Foxtons Group — Medium-term targets come into view

Foxtons Group (LSE: FOXT)

Last close As at 12/07/2024

GBP0.65

−0.20 (−0.30%)

Market capitalisation

GBP199m

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Research: Real Estate

Foxtons Group — Medium-term targets come into view

The new strategic vision set out by the CEO is gaining significant momentum, driven by investment in staff and in best-in-class bespoke IT and data platforms, and implies that medium-term targets are now coming into focus. Market share is being gained in all divisions, which is likely to be boosted if the sales market stabilises in 2024. We have modestly raised forecasts and our valuation to 132p/share and believe that if interest rates stabilise or ease further, there are upside risks to our forecasts.

Andy Murphy

Written by

Andy Murphy

Director, Financials & Industrials

Real Estate

Foxtons Group

Medium-term targets come into view

FY23 results

Real estate

21 March 2024

Price

57p

Market cap

£188m

Net debt at 31 December 2023

£6.8m

Shares in issue

330.1m

Free float

100%

Code

FOXT

Primary exchange

LSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(6.3)

22.5

39.2

Rel (local)

(6.8)

22.4

33.1

52-week high/low

Business description

Foxtons Group is London’s leading and most widely recognised estate agency. It operates from a network of 57 interconnected branches offering a range of residential-related services, which break down into three separate revenue streams: sales, lettings and mortgage broking.

Next events

Q1 trading update

May 2024

Interim results

August

Analyst

Andy Murphy

+44 (0)20 3077 5700

Foxtons Group is a research client of Edison Investment Research Limited

The new strategic vision set out by the CEO is gaining significant momentum, driven by investment in staff and in best-in-class bespoke IT and data platforms, and implies that medium-term targets are now coming into focus. Market share is being gained in all divisions, which is likely to be boosted if the sales market stabilises in 2024. We have modestly raised forecasts and our valuation to 132p/share and believe that if interest rates stabilise or ease further, there are upside risks to our forecasts.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/22

140.3

13.7

3.0

0.9

19.0

1.6

12/23

147.1

15.2

2.9

0.9

19.8

1.6

12/24e

157.6

19.4

3.7

1.3

15.5

2.3

12/25e

166.3

22.5

4.4

1.6

12.8

2.7

Note: *PBT is normalised, excluding amortisation of acquired intangibles, exceptional items discontinued business and share-based payments. EPS is similar but after charging for share-based payments and excluding deferred tax re-measurement attributable to the corporate tax charge (ie diluted company definition).

Rapid strategic progress made in FY23

At the beginning of 2023, CEO, Guy Gittins (who joined at the end of 2022) set out a strategic vision to return Foxtons to its former position as London’s go-to estate agent. This included growing the non-cyclical and recurring revenues, which have already expanded to 72% for the group, to target operating profit of between £25m and £30m and to achieve an operating margin of over 15%. A lot of progress has been made in this direction, with unprecedented investment in staff training and retention, and also developing the proprietary IT and data systems that put Foxtons head and shoulders above its competition. We expect further market share gains.

Robust results in challenging markets

Foxtons’ FY23 results came in modestly ahead of expectations, with revenue up 4.9% to £147.1m, largely driven by the strength of the Lettings division, offset by weakness in Sales and Financial Services. Total adjusted operating profit increased 2.5% to £14.3m, implying modest margin erosion, from 9.9% to 9.7%, at least in part due to the deliberate retention of skilled staff to ensure the business has the right calibre of personnel and capacity to grow when sales markets recover. Net cash reduced from £12m to net debt of £6.8m, at least partly due to working capital investment and M&A.

Valuation: Raised from 127p to 132p/share

After some unhelpful macroeconomic trends over the last two years, we believe the outlook is improving. Accordingly, we have modestly raised forecasts and introduced FY26 numbers that are in line with the medium-term strategy. We have also reviewed, simplified and updated our valuation methodology to include c £20m of M&A investment in Lettings, also in line with the strategy. This revision results in a modest valuation upgrade, from 127p/share, to 132p. The revised dividend policy points to progression potential, with payments at least in line with FY23. The share buy-back remains under review, and probably on hold.

The power of the Foxtons Platform

At the beginning on 2023, CEO Guy Gittins set out a strategic vision to return Foxtons to its former position as London’s go-to estate agent. This included growing the non-cyclical and recurring revenues, which have grown to 72% for the group, to target operating profit of between £25m and £30m and to achieve an operating margin of over 15%. A lot of progress has been made in this direction, with unprecedented investment in staff training and retention, and also developing the proprietary IT systems that put Foxtons ahead of its competition.

The key to success: The Foxtons operating platform

Foxtons utilises its own bespoke operating platform that gives it an edge over the competition. It is a powerful and unique asset that facilitates expansion and industry consolidation over the longer term. The platform has unmatched technology and data capabilities that drive high levels of lead generation, deal excellence and lifetime customer value, while also creating high levels of scalability, all key to delivering growth and ensuring that Foxtons reaches its operating profit target in the shortest space of time.

In 2023, the Foxtons operating platform supported significant year-on-year market share growth across all three businesses, with the Lettings market share up 16%, Sales up 21% and Financial Services up 11%. Foxtons also reclaimed the number one estate agency position in London, is now the UK’s largest lettings estate agency brand and was the fastest growing large UK estate agency brand.

Exhibit 1 gives an overview of the five key elements of the Foxtons operating platform.

Exhibit 1: Schematic of Foxtons’ operating platform

Source: Foxtons

These five elements are explained in more detail below.

The technology platform (Business Operating System, BOS) is an internally developed and fully integrated customer relationship management (CRM) and workflow system that underpins the entire Foxtons operation. Foxtons believes that it is the most advanced UK estate agency platform and a key driver of outperformance. The system is internally managed and developed and is therefore capable of delivering bespoke upgrades and of harnessing new technology at pace, which gives it a distinct advantage over competitors utilising off-the-shelf third-party systems. In 2023, Foxtons developed the UK’s first fully digital end-to-end lettings system, which allows tenants to complete a lettings transaction online and supported the Lettings market share gains mentioned above.

The Foxtons Data Platform was developed and rolled out in 2023 and combines Foxtons’ data infrastructure, rich historical databases alongside real-time market data and advanced data science including AI and machine learning plug-ins. The databases contain up to 20 years of data and has over 1.6bn datapoints that relate to customer and property details, transaction data and analysis of customer behaviour. Foxtons believes that its Data Platform is ‘future-fit’ and is already driving market share gains. It also drives an internal reporting suite that improves management’s visibility of the operation and therefore results in better data-led decision making.

Exhibit 2: Foxtons Technology platform (BOS)

Exhibit 3: Foxtons Data Platform

Source: Foxtons

Source: Foxtons

Exhibit 2: Foxtons Technology platform (BOS)

Source: Foxtons

Exhibit 3: Foxtons Data Platform

Source: Foxtons

The Foxtons brand now has the highest level of brand awareness in London’s fragmented estate agency industry, having fallen behind peers in recent years due to under-delivery of customer expectations. In 2023 Foxtons delivered new data-driven marketing initiatives that reset what Foxtons stood for and why landlords and sellers should choose Foxtons. This has been successful, with the Foxtons website becoming the most visited estate agency website in the UK, by a factor of five. A return to the highest levels of customer service has allowed Foxtons to maintain its premium fee proposition, grow at the fastest rate in the UK and return to its previous, leading position.

The previously existing Foxtons hub and spoke operating model has been developed further following a thorough review process across the business, supported by the new reporting suites. The revised model allows branch-based fee earners to concentrate on the customer experience, while specialised sales and operational support teams underpin transactions. This model improves branch productivity and drives scale to the centralised functions, while as the same time delivering the highest levels of customer service. Success here has been evidenced by the increase in the actively managed Lettings portfolio, which has grown from a long-term average rate of 33% to over 40%. Furthermore, Foxtons acquired an out-of-London lettings property management hub with the acquisition of Ludlow Thompson, which it hopes to expand while reducing the footprint occupied in the group’s Chiswick Park headquarters, potentially offering meaningful cost savings.

People, culture and training have all been reinvigorated in 2023, with Foxtons focusing on training and retaining the best estate agents and driving a rewarding, high-performance culture. It has invested in staff and career progression to support retention as well as introducing a new employee value proposition. The result has been an 11% increase in Lettings and Sales fee earner retention rates and a 9% increase in average tenure since 2022. Foxtons believes it has produced one of the most productive and engaged workforces in the industry.

Results reflect the macro and internal action

Foxtons FY23 results were affected by a range of issues, from strong Lettings rates and market share gains, to weak underlying sales markets and declining house prices. That said, management action to develop a stronger business supported by the Foxtons Operating Platform is paying dividends, which is evident in more motivated employees, reduced staff turnover and increased brand awareness. Overall, revenue and profits increased and although Foxtons ended the period with net debt, the cash-generative nature of the business is likely to see this return to net cash, which in turn is likely to be reinvested in further value-enhancing M&A.

Foxtons’ FY23 results came in modestly ahead of expectations, with revenue up 4.9% to £147.1m, largely driven by the strength of the Lettings division, offset by weakness in Sales and Financial Services. Total adjusted operating profit increased 2.5% to £14.3m, implying modest margin erosion, from 9.9% to 9.7%, at least in part due to the deliberate retention of skilled staff to ensure the business has the right calibre of personnel and capacity to grow when markets recover.

Adjusted PBT rose 2.9% to £12.4m, and EPS (excluding exceptionals) declined 3.8% to 2.9p. The dividend was flat at 0.9p/share, implying cover of more than three times, and net cash reduced from £12.0m to net debt of £6.8m, largely due to investment in working capital of £10.8m as shorter landlord billing terms were introduced to improve competitiveness, M&A spending of £13.9m, £2.7m of dividends paid and £1.1m of share buy backs.

Exhibit 4: Foxtons FY23 results summary

£m

FY19

FY20

FY21

FY22

FY23

FY23 vs FY19

FY23 vs FY22

Revenue

Lettings

65.7

57.3

74.3

86.9

101.2

53.9%

16.4%

Sales

32.6

28.2

42.7

43.2

37.2

13.9%

-14.0%

Financial Services

8.5

8.1

9.5

10.2

8.8

2.9%

-14.1%

Total revenue

106.9

93.6

126.5

140.3

147.1

37.6%

4.9%

Adjusted operating profit

Lettings

4.2

6.3

9.8

18.0

25.8

513.3%

43.6%

Sales

(6.3)

(5.8)

0.5

(3.2)

(10.0)

59.3%

208.7%

Financial Services

1.4

1.4

1.5

1.8

0.7

-52.1%

14.8%

Total adjusted operating profit

(0.7)

1.9

8.9

13.9

14.3

-

2.5%

PBT (ex-exceptionals)

(3.2)

(0.3)

6.9

12.0

12.4

-

2.9%

EPS - continuing, diluted and adjusted (p)

(1.1)

(0.2)

2.0

3.0

2.9

-

-3.8%

DPS (p)

0.0

0.0

0.5

0.9

0.9

-

0.0%

Net cash/(debt)

15.5

37.0

23.1

12.0

(6.8)

N/A

N/A

Source: Foxtons, Edison Investment Research

Lettings boosted by robust rates and M&A

Total Lettings revenue increased 16% to £101.2m (2022: £86.9m) on the back of a c 5% increase in the overall lettings book to c 28,100 tenancies. Revenue was boosted by a 24% increase in the average revenue per transaction to £5,234, offset by a 6% reduction in transactions to 19,334, reflecting longer average tenancy terms reducing renewal volumes.

Of the £14.3m increase in Lettings revenue, £6.3m was organic growth, £3.9m was acquired revenue and £4.1m was additional interest earned on client monies. The £6.3m of organic growth was driven by four factors:

A deliberate focus on securing longer tenancies to drive customer retention with the benefit of a greater proportion of revenue recognised at the start of the tenancy.

Growth in cross selling the higher-value property management services, which saw growth of 9% on new deals under management.

An 11% increase in market share of organic instructions, which boosted available stock.

An 8% increase in rental prices for new deals. New deals accounted for 53% of total Lettings revenue.

The acquired revenue reflected an incremental five months of trading from the May 2022 acquisitions, 10 months of Atkinson McLeod and two months of Ludlow Thompson. The interest income reflects the higher interest rates on client monies held, which offsets the increased costs of managing clients’ money, and compliance costs.

The Lettings operating margin expanded by 480bp, from 20.7% to 25.5%, benefiting from the operating leverage of growth, notably from the additional £14.3m of revenue and £7.8m of operating profit.

The chart below clearly shows that although the number of lettings in H123 and H223 was broadly similar to 2019, the average revenue per rental has risen by roughly a half as overall rates are now higher, and the portfolio has an increased proportion of properties that are now managed, which delivers a higher fee.

Exhibit 5: Foxtons’ Lettings activity, last 10 half years

Source: Foxtons, Edison Investment Research

Sales revenue down, but market share increased

Sales revenue decreased by 14% to £37.2m, curtailed by a 10.7% decline in transaction volumes to 2,872, and a 3.6% decline in the average revenue per transaction to £12,942. Although the volumes were down, according to industry data (source: TwentyCi), Foxtons materially outperformed the market, which declined 22% in volume terms. The decline in average revenue per transaction reflected a 1% fall in the average price of properties sold (2023: £586,000) and a small decline in average commission rates from 2.29% to 2.25%. London property prices fell 2.4% (source: Nationwide House Price Index) and therefore the 1% decline experienced by Foxtons reflected market share gains in higher-value properties, which is in line with strategy.

The decline in revenue and the investment in the sales business to ensure the operation is ready and can capitalise on improved market conditions resulted in operating losses widening materially in the period, from £3.2m in 2022 to £10.0m in 2023. The drop-through rate of declining revenue was in excess of 100% and was further exacerbated by higher than usual cost inflation. We believe that 2023 marks a low point for Sales revenue and profit, and anticipate some recovery in future periods.

The chart below shows the volume of sales, revenue and revenue per unit over the last 10 half years. It shows half-yearly volumes in 2023 of c 1,300–1,600, up c 18% versus c 1,200 in H119 and H219. Revenue per unit is broadly unchanged, implying that total revenue was also up by a mid-teens percentage in FY23 versus FY19.

Exhibit 6: Foxtons’ Sales activity, last 10 half years

Source: Foxtons, Edison Investment Research

Financial Services followed the sales path, but also gained market share

Foxtons’ Financial Services division handled 5,033 units in the year, which was marginally up on FY22. Revenue and revenue per transaction were both down by c 14%, to £8.8m and £1,745 respectively, reflecting lower average loan sizes, a reduction in new purchase volumes and an increase in lower-value product transfers within the refinance business. Of the £8.8m total revenue, £4.4m (broadly flat year-on-year) was from non-cyclical refinance activity and £4.3m (FY22: £5.7m) was from more cyclical purchase activity.

Operating profit in the segment declined to £0.7m (FY22: £1.8m), with the operating margin also weakening, from 17.3% to 7.4%. Over the last 10 half years, volumes have trended modestly higher, but in 2023, revenue per transaction was cyclically lower, which depressed overall revenue down to levels similar to that seen in 2019, pre-pandemic. Financial Services remains the smallest division of the group by a long way, but it is profitable and it is a complementary component of Foxtons.

Exhibit 7: Foxtons’ Financial Services activity, last 10 half years

Source: Foxtons, Edison Investment Research

FY24 outlook is encouraging

Foxtons reported that trading in January and February had been in line with expectations. The Lettings business has strong recurring revenue and is expected to remain resilient. The demand and supply dynamics of the lettings market appear to have normalised, with an increased level of available stock and fewer tenants registering for each property implying good demand, and stable pricing at the prevailing elevated levels. Foxtons remains very optimistic that its Operating Platform will continue to deliver market share growth.

In Sales, the under-offer pipeline was up 31% in value terms at the end of February, reflecting better demand characteristics as mortgage rates have begun to reduce, and continued market outperformance. This bodes well for first half revenue, with Foxtons optimistic that H224 could also offer growth if mortgage rates stabilise and pent-up demand is released. In Financial Services, new buyer demand has improved along with non-cyclical refinance activity, which supports a 16% improvement in the Financial Services pipeline.

Should these levels of demand persist for the full year, our modestly revised forecasts below may look conservative, implying that risks may ultimately be to the upside.

Modest forecast uplift, introduction of FY26 estimates

Foxtons modesty exceeded our FY23 expectations at the operating profit level and we have flowed this into our FY24 and FY25 estimates, which results in a modest profit uplift as described in the table below. The only material change is the improvement in net debt/cash expectations as the investment in working capital normalises. We do not include M&A in our forecast years, so should Foxtons engage in further consolidation, our estimates would need to be reviewed.

We have also introduced FY26 estimates (see Exhibit 10), which include operating profit of £25.2m and an operating margin of 15%, which are in line with medium-term targets.

Exhibit 8: Revised estimates

FY23

FY24e (Old)

FY24e (New)

Chg (%)

FY25e (Old)

FY25e (New)

Chg (%)

Revenue

147.1

157.6

157.6

0.0%

163.9

166.3

1.5%

YoY growth (%)

4.9%

-

7.1%

-

5.5%

-

Adjusted operating profit

14.3

17.4

17.6

1.4%

20.0

20.4

1.8%

YoY growth (%)

1.1%

-

23.8%

-

15.4%

-

Reported PBT

7.9

14.6

15.0

3.0%

17.5

18.2

3.9%

YoY growth (%)

-37.9%

-

90.5%

-

20.9%

-

EPS (Company definition)

2.9

3.5

3.7

5.1%

4.2

4.4

5.8%

YoY growth (%)

-0.9%

-

27.6%

-

20.9%

-

DPS

0.9

1.2

1.3

7.3%

1.5

1.6

3.7%

YoY growth (%)

0.0%

-

43.0%

-

20.9%

-

Net cash/(debt) (pre-IFRS 16)

-6.8

-3.5

-3.6

-4.8%

7.0

10.3

47.8%

YoY growth (%)

-155.9%

-

-46.6%

-

-384.5%

-

Source: Foxtons and Edison Investment Research


Valuation raised to 132p/share

After some unhelpful macroeconomic trends over the last two years, we believe the outlook is improving. Accordingly, we have modestly raised forecasts and introduced FY26 numbers, which are in line with strategy. We have also reviewed, simplified and updated our valuation methodology to include c £20m of M&A investment in Lettings, also in line with the strategy. This revision results in a modest valuation upgrade, from 127p/share to 132p/share.

Methodology revised, valuation modestly raised

We have moved away from our previous valuation model as it has become less relevant, and adopted a simplified multiple-based valuation. Our new valuation model is detailed below and is based on our new FY26 earnings, which are in line with the company’s stated medium-term target (operating profit of £25–30m and an operating margin of 15%). The first FY26 column is based solely on our FY26 forecasts and, with a 17.5x P/E multiple applied, gives a value of 100p/share. The multiple applied is the average multiple that Foxtons traded on in 2014 and 2015, when arguably the outlook was as positive as it is now.

Our preferred valuation is the FY26 (including M&A) column, which is the same as the first, but includes an assumed £20m of M&A spending in Lettings in total in FY24 and FY25, which generates an additional £11m of revenue, in line with previous guidance, with an assumed 50% drop-through rate to operating profit. This level of M&A investment is broadly in line with the last four years, where Foxtons invested a total of £47.4m, or c £12m pa. Excluding FY20, the first COVID year, Foxtons has invested an average of c £14m pa on internally funded acquisitions of predominantly Lettings revenues.

This valuation methodology results in a slight upgrade from 127p/share to 132p/share, implying c 130% upside.

Exhibit 9: Summary valuation table

FY26e

FY26e (inc M&A)

Comment

Revenue

Lettings

119.0

130.1

Assumes £20m M&A spend at 1.8x Price to revenue

Sales

44.3

44.3

Financial Services

9.6

9.6

Total revenue

172.9

184.0

No other growth other than Lettings M&A

Operating profit

Lettings

26.7

32.3

Assumes 50% drop through on M&A

Sales

0.1

0.1

Financial Services

0.9

0.9

Central costs

-2.5

-2.5

Operating profit

25.2

30.8

Operating margin (%)

14.6%

16.7%

Interest

-1.9

-1.9

Assumes M&A funded with internally generated cash

PBT

23.3

28.9

Tax

-5.8

-5.8

Retained earnings

17.5

23.1

No. of shares in issue

306.7

306.7

EPS (p)

5.7

7.5

PER multiple (x)

17.5

17.5

Average forward PER in 2014/2015 was 17.5x.

Value/share (p)

99.8

131.5

Current share price (p)

57

-

-

Upside to implied value per share (p)

75%

131%

Source: Edison Investment Research

Exhibit 10: Financial summary

£'m

2019

2020

2021

2022

2023

2024e

2025e

2026e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

106.9

93.6

126.5

140.3

147.1

157.6

166.3

172.9

EBITDA

 

 

13.5

15.7

25.1

27.8

30.0

35.0

37.7

42.5

Normalised operating profit

 

 

0.6

3.8

12.1

15.6

17.1

22.0

24.7

29.5

Amortisation of acquired intangibles

(0.6)

(0.8)

(1.7)

(1.6)

(1.8)

(2.4)

(2.4)

(2.4)

Share-based payments

(0.7)

(1.0)

(1.5)

(0.2)

(1.0)

(2.0)

(2.0)

(2.0)

Total adjusted operating profit

(0.7)

1.9

8.9

13.9

14.3

17.6

20.4

25.2

Exceptionals

(5.7)

(1.1)

(1.4)

(0.1)

(4.5)

0.0

0.0

0.0

Reported operating profit

(6.3)

0.8

7.6

13.8

9.8

17.6

20.4

25.2

Net Interest and exceptionals

(2.5)

(2.2)

(2.0)

(1.9)

(1.9)

(2.6)

(2.2)

(1.9)

Profit Before Tax (norm)

 

 

(1.9)

1.6

10.0

13.7

15.2

19.4

22.5

27.7

Profit Before Tax (reported)

 

 

(8.8)

(1.4)

5.6

11.9

7.9

15.0

18.2

23.3

Reported tax

1.0

(1.8)

(6.9)

(2.4)

(2.4)

(3.8)

(4.5)

(5.8)

Profit After Tax (norm)

(0.9)

(0.2)

3.1

11.4

12.8

15.6

18.0

21.8

Profit After Tax (reported)

(7.8)

(3.2)

(1.3)

9.6

5.5

11.3

13.6

17.5

Discontinued operations

0.0

0.0

(4.8)

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

(0.9)

(0.2)

(1.7)

11.4

12.8

15.6

18.0

21.8

Net income (reported)

(7.8)

(3.2)

(6.2)

9.6

5.5

11.3

13.6

17.5

Basic average number of shares outstanding (m)

275

314

324

308

302

302

302

302

EPS - basic normalised (p)

 

 

(0.32)

(0.08)

(0.52)

3.69

4.23

5.17

5.95

7.23

EPS - basic reported (p)

 

 

(2.83)

(1.02)

(1.90)

3.11

1.82

3.73

4.51

5.79

EPS - Continuing, diluted, and adj. Company definition (p)

 

 

(1.06)

(0.16)

1.98

3.00

2.88

3.68

4.45

5.70

Dividend (p)

0.00

0.00

0.45

0.90

0.90

1.29

1.56

2.00

Revenue growth (%)

(-4.1)

(-12.5)

35.2

10.9

4.9

7.1

5.5

4.0

EBITDA Margin (%)

12.6

16.8

19.9

19.8

20.4

22.2

22.7

24.6

Normalised Operating Margin (%)

0.5

4.1

9.5

11.1

11.6

14.0

14.9

17.1

BALANCE SHEET

Fixed Assets

 

 

178.7

173.4

184.4

191.7

214.2

204.9

194.0

183.2

Intangible Assets

101.0

103.5

107.3

109.3

114.9

116.0

117.1

118.2

Goodwill

9.3

11.4

17.7

26.1

40.7

40.7

40.7

40.7

Tangible Assets

13.0

10.5

9.7

10.7

9.5

12.1

13.2

14.3

Right of use assets

51.4

44.4

43.8

42.6

42.5

29.5

16.5

3.5

Contract assets

0.6

0.4

0.9

1.7

4.7

4.7

4.7

4.7

Investments & other

3.3

3.1

5.1

1.4

1.9

1.9

1.8

1.8

Current Assets

 

 

30.2

52.6

39.3

34.5

37.1

43.4

58.4

77.3

Contract assets

1.0

1.7

3.7

5.7

14.3

14.3

14.3

14.3

Debtors

13.4

13.9

16.0

16.0

17.4

20.5

21.6

22.5

Cash & cash equivalents

15.5

37.0

19.4

12.0

5.0

8.2

22.1

40.1

Other

0.3

0.1

0.3

0.7

0.5

0.5

0.5

0.5

Current Liabilities

 

 

(27.9)

(29.2)

(31.9)

(38.7)

(57.1)

(51.4)

(52.0)

(52.4)

Creditors

(10.5)

(10.3)

(14.5)

(16.7)

(21.3)

(15.8)

(16.6)

(17.3)

Tax and social security

0.0

0.0

0.0

0.0

(0.1)

(0.1)

(0.1)

(0.1)

Lease liabilities

(9.7)

(10.8)

(8.8)

(10.7)

(10.7)

(10.7)

(10.7)

(10.7)

Short term borrowings

0.0

0.0

0.0

0.0

(11.7)

(11.7)

(11.7)

(11.7)

Contract liabilities

(6.3)

(7.7)

(8.2)

(9.7)

(11.8)

(11.8)

(11.8)

(11.8)

Other

(1.4)

(0.4)

(0.3)

(1.5)

(1.6)

(1.4)

(1.1)

(0.9)

Long Term Liabilities

 

 

(65.2)

(62.4)

(68.4)

(64.9)

(68.6)

(59.4)

(49.8)

(40.3)

Lease liabilities

(46.2)

(40.7)

(39.3)

(35.8)

(36.9)

(27.7)

(18.1)

(8.6)

Contract liabilities

(1.3)

(1.1)

(1.1)

(0.3)

(0.4)

(0.4)

(0.4)

(0.4)

Other long term liabilities

(17.8)

(20.6)

(28.0)

(28.8)

(31.3)

(31.3)

(31.3)

(31.3)

Shareholders' equity

 

 

115.8

134.5

123.5

122.7

125.6

137.5

150.6

167.8

CASH FLOW

Op Cash Flow before WC and tax

(2.6)

4.3

6.6

15.0

11.6

20.0

22.7

27.5

Depreciation - Right of use assets and impairment

9.8

9.4

13.8

12.2

12.9

13.0

13.0

13.0

Branch asset impairment

4.3

1.7

1.1

(0.3)

3.4

0.0

0.0

0.0

Gain on disposal of PPE etc

(0.4)

(0.5)

(1.4)

(0.3)

0.2

(0.5)

(0.5)

0.5

Working capital

(2.6)

(0.6)

1.7

(1.2)

(10.8)

(8.6)

(0.3)

(0.2)

Decrease in provisions

0.8

(0.8)

0.2

1.1

(0.5)

(1.0)

(1.0)

(1.0)

Share based payment charges

0.7

1.0

1.5

0.2

1.0

2.0

2.0

2.0

Cash settlement of share incentive plan

(0.4)

0.0

0.0

(0.0)

0.0

(0.5)

(0.5)

(0.5)

Tax

0.2

0.2

(0.2)

(2.7)

(2.2)

(3.8)

(4.5)

(5.8)

Net operating cash flow

 

 

9.8

14.7

23.5

23.9

15.7

20.6

30.9

35.5

Capex

(0.3)

(0.4)

(1.7)

(2.9)

(2.1)

(0.4)

(0.4)

(0.4)

Acquisitions/disposals

(0.2)

(3.9)

(14.5)

(9.6)

(15.5)

(2.3)

(0.8)

(0.8)

Net interest

0.0

0.0

(0.0)

0.1

0.1

(0.1)

0.1

0.4

Dividends

0.0

0.0

(0.6)

(1.5)

(2.7)

(2.7)

(3.9)

(4.7)

Repayment of lease liabilities

(12.0)

(10.0)

(15.2)

(12.7)

(12.5)

(12.0)

(12.0)

(12.0)

Purchase of own shares

(0.1)

(0.3)

(5.7)

(4.9)

(1.1)

(0.3)

(0.3)

(0.3)

Net proceeds from issue of ord. Shares

0.0

21.1

0.0

0.0

0.0

0.0

0.0

0.0

Other

0.3

0.3

0.3

(3.4)

0.2

0.3

0.3

0.3

Net Cash Flow

(2.4)

21.5

(13.9)

(11.1)

(17.9)

3.2

13.9

18.1

Opening net debt/(cash)

 

 

(17.9)

(15.5)

(37.0)

(23.1)

(12.0)

6.8

3.6

(10.3)

Closing net debt/(cash) (ex lease liabilities

 

(15.5)

(37.0)

(23.1)

(12.0)

6.8

3.6

(10.3)

(28.4)

Source: Foxtons accounts, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Foxtons Group and prepared and issued by Edison, in consideration of a fee payable by Foxtons Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

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Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

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This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Foxtons Group and prepared and issued by Edison, in consideration of a fee payable by Foxtons Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2024 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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