Foxtons Group plc

Good morning, everyone, and thank you for joining the Foxton's 2025 full year results presentation. I'm joined, as always, by Chris Hough, our group CFO, and we will answer any questions at the end of the call. This morning, I will take you through some of the highlights of 2025, provide an update on the London property markets. Chris will then talk you through the financials, and I will finish with an update on our operational progress in the year, followed by some detail on the outlook for 2026. We delivered 5% revenue and EBITDA growth in the year, driven by incremental acquisitions revenue and operational progress in areas such as lettings, cross-selling and financial services. These higher revenues offset the challenging operating environment, including a volatile sales market and cost headwinds to deliver flat operating profit. These results highlight the resilience of our business as a result of our strategy to position Foxton's firmly as a lettings-led business. Our portfolio now exceeds 32,000 tenancies, which is up over 50% over the last five years, and these tenancies generate highly valuable reoccurring revenues. In 2025, these revenues generated over two-thirds of group revenue. We delivered 80% lettings market share growth through improved landlord attraction retention to build on our position as London's largest agent. And impressively for London focused business, we are also the UK's largest lettings brand. We continue to execute our strategy on acquisitions. In 2024, our acquisitions in Reading and Watford made a significant contribution to revenue growth. Recent acquisitions in Milton Keynes and Birmingham create strong platforms in high-value markets that complement our London base. And operationally, we haven't stood still. The business has embraced a culture of continuous improvement and that mindset is cascading through the organisation. We're focused on unlocking the next stage of growth by driving revenue and improving productivity and efficiency right across the business. On slide six, you can clearly see our strategy in action. The business has made great progress since I returned in 2022. Over that period, we reset the strategy with a focus on lettings-led growth, rebuilt our operational capabilities and delivered significant market share gains. The result is consistent year-on-year revenue growth with an 8% CAGR over the last five years. And with a sharp focus on costs, we've maximised operating leverage across the business. As a result, profit growth has outpaced revenue growth, delivering a 23% CAGR over the same period. So, while profits were flat in 2025, I remain confident that we can return to our growth trajectory over the coming years. Turning now to slide 8 and an update on the London lettings market. On the chart on the left hand side, you can see the number of renters per property back to 2021, highlighting supply and demand dynamics in the market. The market was resilient in 2025. Tenant demand remained strong and supply levels were healthy. We did see a softening in supply in the run-up to the autumn budget, reflecting speculation around potential tax changes for landlords, but with no major tax reforms announced, supply picked up in December and we delivered a record December for both deal volume and revenue. Rental prices were broadly flat, as the market balanced flat supply and demand dynamics, with affordability limits for tenants. Even so, the market has delivered a 7% CAGR since 2021 and over the medium term we expect a return to inflation-linked rental growth. Over the next two slides I will take you through an update on the Renters' Rights Act, one of the biggest changes in the lettings industry over the last 25 years. On this slide we've outlined the key provisions in the Act. The Renters' Rights Act will come into effect on the 1st May and brings England broadly in line with the rest of the UK. There are several key changes. Fixed term tenancies will end, meaning all existing and new rental agreements will move to open-ended periodic agreements. Rent increases will become available to landlords annually, although will require evidence that any increase is in line with the market. This is a shift from the current system where rents are typically fixed for the duration of the contract. And local authorities will have stronger enforcement powers, including the ability to impose higher penalties for non-compliance. So what does this mean for landlords? The vast majority of landlords who provide good quality homes and want to keep good tenants in situ for as long as possible, very little changes to their investment. What does matter is staying on top of new compliance requirements and working with an agent who can manage those requirements on their behalf. It's incredibly easy to fall foul of the legislation, which is fragmented across local authorities and often overly complex. Even the Chancellor was caught out last year, a reminder of just how difficult it is for ordinary people to navigate the rules. Slide 10. As these new requirements come into force, we expect to see some shifts in the market and opportunities for Foxton's. These fall across four main areas. The first is increasing the total addressable market for Foxton's as increasing numbers of DIY landlords opt to use an agent to let and manage their property. Over 50% of landlords fall into this DIY category today, highlighting the size of the opportunity ahead. The second is by increasing Foxton's market share of the lettings market. We expect landlords will increasingly turn to high quality agents who can protect their investments and navigate the growing compliance burden. And as the leading agent in our markets, this creates significant opportunity to grow share and also the cross sell of high margin property management services. Thirdly, we expect more portfolio stability. With fixed terms removed, we expect longer occupancy lengths as tenancies become more stable. Annual inflation-linked rent increases are also expected to become the norm, creating a more predictable income profile. And fourthly, we expect the estate agency sector to consolidate further. The industry is still highly fragmented, with 66% of the market made up of small independent agents. The new regulation will place real pressure on these businesses, requiring significant investment in people, training, technology and compliance. Many simply won't be able to make these investments, accelerating consolidation. This dynamic plays directly to our strengths. We are well positioned to lead consolidation in our markets and have a strong track record of delivering attractive returns on capital when we do so. Finally, structurally we anticipate little change in the size of the sector to remain broadly stable over the medium term based on the experience of similar legislation in Scotland. Turning now to slide 11 and an update on the London sales market. The sales market was highly volatile in 2025. Across the year volumes in our London markets were up 2% in line with our own performance. Q1 volumes were around 30% higher than Q1 2024, driven by a large number of first-time buyers competing ahead of the stamp duty deadline. As expected, Q2 volumes were materially lower, reflecting the pull forward of the transactions into Q1. In the second half, activity was impacted by the delayed autumn budget. The wider economic uncertainty and weak consumer confidence was compounded by the intense speculation around potential tax changes, including the abolition of stamp duty and the implementation of mansion taxes for most properties in London, which really dampened the market. You can clearly see the impact on buyer demand on the bottom chart. New offers agreed ahead of the budget were subdued, sitting at levels similar to those seen in 2023 shortly after interest rates spiked following the September 2022 mini-budget. And, with the average transaction taking four to five months to complete, this slowdown in late 2025 will naturally impact volumes in the first half of this year. In the end, the actual policy changes were fairly limited. Stock GT remains unchanged and continues to act as a major barrier to improving affordability for buyers. The new mansion tax coming into effect in 2028 only impacts properties over £2 million. While this may create some drag at the very top end of the market, that segment represents only a small share of transactions. This change reinforces our strategic focus on the volume segment of the market, particularly properties priced below a million pounds, where Foxsons is strongest and where volumes are more resilient. Looking further ahead, it's worth noting that buy demand in early 2026 is still being held back. For vendors looking to sell in this environment, pricing is absolutely crucial. There are buyers in the market, but they are focused on the right properties at the right price. And when we see homes coming to market competitively priced, buyer interest and offer levels remain strong. I'll now pass over to Chris for a run through of the financials.

Thank you, Guy. And good morning, everyone. 2025 saw the group deliver revenue growth despite a challenging operating environment, highlighting the financial resilience we've built into the business over the last four years. Financial highlights are set out on slide 13. Incremental revenues from acquisitions and improved cross-selling of high-value lettings property management services drove a 5% or 8.6 million increase in revenues to 172.5 million. We delivered 22.2 million of adjusted operating profits, which is flat on the prior year. This represented a robust performance in the context of a challenging operating environment due to a volatile sales market and external cost pressures, in particular from employer national insurance and living wage increases. Adjusted operating profit margin decreased by 60 basis points to 12.9%. as margin growth in lettings partially mitigated some of these external cost pressures. I'll provide more detail in the segmental reviews. Adjusted EBITDA, which is defined on the same basis used to calculate the group's RCF governance, grew by 5% to £25.3 million. Statuary profit before tax, or £16.9 million, and net free cash flow grew by 40% to £11.2 million. Finally, the board has declared a final dividend of 0.93 pence per share, with a four-year dividend totalling 1.17 pence per share unchanged from the prior year. The group also brought back 5.5 million shares in the year via the buyback programmes announced in April and September. Now turning to slide 14, which provides an overview of the income statement and key changes. Group revenue increased by 5% to £172.5 million, reflecting 5% growth in lettings revenue, 6% growth in sales revenue and 10% growth in financial services revenue. Group revenue continues to be underpinned by lettings revenue, which represented 64% in the year. Lettings revenue is non-cyclical and recurring in nature and delivers high levels of consistency and earnings visibility. Direct costs were £3 million higher, reflecting an additional acquisition-related headcount, increased for revenue-linked staff commissions, and £1.1 million of additional employment costs. Contribution margin was flat at 64%, including margin growth in lettings. Overheads were 4.2 million higher, primarily driven by incremental acquisition operating costs, targeted marketing investments, high employment costs and 1 million of non-recurring overhead costs. Depreciation, amortisation of non-acquired intangibles and share-based payment charges were 1.2 million higher. Together, these movements delivered adjusted operating profits of 22.2 million. Profit before tax was 0.6 million lower than the prior year, reflecting broadly flatter adjusted operating profits and 0.5 million higher amortisation of acquired intangibles. Cost control continues to be high on our agenda. This included delivering a material cost saving by negotiating an early exit from the Chiswick Park head office lease and right-sizing head office space. This move unlocks 1.5 million of operating cost savings from January 2026 onwards, providing some protection from cost pressures in 2026. Through 2026, we are redoubling our focus on costs to protect profitability in the context of current market conditions. Turning now to slide 15 and performance in lettings. Lettings revenue grew by 5 million or 5% to 111 million as a result of 5.2 million of incremental revenues from lettings acquisitions in Reading and Watford, 0.6 million higher like-for-like revenues which reflects property management revenue growth with a like-for-like increase in uptake of 7% delivered in the year. This progress will continue to benefit the group in 2026 as revenues annualise. and 0.9 million lower interest earned on client monies due to lower Bank of England rates. Revenue per transaction increased by 1%, reflecting the improved cross-sell of property management services, partially offset by the move into higher volume commuter markets and the lower interest on client monies. Contribution grew 6% to 82.9 million off the back of revenue growth. whilst the contribution margin grew by 100 basis points, which is primarily due to margin accreted property management and cross-sell of related ancillary services. Adjusted operating profit grew 9% to 29.8 million, and adjusted operating profit margin grew 100 basis points to 26.9%, reflecting the strong contribution margin and the delivery of acquisition-related synergies. Moving to slide 16, where we have presented detail on the returns from our lettings focused acquisition strategy. We have an industry leading operating platform that delivers high levels of returns from acquisitions by delivering high levels of landlord retention, organic growth from acquired databases and cost synergies. Our operating platform is highly scalable and can power a significantly larger portfolio than we operate today for limited incremental cost. Historic acquisitions in London deliver EBITDA margins above 50% and a return on invested capital above our 20% target rate, as we maintain a tight focus on ensuring returns through a portfolio's lifecycle. Acquisitions are our primary route into new geographies, combining acquired lettings income to underpin profitability, with organic lettings and sales growth. Under our buy, build and bolt-on strategy, we focus on acquiring platform businesses in high value markets and enhancing them through high ROI bolt-ons, targeting aggregate returns of at least 20%. In October 2024, we acquired two leading businesses in Reading and Watford, completing the group's first acquisitions outside London. Both have performed well, delivering organic revenue growth and first year returns on capital above the target level of at least the group's weighted average cost of capital. The Watford business was integrated onto Fox's operating platform in 2025, with Reading planned for 2026. Returns are expected to grow as synergies are delivered in Reading and be analysed in Watford. In February 2025, we completed a Bolton acquisition into the Watford platform. This Bolton was rapidly integrated and is delivering annualised returns on capital above our 20% target, which highlights the growth we can rapidly deliver in new markets. In January 2026, we acquired leading businesses in Milton Keynes and Birmingham. Over the next 12 to 18 months, we'll focus on integration, deploying the Foxen's toolkit to drive organic growth, deliver synergies and support further high ROI bolt-on acquisitions. Moving to slide 17 and an update on the sales business. Sales revenue grew 2.7 million or 6%, reflecting 3.4 million of incremental revenue from our Redding and Watford acquisitions and 0.8 million lower like-for-like revenues. On a like-for-like basis, revenue was 2% lower, reflecting 3% growth in transaction volumes, broadly in line with the market. and 5% reduction in average revenue per transaction, primarily reflecting the higher proportion of lower value first-time buyer properties transacting in Q1 ahead of the March stamp duty deadline. In total, volumes were 19% higher and revenue per transaction was 11% lower. The reduction in revenue per transaction primarily reflects the expansion into commuter markets, which typically display lower revenue per transaction but higher volumes. The acquisitions in Reading and Watford delivered 9% revenue growth in the first year of Foxen's ownership, driven by market share growth. Average market share across Foxen's London markets was robust at 4.8%. The adjusted operating loss in sales increased to 5.7 million as a profitable contribution from new commuter town acquisitions only partially mitigated increased operating costs and a strategic decision to maintain bench strength despite weaker H2 market conditions. Improving the profitability of sales remains a key priority for us and Guy will provide more detail later in the presentation. Moving on to slide 18 and financial services. Revenue in financial services was 10% higher at 10.3 million. Specifically, volumes were 13% higher, reflecting the stronger refinance pipeline, higher estate agency cross-sale rates, and improved advisor capacity and productivity. 2% reduction in average revenue per transaction, reflecting the change in product mix towards refinance activity. In the year, 42% of revenue was generated from non-cyclical refinance activity and 58% of revenue from purchase activity and other ancillary sources. Adjusted operating profit was broadly flat, primarily reflecting investment in fee-owner headcount in H1 as we scale up the business. New fee-earners supported revenue growth in the year and typically break even around the 12-month mark. Moving now to slide 19 and cash flow. There was a 14% increase in net free cash flow to 11.2 million. The operating cash to net free cash flow bridge on the left hand side shows the key items of notes. Operating cash before working capital movements was 36.4 million. 3% higher than the prior year and including 1.9 million of non underlying cash outflows primarily relating to closed branch costs. There was a £4.4 million working capital outflow reflecting the ongoing transition to annual billing across the lettings portfolio to improve competitiveness and landlord retention and position the business ahead of the Renter's Rights Act becoming effective. We expect the portfolio to be fully transitioned to annual billing by 2027 with an estimated £10 million working capital investment across 2026 and 2027. The group paid 4.3 million of corporation tax and made 13 million of lease liability payments in the period. 3.5 million of capex spend, primarily relating to our new H2 fit-out costs and internally generated software developments. Looking at the opening to closing net cash bridge on the right-hand side. Net debt at 31st December was 16.9 million. This reflects 11.2 million of net free cash flow, 5.3 million of acquisition spend and 9.1 million of total shareholder returns. In the year, we increased the RCF to 40 million and extended it by 12 months to June 2028. The interest cover and leverage covenants have remained unchanged. And at the year end, the leverage covenant ratio was 0.7 times, which was below our covenant limit of 1.75 times. And the interest cover ratio was 24 times, which was above our four times covenant. Finally, the board has declared a final dividend of 0.93 pence per share. with a four-year dividend totalling 1.17 pence per share, which is unchanged from the prior year. The proposed dividend will be paid on 15 May 2026 to shareholders on the register at 10 April 2026, subject to shareholder approval at the AGM. Moving to slide 20 and an overview of the group's capital allocation framework. The framework aims to support long-term growth and deliver sustainable shareholder returns through organic growth, making accretive lettings focused acquisitions, paying a progressive dividend whilst maintaining strong dividend cover, and delivering other shareholder returns, namely share buybacks. We continually evaluate the effective uses of capital, including comparing acquisition returns versus those achievable through share buybacks. We consider factors such as expected return on investment, 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 of net debt to adjust for EBITDA of less than 1.25 times at the year-end position. I'll now hand back to Guy who will take us through the operational update.

Thank you, Chris. Over the next two slides, I will lay out operational progress we've made in our business areas and our focus for 2026, followed by the operational upgrades we've delivered across the group. In lettings, we continued to make progress with our organic growth strategy, delivering against our formula of growing the portfolio and driving the cross-sell of high margin services. Over the year, we increased our London market share by 8% and maintained high levels of stability across our tenancy portfolio. Revenue and margin growth were supported by a 7% increase in cross-selling property management and the proportion of the portfolio that is actively managed now stands at 43%, up from 32% at the end of 2021. Our focus over 2026 is to continue delivery of our growth formula to continue to grow this highly valuable business. Organic growth is complemented by acquisitive lettings growth. In the year, we delivered good returns from our Reading and Watford acquisitions with returns above our initial targets. In Watford, we have integrated the business into the operating platform, rebranded to Foxton's and boosted with a bolt-on acquisition that is delivering returns at our 20% target level. We are now the largest lettings agent in Watford, with more than three times the market share of our nearest competitor. And in January 2026, we expanded into two new complementary high growth markets in Milton Keynes and Birmingham. Milton Keynes is well connected to London home to a large number of corporate headquarters and has one of the highest levels of GDP per capita in the UK. Birmingham has undergone a significant regeneration and continues to attract major investment, including a growing number of banking and professional services roles, a trend set to accelerate with the opening of HS2. Both cities have strong pipelines of build to rent and new homes developments, and we have already linked these businesses with our corporate customer base. These acquisitions are not part of a plan to become a national agent. This is a targeted strategy focused on markets where Foxtons can create real value. Our priority over the next 12 to 18 months is maximising returns from these deals through the delivery of organic growth, cost synergies and high return on investment acquisitions. Moving to sales, we operated through a highly volatile market last year and our market share held broadly flat. In November, we appointed a new managing director, James Stevenson, who has a fantastic track record of delivering turnarounds over his 20-year career at Foxton's. And we now have an operational plan to reposition the business to reflect current market environment and, in doing so, improve profitability. It's worth remembering that whilst we are a lettings-focused business, sales is an integral part of our full-service proposition and is highly complementary with lettings. Our offer is built around supporting customers through their entire property lifecycle and sales plays a critical role in helping landlords expand or reposition their portfolios. By delivering this full service approach across sales and nettings, we significantly strengthen landlord loyalty, enhance revenue repeatability and increase customer lifetime value. And as Chris highlighted earlier, sales delivers a positive financial contribution before the allocation of shared costs. In Alexander Hall, our financial services business, we delivered a 10% revenue growth driven by increasing the operational productivity of our advisors and improving the efficiency of our processes. This included a 13% uplift in mortgage deals per advisor and a 5% improvement on the conversion of leads to mortgage applications. Continuing to build on these upgrades will support further growth. And underpinning all of this is a consistent focus on costs and productivity to maximise the operational leverage across the business. As Chris mentioned, we forensically review our cost base on an ongoing basis, taking costs out wherever we can, including our recent HQ move, which generated 1.5 million of annualised savings. And we're focused on leveraging our technology stack and data capabilities to drive efficiency right across the organisation. Turning now to slide 23. Over this slide, I will present the key group-wide operational upgrades we're delivering to support our growth plan. Customer lifetime value is a key focus for the business. We aim to support customers through their property lifecycle, becoming their trusted property partner. And in doing so, we can generate high quality, reoccurring revenues and earnings. To do this, we need to deliver best in class service. We've made significant progress in this area, and I'm pleased to say that we now achieve customer satisfaction scores of over 80%, a double digit uplift since we launched these programs. In 2025, we continued to enhance the customer experience by further embedding our real-time feedback system across the full customer lifecycle, enabling us to measure service throughout the journey and resolve any issues quickly. Combined with AI-powered sentiment analysis, this allows us to identify the drivers of exceptional service. It embeds insights into training and delivers consistently high standards. Supporting this focus on service are our brand and marketing initiatives. Our focus this year was on strengthening customer attraction and retention in a competitive market. Voxens has always had a distinctive level of brand awareness. We do things differently. And in 2025, we built on that by launching an exclusive partnership, which makes us the only UK estate agents where customers can earn Avios points. It's a differentiated position designed to attract new customers, reward loyalty and drive uptake of our higher margin services. Turning now to our technology and data capabilities. Our in-house technology and data stack creates the flexibility to develop and deploy AI and data solutions at pace, without the constraints of an off-the-shelf system. Our approach is very clear. We only invest in AI where it makes a meaningful difference to our financial results. It's not AI for AI's sake. In 2025, we made strong progress. We expanded our AI-driven sentiment analysis, giving us far deeper insight into customer interactions. We also advanced our beta-led lead scoring models, ensuring our people focus their time on the highest value opportunities. And we introduced AI-powered training tools that help new agents reach their full performance faster. Together, these improve efficiency, drive higher productivity, and ultimately enhance profitability. We will continue to identify areas across the platform where embedding AI can deliver an operational and financial impact. These upgrades are a key part of the continuous improvement culture that now runs throughout the entire business. Finally, and most importantly, 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. This year, we worked with external partners to assess our strengths and opportunities, enhance our employee proposition and introduce our Getting It Done Together framework to align recruitment, development and wellbeing across the organisation. The response from our people has been really encouraging. 81% believe Foxton's is well positioned to succeed over the next three years and 85% believe we truly value diversity and build diverse teams. We remain committed to building a collaborative culture that enables our people to deliver exceptional service for our customers. And finally, to slide 25 and the outlook for 2026. In Luttings, we expect the market dynamics we saw throughout 25 to continue with consistent levels of stock and strong tenant demand. The Renters' Rights Act represents a significant growth opportunity for Foxton's as landlords increasingly need professional support to navigate the new regulations. In addition, the two acquisitions we completed in January 2026 will generate incremental lettings revenues. Our plan for 2026 is focused on maximising the returns from the deals we have completed over the last 18 months, driving organic growth, delivering cost synergies and progressing targeted bolt-on acquisitions to strengthen our market positions. Turning to sales, buyer activity continues to be held back by weak consumer confidence, macroeconomic concerns and policy decisions. In response, we are repositioning the business for the current market conditions to improve profitability. Overall, despite the softer backdrop, we are targeting year-on-year revenue and profit growth, supported by a clear mix of organic initiatives, earnings accretive acquisitions and cost-continued discipline. Overall, despite the softer backdrop, we are targeting year-on-year revenue and profit growth, supported by a clear mix of organic initiatives, earnings accretive acquisitions and continued cost discipline. Importantly, profitability across the group remains underpinned by our substantial base of non-cyclical and recurring lettings revenues, giving us confidence in our ability to deliver against our growth strategy. That concludes the formal presentation. Thank you all for joining us today. Chris and I look forward to meeting with many of you in the coming weeks. I'll now pass to the operator for any questions you may have.