REG - Foxtons Group PLC - FULL YEAR RESULTS FOR YEAR ENDED 31 DECEMBER 2024
05/03/2025 07:00
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RNS Number : 3623Z Foxtons Group PLC 05 March 2025
Foxtons Group plc
FULL YEAR RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024
5 March 2025
47% earnings growth(1) driven by significant Sales market share gains(2) and
strong returns from Lettings acquisitions. Next phase of the growth plan now
firmly in focus.
Foxtons Group plc (LSE:FOXT) ("the Group" or "Foxtons") has delivered another
year of growth. Strengthened operational capabilities, combined with strong
returns from Lettings acquisitions, have underpinned 47% earnings growth. The
Group is on track to deliver against its medium-term targets set in March 2023
and the next phase of the growth plan is now coming into focus. Key elements
of this growth plan will be communicated at a capital markets event in Q2
2025.
2024 2023 % change
Revenue £163.9m £147.1m +11%
Adjusted EBITDA(3) £23.8m £17.5m +36%
Adjusted operating profit(4) £21.6m £15.7m +38%
Profit before tax(5) £17.5m £7.9m +121%
Adjusted earnings per share (basic)(6) 5.0p 3.4p +47%
Earnings per share (basic) 4.6p 1.8p +156%
Net free cash flow(7) £9.8m (£0.1m) n/m
Total dividend per share 1.17p 0.9p +30%
Financial highlights:
· Group revenue up 11% to £163.9m, with growth delivered in each
business:
- Lettings revenue up 5%, boosted by earnings accretive
acquisitions.
- Sales revenue up 31%, driven by double-digit market share
gains(2).
- Financial Services revenue up 6%, due to operational upgrades
and stronger new transaction volumes.
· Adjusted operating profit up 38% to £21.6m, showing significant
progress towards medium-term target of £28m-£33m (excluding amortisation of
acquired intangibles, and consequentially restated from £25m-£30m)(8).
· Stronger revenue to profit conversion drove improved adjusted
operating profit margin of 13.2% (+260 bps).
· Profit before tax up 121% to £17.5m.
· Significant improvement in net free cash flow (2024: £9.8m; 2023:
(£0.1m)) reflecting a return to strong cash generation and more normalised
working capital movements.
· Year-end net debt of £12.7m (2023: £6.8m net debt), reflecting
improved cash generation, £12.7m of acquisition spend, and £2.8m of
dividends.
· Total dividend up 30% to 1.17p per share in-line with the Group's
progressive dividend policy.
Strategic highlights
· Continued delivery against strategic priorities:
- 3.3% Lettings organic revenue CAGR since 2022, within the
Group's target range of 3%-5%(9).
- 26% average return on Lettings acquisitions, ahead of the
Group's target of 20%(10), with synergistic acquisitions continuing to be a
key driver of profit growth.
- 4.9% Sales exchange market share (2023: 4.1%), ahead of the
Group's target of at least 4.5% (20% growth versus 2023)(2).
- 67% of revenue generated from non-cyclical and recurring
activities, underpinning Group earnings(11).
Operational highlights:
· Largest lettings agent in London and largest lettings brand in the
UK(12) and highest number of sales agreed in London in 2024(13).
· Organic Lettings portfolio grew 4%, driven by a 12% increase in new
business volumes and stronger landlord retention, supported by the Group's
data and technology capabilities and improving customer service levels.
· Two commuter town acquisitions (Reading and Watford) completed in
October 2024 for an initial consideration of £12.6m. The acquisitions are
earnings enhancing and unlock new organic and inorganic growth opportunities.
The rapid integration of the new Watford hub has enabled the further
acquisition of Marshall Vizard, completed on 28 February 2025(14). This
bolt-on acquisition is expected to generate strong synergies and reinforce
Foxtons' leadership position in the Watford lettings market.
· Sales revenue growth of 31% driven by market outperformance, with a
20% increase in market share in 2024(2). Foxtons' growth was highest in
London's volume markets (up to £1m price range). These markets are more
resilient and more active than higher value ones, and in 2024 comprised 86% of
total London volumes.
· Further upgrades to the industry-leading Foxtons Operating Platform
delivered in 2024, as part of the Group's continuous improvement ethos.
Highlights include a new employee value proposition, technology upgrades, an
AI-driven lead-scoring platform, a new real-time customer satisfaction
feedback system and brand enhancement initiatives.
· We are determined to continue enhancing our culture, and build on the
work to date and this will remain a key area of focus throughout 2025:
- In 2024 we delivered a 6% improvement in employee engagement vs
2023(15); 13% improvement in Lettings and Sales employee retention rates vs
2022(16); and made progress with career development and diversity programmes
resulting in a 25% increase in the number of female managers vs 2022(16).
- 87% of employees believe Foxtons values diversity and builds
diverse teams(15) and 81% of employees recommend Foxtons as a great place to
work (8% higher than the average score for companies in the UK with
1,000-5,000 employees)(15).
· Financial Services has undergone a significant rebuild in 2024 under
a new Managing Director appointed in January 2024. Key initiatives introduced
include process upgrades, enhanced cross-selling from the estate agency
business, and a new data suite to support a KPI-driven performance culture.
Trading and outlook
· Trading year to date is in-line with our expectations.
· Lettings market dynamics are expected to remain consistent with 2024,
with rental levels broadly flat. Healthy stock levels support the Group's
focus on driving new business and organic growth, whilst the October 2024 and
February 2025 acquisitions provide further incremental revenues and organic
growth opportunities.
· In Sales, our under-offer pipeline entering 2025 was at its highest
level since the Brexit vote in 2016, delivering strong year-to-date revenue
growth as the under-offer pipeline converts to exchanges, with volumes boosted
by first time buyers taking advantage of stamp duty relief ahead of 31 March
2025 deadline.
· New under-offer activity, which is not influenced by stamp duty
relief, has shown good growth as buyers respond positively to recent interest
rate reductions. The under-offer pipeline at the end of February 2025 stood
21% higher than the prior year. The speed and extent of future interest rate
reductions will likely determine the number of buyers entering the market,
with faster interest rate cuts providing an opportunity for accelerated
growth.
· Group remains on track to deliver against the medium-term target of
£28m-£33m adjusted operating profit(8) set in March 2023, despite £2m of
additional national insurance costs per annum.
· With the operational turnaround complete, the next phase of the
growth plan is now underway. We will communicate the key elements of this plan
at a capital markets event in Q2 2025. Further details will be provided in due
course.
Guy Gittins, Chief Executive Officer, said:
"2024 was another strong year for Foxtons with revenue up 11% and adjusted
operating profit up 38%. Across 2024 we retained our position as London's
largest lettings agent and the UK's largest lettings estate agency brand, and
increased our share of the London sales market by 20%.
"In Sales, significant market share gains drove revenue growth of 31% and
meant we agreed the highest number of transactions in London last year, while
our Lettings and Financial Services businesses continued to provide the
steady, recurring revenues which underpin Group profitability.
"In October 2024, we acquired Haslams Estate Agents and Imagine Property
Group, both businesses with strong lettings portfolios, taking us into the
exciting new growth markets of Reading and Watford. Last week, as part of our
Watford growth plan, we acquired Marshall Vizard, a high-quality lettings
business that further strengthens Foxtons' Watford presence and market share.
"Estate agency is a people-first business, and maintaining an engaging,
respectful and inclusive culture is of the utmost importance to us. We are
focused on creating an environment which attracts, motivates and retains a
diverse team of talent, that can together deliver excellent customer outcomes.
Although significant progress has been made over the last two years, including
the introduction of mandatory annual respect and inclusion training,
strengthened ED&I policies, and enhanced whistleblowing and speak up
processes, there remains more to do. This is particularly important to me and
we remain steadfast in our commitment to an inclusive, professional and
respectful culture and we will continue to seek further improvement and
progress.
"Changes made to date are supporting our transformation, including: a 25%
increase in female managers over the last two years; improving employee
engagement; and a 12% increase in employee retention rates since 2022 as new
career development and diversity programmes take effect. Our latest employee
engagement survey, indicated that 87% of employees believe Foxtons values
diversity and builds diverse teams, and 81% of employees recommend Foxtons as
a great place to work, 8% higher than equivalent businesses in the UK. These
initiatives are particularly important to me and while progress has been made,
we recognise there is more we can and should do. We remain steadfast in our
commitment to an inclusive, professional and respectful culture and we will
continue to seek further improvements and progress.
"After a good start to 2025, we are well positioned to deliver another year of
growth and are on-track to deliver against the medium-term growth targets I
set out in March 2023. I look forward to setting out details of the next stage
of our growth plan to investors at a capital markets event in Q2 2025."
For further information, please contact:
Foxtons Group plc investor@foxtonsgroup.co.uk (mailto:investor@foxtonsgroup.co.uk)
Chris Hough, Chief Financial Officer +44 20 7893 6261
Muhammad Patel, Investor Relations
Cardew Group Foxtons@cardewgroup.com (mailto:Foxtons@cardewgroup.com)
Will Baldwin-Charles / Olivia Rosser +44 7834 524833 / +44 7552 864 250
Cardew Group
Foxtons@cardewgroup.com (mailto:Foxtons@cardewgroup.com)
Will Baldwin-Charles / Olivia Rosser
+44 7834 524833 / +44 7552 864 250
( )
An analyst presentation will be held at 9.00am today by webinar. For joining
instructions, please contact investor@foxtonsgroup.co.uk
(mailto:investor@foxtonsgroup.co.uk) . A recording of the presentation will be
available at www.foxtonsgroup.co.uk.
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(1) On an adjusted earnings per share basis.
(2) Sales market share calculated as Foxtons' share of exchange volumes in
2024 vs 2023 in Foxtons' core addressable markets. Source: TwentyCi.
(3) Adjusted EBITDA is an alternative performance measure and is consistent
with the definition of adjusted EBITDA used to calculate the Group's revolving
credit facility covenants. The metric is defined as profit before tax before
finance income, non-IFRS 16 finance costs, other gains, depreciation of
property, plant and equipment (but after IFRS 16 depreciation), amortisation,
share-based payment charges and adjusted items.
(4) Adjusted operating profit is an alternative performance measure. Adjusted
operating profit represents profit before tax before amortisation of acquired
intangibles, finance income, finance cost, other gains/(losses) and adjusted
items. This definition has been revised for the 2024 financial results and now
excludes the amortisation of acquired intangibles. Comparatives have been
restated to the new definition to ensure a fair comparison across financial
years.
(5) Profit before tax includes £0.3m of adjusted item credits (2023: £4.5m
of adjusted item charges) and £2.1m of amortisation of acquired intangibles
(2023: £1.4m). On an adjusted basis, adjusted profit before tax is up 40% to
£19.2m (2023: £13.8m).
(6) Adjusted earnings per share is an alternative performance measure. This
definition has been revised for the 2024 financial results and now excludes
the amortisation of acquired intangibles. Comparatives have been restated to
the new definition to ensure a fair comparison across financial years.
(7) Net free cash flow is net cash from operating activities less repayment of
IFRS 16 lease liabilities and net cash generated/used in investing activities,
excluding the acquisition of subsidiaries (net of any cash acquired) and
purchase of investments.
(8) The Group's adjusted operating profit target range has been restated by
£3m to reflect the revised adjusted operating profit definition which now
excludes the amortisation of acquired intangibles.
(9) Defined as organic revenue growth excluding interest earned on client
monies and the revenue contribution from lettings acquisitions completed since
1 January 2022.
(10 ")Return" refers to return on invested capital and is defined as EBITDA
less cash taxes / enterprise value, for acquisitions operated by Foxtons for
over 12 months. The acquisitions of Haslams and Imagine, completed in October
2024, are excluded from this calculation.
(11) Revenue derived from Lettings and Financial Services refinance activity.
(12) Market share of estate agent lettings instructions by brand in 2024.
Source: TwentyCi
(13) Sales agreed in London in 2024 by estate agent brand. Source: TwentyCi.
(14) Acquisition completed for £2.3m on a cash free and debt free basis, of
which £0.5m deferred for 12 months subject to performance conditions.
(15) Result from the Group's annual employee engagement survey independently
administered by a third party, CultureAmp. 77% (2023: 68%) of the workforce
responded to the 2024 survey.
(16) 2022 comparator presented, being the last year before the introduction of
the operational turnaround plan which includes improving staff retention and
improving the gender balance in managerial positions.
PERFORMANCE AT A
GLANCE
Year ended 31 December 2024 2023 Change
Income statement
Revenue £163.9m £147.1m +11%
Adjusted EBITDA(1) £23.8m £17.5m +36%
Adjusted operating profit(1,2) £21.6m £15.7m +38%
Adjusted operating profit margin(1,2) 13.2% 10.6% +260bps
Profit before tax £17.5m £7.9m +121%
Earnings per share
Basic earnings per share 4.6p 1.8p +156%
Adjusted basic earnings per share(1) 5.0p 3.4p +47%
Dividends
Interim dividend per share 0.22p 0.20p +10%
Final dividend per share 0.95p 0.70p +36%
Cash flow and net debt
Net cash from operating activities £24.7m £15.7m +58%
Net free cash inflow/(outflow)(1) £9.8m (£0.1m) n/m
Net debt(1) (£12.7m) (£6.8m) +87%
Segmental metrics
Lettings revenue £106.0m £101.2m +5%
Lettings volumes(3) 19,384 19,334 -
Average revenue per Lettings transaction(3) £5,470 £5,234 +5%
Sales revenue £48.6m £37.2m +31%
Sales volumes(3) 3,725 2,871 +30%
Average revenue per Sales transaction(3) £13,038 £12,942 +1%
Financial Services revenue £9.3m £8.8m +6%
Financial Services volumes(3) 5,115 5,033 +2%
Average revenue per Financial Services transaction(3) £1,824 £1,745 +5%
( )
(1) These measures are APMs used by the Group and are defined, and purpose
explained within Notes 2 and 16.
(2) Adjusted operating profit and adjusted operating profit margin definitions
have been revised for the 2024 financial results and now excludes the
amortisation of acquired intangibles. Comparatives have been restated to the
new definition to ensure a fair comparison across financial years. Refer to
Note 2 of the financial statements for a reconciliation to statutory measures
and purpose.
(3) These segmental metrics are defined within Note 16.
Chairman's Statement
2024 has been a year of continued progress for Foxtons, with our efforts
focused on delivering improved financial performance and making progress
against our strategic priorities following the steps taken in 2023 to
strengthen the foundations of the business. Over the last two years we have
made substantial strides in enhancing our technology, data capabilities,
culture and brand positioning, all of which have contributed to strong revenue
and earnings growth.
The business continues to benefit from a resilient revenue base, with
approximately two thirds of the Group's revenues coming from recurring and
non-cyclical sources, primarily from Lettings. This shift has been supported
by a series of lettings focused acquisitions which have been a key driver of
earnings growth, created a more stable earnings profile and significantly
reduced our exposure to the volatility of the sales market.
At the same time, we have remained focused on rebuilding market share in
Sales, with operating losses reducing significantly in 2024. Continued
progress towards sustained profitability in Sales remains a priority as we
move into 2025, with market share growth remaining the key area of focus.
In October 2024 we completed two acquisitions in the commuter towns of Reading
and Watford, reinforcing our growth trajectory and demonstrating that Foxtons
is firmly on the front foot. In February 2025, we acquired a second Watford
lettings business, Marshall Vizard, which will be earnings accretive in 2025
and builds upon our market leading position in Watford.
Market and financials
The lettings market remained resilient in 2024, with supply and demand
dynamics stabilising after a period of imbalance in prior years. Volumes in
the sales market also saw signs of improvement, as lower interest rates
underpinned improving buyer demand in our core markets. This supported
improved London exchange volumes in 2024 versus 2023, albeit below the 10-year
historical average.
Revenue increased 11% to £163.9 million, reflecting growth across all areas
of the business. Adjusted operating profit, excluding amortisation of acquired
intangibles, increased 38% to £21.6 million, with profit growth outpacing
revenue, demonstrating the operating leverage within the Foxtons model.
The Group returned to cash generation in 2024, with £9.8 million of net free
cash flow (2023: (£0.1 million)) reflecting underlying cash generation and
normalised working capital movements. After £12.7 million of acquisition
spend and £2.8 million of dividends, net debt at 31 December 2024 stood at
£12.7 million (2023: £6.8 million net debt).
To support the Group's continued organic and acquisitive growth strategies,
the Board increased and extended the revolving credit facility in May 2024.
The facility was expanded from £20 million to £30 million and extended by
one year to June 2027, with an option for a further one-year extension. The
facility also includes a £10 million accordion option, which can be drawn
upon with bank approval.
The revolving credit facility supported the acquisitions of Haslams and
Imagine in 2024 and with an increased facility and a return to cash
generation, we are in a strong position to continue to progress our
acquisition strategy, as demonstrated last week through the acquisition of
Marshall Vizard.
Cost base
Like many people-based businesses, the Government's planned April 2025
increase in employer's national insurance contributions will increase our cost
base. The impact is estimated at £2 million per annum, which we expect to
mitigate with the incremental profit that will be generated by the two October
2024 acquisitions, by continuing to improve fee earner productivity and by
proactively managing costs.
We continue to engage with the landlord of our Chiswick Park headquarters to
explore options to surrender a portion of our office space with a view to
generating meaningful cost savings ahead of the September 2027 lease end date.
This ability to downsize our headquarters is now possible through better
utilising our branch network and building out a lower-cost property management
hub outside of London.
Culture
As a sales-focused business, we are firmly focused on building a
high-performance culture which inspires all of our people to deliver the very
best results for our customers and each other. The Board is acutely focused on
building this culture within an environment which is inclusive, professional
and respectful.
The Board takes this very seriously and monitors culture through a variety of
mechanisms, including reviewing employee engagement surveys, visiting
branches, non-executive directors attending each Employee Engagement Committee
meeting, and monitoring a range of culture performance indicators.
Guy has been instrumental in bringing cultural change to Foxtons, and with a
clear tone from the top, he has made changes to create a more respectful and
inclusive environment which attracts, retains and motivates the Foxtons team.
2024 saw a number of culture enhancing initiatives rolled out, including
mandatory annual respect and inclusion training, enhancing the Group's speak
up processes and relaunching the Group's employee value proposition. Although
significant steps have been taken to enhance our culture, we are determined to
continue improving, build on the work to date, and this will remain a key area
of focus throughout 2025.
Rental market reform
The proposed Renters' Rights Bill, set to take effect in 2025, is progressing
through Parliament. While we support many initiatives, we have raised concerns
about recent changes, specifically the ban on upfront rental payments which
could harm lower-income tenants, the international student market, and drive
talent away from London and the UK. We will continue to engage with the
Government and provide a constructive point of view. We believe Foxtons is
well-positioned to seize opportunities as landlords seek professional lettings
agents to navigate the changing regulations.
Dividends
With a strong earnings profile and clear growth ambitions, the Board is
maintaining its progressive dividend policy, balancing capital returns to
investors with reinvestment in the business.
For 2025, the Board is proposing a final dividend of 0.95p per share, bringing
total dividends declared for 2024 to 1.17p, representing a 30% increase on the
prior year.
Outlook
Sales market conditions are continuing to improve, particularly in the volume
segment where Foxtons holds a leading share, creating a supportive backdrop
for the next phase of growth. The Group remains on track to deliver against
the medium-term target of £28 million to £33 million adjusted operating
profit, despite £2 million of additional national insurance costs per annum,
reflecting the strength of our core operations and diversified revenue
streams. Recent acquisitions in key commuter towns have further expanded our
footprint, enhancing our growth potential. We remain confident in our ability
to deliver long-term value for shareholders, employees, and customers alike.
Chief Executive's Review
2024 has been a year of significant progress for Foxtons, reinforcing our
position as London's leading estate agency and the UK's largest lettings
brand. Despite an evolving macroeconomic environment, we delivered strong
financial and operational results, with revenue growth of 11% and adjusted
operating profit growth of 38%. This performance reflects the execution of our
transformation strategy and the resilience of our business model.
We've continued to invest in the capabilities of our industry-leading Foxtons
Operating Platform, driving improvements in efficiency, customer service, and
employee productivity. Investments in key areas such as culture, technology,
data and brand have enhanced our ability to serve customers while increasing
market share across our business segments.
We have made further strategic progress in 2024, particularly in Lettings,
where we have delivered organic portfolio growth and delivered strong returns
through our acquisition strategy which provide a platform for future organic
growth and synergistic value creation. In Sales, enhancements to lead
generation, customer service, and staff productivity drove double-digit market
share growth and we entered 2025 with an under-offer pipeline at its highest
level since 2016.
Additionally, in 2024 we completed two acquisitions, expanding our reach into
the high-growth markets of Watford and Reading. These acquisitions align with
our strategic objective of adding high-quality, earnings-accretive lettings
businesses to our portfolio while unlocking new growth opportunities. Last
week, we acquired Marshall Vizard, a lettings business in Watford, which will
be integrated into the newly created, Foxtons branded hub as we extend our
market leading position.
At the start of 2023, I outlined a vision to re-establish Foxtons as London's
go-to agent and, to ensure we held ourselves fully accountable to this vision,
I also set a number of medium-term growth targets. Over the past two years, we
have successfully rebuilt the Group's competitive advantages, and in 2024, we
saw real momentum in each of our businesses. With a strong operational
foundation in place, we are well positioned to capitalise on further
opportunities in 2025 enabling us to deliver on our growth targets.
2024 market conditions
The London lettings market remained resilient in 2024, supported by sustained
tenant demand and an increase in available rental stock. As a result, the
supply and demand imbalance that had driven sharp rental price increases in
prior years reduced towards historical norms. Rental prices in the market were
broadly flat over the year, while higher stock levels enabled Foxtons to
deliver organic portfolio growth, which will drive future revenue expansion.
Looking ahead, we expect this more stable market environment to persist into
2025, with rental price growth likely to track inflation over the medium term.
The sales market experienced some recovery from the depressed levels of 2023,
as improved macroeconomic stability and declining interest rates supported
growth in buyer demand over the year. Annual transaction volumes in London
increased by 9%, reflecting this increased demand, with a notable divergence
between the first and second halves of the year. In H1, sales volumes were
broadly in line with 2023, while H2 saw a 16% increase in transaction
activity, with the volume market (up to £1 million price range), which is
where Foxtons primarily operates, being the most active and resilient part of
the market. Given the typical three-to-four-month timescale for property
transactions to complete, some of this increased demand will flow into early
2025, and is reflected in our under-offer pipeline entering the year, which
was at its highest level since the Brexit vote in 2016.
Despite the change in government in 2024, market conditions remained stable
over the year. Unlike previous election years, the General Election in June
had minimal impact on the sales market, and the Chancellor's Autumn Budget
introduced no material policy changes affecting the property market, although
the Government did confirm the first-time buyer stamp duty relief will end at
the end of March 2025.
On the regulatory front, the Government is advancing the Renters' Rights Bill,
largely continuing the legislative framework proposed by the prior
administration. While we support several elements of the Bill, we recognise
that ongoing regulatory changes may introduce short-term uncertainty for
landlords. Our focus remains on ensuring our customers-both landlords and
tenants-are well-informed and positioned to navigate any potential market
impacts. As the industry becomes increasingly complex, landlords are likely to
place greater reliance on large, professional lettings agents, reinforcing
Foxtons' competitive advantage.
Financial results
Foxtons delivered strong financial performance in 2024 driven by continued
operational improvements and growth in each business. Revenue for the year was
up 11% to £163.9 million, adjusted operating profit up 38% to £21.6 million
and profit before tax up 121% to £17.5 million.
Lettings
Lettings revenue increased by 5% or £4.8 million to £106.0 million, with
acquisitions contributing £4.3 million of incremental revenue alongside £1.0
million of additional interest on client monies. Organic revenue was broadly
flat as strong new business growth and increased property management revenues,
were offset by an expected temporary reduction in the volume of existing
tenancies re-transacting following longer tenancy terms signed in 2022 and
2023. Lettings adjusted operating profit margin remained strong at 26% (2023:
27%).
Operational improvements, including improved brand visibility, enhanced data
capabilities, and proactive customer acquisition strategies, supported strong
landlord retention and incremental growth in revenue per landlord. We
recognise customer service is key to delivering long term growth, to this end
we embedded a real-time customer satisfaction feedback system, enabling us to
gather valuable and actionable insights across various customer segments and
refine our processes to better align with customer expectations.
Sales
Sales revenue increased by 31% to £48.6 million, supported by a 20% increase
in market share and a modest 10% recovery in transaction volumes.
Significant operational upgrades, including enhancements to instruction
generation, fee earner productivity, and cross-selling of ancillary services,
underpinned our market outperformance. The adjusted operating loss in Sales
reduced by 58% to £4.1 million. This improvement reflects the growing
productivity of the fee earner investments made in 2023, delivering tangible
results throughout the year. With the right number of fee earners now in the
business and significantly better fee earner retention rates, supported by
improving market conditions, the Sales business now has a clear path to
profitability.
Financial Services
Financial Services revenue grew by 6% to £9.3 million, benefiting from both
operational improvements supporting market share growth and improved mortgage
market conditions. Adjusted operating profit increased 74% to £1.1 million.
Under a new Managing Director, who joined in January 2024, a full operational
review of the business has been completed. Key initiatives included process
upgrades, enhanced cross-selling from the estate agency business, and the
implementation of a new data suite to support a KPI-driven performance
culture. These efforts drove an 11% increase in revenue per adviser and an 8%
rise in deals per adviser.
Operational progress
In 2024, we continued to make substantial strides in enhancing our
performance, with a focus on lead generation, customer service, culture and
team productivity. The continued evolution of the Foxtons Operating Platform
continues to be key to our success and provides competitive advantage.
Culture and people
Estate agency is a people-first business, and maintaining an engaging,
respectful and inclusive culture is of great importance. Creating an
environment which attracts, motivates and retains outstanding talent and
delivers excellent customer outcomes is critical to our success. Although
significant progress has been made over the last two years, including
delivering mandatory annual respect and inclusion training, improving ED&I
policies, enhancing whistleblowing and speak up processes, there is always
more we can and should do. Whilst significant progress has been made, we
remain steadfast in our commitment to fostering an inclusive, professional and
respectful working environment and we will continue to further improve and
progress our culture.
A key milestone for us this year was the launch of our new employee value
proposition, 'Make it with us'. This initiative reflects two years of work to
build a culture which fully aligns to our strategic priorities. The
proposition includes an overhaul of our training programmes, a more robust
recruitment process, the introduction of clear career development pathways,
and a refreshed approach to rewards and recognition. Whilst significant
progress has been made, we remain steadfast in our commitment to fostering an
inclusive, professional, respectful and high-performance culture where hard
work and dedication are recognised and rewarded.
Technology and data
Our bespoke real-time productivity reporting system has been instrumental in
driving greater transparency, highlighting best practices, and aligning
individual performance with broader business goals. In 2024 we achieved an 8%
increase in revenue per fee earner, a direct result of both our people
strategy and improved technology and data systems.
Technological advancements were another key driver of our operational success
in 2024. We introduced an AI-driven lead-scoring platform across our branch
network, complementing the system we launched in our customer prospecting
centre in 2023. This has significantly boosted our lead generation efforts and
driven higher instruction levels. We also enhanced our marketing capabilities
with a new data and reporting suite that provides in-depth insights into
campaign performance, improving customer targeting and maximising returns on
marketing spend.
Brand
Foxtons continues to be one of the most recognised brands in London, and 2024
saw the revitalisation of our customer-facing marketing strategy. We launched
a series of thematic campaigns, such as 'Ready, Set, Foxtons', designed to
boost engagement and reinforce our unique market position. These campaigns
drive organic growth and enhanced customer brand perception levels.
Acquisitions
Finally, we expanded our footprint into the commuter towns of Reading and
Watford, through the acquisition of two high-quality, lettings focused
businesses in October 2024. Both businesses are the leading independent agent
in their markets and will act as hubs to deliver long term growth through
organic growth and further synergistic bolt-on acquisitions. We have already
started to increase our Watford presence through the February 2025 acquisition
of Marshall Vizard making Foxtons the clear market leader. With demand for
lettings on the rise in both Reading and Watford, this expansion aligns with
our goal of increasing our portfolio of recurring lettings revenues and
further decoupling Group earnings from sales market volatility.
Continued delivery against our strategic priorities and targets
In March 2023, I presented four strategic priorities which underpin the
delivery of our medium-term adjusted operating profit target. Over the last
two years we set out to rebuild the Foxtons Operating Platform to drive change
across a range of areas including culture, training, technology, data and
brand.
From 2024 onwards, in order to align with market practice, our adjusted
operating profit target has been redefined to exclude the non-cash
amortisation of acquired intangibles, resulting in the target range being
restated by £3 million: £28 million to £33 million. Our 2024 adjusted
operating profit of £21.6 million (2023: £15.7 million) reflects a
materially improved contribution from Sales compared to 2023 and strong profit
accretion from Lettings acquisitions.
Over the course of 2024, we have made good progress against the four strategic
priorities, as set out below:
1. Lettings organic growth: 3.3% organic revenue CAGR since 2022
reflecting good growth across 2023 and broadly flat revenues in 2024 as growth
in new business volumes and higher margin property management revenues offset
an expected temporary reduction in the volume of existing tenancies
re-transacting in 2024, following longer tenancy terms signed across 2022 and
2023.
Medium-term target set in March 2023: 3% - 5% revenue CAGR.
2. Lettings acquisitions: Prior year bolt-on acquisitions continue to
perform well, delivering over 26% average annual returns since acquisition. In
2024, the Group entered new commuter belt markets through the acquisition of
two businesses which will act as strategic hubs in Reading and Watford. These
hubs create new organic and non-organic growth opportunities, with the latter
through subsequent bolt-on acquisitions. A return on capital higher than the
Group's weighted average cost of capital is targeted for the initial strategic
hub investment, and a higher return on capital is targeted for subsequent
bolt-on acquisitions that integrate into a strategic hub.
Medium-term target set in March 2023: 20%+ return on capital for bolt-on
acquisitions.
3. Sales market share growth: Exceeded the target of 4.5%, growing sales
exchange market share by 20% to 4.9% (2023: 4.1%). Continuing to build on this
share level, combined with market volumes recovering to more normalised
levels, will support the Sales business' return to profitability
Medium-term target set in March 2023: 4.5%+ exchange market share.
4. Financial Services revenue growth: 6% revenue growth in 2024 as
operational upgrades drove revenue growth through adviser productivity gains.
The business' foundations have been rebuilt and it is now well positioned to
deliver further growth.
Medium-term target set in March 2023: 7% - 10% revenue CAGR.
2025 trading and outlook
Lettings is expected to remain resilient with the business continuing to
display strong non-cyclical and recurring characteristics. Tenant demand
remains high, underpinning rental prices, while stock levels have steadily
improved over the past 18 months. Through our leading market position, and by
leveraging the Foxtons Operating Platform, we are well positioned to continue
capitalising on the increased supply of rental properties, providing the
opportunity to continue to grow market share organically. The Renters' Rights
Bill may cause some market turbulence as landlords and tenants adapt to any
changes in legislation, but over the medium term, the Bill is expected to
increase the importance of selecting high-quality, professional agents,
creating growth opportunities for Foxtons.
In Sales, we entered 2025 with a notably stronger under-offer pipeline
compared to the previous year, our best start since 2016, underpinning a good
level of year-on-year revenue growth in Q1. The increase in the pipeline
towards the end of 2024 was supported by first-time buyer activity ahead of
increased stamp duty rates from April, which is driving higher exchange
volumes in Q1, particularly in the lower value property segment.
Early 2025 has shown continued strength in buyer demand, boosted by the recent
interest rate reduction. New offers have outpaced last year's levels and the
under-offer pipeline at the end of February stood 21% higher than the prior
year. This signals more potential growth, provided macroeconomic conditions
and consumer confidence hold steady.
We are on track to deliver against the medium-term target of £28 million to
£33 million adjusted operating profit set in March 2023. With the full
potential of the Foxtons Operating Platform at our disposal, we are in growth
mode, and I look forward to setting out details of the next stage of our
growth plan to investors at a capital markets event in Q2 2025.
Financial review
2024 2023 Change
£m £m
Revenue and profit measures
Revenue 163.9 147.1 +11%
Contribution(1) 104.9 93.2 +12%
Contribution margin(1) 64.0% 63.4% +60bps
Adjusted EBITDA(1) 23.8 17.5 +36%
Adjusted EBITDA margin(1) 14.5% 11.9% +260bps
Adjusted operating profit(1,2) 21.6 15.7 +38%
Adjusted operating profit margin(1,2) 13.2% 10.6% +260bps
Profit before tax 17.5 7.9 +121%
Profit after tax 14.0 5.5 +155%
Earnings per share
Adjusted earnings per share (basic) 5.0p 3.4p +47%
Earnings per share (basic) 4.6p 1.8p +156%
Net free cash flow and net (debt)/cash
Net free cash inflow/(outflow)(1,2) 9.8 (0.1) n/a
Net debt(1) (12.7) (6.8) +87%
Dividends
Interim dividend per share 0.22p 0.20p +10%
Final dividend per share 0.95p 0.70p +36%
(1)APMs are defined, purpose explained and reconciled to statutory measures
within Notes 2 and 16 of the financial statements.
(2)Adjusted operating profit and adjusted operating profit margin definitions
have been revised for the 2024 financial results and now exclude the
amortisation of acquired intangibles. Comparatives have been restated to the
new definition to ensure a fair comparison across financial years.
Note: Throughout the financial review, values in tables/narrative may have
been rounded and totals may therefore not be the sum of presented values in
all instances.
Financial overview
As presented in the table above, key financial performance measures include:
· Revenue increased by 11% to £163.9 million (2023: £147.1
million), with Lettings revenue up 5%, Sales revenue up 31% and Financial
Services revenue up 6%.
· Adjusted EBITDA increased by 36% to £23.8 million (2023: £17.5
million) and adjusted operating profit increased by 38% to £21.6 million
(2023: £15.7 million).
· Profit before tax increased to £17.5 million (2023: £7.9
million) and profit after tax increased to £14.0 million (2023: £5.5
million).
· Basic adjusted earnings per share was 5.0p (2023: 3.4p) and basic
earnings per share was 4.6p (2023: 1.8p).
· Net free cash flow was £9.8 million (2023: £0.1 million
outflow) and net debt at 31 December 2024 was £12.7 million (2023: £6.8
million net debt) reflecting the uses of cash explained on page 17.
· An interim dividend of 0.22p per share was paid in September
2024. The Board has proposed a final dividend of 0.95p per share, resulting in
a total dividend for the year of 1.17p per share (2023: 0.90p per share).
In May 2024, the Board increased and extended the Group's revolving credit
facility (RCF). The size of the committed facility increased from £20 million
to £30 million and the facility was extended by a year to June 2027, with an
option to extend for a further year. The facility also includes a £10 million
accordion option which can be requested at any time subject to bank approval.
The RCF supports the Group's inorganic and organic growth strategy.
Revenue
Revenue Volumes(1) Revenue per transaction(1)
2024 2023 Change 2024 2023 Change 2024 2023 Change
£m £m £ £
Lettings 106.0 101.2 +5% 19,384 19,334 - 5,470 5,234 +5%
Sales 48.6 37.2 +31% 3,725 2,871 +30% 13,038 12,942 +1%
Financial Services 9.3 8.8 +6% 5,115 5,033 +2% 1,824 1,745 +5%
Total 163.9 147.1 +11%
(1')Volumes' and 'Revenue per transaction' are defined in Note 16 of the
financial statements.
The Group consists of three operating segments: Lettings, Sales and Financial
Services. Lettings represents 65% (2023: 69%), Sales 30% (2023: 25%) and
Financial Services 5% (2023: 6%) of total revenue. Non-cyclical and recurring
revenue streams, generated by Lettings and refinance activity within Financial
Services, represents 67% (2023: 72%) of Group revenue.
Lettings revenue
Lettings revenue increased by 5% to £106.0 million (2023: £101.2 million),
including £4.3 million of incremental acquisition revenues (2 additional
months of trading from Atkinson McLeod, acquired 3 March 2023; 10 additional
months of trading from Ludlow Thompson, acquired 6 November 2023; and 2
additional months of trading from Haslams and Imagine, both acquired 28
October 2024). Transaction volumes were flat and average revenue per
transaction increased by 5%, reflecting improved property management
cross-sell and a change in mix towards higher fee new business volumes.
Double-digit growth in new business volumes offset an expected temporary
reduction in the volume of existing tenancies renewing/re-letting in 2024,
following longer tenancy terms signed across 2022 and 2023. Average tenancy
lengths have increased by c.15% since 2022 as part of the Group's strategy to
improve client retention and grow its portfolio of recurring revenues.
As expected, rental prices for new deals completed in the year were flat as
year-on-year rental growth moderated as supply and demand dynamics continue to
normalise, but with rental prices remaining at elevated levels.
Lettings revenue includes £6.6 million (2023: £5.6 million) of interest
earned on client monies which supports the operating costs of managing client
money, such as staff costs, bank and card fees, and compliance costs.
Sales revenue
Sales revenue increased by 31% to £48.6 million (2023: £37.2 million), with
the increase driven by an 30% increase in Sales exchange volumes compared to
2023. Foxtons' Sales volumes outperformed the market which saw a 9% increase
in volumes (source: TwentyCi) with Foxtons' market share of exchanges
increasing by 20% to 4.9% (2023: 4.1%).
Average revenue per transaction was 1% higher than 2023 reflecting a 1%
increase in the average price of properties sold (2024: £592,000; 2023:
£586,000), whilst commission rates remained flat at 2.25% (2023: 2.25%). The
1% increase in the average price of properties sold compared to 1% reduction
in London property values (source: Land Registry).
Financial Services revenue
Financial Services revenue increased by 6% to £9.3 million (2023: £8.8
million), reflecting a 2% increase in volumes and a 5% increase in average
revenue per transaction. Higher average revenue per transaction was driven by
growth in new purchase activity, which commands a higher average fee than
product transfers within the refinance business. In 2024, £3.7 million (40%
of revenue) was generated from non-cyclical refinance activity and £5.6
million (60% of revenue) from purchase activity which is more cyclical in
nature.
Contribution and contribution margin
2024 2023
£m margin £m margin
Lettings 78.1 73.7% 75.4 74.5%
Sales 22.7 46.8% 14.5 38.9%
Financial Services 4.0 43.0% 3.4 38.8%
Total 104.9 64.0% 93.2 63.4%
Contribution, defined as revenue less direct salary costs of front office
staff and bad debt charges, increased to £104.9 million (2023: £93.2
million). Contribution margin for the year was 64.0% (2023: 63.4%) reflecting
the following segmental margin changes:
· Lettings contribution margin fell slightly to 73.7% (2023: 74.5%)
reflecting a temporary reduction in higher margin re-transaction volumes.
· Sales contribution margin increased to 46.8% (2023: 38.9%) due to
growth in transaction volumes and the inherent operating leverage in the
business. The margin improvement is reflective of increased productivity of
Sales fee earners, with average revenue per fee earner increasing by 23%
year-on-year.
· Financial Services margin increased to 43.0% (2023: 38.8%) due to
a higher margin revenue mix.
Total average fee earner headcount across Lettings, Sales and Financial
Services is up 4% to 859 (2023: 829), reflecting selective headcount
investment and acquired headcount from acquisitions. Fee earner retention
continues to be important in driving average fee earner productivity, with
Lettings and Sales fee earner retention rates improving by 13% since 2022
(period prior to the Group's operational turnaround).
Adjusted operating profit and adjusted operating profit margin
2024 2023
£m margin £m margin
Lettings 27.2 25.6% 27.2 26.8%
Sales (4.1) (8.4%) (9.9) (26.6%)
Financial Services 1.1 12.2% 0.7 7.4%
Corporate costs (2.6) n/a (2.3) n/a
Total 21.6 13.2% 15.7 10.6%
Adjusted operating profit for the year was £21.6 million (2023: £15.7
million) and adjusted operating margin was 13.2% (2023: 10.6%). Refer to Note
2 of the financial statements for a reconciliation of adjusted operating
profit to the closest equivalent IFRS measure and Note 16 for a reconciliation
of the revised definition of the adjusted operating profit metrics to the
previous definition.
Consistent with prior periods, for the purposes of segmental reporting, shared
costs relating to the estate agency businesses are allocated between Lettings
and Sales with reference to relevant cost drivers, such as front office
headcount in the respective businesses. Corporate costs are not allocated to
the operating segments and are presented separately.
Lettings adjusted operating profit remained flat at £27.2 million. Sales
adjusted operating loss decreased materially by £5.8 million to £4.1
million, and Financial Services operating profit increased by £0.5 million to
£1.1 million.
Within adjusted operating profit the following depreciation, amortisation and
share-based payment IFRS 2 charges were incurred:
2024 2023
£m £m
Depreciation - property, plant and equipment 2.5 2.4
Amortisation - non-acquired intangibles 0.2 0.4
Share-based payment charges 1.5 1.0
Total 4.2 3.8
ADJUSTED EBITDA and adjusted EBITDA MARGIN
2024 2023
£m margin £m margin
Adjusted EBITDA 23.8 14.5% 17.5 11.9%
Adjusted EBITDA increased by 36% to £23.8 million (2023: £17.5 million) and
Adjusted EBITDA margin increased to 14.5% (2023: 11.9%). Adjusted EBITDA,
which excludes non-cash depreciation, amortisation and share-based payment
charges, is defined on a basis consistent with that of the Group's revolving
credit facility covenants. Since the metric includes IFRS 16 lease
depreciation and IFRS 16 lease finance cost the measure fully reflects the
Group's lease cost base. Refer to Note 16 of the financial statements for a
reconciliation of adjusted EBITDA to the closest equivalent IFRS measure.
Adjusted items
A net adjusted items credit of £0.3 million (2023: £4.5 million net charge)
was incurred in the year. Adjusted items, due to their size and incidence
require separate disclosure in the financial statements to reflect
management's view of the underlying performance of the Group and allow
comparability of performance from one period to another. The table below
provides detail of the adjusted items in the year, refer to Note 3 of the
financial statements for further details.
2024 2023
£m £m
Branch asset impairment charge - 3.4
Net property related (reversal)/charge (0.6) 0.7
Transaction related costs 0.3 0.4
Total net adjusted items (credit)/charge (0.3) 4.5
Net cash outflow from adjusted items during the year totalled £1.2 million
(2023: £0.6 million).
Profit before taX AND ADJUSTED PROFIT BEFORE TAX
2024 2023
£m £m
Adjusted operating profit 21.6 15.7
Add/(deduct): adjusted items 0.3 (4.5)
Less: amortisation of acquired intangibles (2.1) (1.4)
Operating profit 19.8 9.8
Less: net finance costs and other losses/gains (2.3) (1.9)
Profit before tax 17.5 7.9
(Deduct)/add: adjusted items (0.3) 4.5
Add: amortisation of acquired intangibles 2.1 1.4
Adjusted profit before tax 19.2 13.8
Profit before tax increased by 121% to £17.5 million (2023: £7.9 million)
due to increased underlying profitability and adjusted items being favourable
by £4.8 million compared to the prior year as previously noted. Net finance
costs and other losses/gains of £2.3 million (2023: £1.9 million), of which
£2.1 million relates to IFRS 16 lease finance costs (2023: £2.0 million),
were incurred in the year. Adjusted profit before tax, which excludes adjusted
items, is £19.2 million (2023: £13.8 million).
profit after tax
2024 2023
£m £m
Profit before tax 17.5 7.9
Less: current tax charge (3.5) (2.8)
Add: deferred tax credit - 0.4
Profit after tax 14.0 5.5
The Group has a low-risk approach to its tax affairs and all business
activities are within the UK and are UK tax registered and fully tax
compliant. The Group does not have any complex tax structures in place and
does not engage in any aggressive tax planning or tax avoidance schemes. The
Group is transparent, open and honest in its dealings with tax authorities.
Profit after tax of £14.0 million (2023: £5.5 million) is after charging
current tax of £3.5 million (2023: £2.8 million). No deferred tax credits
have been recognised in the period (2023: £0.4 million).
The effective tax rate for the year was 19.9% (2023: 30.5%), which compares to
the statutory corporation tax rate of 25.0% (2023: 23.5%). The 2024 effective
tax rate is lower than the statutory corporation tax rate primarily due to an
adjustment in respect of previous periods.
Net deferred tax liabilities totalled £26.8 million (2023: £26.2 million),
which comprise £29.5 million (2023: £28.2 million) of deferred tax
liabilities relating to the Group's intangible assets, offset by deferred tax
assets of £2.7 million (2023: £2.0 million). The deferred tax assets relate
to fixed asset timing differences, share based payments and tax losses brought
forward which are expected to be recovered through future taxable profits.
The Group received £nil in tax refunds during the year (2023: £0.3 million).
ADJUSTED operating cost base
The Group defines its adjusted operating cost base as the difference between
revenue and adjusted operating profit, excluding depreciation of property,
plant and equipment and amortisation of intangible assets. The reconciliation
of the adjusted operating cost base measure is presented below:
2024 2023
£m £m
Revenue 163.9 147.1
Less: Adjusted operating profit (21.6) (15.7)
Difference between revenue and adjusted operating profit 142.3 131.4
Less: Property, plant and equipment depreciation (2.5) (2.4)
Less: Amortisation - non-acquired intangibles (0.2) (0.4)
Adjusted operating cost base 139.6 128.6
The table below analyses the adjusted operating cost base into five
categories. The adjusted operating cost base increased by £11.0 million to
£139.6 million (2023: £128.6 million), with £4.5 million attributable to
incremental acquisition related operating costs.
2024 2023
£m £m
Direct costs(1) 59.1 53.9
Branch operating costs(2) 33.0 32.5
Centralised revenue generating operating costs(3) 16.9 14.9
Revenue generating operating costs 108.9 101.4
Central overheads(4) 28.1 25.1
Corporate costs(5) 2.6 2.3
Adjusted operating cost base 139.6 128.7
(1) Direct salary costs of branch fee earners and bad debt charges.
(2) Branch related operating costs shared between Lettings and Sales.
(3) Centralised fee earners, lead generation staff and Lettings property
management staff.
(4) Central overhead costs supporting branch operations.
(5) Corporate costs not attributed directly to the operating activities of the
operating segments.
Key movements in the adjusted operating cost base in 2024 versus 2023 are as
follows:
· Direct costs increased by £5.2 million primarily due to an
increase in variable commissions paid to fee earners reflecting year-on-year
revenue growth and a 4% increase in fee earner headcount, following selective
headcount investment and acquired headcount from acquisitions.
· Centralised revenue generating operating costs increased by £2.0
million primarily due to acquired headcount relating to Lettings acquisitions
and investment in centralised fee earner and lead generation teams.
· Central overhead costs increased by £3.0 million reflecting
specific investments in centralised teams responsible for the delivery of
revenue generating projects, acquisition related overheads that will be
subject to further rationalisation, general inflationary pressures and £0.5
million of incremental share-based payment charges.
Earnings per share
2024 2023
£m £m
Profit after tax 14.0 5.5
(Deduct)/Add: adjusted items (net of tax) (0.3) 3.6
Add: amortisation of acquired intangibles (net of tax) 1.6 1.0
Adjusted earnings for the purposes of adjusted earnings per share 15.3 10.1
Earnings per share (basic) 4.6p 1.8p
Earnings per share (diluted) 4.5p 1.7p
Adjusted earnings per share (basic) 5.0p 3.4p
Adjusted earnings per share (diluted) 4.9p 3.2p
Cash flow from operating activities and net free cash flow
2024 2023
From continuing operations £m £m
Operating cash flow before movements in working capital 35.3 28.7
Working capital outflow (4.9) (10.8)
Income taxes paid (5.6) (2.2)
Net cash from operating activities 24.7 15.7
Repayment of IFRS 16 lease liabilities (13.2) (12.5)
Net cash used in investing activities(1) (1.8) (3.2)
Net free cash flow 9.8 (0.1)
(1) Excludes £12.7 million (2023: £13.9 million) of cash outflows relating
to the acquisition of subsidiaries (net of any cash acquired), and £0.1
million (2023: £nil) proceeds related to the sale of shares.
Operating cash flow before movements in working capital increased by £6.6
million to £35.3 million (2023: £28.7 million). Net cash from operating
activities increased by £9.1 million to £24.7 million (2023: £15.7 million)
due to increased operating cashflows, more normalised working capital
movements as the impact of shorter landlord billing terms eases (as
highlighted in the prior year), offset by a £3.4 million increase in income
taxes paid. Net free cash flow was a £9.8 million inflow (2023: £0.1 million
outflow).
Net debt
Net debt at 31 December 2024 was £12.7 million (2023: £6.8 million). Net
debt reflects operating cash inflows of £24.7 million, £12.7 million of
acquisition related spend, £4.9 million of working capital outflows, £2.7
million of capital expenditure, and £2.8 million of dividends paid.
Revolving credit facility
In May 2024, the Board increased and extended the Group's RCF. The size of the
RCF was increased from £20 million to £30 million and the facility was
extended by a year to June 2027, with an option to extend for a further year.
The facility also includes a £10 million accordion option which can be
requested at any time subject to bank approval. The RCF supports the Group's
Lettings portfolio acquisition strategy and working capital management.
Drawdowns on the facility accrue interest at SONIA +1.65%.
The RCF is subject to a leverage covenant (net debt to adjusted EBITDA not to
exceed 1.75x) and an interest cover covenant (adjusted EBITDA to interest not
to be less than 4x) as defined in the facility agreement. Both covenants are
calculated using pre-IFRS 16 accounting principles. At 31 December 2024 the
leverage ratio was 0.5x and the interest cover ratio was 29x.
Under an IAS 1 amendment, effective 1 January 2024, which clarified the
requirements relating to the classification of liabilities subject to
covenants, the RCF balance is presented as non-current and the prior year
comparative has been restated on the same basis.
Acquisitions
Haslams
On 28 October 2024, the Group acquired the entire issued capital of Haslams
Estate Agents (Thames Valley) Limited. Gross purchase consideration was £9.7
million, with £7.4 million paid up to 31 December 2024 and £2.2 million
deferred for a period of 12 months post completion. Acquired net assets were
fair valued and include £2.8 million of customer contracts and relationships
and £7.0 million of acquired goodwill. The acquisition contributed £1.1
million of revenue and £0.3 million of adjusted operating profit in 2024,
with cost synergies to be delivered in 2025.
Imagine
On 28 October 2024, the Group acquired the entire issued capital of Imagine
Group Property Limited. Gross purchase consideration was £6.3 million, with
£5.1 million paid up to 31 December 2024 and £1.1 million deferred for a
period of 12 months post completion. Acquired net assets were fair valued and
include £1.1 million of customer contracts and relationships and £5.2
million of acquired goodwill. The acquisition contributed £0.6 million of
revenue and £0.1 million of adjusted operating profit in 2024, with cost
synergies to be delivered in 2025.
Refer to Note 9 of the financial statements for further details of the 2024
acquisitions.
Other balance sheet positions
Significant balance sheet movements in the period:
· Goodwill of £52.3 million (2023: £40.7 million) and other
intangible assets of £118.0 million (2023: £114.9 million), with the
increase in goodwill and other intangible assets driven by the acquisitions in
the year which contributed £12.1 million of goodwill and £3.9 million of
customer contracts and relationships.
· Other intangible assets of £118.0 million (2023: £114.9
million) include £2.8 million (2023: £1.5 million) of assets under
construction which primarily relates to the development of the Group's
customer website due to launch in Q1 2025.
· Total contract assets of £24.2 million (2023: £19.0 million)
and total contract liabilities of £10.5 million (2023: £12.2 million), with
the increase in contract assets including acquired contract assets of £1.2
million.
· Lease liabilities of £42.8 million (2023: £47.6 million) and
right-of-use assets of £38.6 million (2023: £42.5 million) with movements in
the balances explained in Note 8 of the financial statements.
· Borrowings of £18.0 million (2023: £11.8 million) to finance
the Group's acquisition strategy.
Dividend policy and capital allocation
The Group's capital allocation framework has been refined in the year to fully
reflect the Group's ongoing strategic priorities and capital structure. The
framework, which aims to support long-term growth and deliver sustainable
shareholder returns, prioritises:
· Organic growth, by investing in strategically important areas
such as people, technology, data and brand.
· Accretive acquisition opportunities, by acquiring high-quality
lettings portfolios which contribute non-cyclical and recurring revenues and
deliver strong returns on investment and synergy potential.
· A progressive dividend, which provides a reliable and growing
income stream to investors, whilst maintaining strong dividend cover.
We also continuously assess other shareholder return opportunities, such as
share buybacks, considering factors such as earnings per share accretion,
borrowing capacity and leverage.
The Group seeks to utilise its balance sheet and revolving credit facility to
best effect, and to maintain a leverage ratio (net debt to adjusted EBITDA) of
less than 1.25x.
An interim dividend of 0.22p per share was paid in September 2024. The Board
has proposed a final dividend of 0.95p per share, resulting in a total
dividend for the year of 1.17p per share (2023: 0.90p per share). The proposed
dividend will be paid on 16 May 2025 to shareholders on the register at 11
April 2025, subject to shareholder approval at the AGM due to be held on 7 May
2025. The shares will be quoted ex-dividend on 10 April 2025.
Share buy back
No shares were bought back in the year (2023: £1.1 million). The Board will
continue to keep share buybacks under review in the context of other potential
uses of capital.
Related partY transactions
Related party transactions are disclosed in Note 14 of the financial
statements.
Treasury ManAgement
The Group seeks to ensure it has sufficient funds for day-to-day operations
and to enable strategic priorities to be pursued. Financial risk is managed by
ensuring the Group has access to sufficient borrowing facilities to support
working capital demands and growth strategies, with cash balances held with
major UK based banks. The Group has no foreign currency risk and consequently
has not entered into any financial instruments to protect against currency
risk.
Pensions
The Group does not have any defined benefit schemes in place but is subject to
the provisions of auto-enrolment which require the Group to make certain
defined contribution payments for our employees.
POST BALANCE SHEET EVENTS
On 28 February 2025, the Group acquired the entire issued share capital of
Marshall Vizard LLP (and its holding companies), a Watford lettings agent, for
a consideration of £2.3 million on a debt free and cash free basis. The
consideration was fully satisfied in cash, with £0.5 million deferred for 12
months subject to performance conditions. Unaudited revenue and operating
profit for the 12 months ended 31 March 2024 was £0.9 million and £0.5
million respectively. The synergistic acquisition adds a further c.600
tenancies and demonstrates further progress against the Group's acquisition
strategy.
Risk management
The Group has identified its principal risks and uncertainties and they are
regularly reviewed by the Board and Senior Management. Refer to pages 20 and
21 for details of the Group's risk management framework and principal risks
and uncertainties.
Going concern, prospects and viability
The financial statements of the Group have been prepared on a going concern
basis as the Directors have satisfied themselves that, at the time of
approving the financial statements, the Group has adequate resources to
continue in operation for a period of at least 12 months from the date of
approval of the financial statements. Furthermore, the Directors have a
reasonable expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over a five-year viability period.
Refer to Note 1 of the financial statements for details of the Group's going
concern assessment and the going concern statement.
Chris Hough
Chief Financial Officer
4 March 2025
PRINCIPAL RISKS
Risk management
The Board is responsible for establishing and maintaining the Group's system
of risk management and internal control, with the aim of protecting its
employees and customers and safeguarding the interests of the Group and its
shareholders in the constantly changing environment in which it operates. The
Board regularly reviews the principal risks facing the Group, together with
the relevant mitigating controls, and undertakes a robust risk assessment. In
reviewing the principal risks, the Board considers emerging risks, including
climate-related risks, and changes to existing risks. In addition, the Board
has set guidelines for risk appetite as part of the risk management process
against which risks are monitored.
The identification of risks is undertaken by specific executive risk
committees that analyse the risk universe by risk type across four key risk
types: strategic risks, financial risks, operational risks and compliance
risks. A common risk register is used across the Group to monitor gross and
residual risk, with the results assessed by the Audit Committee and Board. The
Audit Committee monitors the effectiveness of the risk management system
through management updates, output from the various executive risk committees
and reports from internal audit.
The principal risks do not comprise all of the risks that the Group may face
and are not listed in any order of priority. Additional risks and
uncertainties not presently known to management, or deemed to be less material
at the date of this report, may also have an adverse effect on the Group.
Risk Impact on the Group
Market risk The key factors driving market risk are:
· Affordability, including ongoing cost of living increases, which
in turn may reduce transaction levels;
· The market being reliant on the availability of affordable
mortgage finance, a deterioration in availability or an increase in borrowing
rates may adversely impact the performance of the Sales business. Over the
course of 2024, there has been improved stability and reductions in borrowing
rates. Future reductions in borrowing rates may support additional market
activity;
· The market being impacted by changes in government policy such as
the Renters' Rights Bill which is being progressed through Parliament or
changes in stamp duty legislation;
· A reduction in London's standing as a major financial city caused
by the macro-economic and political environment; and
· Heightened geopolitical risk which may increase market
uncertainty and customer confidence.
Competitor challenge The Group operates in a highly competitive marketplace and there is a risk the
Group could lose market share.
Market share loss could be the result of competitors scaling up (organically
or through acquisition), developing new customer service propositions,
changing pricing structures or launching alternative business models to drive
competitive advantage.
Compliance with the legal and regulatory environment Breaches of laws or regulations could lead to financial penalties and
reputational damage.
Our estate agency business operates under a range of legal and regulatory
requirements, such as complying with certain money laundering regulations and
protecting client money in line with the relevant regulations.
Our Financial Services business is authorised and regulated by the Financial
Conduct Authority (FCA) and could be subject to sanctions for non-compliance.
During periods of interest rate volatility there is an increased risk of
compliance issues arising which require specific management.
Risk Impact on the Group
IT systems and cyber security Our business operations are dependent on sophisticated and bespoke IT systems
which could fail or be deliberately targeted by cyber attacks leading to
interruption of service, corruption of data or theft of personal data.
Such a failure or loss could also result in reputational damage, fines or
other adverse consequences.
People There is a risk the Group may not be able to recruit or retain quality staff
to achieve its operational objectives or mitigate succession risk. As
experienced in the current labour market, increased competition for talent
leads to a reduction in the available talent pool and an increased cost of
labour. Additional risk could arise in the event there are changes or
downturns in our industry or markets which reduce the earnings potential of
employees and result in less attractive career opportunities.
Reputation and brand Foxtons is an iconic estate agency brand with high levels of brand
recognition. Maintaining a positive reputation and the prominence of the brand
is critical to protecting the future prospects of the business.
There is a risk our reputation and brand could be damaged through negative
press coverage and/or negative social media coverage due to a range of matters
such as customer service issues, employee relations matters and cultural
concerns.
We recognise the need to maintain our reputation and protect our brand by
delivering consistently high levels of service and maintaining a culture which
encourages our employees to act with the highest ethical standards and
maintain a respectful and inclusive environment.
Forward looking statements
This preliminary announcement contains certain forward-looking statements with
respect to the financial condition and results of operations of Foxtons Group
plc. These statements and forecasts involve risk and uncertainty because they
relate to events and depend upon circumstances that will occur in the future.
There are a number of factors that could cause actual results or developments
to differ materially from those expressed or implied by these forward-looking
statements and forecasts. The forward-looking statements are based on the
Directors' current views and information known to them at 4 March 2025. The
Directors do not make any undertakings to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. Nothing in this statement should be construed as a profit forecast.
Responsibility statement
The following statement will be contained in the 2024 Annual Report and
Accounts.
Each of the Directors confirms that to the best of their knowledge:
· The consolidated financial statements, prepared in
accordance with the relevant financial reporting framework, give a true and
fair view of the assets, liabilities, financial position and profit of the
Group;
· The Parent Company financial statements, prepared in
accordance with the relevant financial reporting framework, give a true and
fair view of the assets, liabilities and financial position of the Company;
· The Strategic Report and the Directors' Report include
a fair review of the development and performance of the business and the
position of the Company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks and
uncertainties that they face; and
· The Directors consider that the Annual Report and
Accounts, taken as a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Group's and the
Company's position, performance, business model and strategy.
This responsibility statement was approved by the Board of Directors and was
signed on its behalf by:
Guy Gittins Chris Hough
Chief Executive Officer Chief Financial Officer
4 March 2025 4 March 2025
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2024
Continuing operations Notes 2024 2023
£'000
£'000
Revenue 2 163,927 147,127
Direct operating costs (59,064) (53,881)
Other operating costs (85,057) (83,456)
Operating profit 19,806 9,790
Other gains 260 -
Finance income 296 381
Finance costs (2,877) (2,277)
Profit before tax 17,485 7,894
Tax charge 4 (3,483) (2,404)
Profit and total comprehensive income for the year 14,002 5,490
Earnings per share
Basic earnings per share 6 4.6p 1.8p
Diluted earnings per share 6 4.5p 1.7p
Adjusted measures
Adjusted EBITDA(2) 16 23,803 17,511
Adjusted operating profit(1,3) 2, 16 21,559 15,652
Adjusted profit before tax(1,2) 16 19,238 13,756
Adjusted basic earnings per share(1,4) 6, 16 5.0p 3.4p
( )
(1) In 2024 the Group's adjusted profit/earnings measures have been
redefined to exclude the amortisation of acquired intangibles. 2023
comparatives have been restated as applicable under the revised definition to
ensure a fair comparison. Refer to Note 16 for definitions of each of the
adjusted measures, the rationale for the change in definitions and
reconciliations presenting the restatement of the prior year comparatives as
applicable.
(2) Adjusted EBITDA and Adjusted profit before tax are reconciled to the
nearest statutory measure in Note 16.
(3) Adjusted operating profit is reconciled to the nearest statutory measure
in Note 2.
(4) Adjusted basic earnings per share is reconciled to statutory earnings
per share in Note 6.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2024
Notes 2024 Restated(1)
£'000
2023
£'000
Non-current assets
Goodwill 7 52,278 40,709
Other intangible assets 7 118,017 114,897
Property, plant and equipment 8,084 9,459
Right-of-use assets 8 38,622 42,471
Contract assets 5,608 4,748
Investments 31 31
Deferred tax assets 2,738 1,905
225,378 214,220
Current assets
Trade and other receivables 16,709 17,432
Contract assets 18,579 14,256
Current tax assets 2,172 -
Cash and cash equivalents 5,320 4,989
Assets classified as held for sale - 450
42,780 37,127
Total assets 268,158 251,347
Current liabilities
Trade and other payables (23,921) (21,303)
Current tax liabilities - (79)
Borrowings 10 - (40)
Lease liabilities 8 (11,354) (10,686)
Contract liabilities (10,506) (11,770)
Provisions (2,156) (1,609)
(47,937) (45,487)
Net current liabilities (5,157) (8,360)
Non-current liabilities
Lease liabilities 8 (31,410) (36,915)
Borrowings 10 (18,008) (11,740)
Contract liabilities - (439)
Provisions (2,321) (3,008)
Deferred tax liabilities (29,503) (28,153)
(81,242) (80,255)
Total liabilities (129,179) (125,742)
Net assets 138,979 125,605
Equity
Share capital 11 3,301 3,301
Merger reserve 12 20,568 20,568
Other reserves 12 2,653 2,653
Own shares reserve 13 (11,012) (12,092)
Retained earnings 123,469 111,175
Total equity 138,979 125,605
(1) Current and non-current borrowings as at 31 December 2023 have been
restated to adopt Amendments to IAS 1 effective 1 January 2024. See Notes 1
and 10 for further details.
The financial statements of Foxtons Group plc, registered number 07108742,
were approved by the Board of Directors on 4 March 2025.
Signed on behalf of the Board of Directors
Chris Hough
Chief Financial Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2024
Notes Share Merger reserve Other reserves Own Retained earnings Total
capital
£'000
£'000
shares reserve
£'000
equity
£'000
£'000
£'000
Balance at 1 January 2024 3,301 20,568 2,653 (12,092) 111,175 125,605
Total comprehensive income for the year - - - - 14,002 14,002
Dividends 5 - - - - (2,787) (2,787)
Credit to equity for share-based payments - - - - 2,490 2,490
Settlement of share incentive plan 13 - - - 1,080 (1,411) (331)
Balance at 31 December 2024 3,301 20,568 2,653 (11,012) 123,469 138,979
Notes Share Merger reserve Other reserves Own Retained earnings Total
capital
£'000
£'000
shares reserve
£'000
equity
£'000
£'000
£'000
Balance at 1 January 2023 3,301 20,568 2,653 (10,993) 107,139 122,668
Total comprehensive income for the year - - - - 5,490 5,490
Dividends 5 - - - - (2,725) (2,725)
Own shares acquired in the period 13 - - - (1,112) - (1,112)
Credit to equity for share-based payments - - - - 1,284 1,284
Settlement of share incentive plan 13 - - - 13 (13) -
Balance at 31 December 2023 3,301 20,568 2,653 (12,092) 111,175 125,605
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2024
Notes 2024 2023
£'000
£'000
Operating activities
Operating profit: 2 19,806 9,790
Adjustments for:
Depreciation of property, plant and equipment and right-of-use assets 13,226 12,910
Amortisation of intangible assets 7 2,302 1,791
Net impairment of plant and equipment and right-of-use assets 3 - 3,410
(Gain)/loss on disposal of property, plant and equipment (37) 17
Gain on lease surrenders and lease modifications (556) (894)
Sub-lease asset impairment - 190
(Decrease)/increase in provisions (705) 422
Share incentive plans - tax settlements on behalf of employees (331) -
Share-based payment charges 1,549 1,036
Operating cash flows before movements in working capital 35,254 28,672
Increase in receivables and contract assets (2,916) (12,136)
(Decrease)/increase in payables and contract liabilities (2,004) 1,328
Cash generated by operations 30,334 17,864
Income taxes paid (5,587) (2,192)
Net cash from operating activities 24,747 15,672
Investing activities
Interest received 296 381
Proceeds on disposal of property, plant and equipment and assets held for sale 607 -
Purchases of property, plant and equipment (1,106) (2,121)
Purchases of intangibles 7 (1,565) (1,495)
Proceeds on sale / (purchase) of investments 91 (25)
Acquisition of subsidiaries (net of cash acquired) 9 (12,704) (13,935)
Net cash used in investing activities (14,381) (17,195)
Financing activities
Proceeds from borrowings 26,800 21,573
Repayment of borrowings (20,629) (10,681)
Dividends paid 5 (2,787) (2,725)
Interest on borrowings (536) (236)
Interest on lease liabilities (2,065) (1,971)
Repayment of lease liabilities (11,102) (10,554)
Sub-lease receipts 284 191
Purchase of own shares 13 - (1,112)
Net cash used in financing activities (10,035) (5,515)
Net increase/(decrease) in cash and cash equivalents 331 (7,038)
Cash and cash equivalents at beginning of year 4,989 12,027
Cash and cash equivalents at end of year 5,320 4,989
( )
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies, judgements and estimates
1.1 General information
Foxtons Group plc ('the Company') is a company incorporated in the United
Kingdom under the Companies Act 2006. The address of the Company's registered
office is Building One, Chiswick Park, 566 Chiswick High Road, London W4 5BE.
The principal activity of the Company and its subsidiaries (collectively, 'the
Group') is the provision of services to the residential property market in the
UK.
These financial statements are presented in pounds sterling which is the
currency of the primary economic environment in which the Group operates.
1.2 Basis of preparation
The consolidated preliminary results of the Company for the year ended 31
December 2024 comprise the Company and its subsidiaries.
The consolidated preliminary results of the Group for the year ended 31
December 2024 were approved by the Directors on 4 March 2025. These
consolidated preliminary results have been prepared in accordance with
UK-adopted International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those
standards. They do not include all the information required for full annual
financial statements to comply with UK-adopted International Accounting
Standards, and should be read in conjunction with the consolidated financial
statements of the Group as at and for the year ended 31 December 2024.
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Financial
Review. The Financial Review also includes a summary of the Group's financial
position and its cash flows.
The financial information for the year ended 31 December 2024 does not
constitute statutory accounts as defined in sections 435 (1) and (2) of the
Companies Act 2006. The auditor has reported on these accounts; their report
was unqualified, did not include a reference to any matters to which the
auditor drew attention by way of emphasis of matter and did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2023 have been delivered to
the Registrar of Companies and those for 2024 will be delivered following the
Company's 2025 Annual General Meeting.
1.3 Going concern
Going concern assessment
The financial statements of the Group have been prepared on a going concern
basis as the Directors have satisfied themselves that, at the time of
approving the financial statements, the Group will have adequate resources to
continue in operation for a period of at least 12 months from the date of
approval of the consolidated financial statements. The assessment has taken
into consideration the Group's financial position, liquidity requirements,
recent trading performance and the outcome of reverse stress testing over an
18-month forecast period to August 2026.
At 31 December 2024, the Group was in a net current liability position of
£5.2 million (2023: £8.4 million) and a net debt position of £12.7 million
(2023: £6.8 million net debt), which includes the £18.0 million drawdown on
the Group's £30.0 million revolving credit facility ('RCF') used to fund the
Group's acquisition strategy and working capital requirements. The facility is
available for use until June 2027 and has an option to extend for a further
year to June 2028. The facility also includes a £10 million accordion option
which can be requested at any time subject to bank approval. For RCF terms
refer to Note 10.
Reverse stress scenario
In assessing the Group's ability to continue as a going concern, the Directors
have stress tested the Group's cash flow forecasts using a reverse stress
scenario which incorporates a severe deterioration in market conditions.
Reverse stress testing seeks to determine the point at which the Group could
be considered to fail without taking further mitigating actions or raising
additional funds. For the purposes of the reverse stress test, the point of
failure has been defined as the point at which the Group breaches its RCF
covenants.
The reverse stress scenario has taken into consideration the revenue
characteristics of the Group, specifically the transactional nature of Sales
revenue, which contrasts to the recurring and non-cyclical nature of Lettings
revenue. The scenario assumes a severe macro-economic downturn from April 2025
to August 2026 which heavily impacts Sales and Financial Services revenues
since these streams are most sensitive to the macro-economic environment.
Additionally, Lettings revenues have been assumed to be impacted despite their
resilient nature.
Under the reverse stress scenario Sales revenue would be 15% lower than 2024
and Lettings revenue 4% lower than 2024, despite the Group having completed
two acquisitions in October 2024 which are revenue accretive. The key
assumptions are:
· A 24% reduction in sales market transactions and a 10% reduction
in Lettings units compared to 2024. For context, a 24% reduction in sales
market transactions would see transaction volumes fall c.7% compared to those
levels seen in 2009 following the Global Financial Crisis.
· An 18% reduction in sales market share and a 10% reduction in
Lettings average revenue per transaction from current levels, further reducing
revenues.
· Mitigating action is taken to reduce discretionary spending and
right size fee earner headcount to reflect market conditions. The modelled
actions include: reducing direct costs to reflect market conditions; reducing
discretionary spend such as marketing; and pausing management bonuses.
In the unlikely event of the reverse stress scenario, the Group forecasts it
would breach the RCF's leverage covenant (refer to Note 10 for details of the
covenants) in March 2026. Under such a scenario, further mitigating actions
that could be taken, but not included in the reverse stress scenario, include
further reducing discretionary spend, further rationalising headcount, pausing
capital expenditure, seeking agreement to defer lease payments or raising
additional funds.
1.4 Critical accounting judgements and key sources of
estimation uncertainty
The critical accounting judgements and key sources of estimation uncertainty
within these consolidated preliminary results are the same as those within the
2024 Annual Report and Accounts: 'Useful economic life of the brand intangible
asset', 'impairment of intangibles with an indefinite life' and 'contract
asset expected credit loss provision'.
1.5 Alternative performance measures (APMs)
In reporting financial information the Group presents APMs which are not
defined or specified under the requirements of IFRS. The Group believes that
the presentation of APMs provides stakeholders with additional and helpful
information on the performance of the business, but does not consider them to
be a substitute for or superior to IFRS measures. APMs are also used to
enhance the comparability of information between reporting periods, by
adjusting for factors which affect IFRS measures, to aid users in
understanding the Group's performance. The Group's APMs are defined, explained
and reconciled to the nearest statutory measure within Notes 2 and 16.
Changes in APM definitions
During the financial year, the Board reviewed certain APM definitions and
decided to exclude the amortisation of intangibles acquired in business
combinations from profit measures. The amortisation charge is excluded since
the incremental amortisation charge arising from acquired intangible assets is
not considered when assessing the underlying trading performance of the
Group/segments. The change also aligns the metric with generally accepted
market practice.
As a result of this change, the following APMs have been redefined to exclude
the amortisation of intangibles acquired in business combinations:
• Adjusted operating profit
• Adjusted operating profit margin
• Adjusted profit before tax
• Adjusted earnings per share
2023 comparatives have been restated as applicable under the revised
definition to ensure a fair comparison. Refer to Note 16 for further details
of the restatement of the 2023 comparatives.
Adjusted items
Adjusted operating profit, adjusted operating profit margin, adjusted EBITDA,
adjusted EBITDA margin, adjusted profit before tax and adjusted earnings per
share exclude adjusted items.
Adjusted items include costs or revenues which due to their size and incidence
require separate disclosure in the financial statements to reflect
management's view of the underlying performance of the Group and allow
comparability of performance from one period to another. Items include
restructuring and impairment charges, significant acquisition costs and any
other significant exceptional items. Refer to Note 3 for further information
around the adjusted items recognised in the year.
2. Business and geographical segments
Products and services from which reportable segments derive their revenues
Management has determined the operating segments based on the monthly
management pack reviewed by the Directors, which is used to assess both the
performance of the business and to allocate resources within the entity.
Management has identified that the Board is the Chief Operating Decision Maker
('CODM') in accordance with the requirements of IFRS 8 'Operating Segments'.
The operating and reportable segments of the Group are (i) Lettings; (ii)
Sales; and (iii) Financial Services.
(i) Lettings generates commission from the letting and
management of residential properties and income from interest earned on
tenants' deposits.
(ii) Sales generates commission on sales of residential
property.
(iii) Financial Services generates commission from the
arrangement of mortgages and related products under contracts with financial
service providers and receives administration fees from clients.
All revenue for the Group is generated from within the UK and there is no
intra-group revenue.
Segment assets and liabilities, including depreciation, amortisation and
additions to non-current assets, are not reported to the Directors on a
segmental basis and are therefore not disclosed. Goodwill and intangible
assets have been allocated to reportable segments as described in Note 7.
The segmental disclosures include two APMs as defined below. Further details
of the APMs is provided in Note 16.
Contribution and contribution margin
Contribution is defined as revenue less direct operating costs (being salary
costs of front office staff and costs of bad debt). Contribution margin is
defined as contribution divided by revenue. These measures indicate the
profitability and efficiency of the segments before the allocation of shared
costs.
Adjusted operating profit and adjusted operating profit margin
Adjusted operating profit represents the profit before tax for the period
before amortisation of acquired intangibles, adjusted items (defined in Note
1.5), finance income, finance cost and other gains/losses. Adjusted operating
profit margin is defined as adjusted operating profit divided by revenue. As
explained in Note 16, these measures are used by the Board to measure delivery
against the Group's strategic priorities, to allocate resource and to assess
segmental performance.
As explained in Note 1.5, the definitions of adjusted operating profit and
adjusted operating profit margin have been updated in the year to exclude the
amortisation of acquired intangibles. The 2023 comparatives (Group and
segmental metrics) have been restated as detailed within this note to ensure a
fair comparison.
Segment revenues and results
The following is an analysis of the Group's results by reportable segment for
the year ended 31 December 2024:
Lettings £'000 Sales Financial Services £'000 Corporate costs Group total £'000
£'000 £'000
Notes
Revenue 106,030 48,565 9,332 n/a 163,927
Contribution 16 78,105 22,743 4,015 n/a 104,863
Contribution margin 16 73.7% 46.8% 43.0% n/a 64.0%
Adjusted operating profit/(loss) 16 27,158 (4,099) 1,135 (2,635) 21,559
Adjusted operating profit/(loss) margin 16 25.6% (8.4%) 12.2% n/a 13.2%
Adjusted items 3 331
Amortisation of acquired intangibles (2,084)
Operating profit 19,806
Other gains 260
Finance income 296
Finance cost (2,877)
Profit before tax 17,485
Depreciation and amortisation Lettings £'000 Sales Financial Services £'000 Corporate costs Group total £'000
£'000 £'000
Depreciation(1) 8,249 4,963 14 - 13,226
Amortisation from non-acquired intangibles 103 66 49 - 218
Amortisation from acquired intangibles 1,666 418 - - 2,084
Total 10,018 5,447 63 - 15,528
(1) Total depreciation of £13.2 million consists of £2.5 million of
property, plant and equipment depreciation and £10.7 million of IFRS 16 lease
depreciation (refer to Note 8).
The following is an analysis of the Group's results by reportable segment for
the year ended 31 December 2023:
Lettings £'000 Sales Financial Services £'000 Corporate costs Group total £'000
£'000 £'000
Notes
Revenue 101,188 37,158 8,781 n/a 147,127
Contribution 16 75,381 14,455 3,410 n/a 93,246
Contribution margin 16 74.5% 38.9% 38.8% n/a 63.4%
Adjusted operating profit/(loss) - restated(1) 16 27,148 (9,874) 654 (2,276) 15,652
Adjusted operating profit/(loss) margin - restated(1) 16 26.8% (26.6%) 7.4% n/a 10.6%
Adjusted items 3 (4,466)
Amortisation of acquired intangibles (1,396)
Operating profit 9,790
Finance income 381
Finance cost (2,277)
Profit before tax 7,894
(1) The adjusted operating profit/loss and adjusted operating profit/loss
margin lines have been restated under the Group's revised definitions of these
measures which now both exclude the amortisation of acquired intangibles.
Refer to Note 16 for further details including a reconciliation of the metrics
under the revised definition versus the previous definition.
Depreciation and amortisation Lettings £'000 Sales Financial Services £'000 Corporate costs Group total £'000
£'000 £'000
Depreciation(1) 8,080 4,815 15 - 12,910
Amortisation from non-acquired intangibles 205 130 60 - 395
Amortisation from acquired intangibles 1,315 81 - - 1,396
Total 9,600 5,026 75 - 14,701
(1) Total depreciation of £12.9 million consists of £2.4 million of
property, plant and equipment depreciation and £10.5 million of IFRS 16 lease
depreciation (refer to Note 8).
3. Adjusted items
Adjusted operating profit, adjusted operating profit margin, adjusted EBITDA,
adjusted EBITDA margin, adjusted profit before tax, adjusted earnings per
share, exclude adjusted items. These APMs are defined, purpose explained and
reconciled to statutory measures in Note 2 and Note 16. The following items
have been classified as adjusted items in the period.
2024 2023
£'000 £'000
Branch asset impairment charge(1) - 3,410
Net property related / other (reversal)/charge(2) (629) 671
Transaction related costs(3) 298 385
Total net adjusted items (credit)/charge (331) 4,466
(1) The 2023 branch asset impairment charge related to property and
equipment (£1,037k) and right-of-use assets (£2,373k) (refer to Note 8).
2 Net property related / other (reversal)/charge includes dilapidations,
rates, service charges and other unavoidable costs under onerous leases,
offset by net gains on the disposal of IFRS 16 balances.
3 Transaction related costs relate to costs involved with the acquisition of
Imagine and Haslams (2023: for the acquisition of Atkinson McLeod and Ludlow
Thompson).
Net cash outflow from adjusted items during the year totalled £1.2 million
(2023: £0.6 million).
4. Taxation
Recognised in the Group comprehensive income statement
The components of the tax charge recognised in the Group income statement are:
2024 2023
£'000 £'000
Current tax
Current period UK corporation tax 4,546 2,684
Adjustment in respect of prior periods (1,029) 160
Total current tax charge 3,517 2,844
Deferred tax
Origination and reversal of temporary differences (473) (471)
Impact of change in tax rate - (24)
Adjustment in respect of prior periods 439 55
Total deferred tax credit (34) (440)
Tax charge on profit on ordinary activities 3,483 2,404
Corporation tax for the year ended 31 December 2024 is calculated at 25%
(2023: 23.5%) of the estimated taxable profit for the period.
In the Spring Budget 2021, the UK Government announced that from 1 April 2023
the corporation tax rate would increase to 25%. This new law was substantively
enacted on 24 May 2021. For the financial year ended 31 December 2024 the tax
rate was 25% (2023: the weighted average tax rate was 23.5%). Deferred tax at
the balance sheet date has been measured using this enacted tax rate.
Reconciliation of effective tax charge
The tax on the Group's profit before tax differs from the standard UK
corporation tax rate of 25% (2023: 23.5%), because of the following factors:
2024 2023
£'000 £'000
Profit before tax 17,485 7,894
Tax at the UK corporation tax rate (see above) 4,371 1,855
Tax effect of expenses that are not deductible 392 483
Tax effect of non-taxable income (280) (12)
Other differences - share awards (59) (51)
Adjustment in respect of previous periods (590) 215
Impact on deferred tax of change in tax rate - (24)
Recognition of a deferred tax asset (351) (62)
Tax charge on profit on ordinary activities 3,483 2,404
Effective tax rate 19.9% 30.5%
Group relief is claimed and surrendered between Group companies for
consideration equal to the tax benefit.
Tax arising in the reporting period and not recognised in net profit or loss
or other comprehensive income but directly credited to equity is £941k (2023:
£248k), comprising £750k (2023: £248k) of deferred tax and £191k (2023:
£nil) of current tax. This relates to share-based payment schemes.
5. Dividends
2024 2023
£'000 £'000
Final dividend for the year ended 31 December 2023: 0.70p (31 December 2022: 2,119 2,122
0.70p) per ordinary share
Interim dividend for the year ended 31 December 2024: 0.22p (31 December 2023: 668 603
0.20p) per ordinary share
2,787 2,725
For 2024, the Board has proposed a final dividend of 0.95p per ordinary share
(£2.9 million) to be paid on 16 May 2025.
6. earnings per share
Basic earnings per share is calculated by dividing the earnings for the year
attributable to ordinary equity holders of the Company by the weighted average
number of ordinary shares outstanding during the year, excluding own shares
held.
Diluted earnings per share is calculated by dividing the earnings attributable
to ordinary equity holders of the Company by the weighted average number of
ordinary shares in issue during the financial period, excluding own shares
held, plus the weighted average number of ordinary shares that would be issued
on conversion of all the potentially dilutive ordinary share awards into
ordinary shares. The Company's potentially dilutive ordinary shares are in
respect of share awards granted to employees.
As explained in Note 1.5, the definition of adjusted earnings per share has
been updated in the year to exclude the amortisation of acquired intangibles.
The 2023 comparative has been restated as detailed within this note to ensure
a fair comparison.
2024 Restated(2,3)
£'000 2023
£'000
Profit for the purposes of basic and diluted earnings per share 14,002 5,490
Adjusted for:
Adjusted items (including associated taxation)(1) (314) 3,585
Amortisation of acquired intangibles (including associated taxation) 1,563 1,047
Adjusted earnings for the purposes of adjusted earnings per share(2) 15,251 10,122
Number of shares 2024 2023
Weighted average number of ordinary shares for the purposes of basic earnings 302,867,437 302,039,983
per share
Effect of potentially dilutive ordinary shares 6,899,138 12,877,904
Weighted average number of ordinary shares for the purpose of diluted earnings 309,766,575 314,917,887
per share
Earnings per share (basic) 4.6p 1.8p
Earnings per share (diluted) 4.5p 1.7p
Adjusted earnings per share (basic)(3) 5.0p 3.4p
Adjusted earnings per share (diluted) (3) 4.9p 3.2p
(1) Adjusted items credit of £331k (2023: £4,466k charge) per Note 3, and
associated tax charge of £17k (2023: £881k credit), resulting in an after
tax credit of £314k (2023: £3,585k charge).
(2) The 2023 'adjusted earnings for the purposes of adjusted earnings per
share' comparative has been restated to exclude the amortisation of acquired
intangibles net of tax of £1,047k, increasing the metric from £9,075k (as
presented in 2023) to £10,122k.
(3) The 2023 'adjusted earnings per share (basic and diluted)' has been
restated to reflect the adjusted earnings noted above. The 2023 adjusted
earnings per share (basic) has increased from 3.0p to 3.4p and 2023 adjusted
earnings per share (diluted) has increased from 2.9p to 3.2p.
7. Goodwill and other intangible ASSETS
2024 Goodwill Brand Software Assets under construction Customer Total
£'000
£'000
£'000
contracts and relationships
£'000
£'000
£'000
Cost
At 1 January 2024 50,528 99,000 3,007 1,487 17,925 171,947
Fair value adjustments(1) (577) - - - - (577)
Additions - - - 1,565 - 1,565
Acquired through business combinations 12,146 - - - 3,857 16,003
(refer to Note 9)
Transfer - - 228 (228) - -
At 31 December 2024 62,097 99,000 3,235 2,824 21,782 188,938
Accumulated amortisation and impairment losses
At 1 January 2024 9,819 - 2,193 - 4,329 16,341
Amortisation - - 218 - 2,084 2,302
At 31 December 2024 9,819 - 2,411 - 6,413 18,643
Net carrying value
At 31 December 2024 52,278 99,000 824 2,824 15,369 170,295
At 1 January 2024 40,709 99,000 814 1,487 13,596 155,606
(1) Fair value adjustment relating to prior year acquisitions arising from
an adjustment to deferred consideration within the 12-month window from
acquisition date. Refer to Note 9 for further details on the prior year
acquisitions.
2023 Goodwill Brand Software Assets under construction Customer Total
£'000
£'000
£'000
contracts and relationships
£'000
£'000
£'000
Cost
At 1 January 2023 35,869 99,000 2,244 755 12,041 149,909
Additions - - 763 732 - 1,495
Acquired through business combinations 14,659 - - - 5,884 20,543
At 31 December 2023 50,528 99,000 3,007 1,487 17,925 171,947
Accumulated amortisation and impairment losses
At 1 January 2023 9,819 - 1,798 - 2,933 14,550
Amortisation - - 395 - 1,396 1,791
At 31 December 2023 9,819 - 2,193 - 4,329 16,341
Net carrying value
At 31 December 2023 40,709 99,000 814 1,487 13,596 155,606
At 1 January 2023 26,050 99,000 446 755 9,108 135,359
( )
Annual impairment review
a) Carrying value of goodwill and intangible assets with indefinite
lives
The carrying values of goodwill and intangible assets with indefinite lives as
at 31 December are summarised below.
2024 2023
£'000 £'000
Lettings goodwill 52,278 40,709
Brand asset - Sales and Lettings 99,000 99,000
151,278 139,709
• Lettings goodwill is allocated to the Lettings cash-generating
unit (CGU) and tested at this level. This allocation represents the lowest
level at which goodwill is monitored for internal management purposes and is
not larger than an operating segment.
• The brand asset has been tested for impairment by aggregating
the values in use relating to the Lettings and Sales CGUs. No brand value is
allocated to the Financial Services CGU since the Foxtons brand only relates
to the Sales and Lettings CGUs. This grouping represents the lowest level at
which management monitors the brand internally and reflects the way in which
the brand asset is viewed, rather than being allocated to each segment on an
arbitrary basis.
b) Impairment review approach and outcome
The Group tests goodwill and the indefinite life brand asset annually for
impairment, or more frequently if there are indicators of impairment, in
accordance with IAS 36 'Impairment of Assets'.
The Group has determined the recoverable amount of each CGU from value in use
calculations. The value in use calculations use cash flow projections from
formally approved budgets and forecasts covering a five-year period, with a
terminal growth rate after five years. The resultant cash flows are discounted
using a pre-tax discount rate appropriate to the CGUs.
Following the annual impairment review performed as at 30 September 2024,
there has been no impairment of the carrying amount of goodwill or the brand
asset.
c) Impairment review assumptions
The assumptions used in the annual impairment review are detailed below:
Cash flow assumptions
The key variables in determining the cash flows are Lettings revenues, Sales
revenues and the associated direct costs incurred during the forecast period.
These assumptions are based upon a combination of past experience of
observable trends and expectations of future changes in the market. Key
assumptions are as follows:
· Sales revenue increases by a CAGR (compound average growth
rate) of 7.9% as the market recovers 7.1% in 2025 and 2.5% annually from there
and market share growth continues.
· Within the Sales revenue assumption, house prices are assumed
to increase 1.5% annually.
· Lettings revenue is assumed to grow at a CAGR of 3.2% over
the forecast period, excluding future Lettings portfolio acquisitions that
must be excluded from forecast cash flows under the relevant accounting
standard.
Long-term growth rates
To evaluate the recoverable amounts of each CGU, a terminal value has been
assumed after the fifth year and includes a long-term growth rate in the cash
flows of 2.0% (2023: 2.0%) into perpetuity.
The long-term growth rate is derived from management's estimates, which take
into account the long-term nature of the market in which each CGU operates and
external long-term growth forecasts.
Discount rates
In accordance with IAS 36, the pre-tax discount rate applied to the cash flows
of each CGU is based on the Group's weighted average cost of capital (WACC)
and is calculated using a capital asset pricing model and incorporates lease
debt held under IFRS 16. The WACC has been adjusted to reflect risks specific
to each CGU not already reflected in the future cash flows for that CGU.
The pre-tax discount rate used to discount Lettings cash flows used in the
assessment of Lettings goodwill is 17.6% (2023: 17.1%). The pre-tax discount
rate used to discount aggregated Sales and Lettings cash flows used in the
assessment of the brand asset is 17.6% (2023: 17.1%). The year-on-year
increase in the discount rate is attributable to market changes in WACC
inputs, primarily the adjusted beta.
d) Sensitivity analysis
Sensitivity analysis has been performed to assess whether the carrying values
of goodwill and the brand asset are sensitive to reasonably possible changes
in key assumptions and whether any changes in key assumptions would materially
change the carrying values. Lettings goodwill showed significant headroom
against all sensitivity scenarios, while the brand asset is sensitive to
reasonably possible changes in key assumptions.
The key assumption in the brand impairment assessment is the forecast revenues
for the Lettings and Sales businesses. The carrying value of the brand asset
is not highly sensitive to changes in discount rates or long-term growth
rates.
The impairment model indicates brand asset headroom of £58.6 million (2023:
£60.4 million) or 35% (2023: 38%) of the carrying value under test. Cash
flows are sourced from the Group's Board approved plan while also complying
with the requirements of the relevant accounting standard.
Assuming no changes in other elements of the plan, the brand asset headroom
would reduce to zero if the combined revenue CAGR over the forecast period
reduces from 4.8% to 3.0%. Under a reasonably possible downside scenario,
Sales revenue would grow by 10.9% in 2025 (base: 17.3%) reflecting a possible,
but pessimistic, sales market downside view, Lettings revenue growth is
limited to 1% and the Group takes appropriate mitigating actions, such as
reducing discretionary spend and direct costs, the brand asset headroom would
be reduced to £10.2 million.
8. Leases
Group as a lessee
The Group has lease contracts for its head office, branches and for motor
vehicles used in its operations. With the exception of short-term leases, each
lease is recognised on the balance sheet with a right-of-use asset and a lease
liability. The Group classifies its right-of-use assets in a consistent manner
to its property, plant and equipment.
Generally, the right-of-use assets can only be used by the Group, unless there
is a contractual right for the Group to sub-lease the asset to another party.
The Group is also prohibited from selling or pledging the leased assets as
security.
Right-of-use assets
The carrying amounts of the right-of-use assets recognised and the movements
during the year are outlined below:
Property Motor vehicles Total
£'000
£'000
£'000
At 1 January 2023 38,453 4,117 42,570
Additions 5,701 7,831 13,532
Acquired through business combinations 1,891 - 1,891
Lease modifications (298) - (298)
Disposals (1,845) (495) (2,340)
Depreciation (7,012) (3,499) (10,511)
Impairment charge (2,373) - (2,373)
At 31 December 2023 34,517 7,954 42,471
Additions 2,396 3,475 5,871
Acquired through business combinations (refer to Note 9) 921 80 1,001
Lease modifications (84) 534 450
Disposals (242) (245) (487)
Depreciation (6,754) (3,930) (10,684)
At 31 December 2024 30,754 7,868 38,622
Lease liabilities
The carrying amounts of lease liabilities recognised and the movements during
the year are outlined below:
Property Motor vehicles Total
£'000
£'000
£'000
At 1 January 2023 42,189 4,272 46,461
Additions 5,609 7,831 13,440
Acquired through business combinations 1,891 - 1,891
Lease modifications (574) - (574)
Disposals (2,577) (486) (3,063)
Interest charge 1,771 200 1,971
Payments (8,832) (3,693) (12,525)
At 31 December 2023 39,477 8,124 47,601
Additions 2,367 3,475 5,842
Acquired through business combinations (refer to Note 9) 921 80 1,001
Lease modifications (73) 535 462
Disposals (799) (241) (1,040)
Interest charge 1,683 382 2,065
Payments (9,012) (4,155) (13,167)
At 31 December 2024 34,564 8,200 42,764
Current 7,584 3,770 11,354
Non-current 26,980 4,430 31,410
During the year ended 31 December 2024, the difference in lease modifications
movements recognised within right-of-use assets and lease liabilities,
totalling £nil (2023: £0.3 million), is recognised as an adjusted item and
included in the net property related charge within Note 3.
Of the movements in the year, cash payments with respect to principal lease
instalments totalling £13.2 million were made (2023: £12.5 million) and the
remaining net movement in lease liabilities of £8.3 million (2023: £13.7
million) was non-cash in nature.
At the balance sheet date, the group had outstanding commitments for future
minimum lease payments which fall due as follows:
2024 2023
£'000 £'000
Maturity analysis - contractual undiscounted cash flows
Within one year 13,101 12,488
In the second to fifth years inclusively 27,032 31,007
After five years 8,282 14,739
48,415 58,234
The Group has elected not to recognise a lease liability for short-term leases
(expected lease term is 12 months or less), in line with the IFRS 16
short-term lease exemption. Payments made under such leases are expensed on a
straight-line basis. At 31 December 2024, the Group had a commitment of less
than £0.1 million (2023: less than £0.1 million) in relation to short-term
leases.
Amounts recognised in the profit or loss
The following are the amounts recognised in profit or loss during the year, in
respect of the leases held by the Group as a lessee:
2024 2023
£'000 £'000
Depreciation of right-of-use assets 10,684 10,511
Net impairment of right-of-use assets(1) - 2,373
Interest expense on lease liabilities 2,065 1,971
Expenses relating to short-term leases 915 1,438
Total amount recognised in profit or loss 13,664 16,293
(1) Net impairment of right-of-use assets is classified as an adjusted item
due to the one-off nature and is included in the branch asset impairment
charge within Note 3.
Group as an intermediate lessor
Finance lease receivables
The Group is an intermediate lessor for various lease arrangements considered
to be finance sub-leases. The amounts recognised in the profit or loss during
the year are outlined below:
2024 2023
£'000 £'000
Finance income under finance leases recognised in the year 30 41
As at 31 December 2024 and 2023, third parties had outstanding commitments due
to the Group for future undiscounted minimum lease payments, which fall due as
follows:
2024 2023
£'000 £'000
Within one year 171 210
In the second to fifth years inclusive 580 606
After five years 206 351
957 1,167
9. Business Combinations
On 28 October 2024 the Group acquired 100% of the share capital of the
following independent London estate agents which are primarily focused on the
commuter towns of Reading and Watford:
· Haslams Estate Agents (Thames Valley) Limited and subsidiaries
('Haslams');
· Imagine Property Group Limited ('Imagine').
The acquisitions are in line with the Group's strategy of acquiring high
quality businesses with strong lettings portfolios.
The provisional purchase price allocation exercise for both acquisitions has
been completed which identified a total of £3.9 million of acquired
intangible assets relating to customer contracts and relationships, which are
identifiable and separable, and will be amortised over 10 years.
The discount rates applied to the forecast cash flows from the acquired
customer contracts and relationships are based on the respective acquired
entities' weighted average cost of capital (WACC), calculated using a capital
asset pricing model. The WACC has been adjusted to reflect risks specific to
Haslams and Imagine not already reflected in the future cash flows.
£7.0 million and £5.2 million of goodwill has arisen on the acquisitions of
Haslams and Imagine, respectively, and is primarily attributable to synergies,
new customers, the acquired workforce and business expertise. The acquired
goodwill has been allocated for impairment testing purposes to the Group's
Lettings cash-generating unit which is expected to benefit from the synergies
of the combination. None of the goodwill is expected to be deductible for tax
purposes.
Business combinations - contribution to 2024
From the date of acquisition, 28 October 2024, the Haslams business
combination contributed £1.1 million of revenue and £0.3 million adjusted
operating profit to the Group's performance for the year. If the acquisition
had taken place at the beginning of the year, revenue for the year would have
been £6.2 million and adjusted operating profit would have been £0.8million.
From the date of acquisition, 28 October 2024, the Imagine business
combination contributed £0.6 million of revenue and £0.1 million adjusted
operating profit to the Group's performance for the year. If the acquisition
had taken place at the beginning of the year, revenue for the period would
have been £3.4 million and adjusted operating profit would have been £0.7
million.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of the combined
acquired entities as at the date of acquisition are disclosed below. The fair
value of the identifiable assets and liabilities are estimated by taking into
consideration all available information at the reporting date.
Haslams Imagine Total
£'000 £'000 £'000
Assets
Acquired intangible assets recognised on acquisition 2,797 1,060 3,857
Property, plant and equipment 61 - 61
Right-of-use assets 909 92 1,001
Cash and cash equivalents 377 865 1,242
Trade and other receivables 460 177 637
Contract assets 634 561 1,195
5,238 2,755 7,993
Liabilities
Trade and other payables (774) (533) (1,307)
Contract liabilities (13) (12) (25)
Lease liabilities (909) (92) (1,001)
Current tax liabilities 272 (282) (10)
Deferred tax liabilities (net) (878) (423) (1,301)
Provisions (240) (325) (565)
(2,542) (1,667) (4,209)
Total identifiable net assets at fair value 2,696 1,088 3,784
Goodwill arising on acquisition 6,968 5,178 12,146
Fair value of consideration 9,664 6,266 15,930
The acquired lease liabilities were measured using the present value of the
remaining lease payments as at the date of acquisition. The right-of-use
assets were measured at an amount equal to the lease liabilities, less any
acquisition related adjustments.
The net deferred tax liabilities mainly comprise the tax effect of the
accelerated amortisation for tax purposes of the acquired intangible assets
recognised on acquisition offset by the deferred tax asset recognised on the
acquired net contract liabilities.
Purchase consideration
Haslams Imagine Total
£'000 £'000 £'000
Amount settled in cash 7,434 5,141 12,575
Contingent cash consideration 2,230 1,125 3,355
Fair value of consideration 9,664 6,266 15,930
Purchase consideration settled in cash during the year was £12.6 million as
shown in the table above. Consideration paid in the year, net of cash
acquired, was £11.3 million and is included in cash flows from investing
activities.
As part of the purchase agreement with the previous owners of both Haslams
and Imagine, an estimated £3.4 million of contingent cash consideration will
be payable 12 months after the acquisition date subject to certain performance
targets being met. This contingent consideration of £3.4 million is included
within trade and other payables.
Prior period acquisitions
As disclosed in Note 13 of the 2023 Annual Report and Accounts, on 3 March and
6 November 2023 respectively the Group acquired 100% of the share capital of
the following independent London estate agents which are primarily focused on
providing Lettings and Property Management services:
• Atkinson McLeod Limited ('Atkinson McLeod');
• Ludlow Thompson Holdings Limited and its subsidiaries Ludlowthompson SLM
Ltd and Ludlowthompson.com Limited (collectively 'Ludlow Thompson').
A total deferred consideration of £1.4 million was paid in 2024, with a
further estimated £0.8 million of deferred consideration remaining payable.
Analysis of cash flows on acquisition
2024 2023
£'000 £'000
Cash consideration (12,575) (13,769)
Cash acquired in subsidiaries 1,242 1,306
Current year acquisitions of subsidiaries, net of cash acquired (11,333) (12,463)
Deferred consideration paid in relation to prior year acquisitions (1,371) (1,472)
Acquisitions of subsidiaries, net of cash acquired (included in cash flows (12,704) (13,935)
from investing activities)
Transaction costs of the acquisition (included in cash flows from operating (295) (285)
activities) (1)
Net cash flow on acquisitions (12,999) (14,220)
(1) Transaction costs are presented within adjusted items set out in Note
3.
10. bORROWINGS
2024 Restated(1)
£'000 2023
£'000
Current:
Freehold mortgage - 40
Total borrowings due within one year 40
Non-current:
Revolving credit facility 18,180 11,769
Transaction costs (172) (127)
Freehold mortgage - 98
Total borrowings due in more than one year 18,008 11,740
Total borrowings 18,008 11,780
(1) As noted below, the 31 December 2023 comparative has been restated to
reflect an IAS 1 amendment with all borrowings presented as non-current,
except for £40k. The 2023 borrowings were presented as £11,682k (current)
and £98k (non-current) within the 2023 financial statements.
During the period, the Company increased the revolving credit facility (RCF)
from £20 million to £30 million and extended it by one year from June 2026
to June 2027. The RCF attracts a margin of 1.65% above SONIA and is unsecured.
The facility is available for use until June 2027 and has an option to extend
for a further year to June 2028, as well as an accordion facility to increase
the facility size to £40 million subject to bank approval.
The RCF is subject to a leverage covenant (net debt to adjusted EBITDA not to
exceed 1.75) and an interest cover covenant (adjusted EBITDA to interest not
to be less than 4) as defined in the facility agreement. Both covenants are
calculated using pre-IFRS 16 accounting principles as detailed within Note 16.
The Group has been compliant with covenants throughout the period.
The IAS 1 amendments, effective from 1 January 2024, clarified the
requirements relating to the classification of liabilities subject to
covenants where the entity has the right defer settlement. The Group has the
right to defer settlement of the RCF providing that the covenants are met. The
Group was in compliance with the covenants at 31 December 2024 (leverage
covenant 0.5x and interest cover 29x) and as such the RCF liability has been
classified as non-current. The Group was also in compliance with the covenants
as of 31 December 2023 (leverage covenant 0.4x and interest cover 59x). As the
IAS 1 amendments are applied retrospectively, the comparative has been
restated.
11. Share Capital
2024 2023
£'000 £'000
Authorised, allotted, issued and fully paid:
Ordinary shares of £0.01 each
At 1 January and 31 December 3,301 3,301
As at 31 December 2024 the Company had 330,097,758 ordinary shares (2023:
330,097,758).
12. Merger reserve and other reserves
2024 2023
£'000 £'000
Merger reserve 20,568 20,568
Capital redemption reserve 71 71
Other capital reserve 2,582 2,582
23,221 23,221
During the period, there were no movements in either the merger reserve,
capital redemption or other capital reserve. Prior to the Company's initial
public offering, a ratchet mechanism reduced the number of shares in issue
resulting in a reduction in share capital and transfer to the other capital
reserve.
13. OWN SHARES RESERVE
2024 2023
£'000 £'000
Balance at 1 January 12,092 10,993
Acquired during the year - 1,112
Settlement of share incentive plan (1,080) (13)
Balance at 31 December 11,012 12,092
The own shares reserve represents the cost of shares in the Company purchased
in the market and held by either the Company or the Foxtons Group Employee
Benefit Trust to satisfy awards under the Group's long-term share incentive
schemes. The number of ordinary shares held by the Employee Benefit Trust at
31 December 2024 was 57,467 (2023: 57,467).
The number of ordinary shares held by the Company at 31 December 2024 was
26,192,151 (2023: 28,802,778).
14. RELATED PARTY TRANSACTIONS
Balances and transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and, in accordance with
IAS 24, are not disclosed in this note.
Remuneration of key management personnel
The remuneration of the key management personnel of the Group is set out below
in aggregate for each of the categories specified in IAS 24: 'Related Party
Disclosures'. The definition of key management personnel extends to the
Directors of the Company.
2024 2023
£'000 £'000
Short-term employee benefits 1,955 2,021
Post-employment benefits 22 21
Share-based payments 1,031 772
3,008 2,814
(1) The 2023 comparative has been adjusted to remove related National
Insurance charges to be on a consistent basis with the 2024 disclosure.
15. Client monies
At 31 December 2024, client monies held within the Group in approved bank
accounts amounted to £127.2 million (31 December 2023: £122.4 million).
Neither this amount, nor the matching liabilities to the clients concerned,
are included in the consolidated statement of financial position since these
funds belong to clients. Foxtons Limited's terms and conditions provide that
any interest income received on these client monies accrues to the Company.
Client monies are protected by the FSCS under which the government guarantees
amounts up to £85,000 each. This guarantee applies to each individual client
deposit, not the sum total on deposit.
16. Alternative performance measures
In reporting financial information the Group presents APMs which are not
defined or specified under the requirements of IFRS. The Group believes that
the presentation of APMs provides stakeholders with additional helpful
information on the performance of the business, but does not consider them to
be a substitute for or superior to IFRS measures.
The Group's APMs are aligned to the Group's strategy and together are used to
measure the performance of the business with certain APMs forming the basis of
remuneration performance measures. Adjusted results exclude certain items,
because if included, these could distort the understanding of our performance
for the period and the comparability between periods. The definition, purpose
and how the measures are reconciled to statutory measures are set out below.
During the financial year, the Board reviewed certain APM definitions and
decided to exclude the amortisation of intangibles acquired in business
combinations from profit measures. The amortisation charge is excluded since
the incremental amortisation charge arising from acquired intangible assets is
not considered when assessing the underlying trading performance of the
Group/segments. The change also aligns the metric with generally accepted
market practice.
As a result of this change, the following APMs have been redefined to exclude
the amortisation of intangibles acquired in business combinations:
· Adjusted operating profit
· Adjusted operating profit margin
· Adjusted profit before tax
· Adjusted earnings per share
The reconciliation between the revised definition of the APMs and the previous
definition of the APMs have been included below.
a) Contribution and contribution margin
Contribution is defined as revenue less direct salary costs of front office
staff and costs of bad debt. Contribution margin is defined as contribution
divided by revenue. Contribution and contribution margin are key metrics for
management since both are measures of the profitability and efficiency before
the allocation of shared costs. A reconciliation between revenue and
contribution is presented below.
31 December 2024 Lettings Sales Financial services Consolidated
£'000 £'000 £'000 £'000
Revenue 106,030 48,565 9,332 163,927
Less: Direct operating costs (27,925) (25,822) (5,317) (59,064)
Contribution 78,105 22,743 4,015 104,863
Contribution margin 73.7% 46.8% 43.0% 64.0%
31 December 2023 Lettings Sales Financial services Consolidated
£'000 £'000 £'000 £'000
Revenue 101,188 37,158 8,781 147,127
Less: Direct operating costs (25,807) (22,703) (5,371) (53,881)
Contribution 75,381 14,455 3,410 93,246
Contribution margin 74.5% 38.9% 38.8% 63.4%
b) Adjusted EBITDA and adjusted EBITDA margin
Adjusted EBITDA represents the profit before tax before finance income,
non-IFRS 16 finance costs, other gains/(losses), depreciation of property,
plant and equipment (but after IFRS 16 depreciation), amortisation,
share-based payment charges and adjusted items. Since the measure includes
IFRS 16 lease depreciation and IFRS 16 lease finance cost, adjusted EBITDA
includes all elements of the Group's leasing costs and therefore fully
reflects the Group's lease cost base. Adjusted EBITDA margin is defined as
adjusted EBITDA divided by revenue. These measures are frequently used by
investors, securities analysts and other interested parties to evaluate
financial performance and compare performance of sector peers. Furthermore,
adjusted EBITDA is used to calculate the leverage and interest cover ratios
for the purposes of the Group's RCF covenants. A reconciliation between
operating profit and adjusted EBITDA is presented below.
Notes 2024 2023
£'000 £'000
Operating profit 19,806 9,790
(Deduct)/add back: adjusted items 3 (331) 4,466
Add back: Amortisation of acquired intangibles 7 2,084 1,396
Adjusted operating profit 21,559 15,652
Add back: Amortisation of non-acquired intangibles 7 218 395
Add back: Depreciation of property, plant and equipment(1) 2,542 2,399
Add back: Share-based payment charges(2) 1,549 1,036
Deduct: Interest on IFRS 16 leases(3) 8 (2,065) (1,971)
Adjusted EBITDA 23,803 17,511
Adjusted EBITDA margin 14.5% 11.9%
( )
(1) Depreciation of IFRS 16 right-of-use assets is not added back so that
adjusted EBITDA includes the non-financing element of property and vehicle
leases.
(2) 'Share based payment' charges exclude National Insurance.
(3) Interest on IFRS 16 leases is deducted so that adjusted EBITDA includes
the financing cost of property and vehicle leases.
c) Adjusted operating profit and adjusted operating
profit margin
Adjusted operating profit represents the profit before tax for the period
before finance income, finance cost, other gains/(losses) and adjusted items
(defined within Note 1.5). This measure is reported to the Board for the
purpose of resource allocation and assessment of segment performance. The
closest equivalent IFRS measure to adjusted operating profit is profit before
tax.
Adjusted operating profit margin is defined as adjusted operating profit
divided by revenue. This APM is a key performance indicator of the Group and
is used to measure the delivery of the Group's strategic priorities.
Refer to Note 2 for a reconciliation between profit before tax and adjusted
operating profit and for the inputs used to derive adjusted operating profit
margin. The table below reconciles the revised definition of the metrics to
the previous definition.
Notes 2024 2023
£'000 £'000
Operating profit 19,806 9,790
(Deduct)/add back: adjusted items 3 (331) 4,466
Adjusted operating profit (previous definition) 19,475 14,256
Add back: amortisation of acquired intangibles 7 2,084 1,396
Adjusted operating profit (revised definition) 21,559 15,652
Adjusted operating profit margin (previous definition) 11.9% 9.7%
Add back: amortisation of acquired intangibles 1.3% 0.9%
Adjusted operating profit margin (revised definition) 13.2% 10.6%
d) Adjusted profit before tax
Adjusted profit before tax represents profit before tax before adjusted items
and provides a view of the underlying profit before tax and aids comparability
of performance from one period to another. A reconciliation between profit
before tax and adjusted profit before tax is presented below.
Notes 2024 2023
£'000 £'000
Profit before tax 17,485 7,894
(Deduct)/add back: adjusted items 3 (331) 4,466
Adjusted profit before tax (previous definition) 17,154 12,360
Add back: amortisation of acquired intangibles 7 2,084 1,396
Adjusted profit before tax (revised definition) 19,238 13,756
e) Adjusted earnings per share
Adjusted earnings per share is defined as earnings per share excluding
adjusted items and amortisation of acquired intangibles. The measure is
derived by dividing profit after tax, adjusted for post-tax adjusted items and
amortisation of acquired intangibles, by the weighted average number of
ordinary shares in issue during the financial period, excluding own shares
held. This APM is a measure of management's view of the Group's underlying
earnings per share.
The closest equivalent IFRS measure is earnings per share. Refer to Note 6 for
a reconciliation between earnings per share and adjusted earnings per share.
As noted above, adjusted earnings per share has been redefined to exclude the
amortisation of intangibles acquired in business combinations. The relevant
2023 comparatives have been restated for the change in definition as explained
in Note 6.
f) Net free cash flow
Net free cash flow is defined as net cash from operating activities less
repayment of IFRS 16 lease liabilities and net cash used in investing
activities, excluding the acquisition of subsidiaries (net of any cash
acquired), divestments and purchase of investments. This measure is used to
monitor cash generation. A reconciliation between net cash from operating
activities and net free cash flow is presented below.
2024 2023
£'000 £'000
Net cash from operating activities 24,747 15,672
Less: Interest on lease liabilities (2,065) (1,971)
Less: Repayment of lease liabilities (11,102) (10,554)
Net cash from operating activities, after repayment of IFRS 16 lease 11,580 3,147
liabilities
Investing activities
Interest received 296 381
Proceeds on disposal of property, plant and equipment and assets held for sale 607 -
Purchases of property, plant and equipment (1,106) (2,121)
Purchases of intangibles (1,565) (1,495)
Net cash used in investing activities (1,768) (3,235)
Net free cash flow 9,812 (88)
g) Net debt
Net cash/debt is defined as cash and cash equivalents less external borrowings
and excludes IFRS 16 lease liabilities. The measure is monitored internally
for the purposes of assessing the availability of capital and balance sheet
strength. A reconciliation of the measure is presented below.
2024 2023
£'000 £'000
Cash and cash equivalents 5,320 4,989
External borrowings (18,008) (11,780)
Net debt (12,688) (6,791)
h) Other performance measure definitions
Definitions of other performance measures presented in the Group's Annual
Report and Accounts are summarised below.
Volumes
· Sales volumes: Total number of property sales transactions which have
exchanged during the period.
· Lettings volumes: Total of the number of long and short lets entered
into by tenants and the number of renewals agreed between tenants and
landlords during the period.
· Financial Services volumes: Total number of mortgages arranged during
the period (purchase and refinance units).
Revenue per transaction
· Revenue per Sales transaction: Sales revenue during the period
divided by Sales volumes during the period.
· Revenue per Lettings transaction: Lettings revenue during the period
divided Lettings volumes during the period.
· Revenue per Financial Services transaction: Financial Services
revenue during the period divided by Financial Services volumes during the
period.
17. Events after the reporting period
On 28 February 2025, the Group acquired the entire issued share capital of
Marshall Vizard LLP (and its holding companies), a Watford lettings agent, for
a consideration of £2.3 million on a debt free and cash free basis. The
consideration was fully satisfied in cash, with £0.5 million deferred for 12
months subject to performance conditions. Unaudited revenue and operating
profit for the 12 months ended 31 March 2024 was £0.9 million and £0.5
million respectively. Gross assets at 31 March 2024 were £1.1 million. Given
the proximity of the transaction to the announcement of the Group's financial
statements, a full purchase price allocation exercise has not yet been
completed and the valuation of the assets acquired will be assessed prior to
the next reporting date.
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