Foxtons has just announced its results for the year ended 31 December 2021, reporting improved revenues, profits and cash flow significantly ahead of 2019 and 2020, while the company has made a positive start to 2022.

The London estate agency, which last month disposed of the Douglas & Gordon sales business and all of its branches after integrating the D&G lettings business into the Foxtons network, reported that revenues across all business segments for the 12 month period were well ahead of the prior year and 2019. This reflects organic market share growth, the contribution from acquired lettings businesses and improved market conditions.

In this morning’s update, the firm said revenue for the full year was circa £126.5m, up 35% on the prior year, including a major contribution from Douglas & Gordon.

Foxtons says adjusted operating profit of £8.9m was recorded, up from £1.9m in 2020 after £1.5m voluntary repayment of business rates.

Net free cash flow stood at £6.6m, up from £4.3m in 2020, while net cash reached £19.4m (2020: £37.0m), which excludes £3.7m of cash classified as held for sale relating to the disposal of the D&G sales business.

Final dividend of 0.27p per share is reported, taking full year dividends to 0.45p per share.

Return of £5.7m of excess capital to shareholders via share buybacks.

Foxtons provided the following update.

Strong progress against core objectives

·    Organic revenue growth:

–     Delivered market share growth across all business areas leveraging data science to improve conversion.

–        Built on high levels of landlord loyalty to deliver 4% organic growth in our lettings portfolio and 11% organic growth in property management revenues compared to 2020.

–     Developed new revenue channels and enhanced cross-sell capabilities. Accessed international markets through our Asia Pacific channel, which delivered £2.7m of revenue in its first full year of operation, and grew Build to Rent revenues to £2.7m, 69% up against 2020 and 90% up against 2019, as we build on our London market leadership position.

·    Lettings portfolio acquisitions:

–     Acquired 2,900 new tenancies through the acquisition of D&G, with 4% growth in the lettings portfolio during the first 10 months of ownership to over 3,000 tenancies, delivering £10.0m of revenue and £3.7m of operating profit to continuing operations.

–     D&G lettings portfolio recently integrated into the Foxtons infrastructure and expected to deliver around £4m of operating profit in 2022 through the delivery of further synergies, and a total return on invested capital in excess of 20%.

·    Profit growth:

–     36% increase in branch productivity (average revenue per branch) and 26% increase in employee productivity (average revenue per employee) against the prior year, reflective of our ongoing people programmes, centralised infrastructure efficiencies and branch network reach.

–     Action taken in 2021 to simplify management structures and introduce new remuneration schemes in order to drive revenue growth and improved profitability.

–     Embedded our customer data platform to improve customer conversion and cost per acquisition.

Creating value for all our stakeholders

·    The improved trading performance enabled the business to re-instate the dividend under our policy of returning 35% to 40% of profit after tax (excluding one-off non-cash items) to shareholders as an ordinary dividend, and return £5.7m of excess capital to shareholders via share buybacks.

·    No use of Government support in 2021, a stable employee base and record employee engagement levels.

·    Partnered with leading national charity, Career Ready, to make a positive difference to social mobility in our communities. Established an ESG Committee underscoring our commitment to being a responsible business.

2022 trading update and outlook

In sales, 2022 began with our under-offer sales pipeline marginally ahead of 2021 levels, and significantly up on the pre-pandemic levels, giving us confidence in a more sustained market recovery. In lettings, London average rental prices are in line with 2019 levels which we expect to be underpinned by strong tenant demand as pre-pandemic behaviour returns, including continued growth in Build to Rent in 2022. We have a good pipeline of further lettings portfolio acquisitions and expect to invest £8m in 2022 to generate attractive returns for investors. In mortgage broking, we expect there to be similar levels of market activity to 2021.

Subject to the geopolitical situation, we expect the trading environment to remain positive, and will take steps to control costs, despite inflationary headwinds, and improve productivity. Overall, we have a clear plan for growth and expect to build on the strong progress made in 2021.

Financial summary

Commenting on the results, Nic Budden, CEO, said: “2021 was a good year of progress for Foxtons with revenues, profits and cash flow significantly ahead of 2019 and 2020. We successfully delivered the first phase of our growth plan, making strong progress against our core strategic objectives and are confident of delivering further growth this year and into the future.

“We extended our leadership position in the London sales and lettings markets, developed new revenue channels and enhanced cross-sell capabilities by leveraging our investments in marketing and technology. We are delighted with the D&G acquisition which has had a materially positive impact on profits. With increased market share, and the successful integration of acquisitions driving strong growth in revenue, profits and cash flow, we re-instated the dividend for the first time since 2017 and bought back £5.7m of shares.

“We have now completed the strategic review of our mortgage broking business, Alexander Hall, and believe it is in the Group’s interests to retain the business. Alexander Hall intends to increase its financial adviser base, to fully realise the financial services cross-selling opportunity and grow profits significantly.

“The sales market remains buoyant, with our current under-offer sales commission pipeline marginally ahead of 2021, and we have a good pipeline of potential lettings portfolio acquisitions. We have a clear plan for growth and are highly focused on delivery.”

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