Foxtons Group plc

Good morning everyone and thank you for joining the Foxton's 2025 half-year results presentation. I'm joined by Chris Hough, Group CFO, and we will answer any questions at the end of the call. We have a streamlined presentation today following the in-depth look at the business at our capital markets presentation last month. This morning, I'll take you through some of the key financial and operational highlights to provide an update on London's lettings and sales markets. Chris will then talk you through the numbers and I will finish with an update on operational progress in the half, followed by some detail on July trading and outlook for the rest of the year. The business I took over when I rejoined Foxton's in September 22 was very different to the one we are today. Following a forensic operational review, we undertook a massive rebuilding exercise over 23 and 24. to completely turn around the business. And that work is really paying off. We are now firmly in the next stage of growth and I could not be more excited about the momentum we're building. And that progress can be seen in our results for the first half. We delivered 10% revenue growth and 31% profit growth. Revenue growth was delivered through another half of lettings growth plus a 25% growth in sales as the business capitalized on Q1 volumes that were boosted ahead of the stamp duty deadline. Driving margins is a key area of focus and we delivered profit growth through a focus on higher margin activities, delivering returns from our acquisitions and keeping a tight control on costs without impacting top line growth. Following our strategic rebuild over the last three years, today Foxton's is first and foremost a lettings focused business. In total, non-cyclical and reoccurring activities generated two-thirds of revenue in the half, highlighting our totally changed financial profile as we aim to deliver consistent and predictable earnings growth. In the half, we delivered continued market share growth to further cement our position as London's largest estate agency brand and impressively for a London-focused business, also as the UK's largest lettings brand. Operationally, although the turnaround stage of our plan is complete, we haven't stood still. The business has really embraced a new culture of continuous improvement, which is key to ensuring that we not only stay ahead of the competition, but build a bigger lead over time. In the half, we delivered further upgrades focused on driving lead generation and conversion, customer service and experience, and further developing our people and culture. I will provide more detail on these later in the presentation. Finally, and excitingly, we held a capital markets event last month. On the day, we presented an in-depth look at our business, our enhanced strategy for growth, and set new medium-term financial targets to deliver 240 million pounds in revenue, 50 million pounds in adjusted operating profit, and a 20% adjusted operating profit margin. To give some context, our new profit target is more than double the level delivered last year and really highlights the growth potential that we see in this business. Turning now to slide seven and an update on the London lettings market. On the chart on the left-hand side, we've indexed the tenant demand and property instruction levels to 2021. As you can see, supply and demand dynamics have now stabilized following a period of volatility after COVID-19 to a new normalised level. Demand remains high, and although we are seeing more turnover of properties in the lettings market, demand continues to outstrip supply. Reflecting this structural imbalance between supply and demand, rental prices grew 2% in the half, broadly in line with inflation. We expect this dynamic will continue, underpinned by the long-term trends of high levels of demand and limited numbers of new landlords entering the sector. Our industry leading platform enabled us to maximise our opportunity in the lettings market. We continue to deliver market share growth to further cement our position as London's number one lettings agent. Our commuter town acquisitions are performing well and I'm excited by the growth opportunities we can deliver both acquisitive and organic by rolling out our brand, technology and data capabilities in these new markets. On the regulatory front, the government is advancing the renter's rights bill and it's expected to take effect in 2026. The new legislation creates opportunities for Foxton's. As London's largest estate agents, we are uniquely positioned to guide landlords through the evolving landscape, leveraging our deep market insights, robust research capabilities and sophisticated legal and compliance infrastructure. These strengths enable us to turn regulatory change into a competitive advantage. As we discussed in detail during the capital markets presentation, today over half of landlords operate without an agent. But given the increased levels of regulation, we're seeing an increased number of these landlords now opting to use professional agency services to mitigate the risk of getting it wrong versus a DIY approach. And this is a trend that we expect to continue to grow. In addition, the increased regulatory burden enhances the appeal of our value-add property management services. And with a concerted effort across the business, including training, KPIs, and top-down management, we delivered a 9% increase in our upsell rate in H1 alone, which is a fantastic result that will support further revenue growth in H2. Together, these dynamics are expected to grow the lettings total addressable market and drive stronger customer lifetime value supporting delivery of our growth plan. Turning now to slide eight and an update on the London sales market. Exchange volumes were 18% higher than in the prior year with volumes reflecting two distinct quarters. Q1 volumes were 50% higher than the prior year as we saw high numbers of first-time buyers completing transactions ahead of the stamp duty deadline at the end of March. As expected, Q2 volumes were 10% lower, reflecting the pull forward of deals into Q1. At Foxen's, we're focused on volume markets, characterised by properties priced below a million pounds, which is where the bulk of London's property transactions are completed. This segment massively outperformed prime and super prime markets where tax changes coupled with high levels of stamp duty have disproportionately impacted demand from wealthy and international buyers. In fact, despite the overall London market seeing growth in volumes and exchanges, these markets were year on year lower. This dynamic reinforces our strategic focus on the more resilient volume markets within London and beyond. Looking further ahead, One dynamic to highlight is demand has not grown at the levels that we and most of the industry expected at the end of last year. The primary driver here is borrowing costs, which have not reduced at the rate initially forecast. In fact, borrowing costs are broadly unchanged versus last year. Compounding this is a general weakening in consumer confidence, economic outlook, and uncertainty ahead of the autumn statement. The pace of interest rate cuts will be key in determining how demand evolves over H2. For vendors looking to sell in this environment, pricing is absolutely key. There are high levels of pent-up demand in the market, and where we see properties price competitively, buyer interest and offer rates remain strong. We welcome the government's recent announcement of the new mortgage guarantee scheme and await further detail. More pressingly, in my opinion, is a review of stamp duty. demonstrates just how much stamp duty impacts the market. And I'm firmly of the belief that stamp duty needs reforming across all price points to allow people not just to buy their first property, but create the market fluidity that allows homeowners to either upsize or downsize as their needs evolve. A healthy, functioning and affordable sales market is critical in supporting the government's growth agenda. I'll now pass over to Chris for a run through the financials.

Thank you, Guy, and good morning, everyone. In the first half, the group delivered strong revenue and adjusted operating profit growth as we continue to progress against our growth plan. Financial highlights are set out on slide 10. Group revenue grew 7.6 million or 10% to 86.1 million, with sales contributing 70% of the revenue growth as we capitalized on a buoyant Q1 sales market and lettings contributing 30% of the revenue growth. We've delivered 12.3 million of adjusted operating profits, which is 31% higher than the prior period. Consistent with the full year 2024, adjusted operating profit for the half excludes amortization of acquired intangibles, with the prior period of comparatives restated to provide a fair comparison across financial years. Our adjusted operating profit margin grew by 230 basis points to 14.3% as operational initiatives and the inherent operating leverage in the business growth. I'll provide more detail on these initiatives in the segmental overviews. Adjusted EBITDA, which is defined on the same basis to calculate the group's RCF covenants, grew by 32% to $13.8 million. Statutory profit before tax was 10.2 million, up 35% on the prior period. Net free cash flow was positive at 3.6 million compared to a 0.9 million outflow in the prior period, reflecting improved profitability and a lower working capital outflow. The board has declared an interim dividend of 0.24 pence per share, a 9% increase on the prior period, under the group's progressive dividend policy. The group also bought back 2.8 million of shares in the first half under the buyback programme announced in April this year. Turning now to slide 11, which provides an overview of the income statement and key changes. The 10% increase in group revenue to 86.1 million reflected 4% growth in lettings revenue, 25% growth in sales revenue, and flat financial services revenue. I'll talk to the key revenue dynamics in each business over the next three slides. Group revenue continues to be underpinned by lettings, which represented 63% of group revenue in the half. As highlighted at the capital markets event, lettings revenue is non-cyclical and reoccurring in nature and delivers high levels of consistency and earnings visibility. Direct costs were up £2.6 million, reflecting higher fee-earner numbers as a result of acquisitions and higher revenue-linked staff commissions. Contribution margin was held flat at 65%. Overheads were £1.4 million higher, primarily driven by £1 million of incremental overheads relating to acquisitions. The underlying cost base was broadly flat, despite inflationary headwinds and £0.5 million of higher national insurance costs in the period as part of our focus on driving margin growth. Depreciation, amortisation of non-acquired intangibles and share-based payments were 0.8 million higher than the prior period. Together, these movements delivered adjusted operating profits of 12.3 million, a 31% increase on the prior period. Profit before tax was 10.2 million, which is 2.7 million higher than the prior period. In the first half, we also delivered on a material future cost saving programme by negotiating an early exit from the Chiswick Park headquarters lease and agreeing a new lease for smaller space in order to right size our headquarters footprint. This proactive move has been enabled by the better use of brunch space and growing our lower cost property management centre outside London. The right size will resort in cost savings of approximately £1.5 million per year from January next year. No early exit premium is payable under the terms of the surrender. The Chiswick Park right size is part of a wider programme to deliver cost savings in the property portfolio without impacting revenue generation capabilities. Including the saving on the Chiswick Park lease, the Group's 2026 underlying lease cost base will be approximately 20% lower than 2023 as a result of right-sizing, consolidating branches and successful lease renewal negotiations. Turning now to slide 12 on performance in lettings. Lettings revenue grew by 2.2 million or 4% to 54.6 million. This is a result of 2.9 million of incremental revenues from lettings acquisitions, broad and flat like-for-like lettings revenue, which reflects strong property management revenue growth offset by lower like-for-like transaction volumes, primarily driven by phasing, and 0.5 million lower interest earned on client monies due to lower Bank of England interest rates. Overall, transaction volumes grew 2%, and revenue per transaction increased by 3%, reflecting 2% higher rental prices and improved revenues from property management, supported by a 9% increase in like-for-like upsell versus last year. This is in order to grow our portfolio of non-cyclical earnings and to drive customer lifetime value. Contribution grew 6% to 41.5 million off the back of revenue growth, whilst the contribution margin grew by 90 basis points, which is primarily due to margin accretive property management and cross-sell of related ancillary services. Adjusted operating profit grew 13% to 15.5 million, and adjusted operating profit margin grew 210 basis points to 28.4%, reflecting the stronger contribution margin and the delivery of acquisition-related synergies. Moving to slide 13 and an update on the sales business. Sales revenue grew 5.3 million or 25%, reflecting 3.1 million of like for like revenue growth and 2.2 million of incremental revenue from our commuter town acquisitions. In total, volumes were 44% higher and revenue per transaction was 14% lower. On a like for like basis, excluding the commuter town acquisitions, Revenue was 14% higher, reflecting 21% growth in transaction volumes as we effectively capitalise on a buoyant Q1 market driven by the 31 March stamp duty deadline. And 6% reduction in average revenue per transaction due to a higher proportion of lower value first-time buyer properties transacting Q1 ahead of the stamp duty deadline. H1 2025 market share across Foxton's London markets was robust at 5%, ahead of the 4.5% target set out in March 2023. The adjusted operating loss in sales narrowed to 2.1 million, an improvement of 42%, reflecting higher revenues, improved productivity and a profitable contribution from the new commuter town acquisitions. Moving on to slide 14 and financial services. Revenue in financial services was flat compared to the prior period, as good growth in new purchase activity was offset by lower refinance revenue due to timing of mortgage renewals. Specifically, new purchase mortgage revenue was up 22%, with Q1 benefiting from particularly strong year-on-year growth, and refinance revenue was down 19%, driven by the timing of mortgage expiries, which are weighted towards age two. Average revenue per transaction was up 4%, driven by growth in higher revenue new purchase activity. This was offset by 4% reduction in volumes, reflecting lower refinance expiries. Adjusted operating profit was low in the half, primarily reflecting investment in fee on a headcount up 8% year on year, as we scale up the business. New fee-inners typically break even around the 12-month mark. Moving now to slide 15 and cash flow. There was a 3.6 million net free cash inflow in the period, reflecting improved profitability and a lower working capital outflow. The operating cash to net free cash flow bridge on the left-hand side shows the items of note. Operating cash before working capital movements was positive at 19.2 million, 16% higher than the prior period. There was a 6.5 million seasonal working capital outflow. The group also paid 0.8 million of corporation tax and made 6.9 million of lease liability payments in the period. And 1.4 million of cash was used in investing activities, primarily relating to branched fit-out capex and internally generated software development. Looking at the opening to closing net cash bridge on the right-hand side, We started the year with 12.7 million of net debt and ended the half with 18.2 million of net debt. This reflects 3.6 million net free cash inflow, 3.1 million of acquisition consideration paid, primarily relating to the acquisition of Marshall Vizard in February, and 5.7 million of total shareholder returns, which includes 2.9 million of dividends paid and 2.8 million of share buybacks. In the year, we successfully extended the RCF by 12 months to June 2028. The interest cover and leverage covenants have remained unchanged. At 30th of June, the leverage ratio was 0.7 times, comfortably below our limit of 1.75 times, and the interest cover ratio was 27 times, comfortably above our limit of four times. Finally, we have declared an interim dividend of 0.24 pence per share, and 9% increase on the prior period under the group's progressive dividend policy. I'll now hand back to Guy, who will provide an operational update.

Thank you, Chris. As we've demonstrated over our recent results calls and at the capital markets presentation, our operating platform is highly sophisticated, industry-leading, and a key differentiator, allowing us to drive a level of growth unheard of for an agent of our size. Before my return, the once game-changing platform hadn't evolved, with new products and improvements put on hold and high levels of tech debt building up. Over the last two years, the platform has been comprehensively rebuilt and we're once again developing and bringing to market new innovative products to drive our performance forward. I frequently challenge not just my senior leadership team, but everyone across the company to always find ways of innovating and work better deliver superior customer outcomes. In fact, innovation is one of the core values that underpins our culture. And this approach is really helping us deliver a culture of continuous improvement. By always ensuring that we're driving the capabilities of our own platform forward, we'll not only maintain our competitive advantage, but create even more distance between us and the competition. Improvements to the platform this half were focused on the group level growth enablers that we presented last month. namely lead generation and conversion, customer experience and lifetime value, and our people and culture. We continue to roll out new technology solutions to enhance the customer experience. Our real-time feedback system is now enabled across every stage of the customer journey and delivering incredibly valuable insights, which is unique in our industry. This is now supported by an AI-powered sentiment analysis system which uses natural language processing to measure the customer sentiment at every interaction. This system highlights our strategy of investing in AI products where they can show a high ROI and make a meaningful operational difference. We can now scientifically identify what drives our customer satisfaction, tailor our service approach, and identify training needs instantly. Crucially, we're using these insights to re-engineer processes and incentivize service delivery to deliver exceptional service that drives customer attention and lifetime value. To support lead generation and conversion, we've totally re-engineered and launched a new version of our customer website. Our website is totally unique for the level of traffic that it generates in the sector, ranking only below the aggregators and significantly ahead of all other agents, including the largest national chains. As Foxton's largest source of leads, the new site will play a key role in driving growth. The code base has been totally modernized, making the platform more robust, flexible, and future fit. Customer experience and functionality have been significantly upgraded, including a full redesign of myFoxton's portal based on customer feedback. Pleasingly, we are already seeing stronger digital engagements and higher satisfaction levels with further future enhancements planned over time. Moving now to a hub and spoke model. As Chris mentioned earlier, I'm really pleased that after several years of review, we can significantly reduce our HQ lease cost as we move into a new space. Having been in our current building for over 20 years, this gives us a chance to create a new modern office setup without impacting the culture of our HQ. a culture and level of energy that many of you will have experienced on your visits over the last two years. The HQ rightsizing is part of a wider branch optimization program. We've forensically reviewed our branch requirements over the last two years, reducing costs without impacting the ability to serve our customers or deliver growth. These savings are part of a wider laser focus on costs and tightly managing the cost base without impacting top-line growth is a key lever in delivering our profit and margin targets. Moving now to our acquisition strategy. At the capital markets presentation, we outlined our enhanced strategy to rapidly expand into and consolidate within high value commuter markets. And in doing so, rapidly win market leadership. We term this our buy, build and bolt on strategy. In H1, we made further progress against this strategy Firstly, we integrated Watford-based Imagine Properties into the operating platform. The business has been rebranded to Foxton's and is already leveraging the platform's capabilities in lead generation, delivering a massive 60% increase in the share of new sales instructions. To support the business further, we've rapidly completed the bolt-on acquisition of the third largest lettings agent in the area in February. Foxton's is the number one agent by some distance in this valuable market, an achievement delivered in just under 12 months, highlighting our ability to rapidly consolidate markets, deliver reoccurring lettings revenue, and turbocharge returns with organic growth. We have a good pipeline of opportunities, and aided by comprehensive market and agent analysis, our acquisitions team are identifying and sourcing off-market deals to drive our acquisition strategy forward. Moving now to the most important part of our business, our people and culture. It is my fundamental belief that a state agency is a people business. Having the right talent, developing great leaders, and embedding and really demonstrating our core values is critical to our success. As part of our continuous improvement drive, we've worked with external advisors to understand how we can build on our strengths and ensure that we are always driving our culture forwards. Key upgrades delivered in H1 include further embedding our company values, delivering enhanced training to strengthen our culture, and ensuring that we have the right people data and management metrics across the business. And we're seeing good progress with fee earner productivity and revenue per fee earner both growing in the half. And finally, to slide 19 and an outlook for the rest of the year. Lettings is displaying good momentum, benefiting from the seasonal uplift of summer, building on the instruction market share growth delivered in H1. More generally, with healthy stock levels, strong tenant demand and inflation-linked rents, the market will continue to deliver consistent and predictable returns. Further strategic acquisitions will enhance the returns here. In contrast, the pace of growth in sales has moderated versus the industry's expectations at the beginning of the year. As mentioned, the key driver is borrowing costs, which have remained at elevated levels for longer than anticipated. Weakness in consumer confidence, economic outlook, and uncertainty ahead of the autumn statement are compounding this. The pace of any interest rate reductions will be the key factor in determining how quickly demand grows, with market commentators forecasting a rate drop in August. Financial service revenues are expected to remain resilient. Refinance activity is expected to see good growth in H2, driven by the volume of mortgage terms expiring, whilst demand for new purchase mortgages will reflect sales market trends. Despite the wider macroeconomic uncertainty, our financial profile is strong, underpinned by stable and reoccurring earnings from lettings, giving confidence in our ability to deliver our growth strategy. That concludes our formal presentation. Thank you all for joining us today. Chris and I look forward to meeting with many of you in the coming weeks, and I'll now pass back to the operator for any questions that you may have.

Your first telephone question today is from Greg Polton from Singer Capital Markets. Please go ahead.

Yeah, morning Guy, Chris. Just a couple from me, please. Could you talk a bit about the depth of the M&A pipeline? and how active that is, please. And then could you also talk about M&A pricing and whether you've seen a change in valuation aspirations as a result of the weaker sales market post Q1? Please, thank you.

Hey, morning, Greg. Guy here. Great to hear from you. Yeah, as you may remember, we have an internal... acquisitions team who focus every single day on two things. They're constantly reaching out to agents, independently owned agents across the southeast of England. And as you know, we're looking out in these larger commuter town locations as well as trying to infill within the M25. We have a really strict investment criteria. We're looking not just to spend any money, we're looking to make the right acquisitions. We use data to lead all of the decisions about where we want to be. Generally, if it's outside of London, that will be a formula of volume and value and making sure that collectively we want to try to buy in to become the first, second market leader within the letting space. Now, that's an always-on strategy and the team are doing a great job. We're always talking to lots of people and we've got a meaningful pipeline that we're looking to transact with at any time, and some people that we're looking to transact with this year as well. Of course, timing is always critical with these acquisitions, but we're pleased with the state of the current pipeline, the people that we're talking to, and Chris might want to talk about the actual multiples and the values that we're seeing for these.

Yeah, they're very stable, I'd say, year over year. Greg, so similar position we talked to at the capital market today. And yeah, looking forward to reporting progress as soon as we can in the second half.

Thanks, guys.

The next question comes from Andy Murphy from Edison Group. Please go ahead.

Two questions, please. First of all, can you just remind us that about the size of the shared buyback program and how much of it you might be planning to spend in the second half. And secondly, more sort of a broader question, just thinking about your M&A in the commuter towns so far, I was just wondering what lessons you've learned from the deals that you've made and how that has shaped your thinking in terms of speed, pace, type of business that you're looking for, location, et cetera.

Morning, Andy. I'll pick up the share buyback question, if that's OK. So in the first half, we spent £2.8 million in cash, and that was linked to the programme we announced in April. And that programme was £3 million. So we're substantially through that programme. And in terms of closing that out, we'll continue to monitor in the second half. And as for new programmes, that's very much monitored on a very regular basis by the board as part of the capital allocation framework. I do want to pick up the question around the community towns and how some of the progress of thinking in these acquisitions.

Yeah, absolutely. Thanks for the question, Andy. I think the biggest lesson that we've learned is that there's a fantastic opportunity out there, particularly when we take the Fox and operating platform, the momentum, our obsession with data and what we can do with historic data to really drive organic performance as well as seeing internal improvements from things like productivity, once we bring the new business onto the platform. A great example of this is our recently acquired Watford business called Imagine. They had four or three offices just in and outside of Watford. We made that acquisition at the end of last year. We quickly, well, after the making of the purchase, we actually rebranded entirely to Foxton's. We brought them straight on to our Foxton's BOSS system, as you know, which is the most powerful in the industry. And not only did we see an uplift in their productivity internally, but because of the way that we're able to find data and really accelerate that market share focus, we took all of their historic data and put it into the Foxton's market share internal AI-driven platform. And we've seen a huge growth, particularly in, for example, the sales market share, which has grown, I think, faster than we could even have hoped when we made the acquisition. So I think it highlights the opportunity. And beyond that, it also helps us really define what the buy and build strategy looks like with the bolt-on aspect that Chris mentioned in his piece. Beyond the Watford Imagine business, very shortly after we made the acquisition, we also purchased a business called Marshall Vizar, which in the first quarter of this year, that was a smaller business, but we were able to bolt it straight into Watford. We took great synergies out of that, brought the team across, and we looked after them, and they're doing a great job. and really making sure that we're pushing on and trying to focus on these opportunities as quickly as possible, where we know the Foxton's brand, the Foxton's price point matches this volume and value market that we can find in these higher value commuter belt town locations. And it's always about the people as well. You know, we've been really pleased with the quality of individuals that have come across from these businesses and how quickly they've incorporated and really become part of the team and become part of the region that they're joining. So we're really excited about it. And if anything, we're even more determined than we were this time last year.

Ladies and gentlemen, if you would like to ask a question from the phone, please press the star followed by one on your telephone. We have no more questions from the phone. I would now like to turn the conference back over to the speakers for any questions from the webcast, if any.

Thank you. We had a couple of questions on the web, so I'll read those out. First of all, from Robin Savage, at Zeus Robbins asked us if we can provide some more colour around our Foxton's lettings market share growth, which we mentioned in the release, particularly in terms of share of stock of lettings, share of built rents.

Guy, that might be one for you to talk to. Sure. Morning, Robin. Thanks for your question. I think we're really in a great position here with letting market share growth. A lot of that is organic. Of course, it's also turbocharged by the acquisitions that we're making from years ago, and we're bringing all of this data into the main platform. And of course, we're benefiting from the continued investment into our platform, particularly around the prospecting team that we have here at Chiswick Park. There's 90 people that are using a state-of-the-art AI-driven platform that looks at our four and a half million contacts that we've generated and built up over the last 25 years. And the AI functionality really helps us propensity model those contacts so that we can focus on calling higher likely converting individuals or leads over the way that the rest of the industry does it, which is purely sporadic and very much point and shoot. What that means is that we've seen a huge improvement in the outputs of our prospecting team. To put this into context, the old way of doing things, we might have been making circa 35 calls per evaluation booked from the team. And that's now, depending on the region, as low as 10 or 11 calls per evaluation book. So that's a really great example of where AI has helped improve productivity and will only continue to get better as the machine is learning and as we're optimizing the algorithms and other things. brilliant growth of our market share, particularly if you look before I joined, our market share for lettings was somewhere between 4.5% to maybe 4.9%. We've driven that today somewhere between 6% and 7%, depending on how you define our patch. And that really is massively market leading. We're really pleased to see continued growth in that. If you look at the build to rent, obviously, we've been in the build to rent sector far longer than the majority of London estate agents. And today, we are the number one agent for London leasing partners. And we know that we've got larger volumes of these BTR units coming to market over the next 24 months. And that's because we've built great relationships with the developers and with the built-to-rent clients. We, I think, deliver great advice because we have more data in the lettings market right the way across London. And I think our position is very much valued when we come to really talk about what's happening in the London market. Nobody has a better view on that to be able to advise accordingly. And ultimately, it's about performance. We've got the largest team of lettings experts across London. We've got, as you know, we register well over half a million tenants. We have over half a million tenant inquiries a year. And that means that through the sophisticated system that we've built, we were able to place more of those individuals appropriately into built rent schemes. So, yeah, it's a continued long term. growth area for us. And you know, we're constantly looking at ways that we can, you know, the way I describe this is industrializing the BTR operation for our for our teams here so that we can really scale up and continue to fill what is you know, a meaningfully large volume of units that will be coming to market in the foreseeable future.

We've got one more question on the web. This is from Chris Millington at Deutsche Unis. It's a three-part question. We'll start with the first part. Chris here has asked around front-end demand indicators in sales and lettings through July. Guy, you can pick up that question.

Yeah, sure. No problem. Very happy to talk about that. We saw, as you can expect, and as we'd certainly forecast, a very, very buoyant start to the year in Q1 as we were seeing a lot of buyers scrambling to try to make most of the small stamp duty saving of up to £11,000 for first-time buyers. When that stamp duty holiday was over, as expected, we saw a drop off in demand quite quickly. But actually, as we got into July particularly, we've seen a divergence of that demand becoming much more in line with prior years. So, yeah, it's improved slightly over what we saw in Q2, But we're not seeing, you know, there isn't higher demand than we've seen at any other point in the last two or three years. But that difference between what we saw in Q2 is definitely getting smaller and becoming closer to what we've seen in previous years. So I think, yeah, you know, we've got to work really hard to stimulate the market again. We know that it's a very price sensitive market across London. I spend time in all of the front offices on a Friday, go around and talk to the negotiators. I love getting feedback about what's happening in the market. What are their buyers saying? What are their clients saying? And very much it's about price today. And it's about buyers looking for value. And when prices are correct and in line with where things are trading, we see good demand and we see these things going under offer pretty quickly. So, yeah, we're trying to deliver the correct amount of information and data to our clients so that they can understand themselves what's happening and work with our clients to make sure that their properties are priced accordingly, depending upon their own individual requirements. So, yeah, I think we're working hard to try to make sure that that momentum is pulled across now into Q3 and Q4.

Thank you. Part two of the question was around property management and the level of uplift we've seen in recent years. probably take that and then link to that as well in lettings is what level of organic growth could we expect in the second half so creeping up but both of those it's under property management uh and we really have seen uh a great level of progress here over four years uh some of it driven by organic some of it driven by m a and it's probably around a 50 50 split there between m and a organic we've really taken the portfolio chris from the low 30s percent penetration all the way up to 40%. And particularly in H1 this year, we have seen another leap forward in that. And I've just seen another question come on the web on this topic. So I'll probably pass that to Guy in a second. But does that answer your third question, Chris, your third part was around organic growth in H2, in lettings? The answer is yes, I would expect to see growth. And absolutely, that's where we will get the business going. to be and why we've got some confidence there. Phasing in H1 of deals coming back to market was a slight headwind in the first half. I see that softening in the second half. And when we team that up with the property management growth organic, it's certainly what I'd be expecting to see across the third quarter. But look forward to reporting back on that at the end of the third quarter. So I think the final question now on the web, this is again from Robin Savage at Zeus. And if you'd like a reminder on the importance of our value-added property management service, and particularly calls out the 9% growth we talked to in the statements. Guy, do you want to pick that up in terms of the importance of that service?

I'd love to. Thanks, Robin. Yeah, look, property management for us really is one of the key drivers for our long-term growth within the business. We've really, I think, modernized and really spent a huge amount of time over the last three years looking at property management to find ways that we can increase the cross-sell from the front offices. Now, generally, very generally across London, we've seen glass ceiling levels of conversion into this probably being around the 30, 35%. But because of the focus, the training, and this very much linked position between what the front offices are doing and what our property management teams are delivering here at Chiswick Park, we've been able to see a considerable increase in that upsell into property management for this premium service. And if you remember, we charge a 6% premium for that excellent service where it's literally hands-off for our landlords And that really is a value-add service for them. But it's a very important service that we provide to make sure that we deliver exceptional service. Now, I think it's fair to say that across the whole of the UK, the property management levels of service aren't what I would say as exceptional. And we are working towards an internal mandate to say we want to be able to deliver a level of service excellence that is unseen in the rest of the industry. And we will do that. through really listening to our clients, really listening to the tenants through the journey of property management, through the journey of the life cycle of that property being with Foxton's and making sure that we're constantly evolving the service that we deliver. We're finding any areas that we need to focus on. We're using the best technology platform to be able to speed up various aspects, whether it be report raising, report analysis, getting these jobs looked after and taken care of by our contractors. All of this is a big area of wind for us. And ultimately, it's really important because the more that we can load in in conversion, the larger that portfolio grows over time. And of course, that's our primary objective here is to make sure that we're constantly growing the properties under management portfolio. And we're really pleased, really, really pleased with progress on this. Now, it's important because those property managed properties for us are very sticky when we provide a great service we know that landlords stay with us for longer um which is obviously very important for retention and further growth of that portfolio it's of course margin accretive it's a it's a it's a premium service that we're able to charge um and uh with things like our out of london property management uh center that we've been growing In the north of England, in the Midlands, this is a brilliant opportunity for us to, A, strive for that level of service that's unheard of within the industry, but also see better retention within our teams so that we can deliver that constant strive for service delivery. Hopefully that answers your question. Closing remark, I think thanks firstly for your time for joining us today. We're really pleased with the performance in the first half. I think that the revenue growth of 10% and just breaking that out, lettings up 4% and sales revenue being up 25% is something that we're rightly very pleased with. And of course, that reflects very well on our adjusted operating profit being up 31% against the same period last year. We do know that the sales market is a little less momentum than perhaps we might have expected at the start of the year. And that really is primarily down to the rate of which we've seen, the speed at which we've seen rates dropping for interest rates. But we do see that the gap is starting to close up between last year and this year in terms of appetite, particularly in the last rolling month. We're working flat out to continue to improve all aspects of the business, particularly around what we're doing in nettings. And we know that this reoccurring sticky revenue that we're growing very, very quickly in nettings is the key to our financial stability, no matter what's going on in the sales cycle and something that we're really pleased with the progress. And we're working on making sure that we can continue to bring on board great activities acquisitions within our overall business and integrate them as quickly as possible. We've got a great, you know, the industry's leading team. We've got the industry's leading platform. And I think we've got some really good momentum in the business. I'm really pleased for everybody's interest. I look forward to meeting with many of you over the coming weeks as we, as Chris and I, go about our city tour. Thanks for your interest and see you all soon.