Last close As at 05/08/2026
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Market capitalisation
GBP110m
Research: Real Estate
Foxtons Group’s core London market has been improving all year and the interim results highlight both the recovery and the contribution from recent acquisitions. Furthermore, the company announced a return to paying dividends in respect of the half year and given the strength of both trading and the balance sheet, revealed a £3m share buyback programme that should augment earnings. We retain our underlying assumptions but raise our valuation by 1p to 130p to reflect the share buyback.
Foxtons Group |
Strong results, dividend and share buy back in H2 |
H121 results and outlook |
Real estate |
2 August 2021 |
Share price performance
Business description
Next events
Analyst
Foxtons Group is a research client of Edison Investment Research Limited |
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Foxtons Group’s core London market has been improving all year and the interim results highlight both the recovery and the contribution from recent acquisitions. Furthermore, the company announced a return to paying dividends in respect of the half year and given the strength of both trading and the balance sheet, revealed a £3m share buyback programme that should augment earnings. We retain our underlying assumptions but raise our valuation by 1p to 130p to reflect the share buyback.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
106.9 |
(1.9) |
(0.3) |
0.0 |
N/A |
N/A |
12/20 |
93.6 |
1.6 |
(0.1) |
0.0 |
N/A |
N/A |
12/21e |
130.1 |
8.1 |
0.1 |
0.5 |
622.2 |
1.0 |
12/22e |
137.7 |
12.5 |
3.4 |
0.8 |
15.8 |
1.6 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Strong markets and M&A imply good growth
Foxtons reported H1 revenue of £66.9m, up 29% versus H119, comfortably ahead of our expectations. Operating profit was £5.2m having been in loss in both 2019 and 2020 and PBT was £3.3m, again having been in loss for the previous two years. Adjusted EPS was 1.1p/share which has allowed Foxtons to declare a dividend of 0.18p/share. The company ended the period with net cash of £24.4m which along with the positive cash inflow has encouraged the board to announce a £3m share buyback.
Underlying forecasts unchanged
The outlook is encouraging despite the tapering of the stamp duty holiday as the market appears to be maintaining momentum. Our underlying full year forecasts are essentially unchanged, bar the inclusion of £1.5m of branch business rates, taken voluntarily in H1 and paid in July. Foxtons continues to roll out its growth strategy which was highlighted in its June capital markets day. This includes investing in the underlying business, pursuing M&A of lettings books, regional expansion and focusing on the Build to Rent (BTR) market which is expanding rapidly.
Valuation: Bull case value edges up to 130p/share
Our base case shows 2022e EPS of 2.4p, which gives a valuation below the current share price when we apply the average 2014/15 P/E of 17.5x. If we roll over our forecasts to 2023e, our basic, adjusted and diluted EPS of 2.9p implies a valuation of 50.8p, much closer to the current price. However, we would argue that future growth may not be fully reflected in the share price or our estimates as we do not forecast acquisitions. Our bull case highlights the potential upside in forecasts, where Foxtons is particularly geared to further acquisitions of lettings books as well as growth from BTR, regional expansion and underlying markets. Our bull case scenario suggests a potential 2022e EPS of 7.4p, which implies a valuation of 130p/share when the 17.5x P/E is applied, a 1p uplift due to the £3m share buyback announced.
H1 group and divisional performance
Foxtons reported H121 revenue of £66.9m, which was up 66% versus the previous year and 29% versus 2019. Excluding £7.2m of revenue from Douglas and Gordon (D&G), underlying revenue was up 48% and 15% respectively. These growth rates include the impact of the loss of £1.4m from the tenant fee ban. The principal drivers of the revenue growth were the increase in lettings volumes which were up 26% y-o-y to 10,026, and sales volumes which were up 141% y-o-y to 2,071. Mortgage volumes were also up, by 35% to 2,795, but the revenue base is much smaller compared to the Lettings and Sales divisions.
Exhibit 1: Interim results summary
H119 |
H120 |
H121 |
H121 vs H119 |
H121 vs H120 |
|
Revenue |
|||||
Lettings |
32.4 |
25.7 |
33.1 |
2.0% |
28.8% |
Sales |
15.4 |
11.1 |
28.6 |
85.5% |
158.7% |
Mortgage Broking |
4.0 |
3.6 |
5.2 |
31.0% |
44.3% |
Total revenue |
51.8 |
40.4 |
66.9 |
29.1% |
65.9% |
Adjusted operating profit |
|||||
Lettings |
2.0 |
2.0 |
1.5 |
-27.3% |
-27.3% |
Sales |
(3.5) |
(4.8) |
2.7 |
- |
- |
Mortgage Broking |
0.6 |
0.5 |
1.1 |
71.8% |
134.4% |
Total adjusted operating profit |
(0.9) |
(2.4) |
5.2 |
- |
- |
PBT (ex exceptionals) |
(2.1) |
(3.5) |
4.1 |
- |
- |
EPS - basic, diluted and adjusted (p) |
(0.7) |
(1.6) |
1.1 |
- |
- |
DPS (p) |
0.0 |
0.0 |
0.18 |
- |
- |
Net cash |
14.5 |
40.5 |
24.4 |
67.8% |
-39.9% |
Source: Foxtons and Edison Research
Operating profit improved dramatically, from losses in both 2019 and 2020, to £5.2m in H121. This figure includes c £1m benefit from the acquisition of D&G, but also a charge of £1.5m relating to the voluntary payment of branch business rates. Basic, diluted and adjusted EPS came in a 1.1p and Foxtons declared its first dividend since 2017, of 0.18p/share, in line with its strategy to pay out 35–40% of earnings as dividends.
Foxtons ended the period with net cash of £24.4m after the payment of £10m as part consideration for D&G and a £3m investment in Boomin. This strong position and positive outlook encouraged Foxtons to announce a second share buyback, this time of £3m. We estimate that the buyback is c 1% earnings enhancing in a full year.
Lettings activity showing signs of recovery
Total lettings increased 26% y-o-y to 10,026, benefiting from c 700 units in H1 from the D&G acquisition (from 1 March 2021). This represents growth of 8.2% over the same period in 2019. Revenue per unit improved modestly from £3,229 in H120, to £3,300, benefiting from the higher rates achieved from the acquired business. Adjusting for the acquisition and for the £1.4m impact of the tenant fee ban, average rentals were down c 9% versus 2019. That said, rates are now beginning to improve, and is likely to be given a boost if international travel continues to reopen and international students return from September. Overall, Lettings revenue was marginally higher than the same period in 2019.
|
Exhibit 2: Foxtons’ Lettings activity, last five half years |
|
|
Source: Foxtons |
Sales activity more than doubled
H121 saw sales volumes increase by more than 140% to 2,071, including c 200 units from D&G. This volume represents growth of more than 70% versus 2019. Clearly, the business benefited from the stamp duty holiday and pent-up demand from the lockdown. Revenue per unit was also up, by 7% to £13,833, again benefiting from the higher value sales from the acquired business. However, underlying revenue per unit was c 2% higher on the underlying business. In total, Sales revenue was up nearly 160% to £28.6m, a level not achieved since 2016.
|
Exhibit 3: Foxtons’ Sales activity, last five half years |
|
|
Source: Foxtons |
Mortgage Broking volumes up 35% y-o-y
Mortgage Broking activity was also strong in the period, benefiting from the strength in the sales volumes referred to above. In total, volumes increase 35% y-o-y to 2,795 and average revenue per transaction rose 7% to £1,859. Overall, the business generated revenue of £5.2m in the period, comfortably ahead of H120, and 31% ahead of H119.
Currently, Foxtons is conducting a strategic review of the Mortgage Broking business which could lead to one of a number of outcomes. This is because the business is currently unable to handle the volume of activity that the rest of Foxtons is able to channel to the division without significant levels of investment. However, given the strategic fit of the operation with the core sales business, we believe it is likely that Foxtons will retain some interest in the business in the long term.
|
Exhibit 4: Foxtons’ Mortgage Broking activity |
|
|
Source: Foxtons |
Underlying forecasts unchanged: Valuation edges up to 130p/share
Our underlying trading assumptions are unchanged. However, due to Foxtons’ decision to voluntarily pay £1.5m of branch business rates in July (relating to the first half), we have reflected the charge in our 2021 estimates. This is the primary driver of the reduction in PBT, the balance being minor exceptional charges. Our 2022 and 2023 estimates are essentially unchanged.
Exhibit 5: Summary of estimate changes
|
PBT |
PBT reported (new, £m) |
% |
EPS |
EPS basic reported (new, p) |
% |
2020 |
(1).4 |
(1.4) |
- |
(1.0) |
(1.0) |
- |
2021e |
5.976 |
4.237 |
-29.1 |
1.5 |
(1.1) |
- |
2022e |
9.549 |
9.539 |
-0.1 |
2.4 |
2.4 |
1.5 |
2023e |
11.685 |
11.693 |
0.1 |
2.9 |
3.0 |
1.8 |
Source: Company data, Edison Research
Our valuation is unaffected by the changes above, but due to the share buyback, we have reduced the shares in issue which edges up our valuation from 129p/share to 130p/share.
Exhibit 6: Bear, base and bull case revenue and profit scenarios
£m unless stated |
2022e |
|||||
Bear |
Base |
Bull |
Comments |
|||
2019 revenue base |
106.9 |
106.9 |
106.9 |
|||
Organic revenue growth |
-8.9 |
12.8 |
32.4 |
|||
M&A revenue growth |
16.2 |
18.0 |
25.3 |
|||
2022 revenue |
114.1 |
137.7 |
164.6 |
|||
|
||||||
Operating profit |
(6.2) |
11.5 |
31.7 |
Applied 75% drop-through to decline and growth scenarios |
||
Interest |
(1.9) |
(1.9) |
-1.9 |
Assumed same in all scenarios |
||
PBT |
(8.1) |
9.5 |
29.8 |
|||
Tax (@ 19%) |
- |
(1.8) |
(5.7) |
|||
Profit after tax |
(8.1) |
7.7 |
24.1 |
|||
|
||||||
Average (diluted) shares in issue (m) |
324.4 |
324.4 |
324.4 |
|||
|
||||||
EPS (p) |
(2.5) |
2.4 |
7.4 |
|||
|
||||||
Current price (p) |
53 |
|
||||
|
||||||
Implied 2022e P/E (x) |
-21.2 |
22.3 |
7.1 |
|||
Potential value per share |
||||||
Target P/E (x) |
17.5 |
17.5 |
Average forward P/E in 2014/2015 was 17.5x. |
|||
Implied value per share (p) |
41.7 |
130.0 |
Source: Edison Investment Research
Exhibit 7: Financial summary
Year end 31 December, IFRS |
£'m |
2018 |
2019 |
2020 |
2021e |
2022e |
2023e |
|
INCOME STATEMENT |
||||||||
Revenue |
|
|
111.5 |
106.9 |
93.6 |
130.1 |
137.7 |
142.4 |
Normalised operating profit |
|
|
(0.3) |
0.6 |
3.8 |
10.0 |
14.5 |
16.5 |
Amortisation of acquired intangibles |
(0.2) |
(0.6) |
(0.8) |
(1.2) |
(1.0) |
(1.0) |
||
Exceptionals |
(15.7) |
(5.7) |
(1.1) |
(0.8) |
0.0 |
0.0 |
||
Share-based payments |
(1.3) |
(0.7) |
(1.0) |
(1.8) |
(2.0) |
(1.9) |
||
Reported operating profit |
(17.6) |
(6.3) |
0.8 |
6.2 |
11.5 |
13.6 |
||
Net Interest |
0.0 |
(2.4) |
(2.2) |
(1.9) |
(1.9) |
(1.9) |
||
Exceptionals |
0.3 |
(0.1) |
(0.0) |
(0.1) |
0.0 |
0.0 |
||
Profit Before Tax (norm) |
|
|
0.0 |
(1.9) |
1.6 |
8.1 |
12.5 |
14.6 |
Profit Before Tax (reported) |
|
|
(17.2) |
(8.8) |
(1.4) |
4.2 |
9.5 |
11.7 |
Reported tax |
0.0 |
1.0 |
(1.8) |
(7.8) |
(1.8) |
(2.2) |
||
Net income (normalised) |
0.0 |
(0.9) |
(0.2) |
0.3 |
10.7 |
12.4 |
||
Net income (reported) |
(17.2) |
(7.8) |
(3.2) |
(3.6) |
7.7 |
9.5 |
||
Basic average number of shares outstanding (m) |
275 |
275 |
314 |
325 |
320 |
320 |
||
EPS - basic normalised (p) |
|
|
0.01 |
(0.32) |
(0.08) |
0.09 |
3.35 |
3.87 |
EPS - diluted normalised (p) |
|
|
0.01 |
(0.32) |
(0.08) |
0.08 |
3.31 |
3.81 |
EPS - basic reported (p) |
|
|
(6.25) |
(2.83) |
(1.02) |
(1.09) |
2.42 |
2.96 |
Dividend (p) |
0.00 |
0.00 |
0.00 |
0.54 |
0.83 |
1.02 |
||
Revenue growth (%) |
(-5.2) |
(-4.1) |
(-12.5) |
39.1 |
5.8 |
3.5 |
||
Normalised Operating Margin |
-0.3 |
0.5 |
4.1 |
7.7 |
10.5 |
11.6 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
130.9 |
178.7 |
173.4 |
172.6 |
163.1 |
154.5 |
Intangible Assets |
101.5 |
101.0 |
103.5 |
103.9 |
105.0 |
106.1 |
||
Goodwill |
9.3 |
9.3 |
11.4 |
11.4 |
11.4 |
11.4 |
||
Tangible Assets |
17.2 |
13.0 |
10.5 |
22.4 |
19.8 |
17.2 |
||
Right of use assets |
0.0 |
51.4 |
44.4 |
35.4 |
27.4 |
20.4 |
||
Contract assets |
0.3 |
0.6 |
0.4 |
0.4 |
0.4 |
0.4 |
||
Investments & other |
2.6 |
3.3 |
3.1 |
(0.9) |
(0.9) |
(1.0) |
||
Current Assets |
|
|
32.4 |
30.2 |
52.6 |
38.7 |
46.3 |
52.9 |
Contract assets |
0.5 |
1.0 |
1.7 |
1.7 |
1.7 |
1.7 |
||
Debtors |
13.7 |
13.4 |
13.9 |
18.7 |
19.8 |
20.5 |
||
Cash & cash equivalents |
17.9 |
15.5 |
37.0 |
19.0 |
27.4 |
35.5 |
||
Other |
0.2 |
0.3 |
0.1 |
(0.7) |
(2.5) |
(4.8) |
||
Current Liabilities |
|
|
(22.0) |
(27.9) |
(29.2) |
(33.2) |
(34.0) |
(34.5) |
Creditors |
(13.7) |
(10.5) |
(10.3) |
(14.3) |
(15.1) |
(15.7) |
||
Lease liabilities |
0.0 |
(9.7) |
(10.8) |
(10.8) |
(10.8) |
(10.8) |
||
Contract liabilities |
(2.5) |
(6.3) |
(7.7) |
(7.7) |
(7.7) |
(7.7) |
||
Other |
(5.7) |
(1.4) |
(0.4) |
(0.4) |
(0.4) |
(0.4) |
||
Long Term Liabilities |
|
|
(17.9) |
(65.2) |
(62.4) |
(49.6) |
(37.9) |
(25.7) |
Lease liabilities |
0.0 |
(46.2) |
(40.7) |
(28.8) |
(18.8) |
(8.9) |
||
Contract liabilities |
(1.1) |
(1.3) |
(1.1) |
(1.1) |
(1.1) |
(1.1) |
||
Other long term liabilities |
(16.8) |
(17.8) |
(20.6) |
(19.8) |
(18.0) |
(15.8) |
||
Net Assets |
|
|
123.3 |
115.8 |
134.5 |
128.5 |
137.5 |
147.2 |
Shareholders' equity |
|
|
123.3 |
115.8 |
134.5 |
128.5 |
137.5 |
147.2 |
CASH FLOW |
||||||||
Op Cash Flow before WC and tax |
(13.2) |
(2.6) |
4.3 |
10.4 |
15.5 |
17.6 |
||
Depreciation - Right of use assets |
0.0 |
9.8 |
9.4 |
9.0 |
8.0 |
7.0 |
||
Impairment of goodwill |
9.8 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Branch asset impairment |
2.7 |
4.3 |
1.7 |
0.7 |
0.0 |
0.0 |
||
Gain on disposal of PPE etc |
0.1 |
(0.4) |
(0.5) |
(0.5) |
(0.5) |
(0.5) |
||
Working capital |
1.3 |
(2.6) |
(0.6) |
(0.9) |
(0.3) |
(0.2) |
||
Exceptional & other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Decrease in provisions |
1.2 |
0.8 |
(0.8) |
(1.0) |
(1.0) |
(1.0) |
||
Share based payment charges |
1.3 |
0.7 |
1.0 |
1.8 |
2.0 |
1.9 |
||
Cash settlement of share incentive plan |
0.0 |
(0.4) |
0.0 |
0.5 |
0.5 |
0.5 |
||
Tax |
(1.5) |
0.2 |
0.2 |
(0.8) |
(1.8) |
(2.2) |
||
Net operating cash flow |
|
|
1.8 |
9.8 |
14.7 |
19.2 |
22.4 |
23.1 |
Capex |
0.2 |
(0.3) |
(0.4) |
(0.4) |
(0.4) |
(0.4) |
||
Acquisitions/disposals |
(2.0) |
(0.2) |
(3.9) |
(17.6) |
(0.1) |
(0.1) |
||
Net interest |
0.0 |
0.0 |
0.0 |
0.1 |
0.1 |
0.2 |
||
Dividends |
(0.7) |
0.0 |
0.0 |
0.0 |
(1.8) |
(2.7) |
||
Repayment of lease liabilities |
0.0 |
(12.0) |
(10.0) |
(14.0) |
(12.0) |
(12.0) |
||
Purchase of own shares |
0.0 |
(0.1) |
(0.3) |
(5.7) |
(0.3) |
(0.3) |
||
Net proceeds from issue of ord. Shares |
0.0 |
0.0 |
21.1 |
0.0 |
0.0 |
0.0 |
||
Other |
0.0 |
0.3 |
0.3 |
0.3 |
0.3 |
0.3 |
||
Net Cash Flow |
(0.7) |
(2.4) |
21.5 |
(17.9) |
8.3 |
8.1 |
||
Opening net debt/(cash) |
|
|
(18.6) |
(17.9) |
(15.5) |
(37.0) |
(19.1) |
(27.4) |
Closing net debt/(cash) (ex lease liabilities) |
|
(17.9) |
(15.5) |
(37.0) |
(19.1) |
(27.4) |
(35.5) |
|
Closing net debt/(cash) (inc. lease liabilities) |
(17.9) |
40.4 |
14.6 |
20.6 |
2.3 |
(15.8) |
||
Source: Company accounts, Edison Investment Research
|
|
Research: Metals & Mining
Newmont’s financial results for Q221 materially exceeded our expectations for the third quarter in succession, driven by a 3.8% (or US$111m) positive variance in revenues (of which 2.4% could be attributed to the gold price) and a 2.8% (US$61m) further positive variance in the form of lower costs. Of the 12 mines over which Newmont exerts management control, four outperformed (financially) relative to our prior expectations, two performed in line and six underperformed, although not, on occasion, without commendable management efforts to mitigate negative outcomes in the face of unscheduled challenges (eg the need to put Tanami into care and maintenance for two weeks, at short notice, after a case of COVID-19 was detected there). In the wake of its results, coupled with increases to our estimates for Q3 and Q420, we have upgraded our forecasts for adjusted net EPS for Newmont for FY21 by 18.4%.