year, which essentially meant that everybody did 20% more more on their revenue.

40:26 The reality is now all of our front offices, our negotiators, our area directors, our head of lettings, myself, Chris, we've now split that that that that that remuneration instead of solely being focused on revenue. We're also charging people with growing their volume as well. So it's no good just knocking your your revenue out the target target out of the out of the park because the the market's growing. You've also got to show us that you're growing units. And that cultural change within the business has been enormous. You know, we have a a famous Friday meeting here at FOXTONS where all of the salespeople come together, and they shout out their numbers. Well, up until seven months ago, those numbers were always just the revenue number that you might have have have been able to close to the business. But now as a starting point of this change, as a good example, we're now first of all, the first number they call out is what the volume that they've done, and then it's the revenue number.

41:23 And that change within the culture, the way that we view the business, I think, is is is massively important. And then it's down to us operationally to make sure that we're targeting this growth and and helping use the data, the processes that we have to be the fastest to bring new units to the market. But then absolutely, our focus has got to be the quickest to get that lettings contract concluded. So that means we've got to be the quickest to do the viewings. We've got to be the quickest to agree the offers, and then we've got be the quickest to get it legally bound within that long process. So reducing the time of that process should put us in a at an advantage to improve our instruction to net ratio, which will automatically deliver organic growth. And then one for Neil. Are you concerned about the government legislating on the rental market as it's now very affordable?

42:13 I mean, affordable is it it depends upon who you're looking at. The the half a million letting standards that we register every every year are all fighting for a very small proportion of stock. Now absolutely, I recognize that within the whole of London, this this the the structure is broken from from a government aspect. What we desperately need are more lettings units. And the the the decision by the government, five years ago to remove interest tax relief, some of you may be landlords, you'll know exactly what I'm talking about, has meant that instead of seeing lots more buy to let investors coming into market, the new investors coming in has has started to slow down. And by natural attrition, the the overall size of the portfolio is very, very fractionally each year getting slightly smaller, but that the size of that pie is still enormous.

43:04 Ultimately, what we've got to focus on is taking a a larger percentage of that and and and bringing that onto the market so that we can conclude these deals. The market is is in tension at the moment. There is tension on the prices that are being achieved, but we have so much demand that actually it's purely a supply demand led led situation. And people, unfortunately, as I've said on on record, who are being priced out of of a particular area, exactly the same as when sales prices go up, might have to may have to compromise on their search criteria. It might have to be a slightly different area or slightly different property type in order to fulfill that requirement. But the the volume of of of people looking is so high that we don't see any we don't this price increase is is still is still justified, and it's still absolutely being met by by tenants at the moment. And I'm are we concerned that the government may take a move as we've seen externally outside of London to cap rental increases.

44:06 It may well happen, but the reality for this business is that, you know, people will still need to use an agent in order to find and engage and let those properties and absolutely still manage that portfolio through that through that time frame. So if that happens, we might not see this continued price rate price rise, but but the values that are still being achieved today are are what we're focused on. And the question is from Keith. Why bother with the sales business? Why not just focus on lettings? The market doesn't seem to understand the lettings focus of the business. You're quite right. I agree that the market doesn't understand the lettings focus of this business, which is a shame because I think if it did, I think it would be reflected in our share price. The reality is that you can't have a successful lettings business, in my opinion, unless you have a sales arm. That sales arm is very often at different times in the sales market, sending over new opportunities to be able to feed that machine. That's where our organic growth comes from for lettings, as well as all these other parts that we've been talking about. And at various at various points in the year or in the sales cycle or even in the letting cycle, it may be that, for example, a landlord may come to us and say, oh, we're thinking of selling this investment unit. Could you try it on the sales market? Well, if we didn't have a sales, a sales arm, that would get handed over to, a different agent. And of course, two months later when that property hasn't sold, guess who would get that lettings instruction? It wouldn't be coming back to us. So it's very, very important that we are a full service operation.

45:33 And I believe firmly that we can get back to producing consistent levels of profitability for the sales business, but we absolutely must focus on that on growing the lettings reoccurring revenue. Hopefully, that answered your question. One from James. FOXTONS GROUP PLC, which was a guaranteed strong sales effort. How do we rebuild this? This is purely about culture. This is about how we believe the sales teams should be operated. And and to have gone from, circa four and a half negotiators as an average per per branch down to two and a half or three per branch means that you lose that velocity and that momentum and that very, very important sales culture that was once what made FOXTONS absolutely unbeatable. Now we are growing these these sales teams quickly, and we're going back to face to face training. All of the training of this business, which was once renowned across the industry as being industry leading, was was turned digital. We're now bringing that back to be face to face being led by by the best estate agents in in in the business. And and and that, again, is generating this longer term culture of rebuilding back of those areas of of USPs. Another great USP was was obviously our visibility and our brand visibility in in the areas that we operate in. And we've almost just become a little bit gray in in the And and really now it's about pushing back into that, making sure that we're visible, making sure we've got the best people on the ground, making sure we've got the best tech to give us that advantage.

47:02 And and then ultimately, delivering on the results on our USP. The the thing that we were once reliant upon was for getting those results in sales. Well, we want to be known for getting results in sales and lettings and leaning into that rather than leaning away from it. One from Ben from Chris. Are there investor relations efforts to get new institutions and strategic buyers interested in buying the stake in FOXTONS? Yes. Absolutely. We're we're very focused on getting new investors on register. We've had quite an intense couple of weeks since the since the results, but speaking to new institutions, explaining the story. I think our refreshed narrative mean, the refreshed energy and really identifying what's going wrong with this business, explaining how we're gonna get up back we're gonna get back on the front foot, and indeed the speed at which getting on the front foot. I think there's been a lot of excitement in the in the best base.

47:55 So, absolutely, we look forward to getting getting further investment and and and keeping the narrative over the course of 2023. Thank you for that, Guy, Chris and Mohammed. I think you've actually managed to address all all the questions for investors. And of course, the company will review all the questions submitted today, and we'll publish those responses on the Investor Meet company platform. But just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Guy, could I just ask you for a few closing comments? I hope that we've given you a flavor both for the opportunity of the rebuild of FOXTONS, but also of our intent in order to make it happen. Just And wanted to underline the fact that the quality that we have, the latent quality within this business, it is very, very compelling. And there are many aspects where we still lead the industry in many, many ways.

48:45 And and my initial focus really now is to make sure that we're rebuilding as quickly as we can to demonstrate that this opportunity is real and and that we've got it. And actually, in a very short space of time, we've already started to see very, very positive numbers on on market share delivery, which is just the first step on the rest of this plan being delivered. And we're we're hugely excited, and we'd love you to be part of this journey with us. Guy, Chris, Mohammed, thanks once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of FOXTONS GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.