TIDMFOXT
RNS Number : 5595S
Foxtons Group PLC
07 November 2023
Foxtons Group plc
Acquisition of Ludlow Thompson Holdings Limited
7 November 2023
Second lettings acquisition in 2023, demonstrating continued
progress against strategy to drive recurring and non-cyclical
earnings growth
Foxtons Group plc ("the Group" or "Foxtons"), London's largest
lettings agent, today announces the acquisition of Ludlow Thompson
Holdings Limited ("Ludlow Thompson") and subsidiary companies for a
consideration of GBP10m, on a cash and debt free basis. The
acquisition will be funded through the Group's existing cash
resources and existing GBP20m revolving credit facility.
Strategic rationale
Ludlow Thompson is a high-quality, lettings focused estate agent
operating across 7 branches in London, generating over 70% of total
revenue from Lettings. The business was founded 30 years ago and
has developed a loyal customer base driven by its results
orientated operating model. The acquisition reflects continued
progress against the Group's lettings portfolio acquisition
strategy, which is focused on growing non-cyclical and recurring
revenue streams, and adds to the Group's track record of
identifying, acquiring, and integrating high quality lettings
businesses.
The acquisition will support future earnings growth as it is
integrated into Foxtons scalable operating platform, enabling
synergies to be unlocked and attractive returns on invested capital
to be realised.
Foxtons is now a Lettings focused business, with over 70% of
Group revenue derived from Lettings(1) , which is non-cyclical and
recurring in nature, and decouples the Group's earnings from the
volatility of the sales market. The acquisition of Ludlow Thompson
further consolidates the Group's position as London's largest
lettings agent and is the second acquisition delivered in 2023,
with GBP17.4m invested in 2023 and over 2,800 tenancies
acquired.
Acquisition terms and financial impact
The acquisition constitutes a class 2 transaction pursuant to
the UK Listing Rules. For the purposes of the LR 10.4.1 R
(Notification of class 2 transactions), Ludlow Thompson's unaudited
total revenue and profit before tax for the 12 months ended 31
December 2022 was GBP7.3m and GBP0.1m respectively. Gross assets as
at 31 December 2022 were GBP5.5m.
Following the delivery of operating synergies, which include
integrating Ludlow Thompson into the Foxtons branch network and
scalable operating platform, Ludlow Thompson will deliver
significantly higher levels of profitability from the GBP0.1m of
profit before tax reported for the 12 months ended 31 December
2022.
Foxtons Board of Directors believe the acquisition will be
accretive to the Group's 2024 earnings and deliver an attractive
return on capital in line with the Group's target return on capital
for acquisitions of 20%. Exceptional one-off charges will be
incurred in 2023 relating to the integration of Ludlow Thompson
into the Foxtons branch network.
Total consideration for the acquisition, on a cash and debt free
basis, is GBP10m. Of this total consideration, GBP1.5m is deferred
for a period of 12 months subject to the business delivering
against certain performance targets. The business is being bought
from private individual shareholders.
Guy Gittins, Foxtons CEO, commented :
"We are delighted to have completed our acquisition of Ludlow
Thompson. Having established a leading position in its local
markets and a reputation for delivering the best results for
customers, it is clearly a business which we believe is a perfect
fit for Foxtons. I am very much looking forward to meeting the
Ludlow Thompson team over the coming days and welcoming them into
Foxtons.
"We are proudly London's largest lettings agent, with a proven
track record of acquiring and integrating high quality businesses.
Since inaugurating our lettings acquisition programme in 2020 we
have grown our portfolio by over 40%, which now stands at over
28,200 tenancies. The acquisition reflects continued progress
against our acquisition strategy and our focus on growing recurring
lettings revenues, and further supports the delivery of our GBP25m
to GBP30m operating profit ambition in the medium term."
Stephen Ludlow and David Thompson, Ludlow Thompson Co-founders,
commented:
"Having founded the business 30 years ago, taking the decision
to sell the business was a major milestone for us, our colleagues,
and our clients. We have admired Foxtons for a long time and
Foxtons was a natural fit for us, in fact, our processes, our
culture and market positioning is based on the Foxtons model.
"As we retire from the business, we would like to thank all our
customers for their long-term support along with our colleagues for
many years of loyal service and look forward to seeing the new and
exciting opportunities that ownership under Foxtons will
bring."
-ENDS-
For further information, please contact:
Foxtons Group plc
Chris Hough, Chief Financial investor@foxtonsgroup.co.uk
Officer +44 20 7893 6261
Muhammad Patel, Investor
Relations
TB Cardew Foxtons@tbcardew.com
Will Baldwin-Charles/Olivia +44 7789 998 020/ +44 7738
Rosser 724 630
(1) Revenue for the 9 months ended September 2023.
About
Founded in 1981, Foxtons is London's leading estate agency and
largest lettings agent, with a portfolio of over 27,000 tenancies.
The Group operates from a network of over 60 interconnected
branches, offering a range of residential property services across
three business segments: Lettings, Sales and Financial
Services.
The Group's strategy to accelerate growth is focused on
non-cyclical and recurring revenues from Lettings and Financial
Services refinance activities, supplemented by market share growth
in Sales. In order to drive organic growth, the Group is rebuilding
its competitive advantages, with a strong focus on leveraging data
and technology; investing in people and culture; and reinvigorating
the Foxtons brand.
By rebuilding Foxtons estate agency DNA and returning the
business to its position as London's go-to estate agent, the Group
aims deliver significant profit growth and deliver value for
shareholders.
-- Lettings organic growth : Focus on winning new property
instructions, speed to market and high quality landlord service to
drive revenue growth.
-- Lettings acquisitive growth : Acquire, integrate and service
high quality lettings portfolios.
-- Sales market share growth: Reinvigorating the Foxtons brand
and increasing sales headcount to grow addressable market
share.
-- Financial Services revenue growth : Increasing adviser
headcount, improving productivity and cross sell to drive revenue
growth.
To find out more, please visit www.foxtonsgroup.co.uk
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END
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