REG - Foxtons Group PLC - Acquisition of Ludlow Thompson Holdings Limited

FoxtonsAnnouncement

07/11/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20231107:nRSG5595Sa&default-theme=true

RNS Number : 5595S  Foxtons Group PLC  07 November 2023

Foxtons Group plc

Acquisition of Ludlow Thompson Holdings Limited

7 November 2023

 

Second lettings acquisition in 2023, demonstrating continued progress against
strategy to drive recurring and non-cyclical earnings growth

 

Foxtons Group plc ("the Group" or "Foxtons"), London's largest lettings agent,
today announces the acquisition of Ludlow Thompson Holdings Limited ("Ludlow
Thompson") and subsidiary companies for a consideration of £10m, on a cash
and debt free basis. The acquisition will be funded through the Group's
existing cash resources and existing £20m revolving credit facility.

Strategic rationale

Ludlow Thompson is a high-quality, lettings focused estate agent operating
across 7 branches in London, generating over 70% of total revenue from
Lettings. The business was founded 30 years ago and has developed a loyal
customer base driven by its results orientated operating model. The
acquisition reflects continued progress against the Group's lettings portfolio
acquisition strategy, which is focused on growing non-cyclical and recurring
revenue streams, and adds to the Group's track record of identifying,
acquiring, and integrating high quality lettings businesses.

The acquisition will support future earnings growth as it is integrated into
Foxtons scalable operating platform, enabling synergies to be unlocked and
attractive returns on invested capital to be realised.

Foxtons is now a Lettings focused business, with over 70% of Group revenue
derived from Lettings(1), which is non-cyclical and recurring in nature, and
decouples the Group's earnings from the volatility of the sales market. The
acquisition of Ludlow Thompson further consolidates the Group's position as
London's largest lettings agent and is the second acquisition delivered in
2023, with £17.4m invested in 2023 and over 2,800 tenancies acquired.

Acquisition terms and financial impact

The acquisition constitutes a class 2 transaction pursuant to the UK Listing
Rules. For the purposes of the LR 10.4.1 R (Notification of class 2
transactions), Ludlow Thompson's unaudited total revenue and profit before tax
for the 12 months ended 31 December
2022 was £7.3m and £0.1m respectively. Gross assets as at 31 December
2022 were £5.5m.

Following the delivery of operating synergies, which include integrating
Ludlow Thompson into the Foxtons branch network and scalable operating
platform, Ludlow Thompson will deliver significantly higher levels of
profitability from the £0.1m of profit before tax reported for the 12 months
ended 31 December 2022.

Foxtons Board of Directors believe the acquisition will be accretive to the
Group's 2024 earnings and deliver an attractive return on capital in line with
the Group's target return on capital for acquisitions of 20%. Exceptional
one-off charges will be incurred in 2023 relating to the integration of Ludlow
Thompson into the Foxtons branch network.

Total consideration for the acquisition, on a cash and debt free basis,
is £10m. Of this total consideration, £1.5m is deferred for a period of 12
months subject to the business delivering against certain performance targets.
The business is being bought from private individual shareholders.

Guy Gittins, Foxtons CEO, commented:

"We are delighted to have completed our acquisition of Ludlow Thompson. Having
established a leading position in its local markets and a reputation for
delivering the best results for customers, it is clearly a business which we
believe is a perfect fit for Foxtons. I am very much looking forward to
meeting the Ludlow Thompson team over the coming days and welcoming them into
Foxtons.

"We are proudly London's largest lettings agent, with a proven track record of
acquiring and integrating high quality businesses. Since inaugurating our
lettings acquisition programme in 2020 we have grown our portfolio by over
40%, which now stands at over 28,200 tenancies. The acquisition reflects
continued progress against our acquisition strategy and our focus on growing
recurring lettings revenues, and further supports the delivery of our £25m to
£30m operating profit ambition in the medium term."

Stephen Ludlow and David Thompson, Ludlow Thompson Co-founders, commented:

"Having founded the business 30 years ago, taking the decision to sell the
business was a major milestone for us, our colleagues, and our clients. We
have admired Foxtons for a long time and Foxtons was a natural fit for us, in
fact, our processes, our culture and market positioning is based on the
Foxtons model.

"As we retire from the business, we would like to thank all our customers for
their long-term support along with our colleagues for many years of loyal
service and look forward to seeing the new and exciting opportunities that
ownership under Foxtons will bring."

-ENDS-

For further information, please contact:

 

 Foxtons Group plc
 Chris Hough, Chief Financial Officer  investor@foxtonsgroup.co.uk (mailto:investor@foxtonsgroup.co.uk)

 Muhammad Patel, Investor Relations    +44 20 7893 6261

 TB Cardew                             Foxtons@tbcardew.com
 Will Baldwin-Charles/Olivia Rosser    +44 7789 998 020/ +44 7738 724 630

 

TB Cardew

 

Foxtons@tbcardew.com

Will Baldwin-Charles/Olivia Rosser

+44 7789 998 020/ +44 7738 724 630

 

 

(1) Revenue for the 9 months ended September 2023.

 

 

About

Founded in 1981, Foxtons is London's leading estate agency and largest
lettings agent, with a portfolio of over 27,000 tenancies. The Group operates
from a network of over 60 interconnected branches, offering a range of
residential property services across three business segments: Lettings, Sales
and Financial Services.

 

The Group's strategy to accelerate growth is focused on non-cyclical and
recurring revenues from Lettings and Financial Services refinance activities,
supplemented by market share growth in Sales. In order to drive organic
growth, the Group is rebuilding its competitive advantages, with a strong
focus on leveraging data and technology; investing in people and culture; and
reinvigorating the Foxtons brand.

 

By rebuilding Foxtons estate agency DNA and returning the business to its
position as London's go-to estate agent, the Group aims deliver significant
profit growth and deliver value for shareholders.

 

·   Lettings organic growth: Focus on winning new property instructions,
speed to market and high quality landlord service to drive revenue growth.

·    Lettings acquisitive growth: Acquire, integrate and service high
quality lettings portfolios.

·   Sales market share growth: Reinvigorating the Foxtons brand and
increasing sales headcount to grow addressable market share.

·    Financial Services revenue growth: Increasing adviser headcount,
improving productivity and cross sell to drive revenue growth.

 

To find out more, please visit www.foxtonsgroup.co.uk
(http://www.foxtonsgroup.co.uk)

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  ACQFLFSALSLRIIV