Foxtons Group plc Annual Report and Accounts 2022
GETTING THE
RIGHT DEAL DONE
FOR LONDON’S
PROPERTY OWNERS
AnnuAl RepoRt And Accounts
2022
Strategic Report
1 2022 Highlights
2 About us
4 Chairman’s statement
6 Chief Executive’s review
9 Q&A with Guy Gittins
10 The London property market
12 Resilient business model
14 Refocused strategy
18 Stakeholder engagement
22 Key performance indicators
24 Financial review
30 Risk management
32 Principal risks and uncertainties
36 Prospects and viability
38 Responsible business
61 Non-financial information statement
Corporate Governance Report
62 Chairman’s governance introduction
64 Board of Directors
66 Executive Leadership Team
67 Corporate Governance Report
76 Nomination Committee Report
82 Environmental, Social and Governance Committee Report
84 Audit Committee Report
90
Directors' Remuneration Report
130 Directors’ Report
133 Directors’ Responsibilities Statement
Financial Statements
134 Independent auditor’s report to the members of Foxtons Group plc
142 Consolidated income statement
143 Consolidated statement of comprehensive income
144 Consolidated statement of financial position
145 Consolidated statement of changes in equity
146 Consolidated cash flow statement
147 Notes to the financial statements
184 Parent Company statement of financial position
185 Parent Company statement of changes in equity
186 Notes to the Parent Company financial statements
Information
188 Information for shareholders
CONTENTS
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
1
STRATEGIC REPORT
1
Measures are alternative performance measures (APMs). APMs are defined, purpose explained and reconciled to statutory measures within Note 27 of the financial statements.
2
Refer to PAGE 23 for definitions of these key performance indicators.
2022 HIGHLIGHTS
Revenue
from continuing operations
+11%
£140.3 million
2021: £126.5 million
Adjusted operating profit
1
from continuing operations
+56%
£13.9 million
2021: £8.9 million
Profit before tax
from continuing operations
+115%
£11.9 million
2021: £5.6 million
Net free cash flow
1
from continuing and discontinued operations
+17%
£7.7 million
2021: £6.6 million
Non-cyclical recurring revenues
2
from continuing operations
65%
of total revenue
2021: 61% of total revenue
Productivity
2
year-on-year growth
+5%
average revenue per branch
+11%
average revenue per fee earner
Customer satisfaction
2
Trustpilot
4.7 OUT OF 5
2021: 4.7 out of 5
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
2
/ ABOUT US
WHO WE ARE
Founded in 1981, Foxtons started as a two-person estate agency in Notting Hill and established
itself as an iconic estate agency brand. Today the Group has a network of 60 interconnected
branches providing a range of residential property services through our Lettings, Sales and
Financial Services businesses. Lettings, which now contributes 62% of total revenue, is the
largest part of the Group, delivering non-cyclical recurring revenues from a portfolio of around
26,500 properties.
WHAT WE WANT TO ACHIEVE
Our mission is to be London’s go-to estate agent and to get the
right deal done for London’s property owners.
We want our colleagues to be proud of the role we play in
facilitating important life moments such as letting and renting a
property, selling and buying a property or arranging a mortgage.
2022 was a pivotal year for the Company with a new CEO, a
refreshed purpose and refocused strategic priorities backed up by
a rebuild plan set to drive significant revenue and profit growth.
HOW WE WILL DO THIS
As we rebuild our Foxtons’ estate agency DNA we will be guided
by our purpose:
To get the right deal done for London’s property owners.
Our purpose has informed our strategic priorities and will guide the
Group as we deliver against these priorities, rebuild our competitive
advantages and reinvigorate our results-driven culture. We need to
prove to landlords and sellers that no one in the marketplace has the
same capabilities, quality of people and commitment as Foxtons.
WE GET IT DONE
THAT PERFECT TENANT
SIGNED UP MOMENT
Foxtons' new brand ethos, 'We Get it Done', captures the essence of the Company's estate agency DNA.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
3
STRATEGIC REPORT
PROFESSIONAL AMBITIOUS RELENTLESS INNOVATIVE AUTHORITATIVE
OUR VALUES
Read more about our values on PAGES 14 AND 54.
TO GET THE RIGHT DEAL DONE FOR LONDON’S PROPERTY OWNERS
OUR PURPOSE
Read more about our purpose on PAGES 7 AND 68.
OUR MISSION
TO BE LONDON’S GO-TO ESTATE AGENT
OUR STRATEGIC PRIORITIES
Read more about our strategic priorities on PAGES 7 AND 15.
1. LETTINGS
ORGANIC
GROWTH
2. LETTINGS
ACQUISITIVE
GROWTH
3. SALES
MARKET SHARE
GROWTH
4. FINANCIAL
SERVICES
REVENUE GROWTH
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
4
/ TRANSFORMATION UNDERWAY
Nigel Rich CBE Chairman
CHAIRMAN’S STATEMENT
2022 was an eventful year for Foxtons. Significant Senior
Management changes took place, of which the most significant was
the appointment of Guy Gittins as CEO. His appointment was
announced in late May and after a period of garden leave required by
his previous employer, he joined the Company on 5 September 2022.
Peter Rollings, a Non-Executive Director, who had previously
spent 20 years at Foxtons, latterly as a Managing Director, took
over as Interim CEO pending Guy’s arrival. I am most grateful to
Peter for taking on this responsibility, which he fulfilled with
enthusiasm and commitment.
Guy, who began his career at Foxtons and was most recently CEO
of Chestertons, has brought to Foxtons considerable experience
and success as an estate agent, as well as knowledge of the London
residential market.
During his first six months, Guy has reviewed the business and
developed a set of priorities to put the business firmly on the front
foot and drive revenue and profit growth based upon rebuilding
Foxtons’ estate agency DNA. Already he’s making significant strides
in strengthening Foxtons’ competitive advantages, enhancing our
ability to innovate and lead the industry with our data capabilities, as
well as refreshing our purpose and values.
We are prioritising growth in the non-cyclical revenue streams within
Lettings and Financial Services to drive resilience and recurring
revenues. Growth will be achieved through organic and inorganic
growth in Lettings, and by building up our Financial Services business
to handle more of the referrals generated from the Sales business.
The Group has set out its medium-term ambitions which will return
Foxtons to a leading agency position in London and deliver significantly
improved returns to our shareholders. The management incentive
schemes are closely aligned to the Group’s medium-term ambitions.
During his first six months, Guy
has developed a set of priorities
to put the business firmly on
the front foot and drive profit
growth, based upon rebuilding
Foxtons’ estate agency DNA.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
5
STRATEGIC REPORT
Financials
Revenue from continuing operations increased by 11% to
£140.3 million, driven largely by Lettings which contributed
£86.9 million, an increase of 17%. Adjusted operating profit
increased by 56% to £13.9 million with Lettings contributing
£18.0 million, enhanced by a full year of contribution from the
D&G Lettings portfolio and the additional acquisitions made in
2022. Profit before tax increased by 115% to £11.9 million.
Head office and other administration costs were reduced by
streamlining Senior Management, resulting in annualised savings
of around £3 million, of which around two thirds were reflected in
the 2022 results. In order to grow market share across the business,
these savings have been reinvested, by increasing the number of
agents and advisers, to drive organic growth in Lettings and Financial
Services and return Sales to profitability in the longer term.
Net cash at the year end was £12.0 million, after investing
£8.5 million in lettings portfolios and buying back £4.9 million
of shares.
In the final quarter, the Group wrote off its £3.4m investment in
Boomin which went into liquidation due to the economic slowdown
and a decline in funding availability in the technology sector.
Investment will now be firmly focused on the core business.
Board
Reflecting a period of change and some tenures coming to an end,
there were a number of Board changes during the year, including
a full change of the Executive Directors with Nic Budden,
Richard Harris and Patrick Franco stepping down and the
appointment of Guy Gittins as CEO and Chris Hough as CFO.
Additionally, two of our Non-Executive Directors, Alan Giles and
Sheena Mackay, have chosen not to stand for re-election at the
2023 AGM given the new Chairman, CEO and wider management
team changes are now complete and in place. I would like to thank
Alan and Sheena for their great support and contribution as
Non-Executive Directors during my chairmanship and wish them well
with their new endeavours. Rosie Shapland will take up the position
of Senior Independent Director upon Alan Giles’ resignation from the
Board at the 2023 AGM.
I am pleased to welcome Annette Andrews as Non-Executive
Director and Chair of the Remuneration and ESG Committees and
Jack Callaway as a Non-Executive Director. Both Annette and Jack
joined the Board on 1 February 2023, and Annette will take over as
Chair of the Remuneration and ESG Committees at the 2023 AGM.
Dividends and share buybacks
The Board has declared a final dividend of 0.7p per share, making
a total in respect of 2022 of 0.9p per share under our policy of
returning 35% to 40% of profit after tax in ordinary dividends.
In 2022 we bought back 14.8 million shares through our share
buyback programme at a cost of £4.9 million. The Board will review
the continuation of the programme, bearing in mind our other
capital needs, once the current authority, of which £1.1 million
was unspent at 31 December 2022, is fully utilised.
Medium-term outlook
The new leadership team, the strength of the brand, and an
enhanced approach to data and better leveraging our IT system,
coupled with increasing our salesforce capacity in Lettings and
Sales, will enable Foxtons to build market share. We will continue to
invest in high quality lettings portfolios that meet our investment
criteria. The £7.4 million acquisition of Atkinson McLeod announced
yesterday reflects further progress against this strategy. We will
also continue to support and grow our Financial Services business.
We believe we are creating a much more competitive and resilient
business that is well placed to deliver growth and shareholder value
in the medium term.
Nigel Rich CBE
Chairman
6 March 2023
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
6
/ REBUILDING FOXTONS’ ESTATE AGENCY DNA
Guy Gittins Chief Executive Officer
There is significant unfulfilled
potential to unlock within
the business and our growth
ambitions demonstrate this.
CHIEF EXECUTIVE’S REVIEW
On 5 September 2022 I was delighted to join as the CEO of the
most iconic estate agency in London, and the place I started my
career 20 years ago.
A lot has been achieved in the six months since I joined, having
completed my operational review, a rebuilding programme has begun
and we have refocused our strategic priorities to accelerate growth
in non-cyclical and recurring areas of the business. A new purpose,
to get the right deal done for London’s property owners, was
launched in December to better reflect our ambitions and underpins
our refocused strategic priorities.
There is significant unfulfilled potential to unlock within the
business and our growth ambitions demonstrate this. We want to
deliver between £25 million and £30 million of operating profit, in
the medium term, and improve operating margins to over 15%
through maximising the operating leverage in the business.
It is my aim to make Foxtons London’s go-to estate agent, and by
doing so, create significant value for shareholders.
Results
I am pleased to report that despite a challenging economic
backdrop, revenue from continuing operations was up 11% to
£140.3 million (2021: £126.5 million), adjusted operating profit was
up 56% to £13.9 million and profit before tax was up 115% to
£11.9 million. Net cash at the period end was £12.0 million.
Lettings revenue grew 17% to £86.9 million, and the Lettings
portfolio now stands at c.26,500 tenancies, an increase of
5% over the prior year. In February 2022 the business integrated
the D&G Lettings portfolio onto our scalable operating platform
and disposed of the loss-making D&G Sales business, delivering
significant profit growth. In May 2022 we acquired another two
lettings portfolios, as part of our strategy to deliver attractive total
returns on invested capital and improve the resilience of our
revenues. Both portfolios have been successfully integrated and are
delivering a good level of return.
Sales revenue grew 1% to £43.2 million and market share growth is
a key area of our focus over the medium term. Profitability of the
Sales business was impacted in the year as we began the
investment required to build capability and deliver market share
growth over the medium term.
Financial Services revenue grew 8% to £10.2 million. Growth in
this segment is especially pleasing given the significant upheaval
in mortgage markets, reflecting the strength of our proposition,
the expertise of our advisers and the recurring revenues from
refinance activity.
Non-cyclical recurring revenues from Lettings and Financial Services,
which enhance the Group’s earnings resilience, now represent c.65%
of Group revenue and reflects significant growth in Lettings.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
7
STRATEGIC REPORT
Operational review
My first six months at Foxtons have been spent reviewing
all aspects of the business and its operating model. Alongside
this, I have been busy meeting colleagues and visiting each
of our branches. I have been incredibly impressed by the
shared vision of our people to deliver success and firmly
believe their ambition, drive and professionalism remains a
key differentiator.
Having completed my operational review, I am able to report
that the foundations of the business are strong and the core
operating model is sound. However, it is also clear that some of
Foxtons’ estate agency DNA that I knew so well has been lost;
specifically, the innovation, brand prominence and single-
minded focus on delivering the best results for customers that
Foxtons was once famous for.
The key to rediscovering that DNA is through rebuilding areas
of historic competitive advantage – namely our brand, people
and culture, and data and technology – which have been
eroded over time as a result of some investments made in the
wrong areas, leading to an underinvested core business and
limiting the ability to deliver any significant organic growth.
In addition, the Company’s purpose was confused and our
employee values misaligned with the business’ focus and
ambitions. I have refocused the whole business on what we
need to deliver and launched a new purpose and values to
reflect our strategic priorities and estate agency DNA.
Our purpose, to get the right deal done for London’s
property owners, was unveiled to the entire workforce in
December 2022 and will act as a cornerstone to everything we
do, including delivering the best result for all our stakeholders.
It will inspire and focus our teams as we renew the culture and
remind customers of why they should appoint Foxtons.
Refocused strategic priorities
We now have a refocused set of strategic priorities to deliver
revenue and profit growth and meet our medium-term
operating profit ambition.
In Lettings, a core focus will be to grow revenue and profits
through organic growth, accelerated further by acquisitive
growth. This will significantly enhance the resilience of the
Group’s earnings and mitigate our exposure to the cyclical
sales market.
In Sales, the focus is to drive market share growth, ensuring the
business captures the upside from any sales market recovery
and delivering good levels of cross-sell into Lettings and
Financial Services. We believe this is the right strategy to grow
profitability and deliver strong shareholder returns.
Our four strategic priorities are as follows:
1. LETTINGS: ORGANIC GROWTH
Limited Lettings organic growth has been delivered in recent years. We
will reverse this trend by:
• Winning new property instructions by better leveraging our
database and embedding a culture of proactive lead generation
both in our central hub and branches.
• Being the fastest agent to bring new instructions to market and
improve our instruction to exchange success rate.
• Improving landlord retention through post-transaction service
excellence in Property Management and back office operational processes.
Medium-term ambition: 3%-5% revenue CAGR
2. LETTINGS: ACQUISITIVE GROWTH
We will continue to pursue Lettings acquisitive growth and build on our
successful acquisition track record by:
• Identifying and acquiring high quality portfolios that meet our
investment criteria and expand our footprint in existing and untapped
markets adjacent to our current footprint.
• Integrating acquired portfolios into our scalable operating
platform to deliver revenue and cost synergies and drive significant
margin growth.
• Delivering recurring revenues and profits through retention of
acquired landlords by delivering ongoing excellent customer outcomes.
Medium-term ambition: 20%+ return on capital from lettings
portfolio acquisitions
3. SALES: MARKET SHARE GROWTH
We have c.3.4% share of our addressable market, compared to c.4.5% in
2016. We aim to get back to those levels by:
• Increasing market share of instructions in our core markets by
re-establishing Foxtons' premium brand positioning.
• Improving rate of sell through from instruction to exchange by
maintaining sufficient workforce capacity across our branch network
and delivering industry leading training.
• Improving cross-sell by deepening connectivity with the Financial
Services business and in-house conveyancing panel to improve
conversion of instructions.
Medium-term ambition: 4.5%+ market share in our
addressable markets
4. FINANCIAL SERVICES: REVENUE GROWTH
We can better leverage our referral leads to Financial Services by:
• Growing capacity by increasing adviser headcount to take
advantage of existing referral opportunities.
• Improving adviser productivity by reducing adviser data entry
processes and improving customer contact times through the use of
paraplanners and investment into technology solutions.
• Improving cross-sell through an increased emphasis on secondary
products, such as protection products, to drive revenue and profit
per customer.
Medium-term ambition: 7%-10% revenue CAGR
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
8
/ REBUILDING FOXTONS’ ESTATE AGENCY DNA CONTINUED
Rebuilding our competitive advantages
Underpinning these strategic priorities is the work underway to
rebuild our competitive advantages:
Reinvigorating our iconic brand
We’ve invested in a new marketing initiative to make clear what
Foxtons stands for and why landlords, sellers and those who need
finance should choose us. This is embodied in our new brand ethos,
‘We Get it Done’ which captures the essence of Foxtons’ estate
agency DNA. We have also reintroduced the iconic Foxtons Mini to
re-energise brand visibility on the streets of London, alongside a
programme to refurbish our highly visible branch network. There is
more to do here, but I’m pleased with the direction of travel.
Investing in our people and culture
We started investing in our people in 2022, including increasing
estate agency and adviser headcount. I am particularly pleased with
changes we have made to turbocharge a high-performance sales
culture, including rewarding success, focusing on training and career
progression to support retention, and aligning incentives with our
strategic priorities.
Enhancing our data and technology
We are overhauling our outdated data architecture to modern
standards, with resulting data accessibility and utilisation across the
Group supporting the transition towards becoming a data-led business.
This will deliver a greater level of insight into the drivers of our own
business performance and inform and support business decision
making. Furthermore, this will allow us to better leverage our property
and customer database to drive property instruction opportunities
across Lettings and Sales.
Foxtons was the original property disruptor, but the focus of our in-house
experts was being directed towards back office administrative
enhancements too often, rather than innovating our core estate agency
processes. The focus is now to modernise and revolutionise our core
processes, particularly in Lettings where speed is of the essence, to
provide a true competitive advantage against the market.
I am confident our refocused
strategy is the right one
and we have the collective
determination to put Foxtons
back on top where it belongs.
Outlook and current trading
The overall outlook for 2023 is expected to be more challenging
than 2022, due to the highly uncertain macroeconomic backdrop,
including significantly higher interest rates and inflation levels than
in prior years impacting the sales market.
Lettings is expected to remain resilient in 2023, with demand for
rental properties expected to continue to outstrip supply over the
near term, with rental price growth likely to normalise over the
course of 2023. Yesterday, we announced the acquisition of
Atkinson McLeod, adding a further c.1,100 tenancies and annualised
revenues of around £3 million, demonstrating ongoing progress
with our acquisition strategy.
In Sales, we entered 2023 with a smaller under-offer pipeline than
the prior year as a result of sales market volatility following the
September mini-budget. With the typical property purchase taking
over four months to complete, we expect Sales revenue to be
adversely impacted through the majority of 2023. While it remains
extremely difficult to forecast the sales market, recent reductions in
mortgage rates are encouraging buyer enquiries, which may result
in a more favourable sales market in the latter part of the year.
In Financial Services, refinance volumes are expected to remain
resilient, due to their non-cyclical and recurring characteristics,
whilst demand for new purchase mortgages will track the
performance of the wider sales market.
Trading in the first two months of the year has been in line with our
expectations, with recently implemented operational improvements
starting to drive our market share of property instructions across
Lettings and Sales.
In summary, the business has strong foundations and significant
unfulfilled potential. I am confident our refocused strategy is the
right one and we have the collective determination to put Foxtons
on top where it belongs.
Guy Gittins
Chief Executive Officer
6 March 2023
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
9
STRATEGIC REPORT
What’s it like to be back at Foxtons?
/ I’m delighted to be back where I started my career, at the most
iconic estate agency in London. I’ve enjoyed reacquainting myself with
the business, speaking to colleagues across the Group and reviewing
operations. Whilst it is disappointing to see that Foxtons’ estate agency
DNA has been eroded, I have been truly inspired by the ideas,
commitment, and energy from across the business to build this back.
There is much to be done, but we have a clear plan and a shared
understanding of how to move forward and return the business to its
position as London’s go-to estate agency.
What were the findings from your operational
review of the business?
/ Although the fundamentals of the business remain strong, those
areas that were once competitive advantages have been eroded,
specifically: the power of the brand; the strength of our people and
culture; and our ability to innovate using technology and data.
Over recent years the brand has lost visibility and the premium
position it previously enjoyed. This has given competitors the
opportunity to take a larger share of our market and reduce our
competitiveness in key markets across London. The Foxtons culture
of delivering results for our customers through sales intensity has
been diluted, compounded by an under resourced branch network
and unsustainable levels of staff turnover. When I first joined Foxtons
in 2002, the Company’s technology and data capabilities were
second to none. However, over the years, the speed of innovation has
slowed, the industry leading technology is no longer fully leveraged,
and the business prioritised investments in external property
technology products rather than a focus on core operational progress
and innovation. By rebuilding our competitive advantages, I am
confident we will be able to successfully deliver against our refocused
strategic priorities and fulfil our growth ambitions.
What are the refocused strategic priorities?
/ We have four strategic priorities: Lettings organic growth;
Lettings acquisitive growth; Sales market share growth; and
Financial Services revenue growth.
Lettings growth is a key part of our strategy and will drive growth
in our non-cyclical recurring revenue streams, significantly
enhancing the quality of our earnings. Growing market share in
Sales is key to returning the business to profitability and ensuring
we are positioned to maximise the benefit from any recovery in the
sales market. Finally, Financial Services provides a mix of
transactional and recurring revenues and increases the profitability
derived from sales transactions. With the right level of capacity in
the Financial Services business we can make more of the immediate
cross-sell opportunity from the estate agency business, with the
added benefit of growing the portfolio of long-term refinance
customers. We are targeting a medium-term timeframe through
which to deliver these strategic priorities and I look forward to
reporting progress against them in the years ahead.
What changes have you already made?
/ In December 2022, I launched our new brand ethos: ‘We Get
it Done’. This captures the essence of Foxtons’ estate agency DNA
and what the iconic brand stands for. Quite simply, we aim to work
harder and smarter than our competition to get the right deal done
for London’s property owners. The relaunch of the iconic Foxtons
Mini, now reflecting our ‘We Get it Done’ ethos, will increase our
brand visibility across London.
Early on it became apparent Foxtons’ purpose had become
confused and disconnected from the core offering. I have reset the
Group’s purpose which is: to get the right deal done for London’s
property owners. This purpose, when combined with an
investment in workforce capacity, improved training and a
redesigned salesforce compensation package, will rebuild our
competitive advantage.
The technology roadmap has been reset, which is now focused on
innovating and modernising key processes that will drive organic
growth. I have relaunched our contact management system to ensure
new business leads are prioritised and have embedded a new business
performance information system to enable the market, business and
employee performance to be monitored on a real-time basis.
Whilst I am aware we still have a lot of work to do, I have been
impressed with the positive response from across the business and
the effort put into deliver these changes in such a short space of
time. It clearly evidences my belief that the old Foxtons spirit is
back and here to stay!
What is the Company’s biggest strength?
/ It’s the resilience provided by our Lettings and Financial
Services businesses, which comprise over two thirds of total
revenue, and provide us with non-cyclical recurring revenues.
Within Lettings, our dedicated Property Management team
provides landlords with a fully managed service that not only
provides a recurring revenue stream, but also supports the retention
of landlords through service excellence. This enables us to generate
cash, reinvest in growth and deliver shareholder returns through
lower volume sales markets. We are already the largest lettings
agent brand in London, but we’re not going to sit back and rely on
that. Our refocused strategic priorities are focused particularly on
driving recurring revenues, which will leave us less exposed to
fluctuations in the inherently cyclical sales market.
Q&A WITH GUY GITTINS
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
10
Lettings revenue
year-on-year growth
+17%
£86.9 million
2021: £74.3million
Sales revenue
year-on-year growth
+1%
£43.2 million
2021: £42.7 million
Financial Services revenue
year-on-year growth
+8%
£10.2 million
2021: £9.5 million
/ THE LONDON PROPERTY MARKET
MARKET REVIEW
The London market is a disproportionately
valuable residential property market, accounting
for 9% of United Kingdom sales transactions by
volume but 17% of total value, whilst London’s
private rental sector houses 27% of residents
versus 18% in the rest of the UK.
Historically, the sales market has displayed cyclical
characteristics, whilst the lettings market is more
stable through the cycle. By operating across both
markets, but with a greater weighting towards
lettings, the Group is less exposed to fluctuations
in the inherently cyclical sales market, whilst
remaining well positioned to benefit from further
growth. By driving growth in non-cyclical recurring
revenue streams, the Group aims to deliver
shareholder value through the property cycle.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
11
STRATEGIC REPORT
LETTINGS MARKET
Lettings market dynamics
Demand is driven by a number of factors including that London
continues to be a unique city attracting people from all over the
world to stay, work and study, which drives structural demand for
quality lets. Lower levels of house purchase affordability alongside
the flexibility provided by renting drives high levels of demand.
Supply has been constrained as investment by private landlords has
decreased since 2016, driven by tax changes and increasingly
complex regulatory requirements. Furthermore, private landlords
exited the market over the course of 2021 to take advantage of the
buoyant sales market and recent increases in financing costs will
also impact more highly leveraged landlords, all reducing supply
further. Offsetting this, the number of purpose-built Build to Rent
schemes, which are backed by significant institutional investment
and government support, is increasing.
Rental pricing has been historically resilient due to healthy supply
and demand dynamics with rental prices typically increasing in line
with inflationary trends. Over the last 18 months, a contraction of
supply and strong tenant demand has meant rental prices have
increased at a rate above historic trends.
Lettings market performance in 2022
Levels of tenant demand were extremely strong in London
throughout 2022 as we continued to see high levels of London based
tenant mobility alongside significant growth in demand from UK and
international students. In addition, the resumption of international
travel drove growth in corporate relocations and the summer
short-let markets.
2022 saw a significant decrease in supply as landlords either took
advantage of more buoyant property sales markets or switched
properties to become short lets as international travel and tourism
resumed. Research from Rightmove, the property aggregator
website, noted that nationally the number of new properties
becoming available to rent was down by 38% on the prior year.
Taken together, the supply and demand imbalance of fewer
properties to let and increased tenant demand drove significant
price growth in the year. Foxtons research suggests average rental
prices in 2022 were 20% higher than the prior year and 15% higher
than pre Covid-19 levels.
SALES MARKET
Sales market dynamics
Key drivers of the sales market, which is cyclical in nature, include
property prices, mortgage availability, affordability and consumer
confidence. London transaction volumes have been constrained
since 2016 as a result of affordability constraints, political and
economic uncertainty, stamp duty regime changes and a variety of
disincentives to new buy-to-let investments.
Sales market performance in 2022
The relatively buoyant sales market seen in 2021 carried forward in
2022 with high levels of buyer activity keeping exchange volumes at
their highest levels since 2017. Pricing also remained strong with the
average house price in London standing at £543,000 at the end of the
year, a 7% increase on the prior year.
However, Q4 2022 saw a reduction in new buyer activity which is
expected to impact transaction volumes in 2023. Increasing interest
rates, particularly after the September mini-budget, have
significantly increased the mortgage rates available to prospective
buyers and impacted their affordability. In addition, cost of living
pressures and the closure of the Help to Buy scheme to new
purchasers from October 2022 has removed a substantial support
programme for first time buyers, with no new significant
government or developer-led scheme unveiled to take its place.
Taken together with a generally worsening economic backdrop, the
sales market in 2023 is more likely to resemble that seen in
2018/2019 as buyer and seller pricing expectations find a new
equilibrium to reflect changed buyer affordability. In addition, whilst
mortgage rates were particularly elevated following the September
mini-budget, in recent months we have seen rates come down to
more normalised levels and we note market expectations that rates
will cool further towards the latter half of the year.
FINANCIAL SERVICES MARKET
Financial Services market dynamics
The mortgage broking market is primarily driven by the availability
of mortgage products, interest rates offered and the level of
demand for either refinance mortgages or new mortgages for
property purchases. Whilst the provision of new mortgages is
closely linked to volumes in the residential sales market, the
refinance business is non-cyclical in nature and not dependent on
sales market transactions.
Financial Services market performance in 2022
In the first three quarters of the year, mortgage lending activity was
above levels seen in 2021 reflecting a stable sales market and an
increase in refinance activity, driven by increasing mortgage rates.
The Bank of England base rate rose from 0.25% at the beginning of
the year to 3.5% in December as The Bank’s Monetary Policy
Committee sought to reduce UK inflation.
Following the government’s mini-budget in September and the
subsequent financial market turmoil, mortgage rates rose by
unprecedented levels and many lenders withdrew products. Coupled
with tightened mortgage affordability, driven by underlying base
rate rises and increased costs of living, this has driven a fall in both
purchase and refinance activity over Q4. A change in government
leadership settled markets somewhat, though activity remained
low versus 2021 as consumers waited for rates of borrowing to
reduce further.
As mentioned earlier, in the past couple of months we have seen
mortgage rates decrease from their high point immediately
following the September mini-budget. The best buy rate on a
two-year fixed rate mortgage at 75% LTV has reduced from c.5.6%
in October, to 4.4% at the end of February. At the beginning of
2022 this rate stood at 1.2%.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
12
OUR BUSINESS MODEL IS UNDERPINNED BY NON-CYCLICAL
RECURRING REVENUE STREAMS
Our business model is underpinned by non-cyclical recurring revenue streams, generated by
Lettings and refinance activity within Financial Services. In 2022, 65% of total revenue was
generated from non-cyclical recurring revenue streams.
/ RESILIENT BUSINESS MODEL
OUR REVENUE STREAMS
Lettings Sales Financial Services
1
Revenue from continuing operations.
LETTINGS
London’s largest lettings agent brand
operating across the private rental sector
SALES
One of London’s largest sales agents with
the highest brand prominence
FINANCIAL SERVICES
Award winning independent mortgage
broker and financial products provider
We are the largest lettings agent brand in
London, with a portfolio of around 26,500
tenancies. We provide tenant find, rent
collection, tenancy renewal and property
management services. We are a market
leading agent in the growing Build to Rent
sector, supporting developers and operators
to let large-scale developments at speed.
We provide residential property sales agency
for private sellers and new homes developers.
Our success-based pricing model means
we are focussed on getting the
best result for sellers.
Under our Alexander Hall brand we provide
mortgage broking and ancillary financial
services products. Alexander Hall is an
award-winning business with four awards in
2022 including, What Mortgage Awards for
‘Best Mortgage Broker (up to 39 advisers)’
and ‘Best Broker Customer Service’.
Lettings delivers non-cyclical
recurring revenue and profit
Sales is highly correlated to residential
sales property market cycles and offers
significant medium-term upside potential
Financial Services delivers high levels
of non-cyclical recurring revenue
through its refinancing business
2022 Revenue
1
Non-cyclical revenues 65%:
Lettings and Financial Services
refinance activity
62%31%
7%
Cyclical revenues 35%:
Sales and Financial Services
transactional activity
35% 65%
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
13
STRATEGIC REPORT
/ RESILIENT BUSINESS MODEL
OUR SHAREHOLDERS
Delivering shareholder returns
£6.4 MILLION
of shareholder returns through
dividends paid and share buyback
programmes in 2022
OUR CUSTOMERS AND SUPPLIERS
Providing exceptional service and results
for landlords, sellers, tenants and buyers,
supported by our trusted supplier base
4.7 OUT OF 5
on Trustpilot
OUR PEOPLE
Being known as an employer
of choice, developing and retaining
high-performance talent
85%
2022 employee engagement survey score
1
OUR COMMUNITIES
Engaging with and contributing
to communities through our
Career Ready partnership
220
talented young people supported
through internships, virtual masterclasses
and panel discussions
Our competitive advantages historically underpinned our business model. By
strengthening these areas of differentiation we will be able to deliver against
our strategic priorities and fulfil our growth ambitions.
VALUE FOR OUR STAKEHOLDERS
OUR COMPETITIVE ADVANTAGES
OUR REVENUE STREAMS
1
Results from the 2022 employee engagement survey
independently administered by WTW.
TECHNOLOGY AND DATA
Technology and data underpin every aspect of the Group. Our
in-house, bespoke customer relationship management system
powers every customer interaction and property transaction we
complete. Our technology provides our people with the tools to
deliver the best results and experience for our customers. Our rich
database, the largest of its type in London, and longstanding
customer relationships enable us to successfully connect landlords
and sellers with the best tenants and buyers.
Refer to
PAGE 17 for more information on how we are advancing our
technology and data capability.
PEOPLE AND CULTURE
With values that are rooted in Foxtons’ estate agency DNA and a
new purpose, we are rediscovering our high-performance culture
and investing in existing and new people to create the best, most
innovative team in the industry. Landlords and sellers will choose an
agent they trust to get the right deal done for them. And we will
earn this trust by exhibiting the Foxtons values day in, day out.
Refer to
PAGE 17 for more information on how we are advancing our
people programmes and rebuilding our high-performance culture.
BRAND
Built over 40 years the iconic Foxtons brand is instantly recognisable
and synonymous with residential property in London. It has high
levels of unprompted awareness providing an ideal platform for us to
engage new landlords and sellers. With our new brand ethos –
‘We Get It Done’ – and renewed focus on innovation we will go to
market with a more confident and clear articulation of what Foxtons
is and why we should be London’s go-to estate agent.
Refer to
PAGE 16 for more information on how we are reinvigorating
the iconic Foxtons brand.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
14
To successfully deliver against our strategic priorities, we need to rebuild our competitive advantages.
/ REFOCUSED STRATEGY
NEW PURPOSE, VALUES AND REFOCUSED STRATEGIC PRIORITIES
SET TO DRIVE GROWTH
With an operational review of the business now complete, we have a refocused operational
strategy to rebuild Foxtons’ estate agency DNA, return the business to its position as
London’s go-to estate agency and deliver stakeholder value.
TO GET THE RIGHT DEAL DONE FOR LONDON’S PROPERTY OWNERS
TO BE LONDON’S GO-TO ESTATE AGENT
BRAND
Reinvigorate
our iconic brand
PROFESSIONAL AMBITIOUS RELENTLESS INNOVATIVE AUTHORITATIVE
OUR PURPOSE
OUR MISSION
REFOCUSED
STRATEGIC
PRIORITIES
REBUILDING
OUR
COMPETITIVE
ADVANTAGES
OUR VALUES
Refer to PAGES 16 AND 17 for further information about how we are rebuilding our competitive advantages.
Refer to
PAGE 15 for further information about our refocused strategic priorities.
Refer to
PAGE 54 for further information about how our values shape our culture.
Our values are rooted in Foxtons’ estate agency DNA. They reflect how we should strive together to deliver
the best results and the behaviours that are integral to our success.
The framework below sets out the key components, including our purpose, mission and refocused strategic priorities.
PEOPLE AND CULTURE
Invest in our people
and rediscover our
high-performance culture
TECHNOLOGY AND DATA
Fully harness the power
of our technology and data
Providing the most
efficient, reliable and
dedicated customer
journey, whilst
maintaining the
highest standards of
business ethics
Striving to get the
best results for
our customers
Maintaining
consistently high
standards day in
and day out
Constantly looking
for new and market
leading ways to get
the right deal done
for our customers
Being the most
knowledgeable
agents and financial
advisers in the
market
1. LETTINGS
ORGANIC
GROWTH
2. LETTINGS
ACQUISITIVE
GROWTH
3. SALES
MARKET SHARE
GROWTH
4. FINANCIAL
SERVICES
REVENUE GROWTH
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
15
STRATEGIC REPORT
REFOCUSED STRATEGIC PRIORITIES
Following an operational review of the business, a refocused set of strategic priorities have
been determined that will unlock the significant potential of the business and deliver
stakeholder value.
1. LETTINGS ORGANIC GROWTH
Lettings organic growth enables us to grow non-cyclical
recurring revenue streams, which will significantly enhance
the quality of our earnings.
2. LETTINGS ACQUISITIVE GROWTH
Our scalable operating platform enables us to be a
consolidator in the fragmented lettings market. Acquired
portfolios can be rapidly integrated unlocking revenue and
cost synergies.
How we will deliver
• Winning new property instructions by better
leveraging our database and embedding a culture
of proactive lead generation both in our central
hub and branches.
• Being the fastest agent to bring new instructions
to market and improve our instruction to exchange
success rate.
• Improving landlord retention through
post-transaction service excellence in Property
Management and back office operational processes.
How we will deliver
• Identifying and acquiring high quality portfolios
that meet our investment criteria and expand our
footprint in existing and untapped markets adjacent
to our current footprint.
• Integrating acquired portfolios into our scalable
operating platform to deliver revenue and cost synergies
and drive significant margin growth.
• Delivering recurring revenues and profits through
retention of acquired landlords by delivering ongoing
excellent customer outcomes.
3. SALES MARKET SHARE GROWTH
Sales provides high levels of profitability in more buoyant
markets, and through cross-sell, is a driver of growth for
our non-cyclical recurring Lettings and less cyclical
Financial Services businesses. There is significant upside
potential in the medium term by increasing market share,
combined with a return to more normalised markets.
4. FINANCIAL SERVICES REVENUE GROWTH
The Financial Services business has historically been
under-invested and unable to fulfil its full potential. The
business presents a compelling proposition: high levels of
recurring revenues from refinance activity and new
purchase transactional revenues from Sales cross-sell.
How we will deliver
• Increasing market share of instructions in our
core markets by re-establishing Foxtons’ premium
brand positioning.
• Improving rate of sell through from instruction to
exchange by maintaining sufficient workforce
capacity across our branch network and delivering
industry leading training.
• Improving cross-sell by deepening connectivity with the
Financial Services business and in-house conveyancing
panel to improve conversion of instructions.
How we will deliver
• Growing capacity by increasing adviser headcount
to take advantage of existing referral opportunities.
• Improving adviser productivity by reducing adviser
data entry processes and improving customer contact
times through the use of paraplanners and investment
into technology solutions.
• Improving cross-sell through an increased emphasis
on secondary products, such as protection products,
to drive revenue and profits per customer.
/ REFOCUSED STRATEGY CONTINUED
REBUILDING OUR COMPETITIVE ADVANTAGES
To successfully deliver against our strategic priorities we need to rebuild our competitive
advantages. With the operational review now complete, we know what we need to do,
and have already made good progress in a short space of time to address the issues.
BRAND Reinvigorating our iconic brand
What the operational review found
• Over the years Foxtons’ brand visibility
has diminished which has given
competitors an advantage we
previously enjoyed.
• The brand is no longer seen as premium,
which has eroded our share of higher value
property markets.
• The brand identity was unclear. There was
no clear articulation of our purpose, what
the brand stands for and why we should
be the agent of choice.
What we need to do
• Make the brand more visible, refresh
its look and feel and recover Foxtons’
premium positioning.
• Be clearer about what Foxtons stands
for and why landlords, sellers and
those who need finance should
choose us.
• Clear brand messaging to drive
customer engagement by showcasing
the excitement surrounding the
infrequent yet highly consequential
life moment where a property is
sold or let.
What we have done so far
• New and clear brand ethos,
‘We Get it Done’, closely aligned
to refreshed purpose and values.
• Increased visibility on London’s
streets through the relaunch of the
iconic Foxtons Mini.
• Renewed customer engagement
through our ‘Moments’
marketing campaign.
• Branch refurbishment programme
to reinforce premium positioning of
the Foxtons brand.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
16
Foxtons' new 'We get it done' campaign demonstrates the Company's focus on delivering results for customers.
PEOPLE AND CULTURE Investing in our people and rediscovering our high-performance culture
What the operational review found
• Headcount across the business has been
under resourced which resulted in missed
market share opportunities and has
constrained growth.
• Foxtons previously had a culture of sales
intensity with a workforce motivated to
deliver for clients and go the extra mile.
This eroded away, which has impacted
growth and allowed competitors to take
market share.
• Staff turnover has been too high for too
long, particularly at junior levels. Too
often we failed to retain colleagues before
they reached their peak revenue
generation potential.
What we need to do
• Invest in, and maintain, salesforce
capacity and capability to maximise
lead conversion and deliver the best
service to customers.
• Improve staff retention and tenure to
create an experienced workforce.
• Return to a culture of sales
intensity by celebrating outstanding
performance and rewarding
through highly incentivised
remuneration structures.
• Use purpose and values to focus the
organisation on delivering results
for customers.
What we have done so far
• Invested in estate agency and
adviser headcount, whilst being
mindful of market conditions.
• Refreshed training programme
focussed on salesmanship and
domain expertise.
• CEO led staff engagement
programme to rebuild a culture of
sales intensity once core to the
Foxtons’ estate agency DNA.
• Refreshed salesforce compensation
scheme and staff incentives that
reward exceptional performance.
• New purpose launched: To get
the right deal done for London’s
property owners. New values also
embedded across the business.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
17
STRATEGIC REPORT
TECHNOLOGY AND DATA Fully harnessing the power of our technology and data
What the operational review found
• The business made speculative
investments in prop tech rather than
focussing on internal technology to
innovate core estate agency processes.
• Underinvestment in data capabilities
restricted our ability to maximise the
revenue opportunities held within our rich
customer database.
• The business lacked real-time
management information to monitor
market, business and employee
performance on a real-time basis.
What we need to do
• Refocus our technology development
on technology solutions that
directly support the delivery of our
strategic priorities.
• Invest in our data capabilities and
better leverage our residential
property database to drive
revenue opportunities.
• Build improved internal real-time
management information systems
to improve staff productivity
across the network and enable a
quicker response to changes in
market dynamics.
What we have done so far
• Technology roadmap reset, focusing
time and resources on those areas
underpinning our strategic priorities.
Immediate focus on updating estate
agency processes to deliver on
organic growth priorities in Lettings
and Sales.
• Relaunch of our contact
management system to ensure new
business leads are prioritised.
• Overhaul of our data architecture to
more modern standards is
underway, which will increase data
accessibility and open additional
revenue opportunities.
• Built and embedded a new business
performance information system
to enable business performance
to be actively managed through
data analysis.
Engaging with stakeholders delivers better outcomes for society and is critical to our
long-term success and in turn supports our purpose, our business model and the delivery
of our strategic priorities.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
18
/ STAKEHOLDER ENGAGEMENT
HOW WE PROMOTE THE SUCCESS OF FOXTONS FOR THE BENEFIT OF ALL
The Board recognises the importance of effective stakeholder engagement and that stakeholders’ views should be considered in its decision making.
Read more about the Board’s approach to stakeholder engagement in the context of the UK Corporate Governance Code on
PAGE 69.
In line with Section 172(1) of the Companies Act 2006, the Directors believe that, individually and together as a Board, they have acted in
the way they consider, in good faith, would be most likely to promote the success of the Group for the benefit of its members as a whole,
having regard to the stakeholders and matters set out below in the decisions taken during the year ended 31 December 2022.
Section 172 factor
The likely consequences of any decision in the
long term
Resilient business model
PAGES 12 AND 13
New purpose, values and refocused strategic priorities PAGE 14
Refocused strategic priorities PAGE 15
Rebuilding our competitive advantages PAGES 16 AND 17
Stakeholder engagement PAGES 18 TO 21
Financial review PAGES 24 TO 29
Risk management, principal risks and uncertainties PAGES 30 TO 35
Prospects and viability PAGE 36
Board leadership and purpose PAGES 68 AND 69
Board activity in 2022 PAGE 73
Directors’ Remuneration Report PAGES 90 TO 129
The interests of the Group’s employees
New purpose, values and refocused strategic priorities
PAGE 14
Stakeholder engagement PAGES 18 TO 21
Responsible business – People, culture, skills & knowledge PAGES 50 TO 56
Board leadership and purpose PAGES 68 AND 69
Board activity in 2022 PAGE 73
Directors’ Remuneration Report PAGES 90 TO 129
The need to foster the Group’s business relationships
with suppliers, customers and others
Stakeholder engagement PAGES 18 TO 21
Key performance indicators PAGES 22 AND 23
Responsible business – Other responsibilities PAGES 59 AND 60
Board activity in 2022 PAGE 73
The impact of the Group’s operations on the
community and the environment
Risk management, principal risks and uncertainties
PAGES 30 TO 35
Responsible business – Environment PAGES 40 TO 49
Responsible business – Community PAGES 57 AND 58
Board activity in 2022 PAGE 73
Environmental, Social and Governance Committee report PAGES 82 AND 83
The desirability of the Group maintaining a
reputation for high standards of business conduct
New purpose, values and refocused strategic priorities PAGE 14
Risk management, principal risks and uncertainties PAGES 30 TO 35
Responsible business – Community PAGES 57 AND 58
Responsible business – Other responsibilities PAGES 59 AND 60
Board leadership and purpose PAGES 68 AND 69
The need to act fairly between stakeholders
of the Group
Stakeholder engagement
PAGES 18 TO 21
Board leadership and purpose PAGES 68 AND 69
Board activity in 2022 PAGE 73
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
19
STRATEGIC REPORT
OUR STAKEHOLDERS
Effective engagement with our four stakeholder groups plays an important role throughout our business and helps us to gain a better
understanding of the impact of our decisions on stakeholder interests.
OUR SHAREHOLDERS
Setting strategic priorities that will drive profitable growth
and create substantial shareholder value is the key focus.
Specifically, accelerating growth in Lettings will make the
Group more resilient to fluctuations in the sales market
and protect future profitability.
OUR CUSTOMERS AND SUPPLIERS
Our new purpose, to get the right deal done for
London’s property owners, reflects our commitment to
deliver outstanding results for customers, supported by
our trusted suppliers. Rebuilding our competitive
advantages will be a key enabler in strengthening our
ability to deliver results for customers.
OUR PEOPLE
Investing in our people and rediscovering our
high-performance culture is essential in the delivery of our
strategic priorities and will ensure Foxtons is a rewarding
workplace for employees to develop and grow.
OUR COMMUNITIES
Making a positive contribution to the communities we
work in continues to be an important part of our plan and
culture. Our community programmes will evolve alongside
the delivery of our strategic priorities.
Refer to PAGES 20 AND 21 for further details of other stakeholder engagement in the year.
MATTERS CONSIDERED DURING THE 2022
OPERATIONAL REVIEW
Following the appointment of Guy Gittins, an operational
review of the Group was undertaken, resulting in a new purpose
and a refocused set of strategic priorities, along with a clear
plan to rebuild our competitive advantages. Refer to
PAGES 14 TO 17 for further details.
When considering the operational review’s findings and
recommendations, the Board focused on developing a plan that
will deliver profitable growth and create significant stakeholder
value, with consideration of relevant Section 172 factors. The
Board considered each of our stakeholder groups focusing on
the following priorities:
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
20
Key outcomes from engagement
Operational review: Refer to PAGE 19 for stakeholder
matters considered during the Group’s 2022 operational review.
Customer service improvements: Continuous review of
customer feedback resulting in people, process and system
improvements. Refer to
PAGES 16 AND 17 for details of
how we are driving better results for our customers by
rebuilding our competitive advantages.
Supplier interactions: Improving supplier relationships
within our Property Management function with an increased
focus on our suppliers’ approach to the environment, social
and governance. Refer to
PAGE 60 for details of our
supplier relationships and responsibilities.
OUR CUSTOMERS AND SUPPLIERS
Why we engage
Engaging with customers helps us to satisfy changing needs,
innovate and deliver better results. Our suppliers support us
in maintaining the highest levels of customer service and
business conduct.
How we engage
We engage with our customers throughout a property
transaction, as well as through other channels such as
consumer review platforms, customer surveys, social media
and our marketing channels. Service levels are reviewed
regularly, as well as monitoring the integrity of the way we
do business. We engage with our supplier partners through
regular service reviews and supplier payment practices are
reviewed on a regular basis by the Audit Committee.
Key interests
• Quality of customer service and results
• Effectiveness of our technology
• Navigating legislation and compliance changes
• Supplier engagement and payment practices
Key outcomes from engagement
Operational review: Refer to PAGE 19 for stakeholder
matters considered during the Group’s 2022 operational review.
Capital allocation: Maintaining the dividend and continuing
the share buyback programme. Refer to
PAGE 28 for
details of our dividend policy and share buyback programme.
Board changes: Appointment of Guy Gittins as CEO and other
changes to the Board were informed by engagement with
major shareholders and through the Group’s Annual General
Meeting. Refer to
PAGE 76 of the Nomination Committee
Report for details of Board changes in the year.
Directors’ Remuneration Policy: The Remuneration
Committee engaged with shareholders when reviewing the
Directors’ Remuneration Policy. Refer to
PAGES 103 TO 113
of the Directors’ Remuneration Report for details of the
proposed remuneration policy.
/ STAKEHOLDER ENGAGEMENT CONTINUED
OUR SHAREHOLDERS
Why we engage
Shareholders provide funds that support investment in the
business and generate long-term and sustainable returns.
Engagement enables the Board to make well informed
decisions that take into account shareholder views.
How we engage
The Board regularly interacts with shareholders to facilitate
effective dialogue, both through recurring scheduled events,
such as investor roadshows and trading updates, and through
one-to-one shareholder meetings led by the Chairman, CEO or
Committee Chairs. Shareholder communications are also
supported by regular coverage from external analysts who
cover the financial performance of the Group.
Key interests
• Financial performance and position
• Strategic direction and execution
• ESG
• Capital allocation
• Executive remuneration
• Board composition
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
21
STRATEGIC REPORT
Key outcomes from engagement
Operational review: Refer to PAGE 19 for stakeholder
matters considered during the Group’s 2022 operational review.
Training: Enhanced employee training to improve skills
and knowledge across the salesforce. Refer to
PAGE 56
for further details.
Responsible business practices: Informing our diversity
network programmes and other ESG programmes through
feedback at the EEC and through informal employee
engagement. Refer to
PAGES 40 TO 60 for details of our
responsible business practices, including details of our
approach to health and safety, the environment and
diversity programmes.
Remuneration: Workforce and Director remuneration
strategy discussed with the EEC by the Remuneration
Committee Chairman. Refer to
PAGE 114 of the Directors’
Remuneration Report for details of our approach to
workforce remuneration.
OUR PEOPLE
Why we engage
Our people are key to our future success. The Board engages
with our people to better understand their views, enable
them to influence matters that affect them and encourage
workforce participation in shaping strategic initiatives.
How we engage
We engage with our people through a number of mechanisms,
including the Employee Engagement Committee (EEC), branch
visits, staff meetings, diversity networks and reviewing the
annual employee engagement survey.
Key interests
• Business performance and operating procedures
• Employee communication, working practices and
health and safety
• Workforce remuneration
• Workforce diversity, culture and training
OUR COMMUNITIES
Why we engage
Foxtons is very visible in our communities and our people want
to play an active, local role. A current key focus is advancing
social mobility and helping create stronger communities.
How we engage
We engage with our communities primarily through our
social mobility partnership and through wider community
initiatives. Engagement includes hosting community events
and workshops and allowing our employees to take paid time
off to support a charity or cause of their choice. The Board’s
ESG Committee receives updates from management on the
Group’s contributions to our community partnerships.
Key interests
• Informing ongoing community engagement
programmes and areas of focus
• Maximising value from support offered
Key outcomes from engagement
Further developed our partnership with Career Ready, a social
mobility charity. Through ongoing engagement with Career
Ready in 2022, 14 mentor partnerships formed between our
employees and local students, over 200 students attended
masterclasses and nine completed internships with Foxtons.
Refer to
PAGES 57 AND 58 for more details of our
community programmes and Career Ready partnership.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
22
/ KEY PERFORMANCE INDICATORS
The Group uses key performance indicators to measure its performance and to assess
progress against its strategic priorities and monitor the impact of principal risks.
Refer to PAGE 15 for details of the Group’s strategic priorities.
FINANCIAL PERFORMANCE
Revenue (£ million)
2022 2021
Lettings 86.9
74.3
Sales 43.2
42.7
Financial Services 10.2
9.5
Group 140.3
126.5
Description
Total revenue generated in line with
the Group’s accounting policies from
continuing operations.
Performance for 2022
Revenue increased by 11% to £140.3 million, with Lettings revenue up 17%, Sales revenue up 1%,
and Financial Services revenue up 8%, compared to 2021.
Volumes (units transacted)
2022 2021
Lettings 20,640
22,091
Sales 3,215
3,122
Financial Services 5,003
4,991
Description
Total number of Lettings transactions
(including renewals), Sales transactions and
Financial Services products arranged from
continuing operations.
Performance for 2022
Lettings volumes were down in 2022 compared to 2021 reflecting the constrained stock levels in
the market which prevailed throughout the year, with rental price increases more than offsetting
the reduction in volumes. Transaction volumes in Sales were robust and Financial Services
volumes were broadly in line with 2021.
Adjusted operating profit (£ million)
2022 2021
Lettings 18.0
9.7
Sales (3.2)
0.6
Financial Services 1.8
1.5
Corporate costs (2.6)
(2.9)
Group
13.9 8.9
Description
Adjusted operating profit represents the
profit before tax for the period before finance
income, finance cost, other gains/losses and
adjusted items (defined in Note 1 of the financial
statements) from continuing operations.
Performance for 2022
Group adjusted operating profit was £13.9 million, compared to £8.9 million in 2021, reflecting
significant growth in Lettings, offset by a loss in Sales reflecting investments made in the year in
people capacity and capability required to drive future profitability.
Net free cash flow (£ million)
2022 2021
Group
7.7 6.6
Description
Net free cash flow is defined as 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. Metric is from
continuing and discontinuing operations.
Performance for 2022
Net free cash flow of £7.7 million, driven by increased profitability. Refer to Note 27 of the
financial statements for a reconciliation to net cash from operating activities.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
23
STRATEGIC REPORT
PRODUCTIVITY
(£‘000)
2022 2021
Average revenue per branch 2,332
2,219
Average revenue per fee earner 188
170
Description
Average revenue per branch is Group revenue
(from continuing operations) divided by the
average number of branches (from continuing
operations). Average revenue per fee earner is
Group revenue (from continuing operations)
divided by the average number of fee earning
employees (from continuing operations).
Performance for 2022
Average revenue per branch and per fee earner has increased by 5% and 11% respectively, which is
reflective of our leveraged operating model and progress with branch and employee productivity.
EMPLOYEE ENGAGEMENT
2022 2021
Employee engagement score 85%
87%
Description
Employee engagement score from the Group’s
annual employee engagement survey
(independently administered by WTW).
Performance for 2022
The employee engagement score has continued to be robust despite a change in leadership. This
reflects continued focus on our people strategy and culture. Refer to
PAGE 55 for further
details of the 2022 employee engagement survey.
CUSTOMER SATISFACTION
2022 2021
Trustpilot score (out of 5) 4.7
4.7
Description
Trustpilot is an independent consumer review
platform that enables our customers to review
and rate the quality of our service.
Performance for 2022
We continue to maintain an excellent Trustpilot rating which is reflective of our continued
investment in customer service, employee training and technology.
BALANCE OF BUSINESS
Non-cyclical/cyclical revenue split (%)
2022 2021
Non-cyclical revenues 65%
61%
Cyclical revenues 35%
39%
Description
Non-cyclical revenue consists of Lettings revenue
and Financial Services refinance revenue, both of
which are non-cyclical in nature. Cyclical revenue
consists of Sales revenue and Financial Services
new purchase revenue, which is transactional in
nature. Non-cyclical recurring revenue brings
resilience to our business model and protects
profitability in lower volume sales markets.
Performance for 2022
In line with our Lettings growth strategy, which includes acquiring high quality lettings portfolios,
the proportion of non-cyclical recurring revenue has continued to increase, now representing
approximately two thirds of Group revenue.
Segmental revenue contribution (%)
2022 2021
Lettings 62%
59%
Sales 31%
34%
Financial Services 7%
7%
Description
The measure indicates the revenue contribution
from each operating segment (continuing
operations). With a higher proportion of revenue
coming from Lettings, the Group is able to
withstand fluctuations in the cyclical sales market.
Performance for 2022
In line with our Lettings growth strategy, an increasing proportion of revenue is generated from
the Lettings business.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
24
/ FINANCIAL REVIEW
1
APMs are defined, purpose explained and reconciled to statutory measures within Note 27 of the financial statements.
2
Net free cash flow is from continuing and discontinued operations.
Notes:
- All results and measures within the financial review are presented on a continuing operations basis unless otherwise stated.
- Values in tables may have been rounded and totals may therefore not be the sum of presented values in all instances.
Chris Hough Chief Financial Officer
Non-cyclical recurring Lettings
revenues have underpinned and
driven significant profit growth
in 2022.
Revenue
year-on-year growth
+ 11%
£140.3 million
(2021: £126.5 million)
Adjusted operating profit
1
year-on-year growth
+ 56%
£13.9 million
(2021: £8.9 million)
Profit before tax
year-on-year growth
+ 115%
£11.9 million
(2021: £5.6 million)
Net free cash flow
1,2
year-on-year growth
+ 17%
£7.7 million
(2021: £6.6 million)
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
25
STRATEGIC REPORT
FINANCIAL OVERVIEW – HIGHLIGHTS
2022
£m
2021
£m Change
Revenue
140.3
126.5 11%
Contribution
1
91.3
78.5 16%
Contribution margin
1
65.1%
62.1% 295 bps
Operating profit
13.8
7.6 82%
Adjusted operating profit
1
13.9
8.9 56%
Adjusted operating profit margin
1
9.9%
7.1% 286 bps
Profit before tax
11.9
5.6 115%
Profit/(loss) after tax
9.6
(1.3) -
Adjusted earnings per share (basic)
3.1p
1.9p 63%
Earnings/(loss) per share (basic)
3.0p
(0.4p) -
Net free cash flow and net cash
Net free cash flow
1,2
7.7
6.6 18%
Net cash as at 31 December
1,3
12.0
19.4 (38%)
Dividends
Interim dividend per share
0.20p
0.18p 0.02p
Final dividend per share
0.70p
0.27p 0.43p
Revenue
2022
£m
2021
£m Change
Lettings
86.9
74.3 17%
Sales
43.2
42.7 1%
Financial Services
10.2
9.5 8%
Total 140.3
126.5 11%
The Group consists of three operating segments: Lettings, Sales
and Financial Services. Lettings represents 62% of total revenue
(2021: 59%), Sales 31% of total revenue (2021: 34%) and Financial
Services 7% of total revenue (2021: 7%).
Revenue increased by 11% to £140.3 million (2021: £126.5 million),
with Lettings revenue up 17%, Sales revenue up 1% and Financial
Services revenue up 8%. Adjusted operating profit increased by
£5.0 million to £13.9 million (2021: £8.9 million), driven by strong
profit growth in Lettings. Profit before tax from continuing operations
was £11.9 million (2021: £5.6 million) and profit after tax was
£9.6 million (2021: £1.3 million loss).
£7.7 million (2021: £6.6 million) of net free cash flow was generated
(from continuing and discontinued operations). Net cash at the end
of the period was £12.0 million (2021: £19.4 million, excluding cash
classified as held for sale). The Group continues to have access to a
£5.0 million revolving credit facility (RCF) which expires in June
2024 and remained undrawn throughout 2022.
An interim dividend of 0.2p per share was paid in September 2022. In
line with our dividend policy of returning 35% to 40% of profit after
tax (excluding one-off non-cash items), the Board has proposed a
final dividend of 0.7p per share bringing the total ordinary dividend
for the year to 0.9p per share (2021: 0.45p per share).
Lettings revenue
Lettings revenue increased by 17% to £86.9 million (2021:
£74.3 million), reflecting a 25% increase in average revenue per
transaction (2022: £4,211; 2021: £3,365), partially offset by a
7% reduction in transaction volumes (2022: 20,640; 2021: 22,091).
The key drivers of revenue growth are:
• £7.6 million of organic revenue growth, which excludes
incremental revenues from D&G Lettings and the
May 2022 acquisitions. This organic revenue growth reflects
a 20% increase in average rental prices and longer tenancies being
agreed, partially offset by a decrease in transaction volumes
reflecting ongoing constraints in the supply of rental properties.
• £2.0 million of incremental revenue growth from the D&G
Lettings portfolio reflecting two additional months of trading
in 2022. The D&G Lettings portfolio was fully integrated
into the Foxtons infrastructure in February 2022.
• £3.0 million of incremental revenue from the
May 2022 acquisitions.
Sales revenue
Sales revenue increased by 1% to £43.2 million (2021: £42.7 million),
reflecting a 2% decrease in average revenue per transaction (2022:
£13,431; 2021: £13,668), offset by a 3% increase in transaction
volumes (2022: 3,215; 2021: 3,122). The average price of properties
sold increased to £590,000 (2021: £577,000). The May 2022
acquisitions contributed £0.5 million of revenue.
Financial Services revenue
Financial Services revenue increased by 8% to £10.2 million
(2021: £9.5 million), the increase primarily reflects a 6% increase
from mortgage activity from higher average fees and increased
loan size, and a 2% increase from protection volumes. In 2022,
£4.5 million of Financial Services revenue relates to non-cyclical
refinance activity and £5.7 million relates to purchase activity which
is more cyclical in nature.
1
APMs are defined, purpose explained and reconciled to statutory measures within Note 27 of the financial statements.
2
Net free cash flow is from continuing and discontinued operations.
3
Net cash excludes cash held for sale (only applicable as at 31 December 2021).
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
26
/ FINANCIAL REVIEW CONTINUED
Contribution and contribution margin
2022 2021
1
£m margin £m margin
Lettings
64.8 74.5%
51.7 69.5%
Sales
22.0 51.0%
22.8 53.4%
Financial Services
4.5 43.9%
4.1 42.9%
Total 91.3 65.1%
78.5 62.1%
1
Certain changes have been made to the presentation of the segmental disclosures, with the 2021 presentation restated accordingly. Refer to Note 2 of the
financial statements for further details.
Group contribution, defined as revenue less direct salary costs of front office staff and bad debt charges, increased to £91.3 million
(2021: £78.5 million). The increase is attributable to incremental revenue converting to contribution at an improved margin of 65.1% (2021: 62.1%).
Adjusted operating profit and adjusted
operating profit margin
2022 2021
1
£m margin £m margin
Lettings
18.0 20.7%
9.8 13.2%
Sales
(3.2) (7.5%)
0.5 1.3%
Financial Services
1.8 17.3%
1.5 16.3%
Corporate costs
(2.6) n/a
(2.9) n/a
Total 13.9 9.9%
8.9 7.1%
1
Certain changes have been made to the presentation of the segmental disclosures, with the 2021 presentation restated accordingly. Refer to Note 2 of the
financial statements for further details.
Adjusted operating profit for the period was £13.9 million
(2021: £8.9 million). Non-cyclical Lettings revenues have
underpinned and driven significant profit growth in 2022, with
Lettings revenue increasing by £12.6 million and Lettings adjusted
operating margin improving by 750 bps, reflecting the inherent
operating leverage of the business.
D&G Lettings contributed £5.3 million of adjusted operating profit
(2021: £3.7 million) on £11.2 million of revenue (2021: £10.0 million),
reflecting an adjusted operating margin of 47% (2021: 37%).
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, which relate to
Non-Executive Director and other listed entity costs, are not
allocated to the operating segments and are presented separately.
Adjusted operating profit of £13.9 million (2021: £8.9 million) is
after charging £126.4 million (2021: £117.5 million) of costs,
including the following:
• Direct operating costs of £49.0 million (2021: £47.9 million) relating
to direct salary costs of front office staff and bad debt charges.
• Other operating costs, excluding adjusted items, of
£77.4 million (2021: £69.6 million), which includes the
following charges:
• Depreciation of £12.2 million (2021: £12.2 million).
• Amortisation of £1.6 million (2021: £1.4 million),
including £1.0 million (2021: £0.9 million) relating to
acquired intangibles.
• Share-based payment charges of £0.3 million
(2021: £1.6 million).
Profit before tax
2022
£m
2021
£m
Adjusted operating profit 13.9
8.9
Less: adjusted items
(0.1)
(1.4)
Operating profit 13.8
7.6
Less: Net finance costs and other losses
(1.9)
(2.0)
Profit before tax 11.9
5.6
Profit before tax has increased by 115% to £11.9 million
(2021: £5.6 million). Profit before tax includes £0.1 million of
adjusted items charges (2021: £1.4 million) which comprises:
• £0.4 million property related credits (2021: £0.9 million).
• £0.3 million reversal of branch asset impairment
(2021: £0.5 million charge).
• £0.2 million transaction related costs (2021: £0.6 million).
• £0.6 million reorganisation costs (2021: £0.5 million).
• Nil impairment of interests in associate (2021: £0.7 million).
Net finance costs and other losses of £1.9 million (2021: £2.0 million)
were incurred, primarily relating to IFRS 16 lease finance costs.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
27
STRATEGIC REPORT
Profit/(loss) after tax
2022
£m
2021
£m
Profit before tax 11.9
5.6
Less: current tax (charge)/credit
(2.2)
(0.5)
Less: deferred tax charge
(due to UK corporation tax rate change)
-
(6.1)
Less: deferred tax charge (other movements)
(0.2)
0.3
Profit/(loss) after tax 9.6
(1.3)
The profit after tax of £9.6 million (2021: £1.3 million loss) is after
a total tax charge of £2.4 million (2021: £6.9 million), of which
£0.2 million (2021: £6.4 million) relates to non-cash deferred tax
accounting charges and £2.2 million (2021: £0.5 million) relates to
current tax.
The effective tax rate for the period was 19.9% (2021: 124.1%),
which compares to the statutory corporation tax rate of
19.0% (2021: 19.0%). The 2022 effective tax rate is higher than
the statutory corporation tax rate due to non-deductible expenses,
including share-based payment charges, offset by a reduction due
to the recognition of previously unrecognised deferred tax. In
2021, the effective tax rate was impacted by a £6.1 million
non-cash accounting re-measurement charge as a result of the
UK corporation tax rate increasing from 19% to 25% (effective
from 1 April 2023).
The Group’s net deferred tax liability at 31 December 2022 totalled
£25.7 million (2021: £24.8 million), which includes £27.0 million
(2021: £26.5 million) of deferred tax liabilities relating to the
Group’s intangible assets, offset by deferred tax assets of
£1.4 million (2021: £1.7 million). The deferred tax assets relate to
tax losses brought forward which are expected to be recovered
through future taxable profits.
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
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 always sets out to be transparent,
open and honest in its dealings with tax authorities. The Group
received no tax refunds during the year (2021: none).
Earnings/(loss) per share
2022
£m
2021
£m
Profit/(loss) after tax 9.6
(1.3)
Add back: adjusted items (net of tax)
-
1.5
Add back: deferred tax
(due to UK corporation tax rate change)
-
6.1
Adjusted earnings for the purposes of
adjusted earnings per share
9.6
6.2
Earnings/(loss) per share (basic)
3.0p
(0.4p)
Earnings/(loss) per share (diluted)
3.0p
(0.4p)
Adjusted earnings per share (basic)
3.1p
1.9p
Adjusted earnings per share (diluted)
3.0p
1.9p
Earnings per share (basic) was 3.0p (2021: 0.4p loss) and earnings per
share (diluted) was 3.0p (2021: 0.4p loss). On an adjusted basis,
earnings per share (basic) was 3.1p (2021: 1.9p) and earnings per share
(diluted) was 3.0p (2021: 1.9p). In 2021, the adjusted basis excluded an
adjusted items charge of £1.5 million and a £6.1 million deferred tax
remeasurement charge, no such adjustments were required in 2022.
Net free cash flow and net cash
From continuing and
discontinued operations
2022
£m
2021
£m
Operating cash flow before movements
in working capital
27.8
22.0
Working capital (outflow)/inflow
(1.2)
1.7
Income taxes paid
(2.7)
(0.2)
Net cash from operating activities 23.9
23.5
Repayment of IFRS 16 lease liabilities
(12.7)
(15.2)
Net cash used in investing activities
1
(3.5)
(1.6)
Net free cash flow 7.7
6.6
1
Excludes £8.5 million (2021: £11.5 million) of cash outflows relating to
the acquisition of subsidiaries (net of any cash acquired), £3.7 million
(2021: £nil) relating to the disposal of discontinued operations (net of
cash disposed) and £0.4 million related to the purchase of investments
(2021: £3.0 million).
The £1.2 million working capital outflow in the year is reflective
of the billing cycles on longer tenancies. Net free cash flow,
from continuing and discontinued operations, of £7.7 million
(2021: £6.6 million), was driven by increased profitability.
Net cash at the year end was £12.0 million (2021: £19.4 million,
excluding cash classified as held for sale) with no external borrowing
(2021: nil).
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
28
/ FINANCIAL REVIEW CONTINUED
Acquisitions
Gordon & Co and Stones Residential
On 25 May 2022, the Group acquired the entire issued share capital
of two estate agents, Gordon & Co, and Stones Residential. The
acquisitions have strong lettings businesses that together generate
over 80% of their total combined revenues from lettings across
c.2,500 tenancies.
Gross purchase consideration was £9.8 million, with £8.2 million
paid in May 2022. Consideration paid in the period, net of cash
acquired, was £8.0 million. £1.5 million of contingent cash
consideration remains to be paid, deferred for up to a period of
12 months post completion.
Acquired net assets were fair valued at the date of acquisition and
include £2.9 million of customer contracts and relationships and
£8.3 million of acquired goodwill. The two acquisitions contributed
a total of £3.6 million of revenue and £0.4 million of adjusted
operating profit during the first seven months of ownership. Refer
to Note 13 of the financial statements for further details.
D&G
£0.5 million of deferred consideration, relating to the 1 March 2021
acquisition of D&G, was paid in the period.
Discontinued operations
2022
£m
2021
£m
Revenue
0.6
6.8
Adjusted operating loss
(0.6)
(1.8)
Less: adjusted items
0.2
(3.2)
Operating loss
(0.4)
(5.1)
Loss after tax
(0.4)
(4.8)
Discontinued operations relates to D&G Sales, which was acquired
alongside D&G Lettings and disposed of on 11 February 2022 to
Lochlan Holdings Limited, a company owned by the CEO of Douglas
& Gordon Limited, having been approved by shareholders at the
General Meeting held on 10 February 2022. 2022 results from
discontinued operations reflects trading up to the date of disposal
(11 February 2022) and 2021 results from discontinued operations
includes 10 months of trading from the date of acquisition
(1 March 2021).
On a total Group basis, which includes both continuing and
discontinued operations, revenue was £140.9 million
(2021: £133.3 million) and adjusted operating profit was
£13.3 million (2021: £7.1 million).
Other balance sheet positions
At 31 December 2022 the significant balance sheet positions were:
• Goodwill of £26.0 million (2021: £17.7 million) and other
intangible assets of £109.3 million (2021: £107.3 million), with the
increase in goodwill due to the acquisition of Gordon & Co and
Stones Residential which contributed £8.3 million of goodwill.
• Interest in associate and investments of nil (2021: £3.3 million).
The nil balance reflects a full write down of the investments in
PD Innovations Limited (trading as Boomin) and Global Property
Ventures Limited. The write down resulted in a £3.7 million
non-cash fair value loss recognised in other comprehensive
income, of which £3.4 million relates to Boomin which entered
liquidation having not been able to secure sufficient funding in a
challenging economic climate.
• Trade and other receivables of £16.0 million (2021: £16.0 million)
and trade and other payables of £16.7 million (2021: £14.5 million).
• Total contract assets of £7.4 million (2021: £4.6 million) and
total contract liabilities of £10.0 million (2021: £9.4 million),
with the increase in the contract assets reflecting an increase in
average rental prices and longer tenancies.
• Lease liabilities of £46.5 million (2021: £48.1 million) and
right-of-use assets of £42.6 million (2021: £43.8 million).
• No assets or liabilities were held for sale at 31 December 2022,
compared to £7.4 million of assets held for sale and £7.4 million
of liabilities held for sale liabilities at 31 December 2021 relating
to the D&G Sales business (disposed of on 11 February 2022).
Capital allocation and dividends
Our approach to capital allocation supports long-term growth and
shareholder returns. Our capital allocation priorities are as follows:
• Maintain balance sheet strength to enable the Group to meet
its operational cash requirements and manage through cyclical
sales markets.
• Invest in areas that drive organic growth and rebuild our
competitive advantages.
• Return 35% to 40% of profit after tax (excluding one-off
non-cash items) as an ordinary dividend.
• Deploy capital to acquire high quality lettings books to drive
inorganic lettings growth.
• Return excess capital, not used for profitable growth,
to shareholders.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
29
STRATEGIC REPORT
As shown below, total Group (continuing and discontinued operations) profit after tax was £7.7 million (2021: £3.6 million), after excluding
£1.5 million of one-off non-cash credits (net of tax) (2021: £3.7 million of one-off non-cash expenses (net of tax)) and nil non-cash deferred
tax charges (2021: £6.1 million).
From continuing and discontinued operations
2022
£m
2021
£m
Profit/(loss) after tax (continuing operations)
9.6
(1.3)
Loss after tax (discontinued operations)
(0.4)
(4.8)
Profit/(loss) after tax (total Group) 9.2
(6.2)
Add back: non-cash adjusted items (net of tax)
(1.5)
3.7
Add back: non-cash deferred tax charges (due to UK corporation tax rate change)
-
6.1
Profit after tax for dividend policy (total Group) 7.7
3.6
Interim dividend per share
0.20p
0.18p
Final dividend per share
0.70p
0.27p
An interim dividend of 0.2p per share was paid in September 2022.
The Board has proposed a final dividend of 0.7p per share
bringing the total ordinary dividend for the year to 0.9p per share
(2021: 0.45p per share).
The proposed dividend will be paid on 31 May 2023 to shareholders
on the register at 14 April 2023, subject to shareholder approval at
the AGM due to be held on 9 May 2023. The shares will be quoted
ex-dividend on 13 April 2023.
Capital returns
A total of £4.9 million (2021: £5.7 million) of shares have been
bought back to return excess capital to shareholders. £3.0 million of
shares were bought back through the programme announced in
March 2022 and £1.9 million through the programme announced in
November 2022. The Board will review the continuation of the
programme, bearing in mind our other capital needs, once the
current authority, which stood at £1.1 million at 31 December 2022,
is fully utilised. Since 2020, a total of £10.9 million of shares have
been bought back.
Post balance sheet events
On 3 March 2023, the Group acquired the entire issued share
capital of Atkinson McLeod Limited, a London lettings agent, for a
consideration of £7.4 million, adjusted for current assets less total
liabilities at completion. The consideration was fully satisfied in
cash, with £0.7 million of the consideration deferred for 12 months.
Unaudited revenue and operating profit for the 12 months ended
31 March 2022 was £3.1 million and £0.9 million respectively. Gross
assets as at 31 March 2022 were £2.5m. The acquisition adds a
further c.1,100 tenancies and demonstrates further progress against
the Group’s acquisition strategy.
Related party transactions
Related party transactions are disclosed in Note 24 of the
financial statements. On 11 February 2022, the D&G Sales business
was disposed of through the sale of the entire share capital of
Douglas & Gordon Limited and Douglas & Gordon (2) Limited, to
Lochlan Holdings Limited, a company owned by the CEO of Douglas
& Gordon Limited, for nominal consideration of £2. This transaction
was a related party transaction due to both the CEO and Lochlan
Holdings Limited constituting related parties.
Treasury policies and objectives
The Group’s treasury policy is designed to reduce financial risk.
Financial risk for the Group is low as the Group is in a net cash
position, is entirely UK based with no foreign currency risks and
surplus cash balances are held with major UK based banks. As a
consequence, the Group has not had to enter into any financial
instruments to protect against risk. The Group has access to a
£5.0 million RCF which expires in June 2024 and remained undrawn
throughout 2022. The Group expects to renew the facility, or access
a similar facility, following expiry.
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.
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 30 TO 35 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 will have
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. The prospects and viability statement is set out on
PAGES 36 AND 37.
Chris Hough
Chief Financial Officer
6 March 2023
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
30
/ 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.
RISK MANAGEMENT
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.
Our principal risks
Principal risks are those risks within the Group’s risk register that we
consider could have a potentially material impact on our operations
and/or achievement of our strategic priorities.
Employee training
Independent
whistleblowing
service
1
Divisional
management
Audit Committee
Internal
audit
function
and other
3
rd
party
assurance
Policies and procedures
Health & Safety
Committee
IT Security
Committee
Risk & Compliance
Committee
(Foxtons and
Alexander Hall)
The Board
Executive Committee
2nd line of defence 3rd line of defence1st line of defence
Risk framework overview
The broad structure of our risk management framework, which comprises three lines of defence, is presented in the chart below.
1
Should whistleblowing matters relating to Senior Management be raised, these matters are reported directly to the Audit Committee Chair.
Reputation and brand
Market risk
People
IT systems and cyber risk
Compliance with the legal and regulatory environment
Competitor challenge
Details of each principal risk is provided on PAGES 33 AND 34,
including an overall risk rating and whether the risk has changed
over the course of the year. 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.
Further information on the Group’s risk management procedures
can be found in the Audit Committee Report on
PAGE 87.
Our principal risks
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
31
STRATEGIC REPORT
RISK APPETITE
The risk appetite statement details the Group’s approach to risk, by risk type, and includes a series of risk assertions which are aligned to our
strategy, together with the risk parameters within which we expect our people to work. Compliance with the risk appetite statement is
monitored through the Group’s standard monitoring and reporting mechanisms. The Board reviews the risk appetite statement annually.
Risk appetite statement
The Group operates in markets with high growth potential which are subject to volatility, particularly in the residential sales market. We
continue to pursue ambitious growth targets and are willing to accept certain levels of risk to increase the likelihood of achieving or
exceeding our strategic objectives, subject to the relevant risk parameters.
Risk appetite varies depending on the risk type
The Board’s appetite for risk varies depending on the risk type as set out in the table below. The Group measures risk by estimating the
potential for loss of profit, customer service issues, staff turnover and brand or reputational damage. The Board has a low tolerance for
compliance-related risk. Conversely, it has a higher tolerance for strategic risk. The Board will adjust the short-term appetite for risk to
reflect prevailing conditions as necessary.
Risk type Risk assertion Risk parameter Risk appetite
Strategic
We will not pursue growth at all costs and
expect high margins and strong returns
on capital.
We will pursue growth strategies to deliver against
our strategic priorities. We aim for industry leading
operating margins and returns on capital while
protecting the long-term viability of the Group.
High
Financial
We will manage/avoid situations or actions
that might adversely impact the integrity of
financial reporting.
Delivering the highest standards of financial
reporting integrity through financial reporting
processes and controls is critical to the Group.
Low
Operational
We will manage/avoid situations or actions that
could adversely impact the Group’s ability to
provide a premium service level to our customers
and to protect the assets of the Group.
The costs of control systems must be
commensurate with the benefits achieved.
Moderate
Compliance
We will ensure we comply with all legal
requirements and manage/avoid situations or
actions that could have a negative impact on
our reputation or brand.
Breaches of:
• Legislative/statutory requirements
• Delegated authority levels
• Group and divisional policies
• Health and safety regulations
Low
Assessment of risk versus Board’s appetite for risk
The Board has assessed the risks of the Group and considers all risks to be within the Board’s appetite for risk. The Board recognises the
Group’s Sales business operates in a market which is cyclical and subject to volatility, and as such, the Board’s risk appetite for market risk
is high. Although there continues to be heightened market risk due to the external macro environment, the Board considers appropriate
actions have been taken to mitigate the impact on the Group, in particular prioritising organic growth in Lettings and investing in high
quality lettings portfolios to further increase our resilience to sales market volatility.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
32
/ PRINCIPAL RISKS AND UNCERTAINTIES
1
Residual Likelihood
Residual Impact
External risks
1 Market risk
2 Covid-19
3 Competitor challenge
4 Compliance with the legal and
regulatory environment
Internal risks
5 IT systems and cyber risk
6 People
7 Reputation and brand
moderatelow
high
moderatelow
high
6
5
4
2021 risk positioning
(if year-on-year movement)
2022 risk positioning
2
7
3
1
No change
No change
PRINCIPAL RISKS HEAT MAP
The heat map presented below provides a visual representation of the principal risks facing the Group and movement of risks in the year.
Risks shown in the bottom left-hand corner of the chart have a low risk rating as they have a low residual likelihood of occurring and a low
residual potential impact on the Group. Conversely, risks shown in the top right-hand corner of the chart have a high risk rating as they have
a high residual likelihood of occurring and a high residual potential impact on the Group.
There have been the following movements in residual likelihood or residual impact of the principal risks.
2022 movements in residual likelihood/residual impact
(2)
Covid-19 Covid-19 is no longer considered a principal risk as the likelihood of further lockdowns being put in place and a
shutdown of the housing market is considered to be remote.
(6)
People The residual likelihood is higher due to increased levels of market competition for quality staff. This increases the
risk to the Group of being unable to recruit or retain quality staff.
6
No change
No change
No change
Covid-19 is
no longer a
principal risk
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
33
STRATEGIC REPORT
The assessment of residual likelihood, residual impact and overall residual risk is based on the
following definitions:
Residual likelihood Residual impact
Overall residual
risk rating
Low potential of the
risk crystallising
Very limited or isolated impact to the
Group and/or its broader customer base
Low
Moderate potential of
the risk crystallising
Moderate impact to the Group and/or our
broader customer base
Moderate
High potential of the
risk crystallising
Potentially significant impact to the
Group and/or our broader customer base
High
Principal risks
Impact Mitigation of risk
Assessment of change
in risk year-on-year
Market risk Risk Type: Strategic
The key factors driving market risk are:
• Affordability including the current cost of
living increases, which in turn may reduce
transaction levels.
• Arguably a reduction in London’s standing
as a major financial city caused by the
macroeconomic and political environment.
• The market being reliant on the availability of
mortgage finance, a deterioration in availability
or an increase in borrowing rates may adversely
affect the Group. Interest rates globally
increased across 2022 with the UK particularly
impacted after the September mini-budget,
which is likely to adversely affect affordability in
the sales market.
• The market being impacted by changes in
government policy such as future changes in
stamp duty taxes or increased regulation in the
lettings market.
• Ongoing geopolitical risk which may increase
market uncertainty and customer confidence.
The Group targets an appropriate balance between the Sales
and Lettings businesses through residential property market
cycles, with the Lettings business providing valuable
protection against the cyclical sales market.
The Group’s strategic priorities include Lettings organic
growth and investing in high quality lettings portfolios, both
of which mitigate the sales market risk.
In a significant downturn of the residential sales market, the
Board will make appropriate cost decisions bearing in mind
the long-term prospects of the Sales business.
No change in overall residual
risk rating
Residual likelihood
Residual impact
Overall residual risk rating
Competitor challenge Risk Type: Strategic
The Group operates in a highly competitive
marketplace. New or existing competitors could
develop new technology, service models or
methods of working which could give them a
competitive advantage.
We continually assess competitor activity and utilise our
centralised structure to review competitor intelligence,
monitor market share and respond accordingly. Targeted
pricing enables the Group to respond to competitor challenge
and tailor our offering for certain segments of the market.
Furthermore, the Board regularly reviews our business model
and strategic investments are made to protect and develop our
competitive advantages.
No change in overall residual
risk rating
Residual likelihood
Residual impact
Overall residual risk rating
Our strategic priorities
1. Lettings: Organic growth
2. Lettings: Acquisitive growth
3. Sales: Market share growth
4. Financial Services: Revenue growth
Refer to PAGE 15 for details of our
strategic priorities.
Linked strategic priorities
1. Lettings: Organic growth
2. Lettings: Acquisitive growth
3. Sales: Market share growth
4. Financial Services: Revenue growth
Linked strategic priorities
1. Lettings: Organic growth
3. Sales: Market share growth
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
34
/ PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED
Impact Mitigation of risk
Assessment of change
in risk year-on-year
Compliance with the legal and regulatory environment Risk Type: Compliance
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 tenant deposits 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.
The Group’s centralised systems enable management to
monitor ongoing compliance with the legal and regulatory
environment.
Our Financial Services business has a specific Risk and
Compliance Committee, which monitors compliance with
FCA regulations.
The Group’s compliance and legal team regularly monitors
regulatory reform proposals and participate in industry
forums to enable the Group to respond to regulatory change
in an efficient and coherent manner.
No change in overall residual risk rating
Residual likelihood
Residual impact
Overall residual risk rating
IT systems and cyber risk Risk Type: Strategic, Operational
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.
Our IT function, supported by external specialists, maintains
both preventative and detective processes and controls to
mitigate the identified risks including:
• Enterprise grade data loss prevention, network
monitoring, traffic shaping and predictive
countermeasures.
• Real-time automated monitoring by an independent
security operations centre.
• Regular independent penetration testing.
• Data risk assessments and safeguards established with
oversight from the Data Protection Officer.
• Disaster recovery operations and plans maintained.
• In the event of a cyber incident, a full investigation is
undertaken and remediation activity completed to
provide protection against the latest threats.
No change in overall residual risk rating
Residual likelihood
Residual impact
Overall residual risk rating
People Risk Type: Strategic, Operational
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 in our
industry or markets that result in less attractive
career opportunities.
The Group maintains a structured approach to recruitment
using internal specialist teams, enabling us to increase the
recruitment of high quality people quickly, should it become
necessary to do so.
The Group continues to invest in training, development and
succession planning so that future leaders can be identified and
nurtured. Additionally, our track record of promoting from
within generates significant staff loyalty within senior and
mid-management employees.
Employee turnover rates are reviewed by management on a
regular basis and action taken to understand and address higher
than expected leaver rates.
Increased likelihood of risk but no change
in overall residual risk rating which
remains at moderate
Residual likelihood
Residual impact
Overall residual risk rating
Reputation and brand Risk Type: Strategic, Operational
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 social
media due to customer service falling below
expectations or because our actions are considered to
be inappropriate.
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.
A brand management programme is in place to ensure Foxtons’
brand positioning and identity is clear, appropriately protected
and reflects the way we do business. Our social media presence
and press engagement is managed centrally within an
established framework to ensure press statements reflect the
Group’s purpose, values and strategy.
Maintaining the right culture, underpinned by the right values,
is key to protecting our reputation and brand. The Board
monitors culture on an ongoing basis (refer to
PAGE 69
for further details) and the ESG Committee provides oversight
of the governance framework relating to ESG matters including
training programmes.
Through established policies, controls and processes we
monitor the quality of our customer service. We continue to
invest in our customer proposition in order to strengthen our
service offering and reputation for delivering results.
No change in overall residual risk rating
Residual likelihood
Residual impact
Overall residual risk rating
Linked strategic priorities
1. Lettings: Organic growth
3. Sales: Market share growth
4. Financial Services: Revenue growth
Linked strategic priorities
1. Lettings: Organic growth
3. Sales: Market share growth
4. Financial Services: Revenue growth
Linked strategic priorities
1. Lettings: Organic growth
2. Lettings: Acquisitive growth
3. Sales: Market share growth
4. Financial Services: Revenue growth
Linked strategic priorities
1. Lettings: Organic growth
3. Sales: Market share growth
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
35
STRATEGIC REPORT
Description Risk management
Changes in government housing policies The Board monitors government housing policy and engages with key
external stakeholders as necessary, including Propertymark, a major
industry body. Planned and potential changes in housing policy are
considered when making risk management and strategic decisions.
Future changes in government housing policies may lead to
structural changes in the lettings and sales market. Although
future government policy cannot be reliably predicted, potential
risks could include general market disruption, the introduction of
pricing control mechanisms, private landlords exiting the private
rental sector due to punitive legislation or tax changes that
adversely affect the residential property markets.
Climate-related risk In December 2021, the Board established the ESG Committee which has the
core responsibility of reviewing and providing oversight of the
implementation of the Group’s ESG strategy.
The ESG Committee provides recommendations to the Audit Committee on
climate-related risks as applicable, following which the Audit Committee
considers such risks as part of its wider risk management responsibilities. Refer
to
PAGES 82 AND 83 for the ESG Committee’s report.
The Executive Committee monitors the delivery of the Group’s environmental
programmes and also monitors and manages climate-related risk as part of
the Group’s overall risk management framework.
The Group utilises the TCFD framework to identify, assess and manage
emerging climate-related risks.
Climate change is an emerging risk that may have medium
to long-term implications for the Group. Further details of
the potential climate-related risks, as well as potential
climate-related opportunities, are set out on
PAGE 45
as part of the Group’s application of TCFD.
Emerging risks
The Board considers emerging risks on a regular basis and manages them accordingly, taking into account the expected timing of the risk.
The Group has procedures in place to identify emerging risks, including horizon scanning, and to monitor market and consumer trends.
Two emerging risks and the associated risk management approach are set out below.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
36
/ PROSPECTS AND VIABILITY
Foxtons has an increasingly resilient business model underpinned by non-cyclical recurring
revenues from Lettings and Financial Services. Long-term prospects and viability is a key
consideration when determining and assessing the Group’s business model and strategic
priorities, and also a key area of focus when managing principal risks.
Long-term prospects
Market risk continues to present the highest risk to the Group. The
Group’s resilience to market risk continues to improve as non-
cyclical recurring Lettings and Financial Services revenues grow,
which when combined now represent c.65% of Group revenues.
Despite improved resilience, the Group continues to be exposed to
the cyclical London residential sales market which is subject to
volatility. Following a period of recovery in 2021, in the second half
of 2022 the UK economy was impacted by higher interest rates,
inflationary pressures and general economic uncertainty resulting in
a more subdued sales market outlook for 2023 and potentially the
medium term.
Growing market share within Sales is a strategic priority and will
help mitigate any reductions in sales market volumes due to the
macro environment. Additionally, the continued focus to grow
Lettings organically and by acquisition helps reduce volatility in the
Group’s results and protects earnings and net free cash flow.
Notwithstanding the market risk, the Group is well positioned to
withstand a variety of market conditions with cost action taken in
2022 and ongoing cost discipline supporting the necessary
reinvestment to deliver against the strategic priorities, whilst partly
mitigating inflationary pressures.
Viability approach
The Group’s viability is assessed through the strategic planning
process which includes financial projections for the next five years
and take into account the Group’s principal risks. Key assumptions
within the strategic plan include market volumes, market pricing,
market share and cost base assumptions, including inflationary
pressures, required investment and cost savings.
Other factors taken into consideration when assessing viability
include use of cash resources and liquidity. At 31 December 2022
the Group held net cash of £12.0 million (2021: £19.4 million).
The Group has no external borrowings and the availability of a
£5 million RCF which expires in June 2024 and remained undrawn
throughout 2022.
Assessment of viability
In accordance with the UK Corporate Governance Code, the
Directors have assessed the prospects of the Group over a longer
period than the 12 months required by the going concern provision.
The Directors have determined that five years is the most appropriate
timeframe over which the Board should assess long-term viability,
with this being the longest period over which the Board considered
an appropriate assessment of the principal risks could be made. This
is consistent with the period over which the Group’s strategic review
is assessed by the Board and the minimum vesting and holding period
for Executive Director share schemes.
This viability assessment has considered the potential impact of the
principal risks on the business model, future performance and
liquidity of the Group. In making this statement, the Directors have
considered the resilience of the Group under varying market
conditions together with the timing and effectiveness of any
mitigating cost actions.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
37
STRATEGIC REPORT
/ PROSPECTS AND VIABILITY
Severe but plausible scenario
For the purpose of testing viability, a severe but plausible scenario has been determined under which the Group is significantly impacted by
market risk, which has been assessed to have the highest residual likelihood and impact on the performance of the Group from a range of
scenarios considered (refer to the principal risks heat map on
PAGE 32 for further details).
The severe but plausible scenario assumes a sustained downturn in the sales and mortgage markets with an adverse impact on transaction
volumes and pricing while lettings market rental prices reduce and supply remains restricted. The scenario captures the risk of ongoing
adverse macroeconomic and political events.
As well as capturing market risk, the scenario incorporates the associated reduction in costs due to reduced revenue and the availability and
effectiveness of controllable mitigating actions, including reducing capital expenditure and reducing costs primarily by reducing the
salesforce to reflect market conditions. Each of these actions would be available to limit the impact of the identified risks. The key
assumptions assumed in the severe but plausible downside scenario are summarised below.
Lettings volumes and pricing
Lettings volumes remain flat in 2022 which are already suppressed compared to 2021
volumes. Average rental prices reduce in 2023 to 2021 levels and remain suppressed at this
level over the five-year forecast period.
Sales volumes and pricing
2023 market sales volumes reduce c.30% to 2009 levels, reflecting the same volume of
transactions seen following the global financial crisis, before recovering to 2021 levels by the
end of 2027.
House prices are assumed to decline by 10% in 2023 before recovering to current levels
by 2027.
Financial Services volumes
New purchase mortgage transactions reduce in line with the sales volume reduction noted
above. Refinance business is unaffected due to the resilient nature of the revenue.
Direct operating costs and mitigating actions
Mitigating actions to reduce discretionary expenditure and reduce salesforce to reflect
market conditions.
Capital expenditure and acquisition spend is minimised and no dividend payments
are forecast.
Revolving Credit Facility (RCF)
The £5m RCF facility which expires in June 2024 is assumed to be renewed.
Under the severe but plausible scenario, the Group would be able to withstand the adverse conditions and would have sufficient cash
resources throughout the period. Based upon the results of this analysis, 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 the five-year viability period.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
38
/ RESPONSIBLE BUSINESS
Our commitment to being a responsible business focuses on the areas that are
most important to our stakeholders and to our long-term success.
OVERVIEW
Our purpose is to get the right deal done for London’s property owners. In doing this we want to
deliver value for our customers, provide opportunities and progression for our staff and ensure we are
valued members of the communities in which we operate. Our responsible business report is split into
four sections which reflects those areas that are most important to our stakeholders and to our
long-term success:
1. ENVIRONMENT
We use natural resources as efficiently as possible and minimise the impact of our business
on the environment.
Refer to
PAGES 40 TO 49.
2. PEOPLE, CULTURE, SKILLS & KNOWLEDGE
We have a unique culture that is fundamental to our responsible commercial progress. We
are proud to have a diverse and inclusive workforce that has organically developed through
our focus on hiring the right people from the communities in which we operate. We
recognise the importance of delivering industry leading opportunities for all employees
through our training and development programmes.
Refer to
PAGES 50 TO 56.
3. COMMUNITY
We contribute to the wellbeing and development of the communities in which we operate.
Refer to PAGES 57 AND 58.
4. OTHER RESPONSIBILITIES
We recognise the importance of maintaining the highest standards of business ethics,
protecting human rights and maintaining health and safety standards.
Refer to
PAGES 59 AND 60.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
39
STRATEGIC REPORT
ESG COMMITTEE
In December 2021, the Board established the ESG Committee
to review and oversee the implementation of our ESG strategy.
Our ESG strategy is driven by the Executive Leadership Team,
and indeed everyone at Foxtons, as we believe that every single
employee has a role to play in having a more positive impact on
the environment, communities and people that we interact with.
The Board’s ESG Committee regularly monitors the delivery of the
ESG strategy and reports any risks and opportunities to the Board.
Refer to
PAGES 82 AND 83 for the ESG Committee’s report.
FTSE4Good
The Group has been independently
assessed according to the FTSE4Good
criteria and satisfies the requirements
to be a constituent of the FTSE4Good
Index Series, which measures the
performance of companies
demonstrating specific ESG practices.
OUR ENVIRONMENTAL AND
SOCIAL COMMITMENTS
We have established environmental and social commitments
that provide ambitious, but achievable, goals on which we
can focus our sustainability efforts. In 2022, we have added
an interim emissions reduction target to reduce our Scope 1
and Scope 2 greenhouse gas emissions by 30% by 2030,
measured against the 2021 baseline. This target will act as a
milestone to our longer-term target of reaching net zero
across Scope 1, Scope 2 and Scope 3 emissions by 2050.
Thanks to the collective efforts of everyone at Foxtons we
have made good progress towards these commitments in
2022 and have plans to make further improvements in the
year ahead.
Environment
• Electrifying our entire vehicle fleet by 2030 in line with
our EV100 commitment.
• 30% reduction in Scope 1 and Scope 2 emissions by
2030 against the 2021 baseline.
• Reaching net zero across Scope 1, Scope 2 and Scope 3
emissions by 2050.
Social
• Continuing to drive diversity initiatives so that our
workforce more closely reflects the society we serve.
• Helping people within the communities we serve move
up in the world through our Career Ready partnership and
by working more closely with our local communities.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
40
/ RESPONSIBLE BUSINESS CONTINUED – 1. ENVIRONMENT
Despite Foxtons having a relatively simple
infrastructure and supply chain, with a
smaller impact on the environment than
some other listed businesses, we are
committed to reducing our environmental
impact and carbon footprint.
1. ENVIRONMENT
OUR APPROACH – ENVIRONMENT
We are committed to reducing our environmental impact and
continue to take steps to support the government’s long-term
environmental pledges, as well as our own long-term ESG
commitments. We use the TCFD framework to identify and assess
emerging climate-related risks, use natural resources as efficiently as
possible and take steps to change our business practices and
operations where relevant to ensure that we minimise our impact on
the environment.
The Board has ultimate oversight of our approach to climate change,
with the Board’s ESG Committee monitoring progress against its
ESG commitments and the Audit Committee monitoring climate-
related risk management. The Board also receives updates from the
Executive Leadership Team, which is responsible for day-to-day
management of the business and ensuring that the ESG
commitments are delivered upon. Progress is discussed and reviewed
by the ESG Committee on a regular basis (refer to
PAGE 83 for
the ESG Committee’s key activities during the year).
2001 Italian Job Mini
2002 Hot Rod Mini
2003 Urban Graffiti Mini
2005 Camo Mini
2004 Flower Power Mini
Electric vehicle rollout
26%
Increase in the number of green vehicles
in our fleet in 2022 and launched the
Foxtons Electric Mini
Annual energy saving
c.7%
Annualised branch energy saving as
a result of energy saving measures
made in 2022
Reduction in GHG emissions
20%
Reduction in GHG emissions
(combined Scope 1 and Scope 2,
market based methodology) in 2022
2022 HIGHLIGHTS
The Foxtons Mini over the years
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
41
STRATEGIC REPORT
KEY INITIATIVES AND PROGRESS MADE IN 2022
Vehicle fleet electrification
Our vehicle fleet is used in the day-to-day operations of our
business, including transporting customers to property viewings
and carrying out property inspections. Through the electrification
of our fleet we can reduce our emissions and help cut pollution in
the communities we operate. As a member of EV100, the global
climate initiative from The Climate Group, we have set a target to
switch all of our vehicles to electric by 2030. Despite global
constraints on the supply of electric vehicles, during 2022 we made
progress towards this target, with fully electric or hybrid vehicles
representing 16% of the vehicle fleet (2021: 14%).
2022 saw the arrival of our greenest Mini ever
Since its launch in 2001, the Foxtons Mini has become iconic in
London’s culture, with the designs over the years catching the spirit
of Foxtons and London’s residential property market. 2022 was a
milestone year for the Foxtons Mini, with the first fully electric
version being launched. The Foxtons Electric Mini, which emits zero
emissions, is a perfect car for the city and reflects our commitment
to fully electrify our fleet by 2030.
2006 Punk Mini
2007 Property Chase Mini
2008 Space Mini
2010 X-ray Mini
2014 Anniversary Edition Mini
2022 The Foxtons
Electric Mini – our
greenest Mini ever!
Energy sourcing and reduction initiatives
Renewable energy sources
We continue to reduce the environmental footprint of our leased head
office and branch network, working closely with our energy supplier
to monitor our usage and use a REGO backed electricity product
(REGO – Renewable Energy Guarantees of Origin) across our branches.
Through REGO, our branch electricity is backed by renewable sources,
which helps reduce our carbon footprint and is another step towards
carbon neutrality and becoming net zero across Scope 1, Scope 2 and
Scope 3 emissions by 2050.
Branch network efficiency
In 2022 we undertook an extensive review of our energy usage across our
branch network and have taken steps to significantly improve our
efficiency. Within our branches we replaced lamps with modern LEDs and
installed timers for lighting, air conditioning and fresh air systems to
reduce the period of usage. This investment will result in approximately
a 7% reduction in energy consumption per year across our branches.
Energy efficient data centres and technology
The Group has two modern eco efficient data centres, with one designed
to BREEAM excellent standard. Both data centres use highly efficient
cooling technologies to reduce energy consumption and reuse waste heat
in communal areas. In the year we have also completed a series of
infrastructure refresh programmes to enhance our technology capabilities
and improve our energy efficiency.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
42
Emissions
We have a long-term target to reduce our total value chain to net zero, across Scope 1, Scope 2 and Scope 3 by 2050. This year the ESG Committee
set an interim target to reduce our combined Scope 1 and Scope 2 emissions by 30% by 2030 against the 2021 baseline. We will primarily achieve
this through electrification of the vehicle fleet, as well as identifying ways to reduce the size of our fleet through vehicle sharing technology and
further efficiency measures across our property estate.
Scope 1 and Scope 2 reporting
Our Streamlined Energy and Carbon Reporting (SECR) reports emissions from fuel consumption and the operation of our facilities (Scope 1)
and from purchased electricity (Scope 2), both of which are mandatory. Our Scope 1 and Scope 2 footprint, measured in line with
mandatory reporting requirements on a location basis, is 1,942 tonnes CO2e in 2022 (2021: 2,248 tonnes CO2e). All emissions and energy
usage are incurred within the UK.
GHG emissions 2022
2021
(restated
1
)
Scope 1 emissions
Combustion of fuel (tonnes CO
2
e)
1,191
1,224
Other – gas, diesel and LPG (tonnes CO
2
e)
45
114
Scope 2 emissions
Purchased electricity (tonnes CO
2
e) Location based
706
910
Purchased electricity (tonnes CO
2
e)
2
Market based
79
_
Total: Scope 1 & Scope 2 emissions
Total: Scope 1 & 2 emissions (tonnes CO
2
e) Location based
1,942
2,248
Total: Scope 1 & 2 emissions (tonnes CO
2
e)
2
Market based
1,315
1,338
Intensity ratio
Tonnes of CO
2
e per full-time employee Location based
1.62
1.94
Tonnes of CO
2
e per full-time employee
2
Market based
1.09
1.15
Energy consumption
Aggregate energy consumption (kWh)
8,874,847
9,186,775
Total CO
2
e by emission type
Electricity: lighting, heating and cooling
706
910
Combustion of fuel
1,191
1,224
Other: gas, diesel and LPG
45
114
Methodology
Base line: 2021
Emission factor data source: UK Government GHG Conversion Factors for Company Reporting
Assessment methodology: The Greenhouse Gas Protocol
Intensity ratio: Emissions per full-time employee
1
2021 disclosures have been restated using the 2022
calculation basis to enable year-on-year comparability.
2
Market based measurement of Scope 2 purchased
electricity reflects procured renewable energy (REGO
certified) reducing scope 2 emissions by 627 tonnes CO2e
(2021: 910 tonnes CO2e).
/ RESPONSIBLE BUSINESS CONTINUED – 1. ENVIRONMENT
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STRATEGIC REPORT
Scope 1 and Scope 2 reporting
Scope 1 emissions have fallen year-on-year as a result of the
continued electrification of the vehicle fleet, with total Scope 1
emissions down 8% to 1,236 tonnes CO2e (2021: 1,338 tonnes
CO2e). Scope 2 emissions (location based methodology) have fallen
by 22% to 706 tonnes CO2e (2021: 910 tonnes CO2e) reflecting
ongoing energy saving initiatives and the disposal of 15 branches
relating to the D&G Sales business in February 2022 (resulting in a
7% year-on-year reduction in emissions).
Scope 3 reporting
In 2022, we have undertaken an initial assessment of the Group’s
Scope 3 emissions, and like other companies, are adopting a staged
approach to the assessment. Through a desktop exercise, the Scope
3 categories have been considered for relevance, and where
relevant, an initial quantification exercise completed to assess
whether the associated emissions are material to the Group (refer
to
PAGE 44 for materiality considerations).
The Scope 3 categories with the highest associated emissions are
purchased goods and services and the element of employee
commuting not already captured in Scope 1. The desktop exercise
has concluded Scope 3 emissions are not material, however, a more
detailed assessment will be undertaken to validate this assertion in
due course, with further disclosure as necessary.
Recycling and water
Recycling
We have a recycling policy and our offices are equipped with
designated bins for the recycling of widely used materials in order
to reduce our consumptive waste. We actively encourage a
paperless environment and try to limit any written correspondence
to email. The use of the ‘My Foxtons’ customer portal continues to
increase meaning customers can transact without paper and use
digital signing technology. Additionally, within our branches, we use
recyclable glass bottles for customer drinking water, rather than
plastic bottles.
Water consumption
Our water consumption relates to water consumed in our offices,
primarily for drinking and staff facilities, and water consumed to
clean our vehicle fleet. Although our water consumption is not
considered to be significant, we regularly review our operations with
a view to reducing water usage noting it is a resource that is under
increasing pressure.
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Assessing materiality of climate-related risks
The Board has assessed the materiality of climate-related matters taking into consideration the extent to which climate change poses a
material risk to the business and after considering the following points:
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
2022 is the second year the Group has applied the TCFD framework to support our
understanding and management of climate-related risks and opportunities. In this
year’s disclosures we have sought to provide more detailed definitions, more evidence
and in-depth explanations of future plans.
Following the assessment, the Board has concluded that climate-related risks are not material to the Group and has taken this into account when
applying the TCFD framework to ensure the level of disclosure is commensurate to the level of risk.
Size of environmental footprint .
Foxtons is a service based business with relatively low
levels of Scope 1 and 2 emissions.
Whether there are any business segments, elements
of the business model or locations that could be
more significantly impacted by climate risks.
No particular business segment or element of the
business model has a heightened exposure to climate
change risk. Since Foxtons operates in Greater London
no special location considerations are required.
The complexity of the Group’s supply chain and
exposure to climate-related factors.
Foxtons operates in a service industry with a
relatively asset light business with a non-complex
supply chain.
The possible impact of climate risks.
Within the scenario analysis presented on
PAGES 46 AND 47 the climate risk impacts have
been assessed as being low to medium.
Whether the likelihood of risks and the associated
financial impacts could significantly evolve
over time.
The assessment has considered risks over the short,
medium and long term. Management will continue to
evaluate the long-term impact and evolve the risk
assessment accordingly.
Materiality consideration points Assessment outcome
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STRATEGIC REPORT
Climate-related risks and opportunities
The TCFD divides climate-related risks into two major categories: (1) Risks related to the transition to a lower carbon economy
(“Transition risks”); and (2) Risks related to the physical impacts of climate change (“Physical risks”). The risks are presented below, having
considered the TCFD all sector guidance points, alongside climate-related opportunities.
The Board will continue to assess climate-related risks under review as an emerging risk as noted within the risk management disclosures on
PAGE 35.
Transition risks
Short term (to 2030) Medium term (2030 to 2040) Long term (beyond 2040)
Market risk: Climate-related
regulation could reduce the supply of
stock and impact growth plans. For
example, property energy
performance regulation may increase
landlord operating costs,
discouraging landlords from
operating in the private rental sector.
Operational risk: There will be additional costs of becoming net zero across Scope 1, Scope 2 and
Scope 3 emissions due to the cost of renewable energy, electric vehicles, environmental levies and
carbon offsets. The cost of investment is likely to be partially offset by lower energy costs.
Market risk: Changes in customer behaviour could result in changes in supply and demand for
residential property and cause volatility in property and rental prices.
Market risk: Vulnerable social groups and lower income households may be disproportionately affected
by climate change which may impact local property markets and balance of business.
Reputational risk: If we do not transition our business model quickly enough there may be increased
reputational risk.
Physical risks
Short term (to 2030) Medium term (2030 to 2040) Long term (beyond 2040)
Business disruption as a result of
extreme weather events.
As temperature rises and extreme weather events
become more regular, climate change predictions suggest
that by the 2050s London could be some 2 degrees
hotter with wetter winters and drier summers, leading to
changes in customer behaviour and wider social impacts.
Business disruption as a result of extreme weather events.
It is likely that a significant proportion of
London’s critical infrastructure will be at
increased risk from flooding and there are
likely to be more people living on a
floodplain which may impact customer
behaviour and potentially reduce available
housing stock.
Climate-related opportunities
Short term (to 2030) Medium term (2030 to 2040) Long term (beyond 2040)
In the short term there are
investments that we can make to
improve our energy efficiency across
our business operations which will
reduce operating costs.
Over the medium to long term there will need to be significant investment by property owners to
ensure existing homes are low carbon and resilient to the changing climate. This is a major UK
infrastructure priority and is expected to be supported by the Treasury. There could be an opportunity
for the Group to increase its property management revenues by supporting property owners make the
required changes.
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46
Climate scenario analysis
To evaluate the resilience of the Group’s approach to climate-related risks and opportunities, analysis under two possible
climate scenarios has been completed:
i) The rise in global temperature is limited to less than 2°C.
ii) The global temperature rises by more than 2°C.
The risks and opportunities under each scenario are presented against short, medium, and long-term time horizons. Further work will be
undertaken to define the resilience of the business model in the longer term as market practice and market intelligence develops.
Low impact
Key:
Medium impact High impact
Short term (to 2030) Medium term (2030 to 2040) Long term (beyond 2040)
Risks: Higher transition risks associated with
moving to a low carbon economy
• Climate-related regulation could
reduce the supply of stock and
impact revenue growth plans.
• Transition costs to meet
emission targets and/or imposed
climate levies.
• Reputation risk due to a
slow transition to a low
carbon economy.
Continued
transition risks
• Transition costs to meet
emission targets and/or imposed
climate levies.
• Potential market volatility
impacting local markets and
balance of business.
• Reputation risk due to a
slow transition to a low
carbon economy.
Less significant increase in
physical risks
• Isolated extreme weather events
expected causing manageable
business disruption to operations.
Impact assessment: Impact assessment: Impact assessment:
Opportunities:
• There is an opportunity for the Group to benefit from increased demand for property management services as landlords
seek to make properties more energy efficient.
• Opportunity to reduce running costs by adopting lower energy technologies and electric vehicles.
Impact assessment:
i) The rise in global temperature is limited to less than 2°C.
Under the less than 2°C scenario, transition risks, as a result of transitioning to a low-carbon economy pose a greater risk to our business
model, whilst physical risks, pose a lower risk. Overall, we expect the Group’s business model to be resilient under this scenario as
summarised in the table below.
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STRATEGIC REPORT
ii) The global temperature rises by more than 2°C.
Under the greater than 2°C scenario, global climate policy is less effective and cause climate change above that envisaged by the Paris
Agreement. Under this scenario, physical risks pose a greater risk as a result of more extreme weather events, whilst transitional risks pose a
lower risk. Overall, we expect the Group’s business model to be resilient under this scenario as summarised in the table below.
Short term (to 2030) Medium term (2030 to 2040) Long term (beyond 2040)
Risks: Slight increase in transition and
physical risks
• More regular extreme weather
events expected to cause
manageable business disruption
to operations.
• Insurance cost rises due to increase
in physical damage to properties
and vehicles.
Increasing physical risks due to a failure to adequately transition to a
low-carbon economy
• More regular extreme weather events expected causing more significant
business disruption to operations.
• Market volatility impacting local markets and balance of business.
• Reputation risk due to a slow transition to a low-carbon economy.
• Increase in energy costs as energy sources become constrained
or compromised.
Impact assessment: / Impact assessment: /
Opportunities:
• There is an opportunity for the Group to benefit from increased demand for property management services as landlords
seek to make properties more energy efficient or make a greater use of our property management services to manage
climate-related issues.
• Opportunity to reduce running costs by adopting lower energy technologies and electric vehicles.
Impact assessment:
Low impact
Key:
Medium impact High impact
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
48
TCFD recommended
disclosure and compliance Activities to date and actions to achieve compliance
Governance
(a) Describe the
Board’s oversight of
climate-related risks
and opportunities
The Board has overall accountability for ESG and is responsible for maintaining the Group’s system of risk
management and internal control, including climate-related risks. This is informed by the work of the ESG
Committee and the Audit Committee.
The ESG Committee regularly reviews environmental and social related risks to the Group and makes
recommendations to the Audit Committee regarding inclusion in the Group’s risk management practices.
Climate-related opportunities will also be reported directly to the Board by the ESG Committee. Where
relevant and material, the Board will consider climate-related matters when making strategic decisions,
such as deciding the speed at which the vehicle fleet is electrified.
Planned actions – The Board will continue to receive updates from the ESG Committee and Audit
Committee to inform strategic decisions.
Governance
(b) Describe management’s
role in assessing and
managing climate related
risks and opportunities
The Executive Leadership Team is responsible for day-to-day management of the business and ensuring
that the ESG strategy is actioned appropriately within the business. The Executive Leadership Team
monitors the delivery of the Group’s environmental programmes and also monitors climate-related risk as
part of the Group’s overall risk management framework. The Executive Leadership Team receives progress
reports on environmental and social initiatives from relevant departmental heads. The ESG Committee,
which meets three times a year and otherwise as required, receives reports from the Executive Leadership
Team or relevant department heads. The ESG Committee Chair reports key matters to the Board following
each Committee meeting.
Planned actions – As our environmental programmes progress, we will assign specific responsibilities to
Senior Managers to ensure that climate-related risks and opportunities are assessed and managed
effectively throughout the business.
Strategy
(a) Describe the
climate-related risks
and opportunities the
organisation has identified
over the short, medium,
and long term
On
PAGE 45 we describe the possible climate-related risks and opportunities that may impact our
business over the short, medium and long term.
Planned actions – The Board will continue to monitor risks on a short, medium and long-term basis and
monitor the emerging climate-related risk.
Strategy
(b) Describe the impact
of climate-related risks
and opportunities on
the organisation’s
businesses, strategy,
and financial planning
The Board has not identified any material climate-related risks that impact the Group’s business model,
strategy, financial planning or viability of the Group. This conclusion is supported by the risk assessment set
out on
PAGE 35. No material cost investment is required to meet our medium-term environmental
commitments, with the relevant costs incorporated into financial projections for the next five years.
Planned actions – The Board will continue to monitor the risks and opportunities presented by
climate change and will make changes to the Group’s operations, strategy and financial planning
where appropriate.
Strategy
(c) Describe the resilience
of the organisation’s
strategy, taking into
consideration different
climate-related
scenarios, including a
2°C or lower scenario
On
PAGES 46 AND 47 the impact on the Group’s strategy under two climate-related scenarios has
been assessed: i) a 2°C or lower scenario; and ii) a more than more than 2°C scenario.
Planned actions – The Board will continue to monitor the resilience of the Group’s strategy, and in
particular the longer-term impacts which are inherently more difficult to assess.
Alignment with the recommendations of the TCFD
Our TCFD compliance statement is set out below. In line with the requirements of LR 9.8.6(8)R, we are reporting on a ‘comply or explain’
basis against the eleven recommended TCFD disclosures. The table below sets out our compliance status in relation to each of the
recommendations and, where relevant, the actions we are taking to achieve compliance.
For 2022, our disclosures were either compliant or partially compliant with all of the TCFD recommendations. We will continue to develop
our disclosure in future years as market practice develops or in the event our materiality assessment evolves.
Compliant
Key:
Partially compliant
/ RESPONSIBLE BUSINESS CONTINUED – 1. ENVIRONMENT
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STRATEGIC REPORT
TCFD recommended
disclosure and compliance Activities to date and actions to achieve compliance
Risk Management
(a) Describe the
processes for identifying
and assessing
climate-related risks
Climate-related risks are identified through the Group’s risk management processes. The Group utilises the
TCFD framework to identify climate risks and horizon scans to change in the risk environment.
Planned actions – We will continue to review our risk register to ensure effective identification of our
climate-related risks.
Further information – Refer to
PAGE 30 for details of the Group’s risk identification process.
Risk Management
(b) Describe the
processes for managing
climate-related risks
Climate-related risks are managed through the Group’s risk management processes. The Executive
Leadership Team regularly reports progress to the ESG Committee, including actions to manage the
impact of emerging climate-related risks.
Planned actions – Continue to monitor climate-related risks and respond through operational or strategic
changes where relevant.
Further information – Refer to
PAGE 30 for details of the Group’s risk management process.
Risk Management
(c) Describe how
processes for identifying,
assessing, and managing
climate-related risks are
integrated into overall
risk management
The Group’s risk management framework includes the key process for identifying, assessing and managing
climate-related risks alongside non-climate-related risks.
Planned actions – The Board and Audit Committee will continue to regularly review the Group’s principal
and emerging risks.
Further information – Refer to
PAGE 30 for details of the Group’s risk management process.
Metrics and Targets
(a) Describe the
metrics used to assess
climate-related risks and
opportunities in line with
the strategy and risk
management process
The metrics used by the Group to assess the climate-related risks and opportunities include:
• GHG emissions (Scope 1 and Scope 2)
• Intensity ratio
• Energy consumption
Planned actions – Continue to monitor our total GHG emissions, intensity ratio and energy consumption.
We will also keep these metrics under review and consider whether to add further metrics in the future.
Further information – Refer to
PAGES 42 AND 43 for more detail on our environmental impacts and
climate-related targets.
Metrics and Targets
(b) Disclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
GHG emissions, and
related risks
GHG Scope 1 and 2 emissions reported in line with the Streamlined Energy and Carbon Reporting (SECR)
regulations. Scope 3 GHG emissions are not considered to be material for the Group and are therefore not
currently disclosed.
Planned actions
• We will continue to report on GHG Scope 1 and 2 emissions.
• A desktop exercise has concluded Scope 3 emissions are not material, however, a more detailed assessment
will be undertaken to validate this assertion in due course, with further disclosure as necessary.
Further information – Refer to
PAGE 42 for the Group’s Streamlined Energy and Carbon Reporting and
PAGE 43 for details of the Group’s Scope 3 emission assessment.
Metrics and Targets
(c) Describe the
targets used to manage
climate-related risks
and opportunities
and performance
against targets
The Group has a number of targets to manage climate-related risks as set out on
PAGES 39 AND 42.
In summary these are:
• Electrifying our entire vehicle fleet by 2030 in line with our EV100 commitment.
• 30% reduction in Scope 1 and Scope 2 emissions by 2030 against the 2021 baseline.
• Reaching net zero across Scope 1, Scope 2 and Scope 3 emissions by 2050.
Planned actions – To keep our targets under review and continue to monitor progress against them.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
50
Having the right people, culture, skills & knowledge are critical to our success. Guided by
our new purpose and values we are revitalising the Foxtons culture such that it becomes
more customer-centric and results-based, and ultimately a rewarding workplace for
employees to develop and grow.
2. PEOPLE, CULTURE, SKILLS & KNOWLEDGE
Diverse and inclusive workplace
92%
of employees believe the
Company supports a diverse
and inclusive workplace
1
Rebuilding culture
5
New values embedded within
the business to rebuild our
high-performance culture
2022 HIGHLIGHTS
/ RESPONSIBLE BUSINESS CONTINUED – 2. PEOPLE, CULTURE, SKILLS & KNOWLEDGE
1
Results from the 2022 employee engagement survey independently administered by WTW.
Employee engagement
85%
Employee overall
engagement score
1
Training and development
257
Negotiators completed the new
five-day induction programme
at Chiswick Park in 2022
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STRATEGIC REPORT
OUR APPROACH – PEOPLE, CULTURE, SKILLS & KNOWLEDGE
Working at Foxtons is exciting, sociable and rewarding. We reward hard work, delivering for customers and those who demonstrate our
values. We provide the opportunity for talented and enthusiastic individuals to thrive in their careers and our highly incentivised
remuneration structures reward exceptional performance and customer delivery.
In the year, we refreshed our purpose and values to reflect Foxtons’ estate agency DNA. This gives our people a clear focus and underpins
our high-performance culture that recognises and celebrates the role we play in facilitating that often highly emotional and consequential
transaction of letting or selling a house.
PEOPLE
We are committed to recruiting and retaining a highly
motivated, skilled and experienced workforce that mirrors the
diversity of London, the city we predominantly serve. This
approach enables us to access a diverse mix of people and
skills, with different ideas and creates a culture where each
employee can feel motivated to deliver the best results for
customers and are able to be their best selves.
Refer to
PAGES 52 AND 53 for details of our initiatives and
progress made in 2022.
CULTURE
We are committed to investing in and maintaining a high-
performance culture that attracts and retains talented people
who deliver outstanding results for our customers. This culture
will enable us to rebuild our competitive advantages, deliver
our strategic priorities and ultimately enhance the success of
the Group.
Refer to
PAGES 54 AND 55 for details of our initiatives and
progress made in 2022.
SKILLS & KNOWLEDGE
We are committed to ensuring our people receive the best
training and career development opportunities with a view to
building a long-term career. Our industry leading training
consists of formal and informal training, mentor programmes
and networking events, giving everyone the support and the
resources they need to enhance their development.
Refer to
PAGE 56 for details of our initiatives and progress
made in 2022.
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52
Recruitment
We are always challenging ourselves to do more and ensure we are
using all the tools at our disposal to attract candidates from diverse
backgrounds. This includes consistent, objective and effective
people practices for both hiring and managing people.
Recruiting the best talent, whilst supporting a diverse workforce, is
a key part of restoring competitive advantage and will be a priority
going forward.
Our employer brand attracts a high calibre of candidates, backed by
our recruitment practices which use a range of selection and
assessment methods to match the right talent to our vacancies.
Our progressive policies ensure fairness and diversity in our hiring
processes. We judge the merits of candidates’ abilities and
achievements in the context of their background, not simply the
absolutes of any achievements. Our equal opportunities policy
locks in this approach and ensures we are not discriminating in any
way. We have backed this with a programme of unconscious bias
training across all our hiring managers and recruitment team.
In 2022, to ensure we continue to attract the best diverse talent, we:
• Reviewed and upgraded our external recruitment partners to
support candidate attraction.
• Continued to welcome and develop new hiring managers and
enhanced our interview and assessment methods to ensure we
are selecting the right talent.
• Invested in growing and developing our internal
recruitment team.
• Joined the Good + Fair Employers Club, which involves
recruitment leaders from some of the biggest UK companies
coming together once a month to discuss how we can best
attract and assess candidates whilst always treating everyone
fairly. This has proven a beneficial network to join, enabling our
recruitment team to share insights, discuss challenges and
opportunities with other professionals in the industry.
Workforce retention
This year there has been a renewed focus on improving our workforce
retention to ensure that we see the most value from our investment
in training and development. In 2022 we enhanced our analysis of
leaver data to get a better understanding of why employees leave the
business and the steps we can take to minimise attrition. Employee
retention will be a key focus throughout 2023 and is key to rebuilding
our competitive advantage.
Our diversity networks
Across the business, our diversity networks, Women@Foxtons, Afro
Foxtons and Foxtons LGBTQ+, continue to be active and engaged.
Women@Foxtons brings together female team members at
various levels of their careers to provide personal and professional
career development support and to help increase the number of
women in management and senior roles.
Having celebrated International Women’s Day and provided an
active voice in trade press during the year, we began a process of
review towards the end of 2022 to make sure the network
continues to provide relevant support to all members moving
forward. This included lunch and learn sessions at head office and
reinvigorating our mentor groups for our branch network.
PEOPLE
Our people strategy is focused on having
the right people, with the right skills and
values, to deliver the very best results for
our customers and diversity is a key
element of this. Our recruitment policy,
action taken to improve staff retention and
our diversity networks all play a key role in
maintaining an engaged, productive and
diverse workforce.
KEY INITIATIVES AND PROGRESS MADE IN 2022
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STRATEGIC REPORT
Diversity reporting: gender and ethnicity
Alongside our gender diversity reporting, this year we have also published our ethnic diversity in the table below. We will use our annual
disclosure as a benchmark to monitor our progress as we further enhance our gender and ethnic diversity at all levels of the Group.
The table below presents our gender and ethnicity diversity splits as at 31 December 2022. Gender splits reflect employer information we hold on
employees’ legal sex and ethnicity splits reflect diversity information anonymously collated as part of our annual employee survey or specific
returns made by the Board and Senior Management.
Below the Senior Management level, there is a reasonable gender balance with 56% males and 44% females. Likewise, 34% of the below
Senior Management population, who responded to the annual employee survey, identified as non-white or from an ethnic minority
background. This ethnic diversity is lower than London’s ethnic diversity with 46% of London identifying as non-White in the 2021 Office
for National Statistics census.
At more senior levels of the business we recognise there is more work to do to improve both gender and ethnic diversity, with our employee
development programmes being a key area of focus to improve the diversity of the Senior Management and the Executive Leadership Team.
Refer to
PAGE 79 for consideration of Board diversity.
1
Executive Leadership Team includes two Executive Directors, refer to PAGE 66 for Executive Leadership Team membership.
2
Senior Management includes the Executive Leadership Team and their direct reports, excluding Executive Assistants.
Afro Foxtons is an inclusive network which allows employees
to share their stories, support each other’s ambitions and
promote career development. The network plays a vital role in
supporting the Group’s aims of increasing the level of black
leadership representation.
In 2022 the Committee implemented an action plan to showcase
talent in 2023 with the goal to increase member registrations. 2022
also saw the launch of Foxtons’ first ever podcast show, Top Talk, an
internal podcast intended to educate, influence and motivate our
diverse culture.
Foxtons LGBTQ+ aims to promote that Foxtons is a safe and
inclusive workplace where everyone can feel included, represented
and allowed to be themselves.
In 2022 we promoted our commitment to providing LGBTQ+ safe
spaces in all 60 of our offices through events in Chelsea and our
sponsorship of Pride in London. We also had 50 colleagues march
through London as part of the Pride in London 50th anniversary
parade and supported our marketing team to deliver related
content for our website and social media accounts.
A RO
Gender Ethnicity
Male Female
White ethnic
background
Non-white or ethnic
minority background
Prefer not
to say
Board 71% 29% 100% 0% 0%
Executive Leadership Team
1
75% 25% 88%
12%
0%
Senior Management
2
76% 24% 76% 24% 0%
All other employees 56% 44% 63% 34% 3%
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
54
CULTURE
This year we refreshed the Group's values
to reflect our new ambitions and
expectations for the business as well as
providing a framework from which we can
build and strengthen our culture. This
encapsulates an increasing focus on
delivering exceptional results for our
customers, driven by our new purpose: to
get the right deal done for London’s
property owners.
Our Values
Our culture is shaped and underpinned by our values which have
also been refreshed in the year. Our values guide our employees
on how they contribute to the Group’s success and adhere to the
highest ethical standards:
Professional – providing the most efficient, reliable and dedicated
customer journey, whilst maintaining the highest standards of
business ethics.
Ambitious – striving to get the best results for our customers.
Relentless – maintaining consistently high standards day in
and day out.
Innovative – constantly looking for new and market leading ways to
get the right deal done for our customers.
Authoritative – being the most knowledgeable agents in the market.
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STRATEGIC REPORT
Monitoring and assessing culture
The Board monitors culture in a number of ways, including engaging
with the Employee Engagement Committee (EEC), reviewing the
results of the annual employee engagement survey and more
informal mechanisms, such as branch visits, attending divisional
meetings and reviewing employee suggestions captured through a
dedicated intranet page.
Refer to
PAGE 69 for further details as to how the Board
monitors culture.
Employee Engagement Committee
The EEC is designed to give our people another route into our
leadership to directly discuss any issues they wish and to help the
Board monitor our culture. Each EEC meeting is attended by a
Non-Executive Director on a rotational basis, who reports back to
the Board to ensure it is fully informed of employee views when
making decisions.
In 2022 we also reviewed the members of the EEC and removed
five senior members and replaced them with more junior members
to further foster an environment where all members felt they could
speak up about the topics that matter to them. We also changed
the format of the meetings to include a closing session with a small
panel of senior leaders joining the meeting to hear what topics have
been discussed and answer any related questions.
In 2022, the EEC covered a range of areas including:
Reviewing the results of the 2021 Employee Engagement
Survey and considering response actions.
• Discussing our strategy to acquire, engage and
retain customers.
• Discussing Executive Directors pay structures and the
2021 Directors’ Remuneration Report.
• Discussing employee attraction and retention.
Key outcomes from the EEC meetings in 2022 included:
• Identifying areas that require additional management
focus to improve the working environment, culture and
staff retention.
• Identifying innovative ideas to improve customer service,
experience and competitiveness.
• Employees having a better understanding of the decisions
made by the Remuneration Committee in the context of
wider workforce remuneration as set out in the 2021
Directors’ Remuneration Report.
2022 employee engagement survey
The annual employee engagement survey, which is independently
administered by WTW, acts as a formal mechanism for the
Board and Senior Management to monitor culture, assess
year-on-year progress and form a tangible action plan in response
to employee feedback.
We ran our annual employee engagement survey at the end of
2022 and are pleased to report a robust outcome during a year
of change for the organisation.
Highlights from the survey include:
• 85% employee engagement score (2021: 87%), which is
4% higher than WTW’s assessment of the UK norm.
• 90% of employees indicated they have confidence in the
CEO and Senior Management.
• 92% of employees have a clear understanding of the
goals and objectives of the Company.
• 92% of employees believe the Company supports a
diverse and inclusive workplace.
The Board has reviewed all areas of feedback from the survey
and incorporated areas for improvement into the 2023 people
related strategy.
Employee recognition
Employee recognition is an important part of our high-performance
culture. Throughout the year employee success is celebrated and
model behaviours shared across the Company.
A highlight of the year was the Foxtons Awards held in December
2022, which saw 70 employees receive awards for outstanding
customer delivery. Following the operational review, we also
refreshed the salesforce compensation scheme and staff incentives
to reward exceptional performance and help to rebuild our culture
of sales intensity.
We are also pleased to report that our commitment to employee
experience and culture was recognised externally:
• Foxtons and OpenBlend, the provider of our coaching-led
performance management system, were jointly shortlisted for
the Investors in People Award for the Best Use of Technology.
• We were voted one of the UK’s Most Loved Workplaces for
2022 by Newsweek.
• Foxtons colleagues collected a ‘Leading Light’ award at the UK
Social Mobility Awards for our contribution to social mobility.
Employee wellbeing
Mental health and employee wellbeing is an important part of our
health and safety programme.
At Foxtons we use OpenBlend, a digital performance management
platform, to monitor colleagues’ development, performance and
wellbeing. OpenBlend is designed to capture colleagues’ objectives
and actions, as well as being underpinned by coaching frameworks
so that managers can coach their direct reports in relation to
reaching their professional and personal objectives.
OpenBlend also has a wellbeing measurement tool that tracks
colleagues’ happiness, confidence, and capability to manage stress,
which is self-reported by users. Our average 2022 wellbeing score
across the business was 78%, which is 2% higher than the
OpenBlend customer average.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
56
SKILLS & KNOWLEDGE
Our training and employee development
programme delivers tailored and
meaningful training, which aims to help all
our employees deliver the best results for
customers and reach their career goals.
Employee onboarding
This year we reintroduced our five-day onboarding programme for
new starters, returning to classroom based learning after a period
of predominantly digital learning during the Covid-19 pandemic.
This intensive onboarding programme covers all aspects of estate
agency, providing essential skills and on-the-job learning
experiences for those starting their career at Foxtons, as well as
ensuring that every employee quickly understands the business and
is equipped with the tools they need to start delivering results for
customers straight away. This induction week also ensures that all
of our new starters understand how they can play their part in
delivering our purpose and can adopt values that we live by, which
is what creates our unique culture.
Management training programme
In 2022, 106 employees completed the first cycle of our in-house
management training programme, Impact, which is designed to
drive performance and develop our future leaders. Impact training
is a tailored management development programme which takes
place over several months with the aim of developing market
leading managers who will play a critical role in maintaining the
right culture and delivering results for our customers.
Internal mentoring
All newly promoted Valuers and Associate Negotiators are enrolled
onto a ten-week peer-to-peer mentoring scheme during which they
are given a mentor doing the same role but in a different region to
support their transition into their new role. We had 19 trained
mentors at Foxtons in 2022 who all found the scheme to be
beneficial for their self-development and sense of purpose.
Diversity, respect and inclusion training
As part of the Group’s commitment to creating an inclusive
workplace, where individual differences are respected and valued,
we have refreshed our diversity, respect and inclusion training
programmes to ensure the Board, and our employees, understand
their role in this important area.
Training to improve skills
106
Employees completed our in-house management
training programme, Impact, in 2022
19
Foxtons employees trained as peer-to-peer
mentors in 2022
85%
of employees believe they receive all the necessary
training to continuously improve their skills
1
1
Results from the 2022 employee engagement survey independently administered by WTW.
/ RESPONSIBLE BUSINESS CONTINUED – 2. PEOPLE, CULTURE, SKILLS & KNOWLEDGE
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
57
STRATEGIC REPORT
We seek to be both active and visible in the communities where we serve through our
community outreach programmes and the charitable activities our teams engage in.
3. COMMUNITY
Career Ready partnership
220
Students supported by Foxtons
colleagues through our Career Ready
partnership in 2022
/ RESPONSIBLE BUSINESS CONTINUED – 3. COMMUNITY
OUR APPROACH
Social mobility and diversity are integral to Foxtons’ culture and
what makes our business a success. Foxtons has consistently given
opportunities to Londoners from all backgrounds and walks of life.
Our desire to make a meaningful contribution to social mobility and
diversity goes beyond our own approach to recruitment and this is
why we choose to partner with organisations that help us to
improve the wellbeing of the communities in which we operate and
provide opportunities to the people that live within them.
OUR KEY INITIATIVES AND PROGRESS IN 2022
Career Ready
In 2021 we started our partnership with Career Ready, a national
social mobility charity that works with employers, schools, and
volunteers to support young people across the UK. This partnership
enables us to work directly with young people, primarily 16 to 18
year olds based in London, who face barriers in education
and employment.
Through our partnership we provide financial support to Career
Ready and support them with our time and expertise. Everyone at
Foxtons can get involved in a hands on way through Career Ready’s
structured programme that helps to make a positive difference to
social mobility in our communities.
2022 HIGHLIGHTS
9
Internships at our head office and branch
network across disciplines including
Marketing, Finance, Property Management
and New Homes Sales in 2022
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
58
2022 SAW US SUPPORTING EVEN
MORE YOUNG PEOPLE
In 2022 we have helped even more young people start to
build a rewarding future through internships, mentoring and
masterclasses on leadership and perseverance.
14 Foxtons colleagues provided mentoring for students,
which involved meeting them on a regular basis to help
them through the Career Ready programme, provide real
world insight and guide them to make decisions about their
future career.
We ran masterclasses on communication, leadership and
perseverance, supported by the experiences of our people
for over 200 students in schools across London in the local
communities where we operate.
We offered nine paid internships across disciplines including
Marketing, Finance, Property Management and New Homes
Sales. The internships helped students to understand our
working environment, provided opportunities to work
collaboratively and challenged them to present to
senior stakeholders.
UK Social Mobility Awards
As part of a two-year agreement, we continued to support the
Rising Star award at the UK Social Mobility Awards, which are run
by Making the Leap and are dedicated to celebrating the
achievements of individuals and businesses that champion social
mobility. The category recognised those who are still in the early
stages of their career (30 years or under), who have already made a
significant contribution to advancing the cause of social mobility. At
the event we also collected a ‘Leading Light’ award for our
contribution to social mobility.
Social Mobility Pledge
In 2018 we signed the Social Mobility Pledge, a coalition of 550
businesses globally that encourages organisations to be a force for
good by putting social mobility at the heart of their business. We
continue to be a signatory today, demonstrating our long-term
commitment to this cause.
/ RESPONSIBLE BUSINESS CONTINUED – 3. COMMUNITY
Career Ready students at our Chiswick Park head office.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
59
STRATEGIC REPORT
The Board recognises its wider responsibilities, and through a number of established policies
and practices, governs compliance with legislation and governance guidance.
Governance and ethics
The Board promotes the highest ethical standards when carrying
out our business activities, and the Group has clear and available
policies for:
• Dealing with gifts and hospitality.
• Anti-money laundering.
• The use of inside information.
• Guarding against bribery and corruption.
All of these policies are included in our employee handbook and are
backed by mandatory training for our people and adherence to the
policies is monitored on a regular basis.
Whistleblowing
The Group is committed to conducting its business with honesty and
integrity, and all employees are expected to maintain high standards.
However, all organisations face the risk of things going wrong from
time to time, or of unknowingly harbouring illegal or unethical
conduct. A culture of openness and accountability is essential in order
to prevent such situations occurring or to address them when they do
occur. The Group’s whistleblowing policy aims to:
• Encourage employees to report suspected wrongdoing, in the
knowledge that their concerns will be taken seriously and
investigated as appropriate, and that their confidentiality will
be respected.
• Provide employees with guidance as to how to raise
those concerns.
• Reassure employees that they should be able to raise genuine
concerns in good faith without fear of reprisals, even if they
turn out to be mistaken.
Employees have a number of routes to report whistleblowing
matters, including through our confidential whistleblowing helpline
run by an independent third party. The whistleblowing helpline is
advertised in the business, including prominently in the staff
handbook which is accessible to all employees. The Audit
Committee regularly reviews any matters reported to the
whistleblowing helpline as detailed on
PAGE 87.
4. OUR OTHER RESPONSIBILITIES
/ RESPONSIBLE BUSINESS CONTINUED – 4. OUR OTHER RESPONSIBILITIES
1
Results from the 2022 employee engagement survey independently administered by WTW.
2022 HIGHLIGHTS
Upholding high ethical standards
94%
of employees feel encouraged to act
ethically and adhere to the highest
standards at all times
1
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
60
Supplier/customer relationships and responsibilities
The Group has a range of established supplier relationships as well as
trusted and vetted supply partners who provide a range of lettings
property management services to our landlords and tenants.
We carefully manage our supplier relationships and regularly review
our supplier engagement policies with a view to maintaining a high
quality of service, both for the Group and our customers. We
engage with all our suppliers in a fair and transparent manner.
The Board, supported by the Audit Committee, regularly reviews
our supplier payment practices and associated statutory reporting.
We also recognise our responsibility to encourage good ESG
behaviour among our suppliers and maintain a policy that seeks
commitments and minimum standards in this respect from
our suppliers.
One of the strengths of our business is our ongoing relationship
with tens of thousands of customers. We use these relationships to
promote improvements, especially in terms of environmental
policy. For instance, we advise all our landlords proactively on
improving the energy efficiency of their homes and will not do
business with anyone who does not comply with government
energy efficiency standards.
Human rights and modern slavery
The Board has reviewed the risk of modern slavery within the Group
and maintains the risk to be low. This assessment is based upon the
nature of the business, which operates almost exclusively within
Greater London. The Group’s standard practice is to check that
prospective employees have the right to work in the UK and we do
not generally employ agency staff. Where we work with suppliers,
these are generally large organisations. We publish our modern
slavery statement on both our Group and the Foxtons Limited
website, as well as voluntarily on the government’s Modern Slavery
Statement Registry for organisations.
We are committed to ensuring that there is no slavery or human
trafficking in our organisation or our supply chain, and regularly
review supplier service and behaviours. Before we contract with a
supplier, we issue detailed contractor guidelines that contain our
clear requirements to ensure that staff employed or contracted by
these companies are entitled to work in the UK and are free from
slavery, servitude, forced or compulsory behaviour and to comply
with other laws, including health and safety. Through our contractor
management procedure, we undertake and collect due diligence
documents on potential suppliers before we engage their services.
Health and safety
Foxtons is committed to providing a safe and healthy working
environment for staff and visitors in compliance with the Health
and Safety at Work etc. Act 1974 and the Management of Health
and Safety at Work regulations. Specifically the Group:
• Maintains safe and healthy working conditions.
• Provides adequate control of the health and safety risks arising
from its work activities.
• Provides adequate training to staff on health and
safety matters.
• Regularly reviews and revises its Health and Safety Policy.
All employees are required to comply with the Group’s Health and
Safety Policy and must not interfere with anything provided to
safeguard health and safety. They must take reasonable care of
their own health and safety and report all health and safety
concerns through the Group’s established reporting mechanism.
All employees are made aware of the Health and Safety Policy
through publication in the Employee Handbook and induction
training. It is also made available on the Group’s intranet. The
Group uses an appropriately qualified external third party expert to
support with the Group’s ongoing compliance with health and
safety regulations. In the year the Audit Committee commissioned
an internal audit to review the Group’s health and safety
framework, refer to the Audit Committee’s report on
PAGE 87
for further details.
Our wider responsibilities and lobbying
The Board recognises the Group’s wider responsibility of supporting
society’s need for high quality housing and a well regulated estate
agency industry that supports this supply.
From time to time we engage with industry influencers, such as
regulators, industry bodies, government and the media, to discuss
sector regulation. We do not contract with or pay for any third
party to engage in lobbying activity on our behalf.
/ RESPONSIBLE BUSINESS CONTINUED – 4. OUR OTHER RESPONSIBILITIES
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
61
STRATEGIC REPORT
/ NON-FINANCIAL INFORMATION STATEMENT
The table below, and information throughout the 2022 Annual Report and Accounts and on our website that it refers to, is intended to help
our stakeholders to understand our position on key non-financial matters and satisfy the requirements of Section 414CA of the Companies
Act 2006.
Non-financial
matter
Policies and standards
governing our approach
1
Risk management and
additional information
Associated KPIs and
other published metrics
Business
model
• Stakeholder engagement
• Resilient business model
• Rebuilding our competitive
advantages
• New purpose, values and
refocused strategic priorities
• Principal risks: Market risk and
competitor challenge
PAGES 18 TO 21
PAGES 12 AND 13
PAGES 16 AND 17
PAGES 14 AND 15
PAGE 33
• Key performance
indicators
PAGES 22 AND 23
Employees
• Data protection policies
• Health and safety policies
• Employee handbook
• Equal opportunities policy
• Whistleblowing policy
• Stakeholder engagement
• Principal risks: People
• Responsible business
• Directors’ Report
• Corporate Governance Report
• Directors' Remuneration Report
PAGES 18 TO 21
PAGE 34
PAGES 50 TO 60
PAGES 130 TO 132
PAGES 69 AND 73
PAGES 114 AND 115
• Employee
engagement score
• Gender and
ethnicity diversity
• Our gender pay gap
report can be found
on www.foxtonsgroup.
co.uk
PAGES 23 AND 55
PAGE 53
Human
rights
• Environmental, social
and governance policy
• Modern slavery
statement can be found
on our website
• Responsible business
PAGE 60
Social
matters
• Environmental, social and
governance policy
• Stakeholder engagement
• Principal risks: Reputation
and brand
• Responsible business
PAGES 18 TO 21
PAGE 34
PAGES 57 AND 58
• Employee metrics
• Community metrics
PAGE 23
PAGES 57 AND 58
Anti-corruption
and bribery
• Anti-money laundering
and anti-bribery policies
• Employee handbook
• Environmental, social and
governance policy
• Principal risks: Compliance
with the legal and
regulatory environment
• Responsible business
• Audit Committee Report
PAGE 34
PAGES 38 TO 60
PAGE 87
Environmental
matters
• Environmental, social and
governance policy
• Recycling policy
• Stakeholder engagement
• Emerging risks:
Climate-related risks
• Responsible business
PAGES 18 TO 21
PAGE 35
PAGES 40 TO 49
• Streamlined Energy
and Carbon Reporting
PAGE 42
1
Certain Group policies and guidelines are not published externally.
The Strategic Report, from PAGE 1 TO 61, has been reviewed and approved by the Board of Directors on 6 March 2023.
Guy Gittins
Chief Executive Officer
Chris Hough
Chief Financial Officer
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
62
/ CORPORATE GOVERNANCE REPORT
Chairman’s governance introduction
I am pleased to introduce my second Corporate Governance Report,
in which we describe our governance arrangements, the operation
of the Board and its Committees, and how the Board discharged
its responsibilities.
Board priorities
2022 has been an important year for the Group, with the Board
reviewing executive leadership, resulting in the appointment of Guy
Gittins as CEO. Chris Hough was promoted to CFO, alongside a
streamlined and refreshed Executive Leadership Team. A review of
the Group’s operations has been undertaken, led by Guy Gittins,
resulting in a refreshed purpose and a refocused set of strategic
priorities. Further details on our strategic priorities can be found on
PAGE 15.
There has been a continued focus on delivering results, reflected in
the 56% increase in adjusted operating profit in the year, alongside
making good progress with the operational and culture changes
necessary to deliver against the new strategic priorities.
In 2023, the Board looks forward to supporting the Group, under
Guy’s leadership, as it rebuilds Foxtons’ estate agency DNA and
competitive advantage, delivers against its strategic priorities and
generates sustainable value for its shareholders.
Governance
The Board is responsible for leading the Group and ensuring that we
have a strong and robust governance framework. This framework is
designed to encourage strong debate and challenge by all Board
members, leading to successful decision making within acceptable
timeframes based on accurate information. Being committed to
achieving a high standard of governance is an important factor in
delivering against our strategic priorities and in generating
shareholder value and contributing to wider stakeholder interests.
In summary, I am satisfied with the standards of governance that
the Board continues to maintain and build upon, and the Group has
complied with the UK Corporate Governance Code published in July
2018 (“the Code”) throughout the year.
Purpose, culture and values
The Board has reviewed and updated Foxtons’ purpose to articulate the
new strategic direction of the Group under Guy’s leadership. Our new
purpose, to get the right deal done for London’s property owners
captures the essence of our business, reflects our results-based
approach and our drive to get the best outcomes for our customers.
The Board is committed to developing a high-performance culture
that attracts and retains talented people who deliver outstanding
results for our customers. Development of this culture is a key
priority enabling us to deliver our strategic priorities and ultimately
enhance the success of the Group.
Being committed to achieving
a high standard of governance
is an important factor in
delivering against our strategic
priorities and in generating
shareholder value and
contributing to wider
stakeholder interests.
Nigel Rich Chairman
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
63
Our culture is shaped and underpinned by our values which have
also been refreshed in the year. Our values guide our employees on
how they contribute to the Group’s success and adhere to high
ethical standards.
Further details on our purpose, culture and values can be found on
PAGES 7, 54 AND 68.
Stakeholder engagement
Having regard for all stakeholders, and specifically the matters set out
in Section 172 of the Companies Act 2006, continues to be a key part
of the major decisions that the Board has made during the year.
Throughout the year the Board has used a number of mechanisms
to engage with stakeholders, with the Board engaging with
employees both through formal and informal channels which are
important in helping the Board monitor culture effectively. In a year
of leadership changes, dialogue with shareholders has been
particularly important and is vital to ensuring mutual
understanding. We are in regular contact with our major
shareholders and in 2022 supplemented our scheduled shareholder
engagement programme with additional dialogue on the key
developments in the business.
An overview of our engagement with stakeholders, including
our Section 172 statement and examples of how stakeholders
were considered when making key Board decisions, is set out
PAGES 18 TO 21 of the Strategic Report.
Board changes
Guy Gittins joined the Board as CEO on 5 September 2022,
replacing Nic Budden who stepped down from the role on 30 May
2022. Peter Rollings acted as Interim CEO for the interim period
between Nic Budden stepping down and Guy Gittins taking up his
position as CEO. Peter has since resumed his role as an Independent
Non-Executive Director.
Chris Hough was appointed CFO and an Executive Director on 1
April 2022 succeeding Richard Harris who took up another position
elsewhere. Patrick Franco, the Group’s previous COO, also stepped
down from the Board on 1 April 2022.
As announced on 23 November 2022, with the new Chairman, CEO
and wider management team changes now complete and in place,
Alan Giles and Sheena Mackay have chosen not to stand for
re-election at the 2023 AGM. I would like to thank Alan and Sheena
for their significant support and contribution as Non-Executive
Directors since I joined the business and wish them well with their
new endeavours. Annette Andrews and Jack Callaway were
recruited as Independent Non-Executive Directors and joined the
Board on 1 February 2023. Annette Andrews will take up the
position of Chair of the Remuneration Committee and Chair of the
ESG Committee at the 2023 AGM. Rosie Shapland will take up the
position of Senior Independent Director upon Alan Giles’ resignation
from the Board at the 2023 AGM.
Further details regarding these Board changes can be found in the
Nomination Committee Report on
PAGES 77 AND 78.
Shareholder returns
Alongside the dividend, the Board continued to return excess cash
to shareholders by way of share buybacks, having considered the
application of the Group’s capital needs and after engaging with
shareholders to obtain their views. Further information on the share
buyback activity is set out on
PAGES 5 AND 29.
Remuneration
As planned, during the year the Remuneration Committee
undertook a review of the Directors’ Remuneration Policy. We are
proposing minor changes to our remuneration policy. The Policy will
be presented to shareholders for approval at the forthcoming AGM.
Further details can be found on
PAGES 98 TO 113.
Audit, risk and internal control
The Audit Committee’s work has continued to focus on protecting
the interests of shareholders and strengthening the Group’s risk
management and internal control systems. The Audit Committee
has focused on monitoring and strengthening internal controls and
risk management processes. The internal audit programme has
continued to progress with PwC internal audit reporting on four
reviews in the year.
Further information on audit, risk and internal controls can be found
in the Audit Committee report on
PAGES 87 TO 88.
Environmental, social and governance (ESG)
2022 has been the first full year of operation for the ESG
Committee which has met three times in 2022. The Committee has
played an important role in providing oversight of the Group’s ESG
strategy and related responsibilities.
The Committee has reviewed a number of areas including our
environmental commitments, compliance with the Task Force on
Climate-Related Financial Disclosures (TCFD), reviewing workforce
health and safety processes and our broader community
programmes. Further information on the work of the Committee
can be found on
PAGES 82 AND 83.
Board evaluation
An internal Board evaluation was completed in the second half of
2022 to review the performance of the Board, its Committees and
the individual Directors. Alan Giles, Senior Independent Director, led
the Directors in evaluating my performance as Chairman. Details of
the process undertaken and a summary of the results and proposed
actions for 2023 are set out on
PAGES 80 AND 81.
Annual General Meeting
We plan to hold our AGM on 9 May 2023 with details of the
arrangements for the meeting set out in the AGM notice which is
included as a separate document within this mailing. The AGM
notice is also available on our website at www.foxtonsgroup.co.uk.
Nigel Rich CBE
Chairman
6 March 2023
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
64
/ BOARD OF DIRECTORS
Nigel Rich CBE
Chairman
Appointed
to the Board
1 October 2021
Committee memberships
Skills and experience Extensive UK and international, listed Board
experience in a career spanning more than five decades. Nigel qualified as
a Chartered Accountant before joining Jardine Matheson where he spent
20 years working in a variety of roles primarily across Asia, including
Managing Director of Hong Kong Land, a leading Hong Kong property
company, and thereafter Managing Director of Jardine Matheson Holdings.
He previously served as the Chairman of Hamptons International, Exel plc,
CP Ships Limited, Xchanging plc and SEGRO plc, and held numerous
Non-Executive Director positions at companies including Granada Group plc,
ITV plc, Pacific Assets Trust plc and AVI Global Trust plc. He has also served
as a Member of The Takeover Panel (UK).
External appointments Non-Executive Chairman of Urban Logistics Reit
plc and Non-Executive Director of Matheson & Co.
NON-EXECUTIVE DIRECTORS
Sheena Mackay
Independent
Non-Executive Director
Appointed
to the Board
14 September 2017
Committee memberships
Skills and experience Extensive HR experience, leading global HR
functions across FTSE 100 and 250 companies. Sheena was previously
Group HR Director of Smiths Group plc, Aggreko plc, BBA Aviation plc and
SSL International plc, starting off her career at GEC plc. Her HR experience
covers business transformations including acquisitions and disposals.
Leadership development and remuneration design have been a particular
focus throughout her career.
External appointments None
Peter Rollings
Independent
Non-Executive Director
2
Appointed
to the Board
1 December 2021
Committee memberships
3
Skills and experience Extensive estate agency experience having started
his career at Foxtons in December 1985, and holding the position of
Managing Director between 1997 and 2005 where he made a significant
contribution to both the growth and dynamics of the business. From 2005
to 2016 Peter was CEO of Marsh & Parsons where he presided over
significant expansion and value creation.
External appointments Non-Executive Director at Viewber Limited.
Alan Giles OBE
Senior Independent
Non-Executive Director
Appointed
to the Board
1 June 2019
Committee memberships
Skills and experience Extensive experience as a Non-Executive Director,
Alan was the Senior Independent Director and Chairman of the
Remuneration Committee of Rentokil Initial plc until May 2017, and the
Senior Independent Director and Remuneration Committee Chairman of
The Competition and Markets Authority until March 2019. He was formerly
Chairman of Fat Face Group Limited, Chief Executive of HMV Group plc and
a Non-Executive Director of The Office of Fair Trading, Somerfield Plc and
Wilson Bowden Plc.
External appointments Non-Executive Director of Murray Income Trust plc.
He is also the Chairman of The Remuneration Consultants Group, an associate
fellow of Saïd Business School, University of Oxford, and an honorary visiting
professor at The Bayes Business School, City, University of London.
Rosie Shapland
Independent
Non-Executive Director
1
Appointed
to the Board
5 February 2020
Committee memberships
Skills and experience Chartered Accountant with extensive knowledge of
accounting and financial reporting, risk management and governance. A
former audit partner at PwC with over 30 years of audit experience across
multiple sectors within public and private companies, Rosie has worked with
numerous boards and their audit committees.
External appointments Non-Executive Director and Chair of the Audit
Committee at PayPoint plc and Workspace Group plc. Senior Independent
Director at Workspace Group plc.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
65
Annette Andrews
Independent
Non-Executive Director
Appointed
to the Board
1 February 2023
Committee memberships
4
Skills and experience 30 years’ HR and people experience, leading HR
functions in both regulated and commercial businesses. Annette was
previously Chief People Officer at Lloyd’s of London and before that held
senior HR leadership positions at Catlin Insurance, Lloyds Banking Group PLC
and the Ford Motor Company. Her HR experience covers compensation
regimes and leadership development.
External appointments Non-Executive Director and Chair of the
Remuneration at finnCap Group PLC and Sole Director of Acaria Coaching
& Consulting Ltd.
1
Rosie Shapland will be appointed Senior Independent Non-Executive Director upon Alan Giles retiring from the Board at the 2023 AGM.
2
Peter Rollings was appointed as Interim CEO, effective from 30 May 2022 to 5 September 2022, prior to which, and immediately after, he was an Independent Non-Executive Director.
3
Peter Rollings temporarily stepped down as a member of the Board Committees from the date he was appointed as Interim CEO (30 May 2022) to the end of the financial year
(31 December 2022). During this period he attended all meetings as set out on
PAGE 72.
4
Annette Andrews will be appointed as Chair of the Remuneration Committee and ESG Committee upon Alan Giles’ and Sheena Mackay’s retirement from the Board at the 2023 AGM.
EXECUTIVE DIRECTORS
Guy Gittins
Chief Executive Officer
Appointed
to the Board
5 September 2022
Committee memberships
N/A
Skills and experience Significant estate agency and leadership experience
having been CEO of Chestertons, the London and international residential
property specialist, prior to joining Foxtons. Guy started his early career at
Foxtons, leaving in 2006 to become Sales and Marketing Director for Peter
de Savary. In May 2010 he joined Savills, before moving to Chestertons in
2012, as head of their flagship Chelsea office before becoming CEO in 2018.
External appointments None
Chris Hough
Chief Financial Officer
Appointed
to the Board
1 April 2022
Committee memberships
N/A
Skills and experience A Chartered Accountant having qualified with
Deloitte LLP where he was a director within Deloitte’s audit and assurance
practice working across a range of sectors. Prior to his appointment as CFO
on 1 April 2022, Chris was the Group’s Director of Finance and Company
Secretary and played a key role in the financial management of the business.
External appointments None
Directors who served during the year: Nic Budden Chief Executive Officer (until 30 May 2022), Richard Harris Chief Financial
Officer (until 1 April 2022), Patrick Franco Chief Operating Officer (until 1 April 2022)
C inside the circle indicates
Committee Chair
Key Audit Committee
Nomination Committee Remuneration Committee ESG Committee
Jack Callaway
Independent
Non-Executive Director
Appointed
to the Board
1 February 2023
Committee memberships
Skills and experience Experienced financial services executive with over
30 years of investment banking, mergers and acquisitions and financing
experience. He was recently a Non-Executive Director of Euromoney
Institutional Investor plc and was previously Global Chairman of Barclays
Telecom, Media and Technology Investment Banking business. Jack formerly
held senior leadership positions at Lehman Brothers and Rothschild.
External appointments
Board Member of the Cholangiocarcinoma Foundation.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
66
The Executive Leadership Team is responsible for:
Developing the Group’s
strategy and delivering
against the strategic priorities
Developing and implementing
key policies, procedures and
operating plans
Monitoring and driving
performance and managing
risk across the Group
Allocating resources
effectively across the Group
/ EXECUTIVE LEADERSHIP TEAM
The Board delegates responsibility for the
day-to-day operational management to the
Executive Directors, who are supported by
the Executive Leadership Team.
The Executive Leadership Team is made up of our Executive
Directors and other Executives responsible for key areas of
the business.
EXECUTIVE LEADERSHIP TEAM
(FROM LEFT TO RIGHT)
Tom Davies, Managing Director | Financial Services
Sarah Tonkinson, Managing Director | Lettings Build to Rent
Imran Soomro, Chief Information Officer
Chris Hough, Chief Financial Officer
Guy Gittins, Chief Executive Officer
Gareth Atkins, Managing Director | Lettings
Fran Giltinan, Managing Director | Lettings Property
Management & Customer Experience
Jean Jameson, Chief Sales Officer
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
67
/ CORPORATE GOVERNANCE REPORT
CORPORATE GOVERNANCE REPORT OVERVIEW
This report has been structured to follow the Principles of the Code, which are categorised under the following headings: Board leadership
and purpose; Division of responsibilities; Composition, succession and evaluation; Audit, risk and internal control; and Remuneration. This
report sets out our governance framework and illustrates how we have applied the Code Principles and complied with its Provisions.
Code Category Code Principles Key elements of the Code Report detail
1
BOARD LEADERSHIP
AND GROUP
PURPOSE, VALUES
AND STRATEGY
A. Effective Board
B. Purpose, values
and strategy
C. Governance
Framework and
Board resources
D. Stakeholder
engagement
E. Workforce policies
and practices
The Board’s role is to:
• Establish a purpose, values and strategy and ensure these
are aligned with its culture.
• Promote the long-term sustainable success of The Group,
generating value or shareholders and contributing to
wider society.
• Ensure the necessary resources are in place for the Group to
meet its objectives and measure its performance.
• Establish a framework of prudent and effective controls for
the assessment and management of risk.
• Ensure effective engagement with shareholders and
other stakeholders.
• Ensure workforce policies are consistent with the Group’s
values and that the workforce can raise any concerns.
This section explains:
(i) The role of the Board and matters reserved for
the decision of the Board.
(ii) How we have assessed the basis on which the
Group generates and preserves value over the
long term.
(iii) Our purpose and how we have assessed and
monitored our culture.
(iv) The methods used to engage with our
shareholders and other key stakeholders,
including engagement with our workforce.
Refer to PAGES 68 AND 69.
2
DIVISION OF
RESPONSIBILITIES
F. Board roles
G. Independence
H. External
commitments
and conflicts
of interest
I. Board policies,
processes and
resources
The Chairman leads the Board and is responsible for its overall
effectiveness.
The Board should include an appropriate balance of Executive and
Independent Non-Executive Directors. There should be a clear
division of responsibilities between the leadership of the Board
and the executive leadership of the business.
Non-Executive Directors should devote sufficient time to meet
their responsibilities.
The Board, supported by the Company Secretary, should
ensure it has appropriate policies, processes and resources
to function effectively.
This section explains:
(i) The Group’s governance framework including
Board and Board Committee membership.
(ii) The role of the Chairman, Executive Directors,
the Senior Independent Director and other
Non-Executive Directors.
(iii) Board and Committee meetings and Director
attendance during the year.
(iv) Board activity in 2022.
Refer to
PAGES 70 TO 75.
3
COMPOSITION,
SUCCESSION AND
EVALUATION
J. Appointments
to the Board
K. Board skills,
experience and
knowledge
L. Annual Board
evaluation
Board appointments should be subject to a formal, rigorous and
transparent process. A succession plan should be maintained for
Board and Senior Management.
The Board and its Committees should have a combination of skills,
experience and knowledge.
The annual evaluation of the Board should consider its
composition, diversity and how effectively members work
together to achieve objectives.
The report of the Nomination Committee
includes a review of:
(i) The role of the Nomination Committee.
(ii) The activities of the Committee during 2022,
including succession planning and related
Board changes.
(iii) The Group’s policies and practices in relation to
Board appointments, Directors’ induction and
professional development.
(iv) The Board’s diversity policy.
(v) The nature of the performance evaluation and
outcomes for 2022.
Refer to
PAGES 76 TO 81.
4
AUDIT, RISK
AND INTERNAL
CONTROL
M. Financial reporting
and external and
internal audit
N. Fair, balanced and
understandable
O. Internal financial
controls and risk
management
The Board should establish formal and transparent policies to
ensure the effectiveness of internal and external audit functions.
The Board should satisfy itself as to the integrity of the financial
and narrative statements and should present a fair, balanced and
understandable assessment of the Group’s position and prospects.
The Board should establish procedures to manage risk, oversee
internal controls and determine the nature and extent of the
principal and emerging risks facing the Group.
The report of the Audit Committee includes
details of the policies, and the activities of the
Audit Committee during 2021, in relation to:
(i) Financial and narrative reporting.
(ii) Significant accounting judgements.
(iii) The relationship with and appointment of the
external auditor.
(iv) Risk management and internal controls,
including reviewing the work of the Group’s
internal auditor.
Refer to
PAGES 84 TO 89.
5
REMUNERATION
P. Linking
remuneration
with purpose
and strategy
Q. Procedure for
developing policy
Executive
remuneration
R. Judgement and
discretion when
authorising
outcomes
Remuneration policies should be designed to support strategy and
promote long-term sustainable success.
There should be a formal and transparent procedure for
developing policy on executive remuneration and for determining
Director and Senior Management remuneration.
Directors should exercise independent judgement and discretion
when authorising remuneration outcomes.
The report of the Remuneration Committee
sets out:
(i) The annual statement from the Chairman of the
Remuneration Committee.
(ii) The proposed remuneration policy.
(iii) The Directors’ Annual Report on Remuneration.
Refer to
PAGES 90 TO 129.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
68
/ CORPORATE GOVERNANCE REPORT CONTINUED
1
BOARD LEADERSHIP
AND PURPOSE
The role of the Board
The Board is responsible for promoting the long-term sustainable
success of the Group, delivering value for shareholders and
contributing to wider society. It agrees the strategic priorities of the
Group, ensuring that these are consistent with the Group’s culture
and achieved within an appropriate framework of effective controls
that enable risk to be assessed and managed. It also ensures
effective engagement with shareholders and other stakeholders,
and that workforce policies are consistent with the Group’s values.
Further details of our engagement with stakeholders and how we
promote success are set out on
PAGES 18 TO 21.
Responsibility for day-to-day operations is delegated by the Board
to the Executive Directors within defined authority limits, which are
regularly reviewed and updated by the Board.
Matters reserved to the Board
The Board maintains a schedule of matters reserved for decision by
the Board, which details the key aspects of the affairs of the Group
which the Board does not delegate to management or any Board
Committees, though it may consider recommendations from them.
The schedule of matters reserved for the Board is regularly reviewed
and is available at www.foxtonsgroup.co.uk.
The Board’s specific responsibilities include:
• Setting the strategic aims, purpose and values.
• Approving the Group’s budget and financial plans.
• Ensuring alignment of culture, policy, practices and behaviour
throughout the business with the Group’s purpose, values
and strategy.
• Approval of capital expenditure, significant investments,
acquisitions and share buybacks.
• Approval of annual and interim results and trading updates.
• Payment of interim dividends and recommendation of final
dividends to shareholders.
• Setting the Group’s risk appetite and oversight of the internal
control, risk management and governance frameworks.
Statement of Compliance with the UK Corporate
Governance Code
In the year ended 31 December 2022 the Group has applied
the Principles and complied with the Provisions of the UK
Corporate Governance Code published in July 2018. This
report outlines the key features of the Group’s corporate
governance framework and sets out how the Group has
applied the Principles of the Code.
A copy of the Code is available on the Financial Reporting
Council’s website at www.frc.org.uk.
Our purpose
Foxtons’ purpose is to get the right deal done for London’s
property owners, be it obtaining the best lettings result for
London’s landlords, the best sales outcome for London’s property
sellers or the best mortgage rates for borrowers. Our purpose has
been refreshed in the year to capture the essence of our business,
reflect our results-based business model and our drive to get the
best outcomes for our customers. The Board is responsible for
ensuring the business is purpose led and that our decisions and
activities reflect our purpose.
An explanation of the basis on which the Group generates and
preserves value over the longer term is set out in the business model
on
PAGES 12 AND 13.
Our culture
The Board is committed to investing in and maintaining a high-
performance sales culture that attracts and retains talented people
who deliver outstanding results for our customers. This culture will
enable us to rebuild our estate agency DNA and competitive
advantage, deliver our strategic priorities and ultimately enhance
the success of the Group.
The Board believes maintaining the optimal culture is underpinned
by strong corporate governance and effective monitoring processes
that enable culture to be assessed on a regular basis. This means as
a Group we deliver great customer results whilst doing the right
thing and acting responsibly. As a Board, we therefore set the tone
and expectations from the top and look to make decisions that
reflect the high-performance sales culture that we wish to foster.
• Monitoring management’s performance.
• Ensuring succession plans are in place.
• Ensuring a satisfactory dialogue with shareholders and other
key stakeholders.
Matters outside the schedule of matters reserved for decision by
the Board or the Committees’ terms of reference fall within the
responsibility and authority of the Executive Directors, including
all executive management matters.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
69
How we monitor culture
The Board monitors culture through a number of
mechanisms including:
• Non-Executive Directors attending the Employee
Engagement Committee (EEC) meetings on a rotational
basis to directly canvass the views of employees,
including areas of improvement and areas of success.
More detail on the EEC, its operation and its areas of
focus is provided on
PAGE 55.
• Reviewing the outcome of the annual employee
engagement survey and identifying themes from the
survey relevant to the monitoring of culture.
• Regular engagement with Senior Management to
understand the internal tools used to monitor culture,
including employee retention metrics, training
programme materials, exit interview feedback and social
media scanning.
• Informal engagement with the workforce through
branch visits, regular engagement with line managers,
involvement in divisional meetings and shadowing
departmental activity.
• Reviewing whistleblowing reports and outcomes.
• Receiving regular updates from Senior Management on
the Group’s compliance programmes and results.
• Reviewing the Group’s people strategy, including
training and recruitment strategies.
• Reviewing workforce diversity, equality and
inclusion initiatives.
Our values
Our culture is shaped and underpinned by our values which have
also been refreshed in the year. Our values guide our employees on
how they contribute to the Group’s success and adhere to the
highest ethical standards.
Board stakeholder engagement
Proactive engagement with our stakeholder groups remains a central focus for the Board, which ensures the Directors have regard to the
matters set out in Section 172. The Board receives regular stakeholder insights and feedback, which enables stakeholder views to be
considered in key Board decisions.
The Board engages with stakeholders both directly and by receiving updates from the Executive Directors on management led
stakeholder engagement.
The Board regularly interacts with shareholders to facilitate effective dialogue, both through recurring scheduled events, such as investor
roadshows and trading updates, and through one-to-one shareholder meetings led by the Chairman, CEO or Committee Chairs. Shareholder
communications are also supported by regular coverage from external analysts who cover the financial performance of the Group. In 2022,
the Chairman spent additional time engaging with major shareholders ahead of certain Board changes, including the change in CEO.
For further information on the Group’s engagement with stakeholders, and the Group’s Section 172 statement, refer to
PAGES 18 TO 21
of the Strategic Report.
Post 2022 AGM shareholder engagement
At the 2022 AGM the reappointment of Alan Giles, Sheena Mackay and Rosie Shapland as Directors of the Company were approved by
56.93%, 57.29%, and 72.44% of shareholders respectively.
As announced on 23 November 2022, the Board engaged with shareholders to understand their views with regard to management decisions
taken by the Board in 2021.
As previously advised Alan Giles and Sheena Mackay will not be standing for re-election at the 2023 AGM. The Board has appointed two
new Directors Annette Andrews and Jack Callaway as successors to Alan Giles and Sheena Mackay.
PROFESSIONAL
Providing the most efficient, reliable and dedicated
customer journey, whilst maintaining the highest
standards of business ethics
AMBITIOUS
Wanting to get the best results for our customers
RELENTLESS
Maintaining consistently high standards day in and day out
INNOVATIVE
Constantly looking for new and market leading ways to get
the right deal done for our customers
AUTHORITATIVE
Being the most knowledgeable agents in the market
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
70
/ CORPORATE GOVERNANCE REPORT CONTINUED
2
DIVISION OF
RESPONSIBILITIES
Our governance model in 2022
At the 31 December 2022, the Board comprised of the
Non-Executive Chairman, four independent Non-Executive
Directors and two Executive Directors.
This page shows the Group’s corporate governance structure and
provides an overview of the Committees of the Board.
2022 roles and responsibilities
There is clear delineation of responsibility between the Chairman and the CEO, which is set out in writing. This division of responsibilities,
together with the schedule of matters which are reserved for the Board, ensures that no individual has unfettered powers of decision making.
By delegating specific responsibilities to its Committees, the Board can ensure that it is operating effectively and efficiently with the right level
of attention and consideration being given to relevant matters. The role and responsibilities of each Board Committee are set out in formal
terms of reference, which are reviewed annually. The Chairman ensures that the very significant work of the Committees feeds into, and is
influenced by, the full Board.
The Chair of each Committee reports to the Board after each Committee meeting on the matters discussed and minutes of each meeting are
provided to the Board for information as appropriate. The terms of reference of the Committees are available at www.foxtonsgroup.co.uk.
THE BOARD
Chairman: Nigel Rich
Other members: Alan Giles, Sheena Mackay, Peter Rollings,
Rosie Shapland, Guy Gittins, Chris Hough.
Key responsibilities: Responsible for the long-term
sustainable success of the Group.
Board activities in 2022, refer to
PAGE 73.
Board biographies, refer to
PAGES 64 AND 65.
Roles and responsibilities, refer to
PAGES 70 AND 71.
1
Peter Rollings temporarily stepped down as a member of the Committees from the date he was appointed as Interim CEO (30 May 2022)
to the end of the financial year (31 December 2022). During this period he attended all meetings as set out on
PAGE 72.
Nomination
Committee
Chairman: Nigel Rich
Other members: Alan Giles,
Sheena Mackay, Peter Rollings
1
,
Rosie Shapland
Key responsibilities:
Responsibility for reviewing
Board composition, identifying
and nominating candidates for
Board appointments and for
succession planning.
Refer to PAGES 76 TO 81 for
more information.
Audit
Committee
Chair: Rosie Shapland
Other members: Alan Giles,
Sheena Mackay, Peter Rollings
1
Key responsibilities: Provides
oversight and governance over
the Group’s financial reporting,
risk management and internal
controls, internal audit function
and relationship with the
external auditor.
Refer to PAGES 84 TO 89
for more information.
Remuneration
Committee
Chairman: Alan Giles
Other members: Nigel Rich,
Sheena Mackay, Peter Rollings
1
,
Rosie Shapland
Key responsibilities: Reviews
and recommends the
remuneration policy and sets and
monitors the level and structure
of remuneration for Executive
Directors and Senior
Management. Sets the
Chairman’s fee.
Refer to PAGES 90 TO 129
for more information.
ESG Committee
Chair: Sheena Mackay
Other members: Nigel Rich,
Alan Giles, Peter Rollings
1
,
Rosie Shapland
Key responsibilities: Reviews
and has oversight of the
implementation of the Group’s
ESG strategy and initiatives.
Refer to PAGES 82 AND 83
for more information.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
71
The roles and responsibilities of the Board members and Company Secretary as at 31 December 2022 are set out below.
Chairman
Nigel Rich
• Provides leadership and promotes a culture of openness and debate between Executive and
Non-Executive Directors, facilitating constructive Board relations and the effective contribution of all
Directors, and providing constructive challenge to management.
• Sets the Board agenda and ensures that Directors are provided with accurate, timely and clear
information to enable the Board to operate effectively.
• Responsible for the integrity and effectiveness of the systems of governance.
• Seeks regular engagement with major shareholders in order to understand their views on performance
and governance, and ensures the Board has an understanding of their views.
• Acts on the results of the annual Board evaluation by recognising the strengths and addressing any
weaknesses of the Board.
Senior Independent Director
Alan Giles
• Available to shareholders if they have concerns that cannot be addressed through normal channels.
• Internal sounding board for the Chairman, providing support in the delivery of his objectives.
• Leads the evaluation of the Chairman on behalf of the other Directors as part of the annual
evaluation process.
• Acts as an intermediary for the other Directors with the Chairman, if necessary, working with the
Chairman, other Directors and/or shareholders to resolve significant issues in order to maintain
effectiveness and stability.
Non-Executive Directors
Alan Giles, Sheena Mackay,
Rosie Shapland, Peter Rollings
1
• Provide a broad range of skills and experience to the Board to assist in formulating the Group’s strategy.
• Provide constructive challenge, strategic guidance and support to the Executive Directors based on
their breadth of knowledge and experience.
• All of the Non-Executive Directors are regarded by the Group as independent and are free from
any business or other relationship which could materially interfere with the exercise of their
independent judgement.
Chief Executive Officer
Guy Gittins (from
5 September 2022)
• Responsible for the development and delivery of the strategic priorities agreed by the Board.
• Responsible for leading the Group’s operating performance, day-to-day management and risk
management programmes in conjunction with the CFO.
• Managing relationships with key stakeholders and advising the Board accordingly.
Chief Financial Officer
Chris Hough
(from 1 April 2022)
• Responsible for the Group’s financial affairs, including treasury and tax matters.
• Responsible for financial strategy, budgeting, monitoring key internal controls, risk management and
delivering the investor relations programme.
• Supports the CEO in the development and delivery of the Group’s strategic priorities.
Company Secretary
Link Company Matters
• Supports the operation of the Board and its Committees through the provision of company secretarial
services, including providing guidance and advice on corporate governance matters.
1
Peter Rollings was appointed as Interim CEO, effective from 30 May 2022 to 5 September 2022, prior to which, and immediately after, he was an
Independent Non-Executive Director.
2023 Board changes
At the date of issuing this report, the Board consisted of six Independent Non-Executive Directors reflecting the appointment of Annette
Andrews and Jack Callaway to the Board effective as of 1 February 2023 (biographical details can be found on
PAGES 64 AND 65).
Alan Giles and Sheena Mackay will step down from the Board at the 2023 AGM, reducing the number of Independent Non-Executive
Directors to four. Upon Alan Giles’ and Sheena Mackay’s retirement, the following changes in responsibilities will be made:
• Rosie Shapland will be appointed Senior Independent Non-Executive Director (replacing Alan Giles).
• Annette Andrews will be appointed Chair of the Remuneration Committee (replacing Alan Giles) and Chair of the ESG Committee
(replacing Sheena Mackay).
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
72
/ CORPORATE GOVERNANCE REPORT CONTINUED
Board governance
The Board is comprised of the Chairman and a mix of Executive and
Independent Non-Executive Directors. The Independent Non-
Executive Directors have an appropriate balance of skills and
experience, and consider that, collectively, they have substantial
recent and relevant experience in a variety of sectors which enable
robust discussion and appropriate challenge at Board and
Committee discussions. The Chairman was independent on his
appointment as Chairman and is deemed by his fellow independent
Board members to be independent in character and judgement and
free of any conflicts of interest.
The Board has established a governance framework to discharge its
collective responsibilities. This framework supports our Directors’
compliance with their duty to promote the success of the Group under
Section 172 of the Companies Act 2006, which requires the Directors
to act in the way they consider, in good faith, would most promote the
success of the Group for the benefit of its shareholders, having regard
to certain other matters including other key stakeholders. Agendas
for Board meetings identify matters that require a Board decision,
and an overview of Section 172 is included in the papers for each
Board meeting to act as a reference for Board decisions. Information
about how this duty has been performed by our Directors, including
the Section 172 statement, is detailed on
PAGES 18 TO 21.
Board and Committee meetings
The Chairman sets the agenda and determines the format of
discussions at Board meetings. At each scheduled Board meeting, the
CEO and CFO present reports on business performance and progress
against strategic priorities.
Other members of Senior Management are invited to attend during the
year to update the Board on key priorities and challenges, with the
Chief Sales Officer and Managing Director of Lettings attending every
Board meeting. External advisers also attend meetings as required.
To ensure the continued effectiveness of the Board, the Chairman
meets with the Non-Executive Directors without the presence of the
Executive Directors when necessary. Similarly, the Senior Independent
Director consults when necessary with the other Non-Executive
Directors, without the Chairman being present, to consider the
Chairman’s performance. Refer to
PAGES 76, 80 AND 81 of the
Nomination Committee Report on the Group’s evaluation procedures.
Meetings attended
Director
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
ESG
Committee
Nigel Rich
-
Guy Gittins (appointed on 5 September 2022)
1
- - - -
Chris Hough (appointed on 1 April 2022)
1
- - - -
Alan Giles
Sheena Mackay
Rosie Shapland
Peter Rollings
2
-
Nic Budden (resigned on 30 May 2022)
1
- - - -
Patrick Franco (resigned on 1 April 2022)
1
- - - -
Richard Harris (resigned on 1 April 2022)
1
- - - -
Eligible meetings attended out of those scheduled Non-attendance at eligible meetings
1
Attended all meetings that they were eligible to attend prior to retirement and post appointment.
2
Peter Rollings temporarily stepped down as a member of the Board Committees from the date he was appointed as Interim CEO (30 May 2022) to the end of
the financial year (31 December 2022).
During the year, five additional Board meetings and two additional Committee meetings were held in connection with changes to the composition
of the Board, to approve the share buyback proposal, subsidiary account exemptions, and the appointment of a new Company Secretary.
Directors’ attendance at scheduled Board and Board Committee meetings held during 2022 is provided in the table below:
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
73
Board activity in 2022
The Board has a rolling agenda of items that are regularly considered, which includes reviewing key areas of the business throughout the year,
monitoring delivery against strategic priorities and covering any topical matters that arise. The Board dedicates one of its meetings every year
to focus on reviewing the Group’s strategy and to consider annual objectives. The Board monitors the achievement of the Group’s objectives
through regular Board reports which include updates from the Executive Directors, members of the Executive Leadership Team and other
Senior Management.
The Board held seven scheduled meetings during the year, with five additional meetings held to approve the share buyback proposal,
subsidiary account exemptions, the appointment of a new Company Secretary as well as changes to Board composition. The main activities
of the Board during 2022 were as follows:
Strategy and execution Shareholder engagement Employees and culture
• Review of the findings following the
CEO’s operational review (Q4 2022) and
subsequent approval of the Group’s
strategic priorities.
• Reviewing technology, data and
marketing strategies.
• Considering market outlook and
competitor activity.
• Reviewing financial and operational
performance, cost base reduction
initiatives and resource allocation.
• Reviewing ongoing customer
service levels.
• Engagement with shareholders through
recurring scheduled events such as
investor roadshows and trading updates.
• One-on-one shareholder meetings
covering topical matters including results,
strategy, capital allocation, Director
remuneration and ESG matters.
• The Chairman spent additional time
engaging with major shareholders ahead
of key Board changes, including the
change in CEO.
• Considering views of investors, including
feedback from external brokers and
shareholders following investor meetings.
• Consideration of market reaction to
key announcements.
• Reviewing outcomes from employee
engagement at EEC meetings and
considering any follow up actions.
• Reviewing the Group’s refreshed purpose
and values.
• Monitoring culture through a range
a mechanisms (refer to
PAGE 55 for
further details).
• Reviewing and making recommendations in
relation to employee training programmes.
Stakeholders impacted:
• Our Shareholders
• Our Customers
• Our People
Stakeholders impacted:
• Our Shareholders
Stakeholders impacted:
• Our People
Internal control and risk management Financial oversight Governance
• Reviewing risk appetite and principal
and emerging risks.
• Assessing the effectiveness of internal
controls and risk management
systems, including considering internal
audit reviews.
• Reviewing the cyber security strategy
and compliance reviews.
• Reviewing the health and safety
framework and related updates.
• Reviewing and approving the annual
budget and reviewing the five-year
strategic plan.
• Approving 2021 annual results and 2022
interim results for 2022. Annual results
for 2022 were approved in March 2023.
• Reviewing acquisition opportunities.
• Approving trading updates.
• Considering the Group’s financial
position, including viability and
going concern.
• Reviewing capital allocation and
approving the continuation of the share
buyback programme.
• Reviewing the dividend policy.
• Reviewing compliance with the Code,
including the approval of the Annual
Report and Accounts.
• Reviewing terms of reference of
Committees and matters reserved for
the Board.
• Reviewing governance, legal and
regulatory matters and the impact of
regulatory changes on the Group.
• Considering Board evaluation results
for 2022.
• Reviewing ongoing ESG programmes
and targets.
• Reviewing remuneration matters.
Stakeholders impacted:
• Our Shareholders
• Our Customers
• Our Suppliers
• Our People
Stakeholders impacted:
• Our Shareholders
• Our Suppliers
• Our People
Stakeholders impacted:
• Our Shareholders
• Our Customers
• Our Suppliers
• Our People
• Our Communities
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
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2022
Month
Board and committee
meetings
Key business considered at
Board meetings Key market announcements
January
• Year end trading update
• Disposal of D&G Sales business and
publication of related shareholder circular
February
• Main Board
• Audit Committee
• Remuneration
Committee
• ESG Committee
• Approval of the 2021 Annual Report and Accounts
• Proposal of final dividend
• Approval of Modern Slavery Act statement
• 2022 budget approval and capital allocation policy review
• Appointment of new CFO (effective 1 April 2022)
• Senior Management trading and market update
• Result of General Meeting
March
• Three additional Board
meetings*
• Approval of share buyback programme
• Change of Company Secretary
• Executive Board changes
• Approval of share awards
• Commencement of up to £3 million share
buyback programme
• Appointment of Link Company Matters as
Company Secretary
April
• Main Board
• ESG Committee
• Strategic programmes review
• Update on Alexander Hall
• Approval of acquisitions
• Review of risk appetite
• Review of employee engagement and workforce diversity and
inclusion programmes
• Investor feedback
• Appointment of additional broker
• Senior Management trading and market update
• 2021 full year results
• Notice of AGM
• Appointment of Chris Hough as CFO and
resignation of Patrick Franco as COO with
effect from 1 April 2022
• Q1 trading update
May
• One additional Board
meeting*
• One additional
Remuneration
Committee meeting*
• Resignation of Nic Budden
• Appointment of Interim CEO and new CEO (effective 5
September 2022) and approval of related remuneration
• Appointment of Guy Gittins as CEO with
effect from 5 September 2022 and resignation
of Nic Budden with effect from 30 May 2022
Peter Rollings to act as Interim CEO
• Acquisitions of Gordon & Co and
Stones Residential
• Appointment of Singer Capital Markets
June
• Two main Board
meetings (one
additional meeting*)
• Interim CEO initial report
• Review of the Build to Rent business
• Review of KPIs and other metrics considered by the Board
• ESG initiatives
• Review of risk appetite
• Investor relations update
• Senior Management trading and market update
• Result of 2022 AGM
• Update on share buyback programme
July
• Main Board
• Audit Committee
• Nomination Committee
• Approval of half year results
• Employee engagement feedback
• Review of shareholder feedback on Board composition
• Senior Management trading and market update
• 2022 half year results
September
• Main Board
• Audit Committee
• Remuneration
Committee
• Consideration of CEO first impressions
• Review of legal compliance and internal controls
• Review of external auditor’s plan for the 2022 audit
• Senior Management trading and market update
• Grant of share awards to Guy Gittins
October
• Main Board
• ESG Committee
• Group strategy review day
• Employee engagement feedback
• Approval of share buyback programme
• Senior Management trading and market update
• Q3 trading statement
November
• Statement on 2022 AGM vote, including
retirement of Alan Giles and Sheena Mackay
at the 2023 AGM
• Commencement of up to £3 million share
buyback programme
December
• Main Board
• Audit Committee
• Remuneration
Committee
• Nomination Committee
• ESG Committee
• Review and approval of the 2023 budget
• Review of the 2022 Board evaluation results
• Review of the Financial Services business
• Review of risk appetite, risk management and internal controls
• Results of the external auditor’s interim procedures
• Review of Directors’ Remuneration Policy
• Acquisitions strategy update
• Senior Management trading and market update
• Update on share buyback programme
* Additional meetings held in the year beyond the original schedule of Board and Committee meetings
Key business considered at Board meetings and key market announcements across the year.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
75
Conflicts of interest
Directors have a statutory duty to avoid situations in which they have
or may have interests that conflict with those of the Group, unless
that conflict is first authorised by the Directors. This includes
potential conflicts that may arise when a Director takes up a position
with another company. Foxtons’ Articles of Association allow the
Board to authorise such potential conflicts, and there is in place a
procedure to deal with any actual or potential conflict of interest.
During the year, no actual or potential conflicts were identified which
required approval by the Board. Should a Director become aware that
they, or their connected parties, have an interest in an existing or
proposed transaction with the Group, they should notify the Board.
The Board deals with each actual or potential conflict and takes into
consideration all the relevant circumstances.
Time commitment
All Non-Executive Directors are required to set aside sufficient time
to carry out their Board responsibilities and show commitment to
their role. During the year the Nomination Committee, as part of
their review of the results of the Board evaluation process,
considered the time commitment of all the Directors and agreed
that the required time commitment is still appropriate. For the year
ended 31 December 2022, and at the date of the publication of this
Annual Report, the Board is satisfied that none of the Directors are
over committed and that each Director devotes sufficient time to
discharge their responsibilities.
Independence
The Nomination Committee reviews the independence of the
Non-Executive Directors annually and has confirmed to the Board
that it considers all of the Non-Executive Directors to be
independent in accordance with the matters set out in the Code.
Peter Rollings was appointed as Interim CEO, effective from
30 May 2022 to 5 September 2022, prior to which, and
immediately after, he was an Independent Non-Executive Director.
Peter temporarily stepped down as a member of the Board
Committees from the date he was appointed as Interim CEO
(30 May 2022) to the end of the financial year (31 December 2022).
During this period he attended all meetings as set out on
PAGE 72.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
76
The Nomination Committee regularly reviews the structure, size and
composition of the Board and its Committees to ensure they are best
placed to drive operational performance, oversee the delivery of the
Group’s strategic priorities and support the management team.
Maintaining the right composition of the Board underpins the quality
of debate and constructive challenge during Board discussions. The
process for Board appointments is led by the Committee which makes
recommendations to the Board for its approval.
2022 areas of focus
• Appointment of Guy Gittins as CEO.
• Recruitment of two new Non-Executive Directors.
Executive Director changes
During the year there have been significant changes to the
Executive Board, with a change in CEO, CFO, and the removal of the
COO role from the Board.
On 30 May 2022 it was announced that Guy Gittins would be
appointed Group CEO with effect from 5 September 2022.
Peter Rollings was appointed as Interim CEO when Nic Budden
stepped down with effect from 30 May 2022. Guy has significant
sector and leadership experience and further strengthens our estate
agency expertise on the Board. Details of the appointment process
for Guy Gittins can be found below on
PAGE 77.
Both Richard Harris (previous CFO) and Patrick Franco (previous
COO) stepped down from the Board on 1 April, and Chris Hough,
previously the Group’s Director of Finance, was appointed CFO with
effect from 1 April 2022.
3
COMPOSITION, SUCCESSION
AND EVALUATION
Non-Executive Director changes
As announced on 23 November 2022, with the new Chairman, CEO
and wider management team changes now complete and in place,
Alan Giles and Sheena Mackay have chosen not to stand for
re-election at the 2023 AGM. In November 2022, the Committee
commenced a search process to recruit two replacement Non-
Executive Directors, and Annette Andrews and Jack Callaway joined
the Board as Independent Non-Executive Directors on 1 February
2023. Annette Andrews will take up the position of Chair of the
Remuneration Committee and Chair of the ESG Committee at the
2023 AGM. Rosie Shapland will take up the position of Senior
Independent Director upon Alan Giles’ resignation from the Board
at the forthcoming AGM. Further details regarding the recruitment
process are set out on
PAGE 78.
Board performance evaluation
During the year, we conducted an internal performance evaluation
exercise led by the Senior Independent Director which concluded
that the Board, its Committees and the Directors continue to
perform effectively, particularly in respect of the significant changes
in executive leadership during the period. A number of suggestions
for improvement were agreed and are reported on
PAGE 81.
We set out on
PAGES 76 AND 77 details of the composition and
work of the Nomination Committee during the year.
/ NOMINATION COMMITTEE REPORT
Nigel Rich CBE
Chairman of the Nomination Committee
On behalf of the Nomination
Committee, welcome to our
report for the financial year
ended 31 December 2022.
Members of the Nomination Committee and
attendance at meetings
The membership of the Committee is set out below. All
of the Non-Executive Director Committee members are
considered independent by the Board and in accordance
with the Code. The Chairman of the Committee was
considered to be independent on his appointment as
Chairman of the Group. Biographical information can be
found on
PAGES 64 AND 65. Members’ attendance at
Committee meetings is set out in the table on
PAGE 72.
The Company Secretary acts as Secretary to the Committee.
Chairman: Nigel Rich
Members as at 31 December 2022
1
: Alan Giles,
Sheena Mackay, Peter Rollings
2
, Rosie Shapland
1
Annette Andrews and Jack Callaway were appointed to the Board and Nomination Committee on 1 February 2023.
2
Peter Rollings temporarily stepped down as a member of the Nomination Committee from the date he was appointed as Interim CEO (30 May 2022) to the end of
the financial year (31 December 2022).
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
77
Role and responsibilities and activities undertaken during the year
The Committee’s main responsibilities, as outlined in its terms of reference, are:
• To keep under review the structure, size and composition of the Board and the membership of its Committees.
• To review succession planning processes for the Board and other Senior Management positions and the opportunities available to the
Company to further promote diversity and inclusion.
• To ensure a formal rigorous and transparent process is adopted for the appointment of new Directors, both Executive and Non-Executive.
Terms of reference were reviewed during the year and set out in detail the Committee’s role and responsibilities. The terms of reference can
be found on the Company’s website at: www.foxtonsgroup.co.uk.
Since the last Nomination Committee Report, the Committee held two scheduled Committee meetings. The Committee’s main activities
and areas of focus were as follows:
Board composition
• Reviewed the structure, size and composition of the Board.
• Reviewed the skills, experience and knowledge of each Board
member and of the Board as a whole, against the needs of
the Board (refer to
PAGES 64 AND 65 for details of Board
members’ experience).
• Reviewed the time commitment required from the Chairman
and Non-Executive Directors to fulfil their roles.
• Considered and recommended to the Board the re-election of
Directors at the 2022 AGM.
• Considered succession planning for the Group CEO leading to the
appointment of Guy Gittins with effect from 5 September 2022.
• Commenced an external recruitment process for two
new Non-Executive Directors.
Governance
• Considered and confirmed that each Non-Executive Director
remained independent and committed to their role.
• Approved the report from the Nomination Committee in the
2022 Annual Report and Accounts.
• Reviewed its terms of reference.
• Reviewed and updated the Board diversity policy and
ensured that diversity and inclusion was being promoted
across the business.
• Reviewed the gender balance of those in Senior
Management and their direct reports.
Succession planning
• Assessed the tenure of Board members in order to review
the succession plan.
• Considered succession plans for Executive Directors and
Senior Management.
Committee effectiveness
• Reviewed progress against matters arising from the
2021 Board evaluation and the matters arising from the
2022 Board evaluation.
• Participated in the evaluation of its performance and agreed
a plan to address any issues arising.
CEO appointment
Guy Gittins was appointed CEO with effect from 5 September 2022.
The search process was led by the Chairman, who together with the
Committee, decided a candidate with an estate agency background,
significant leadership experience and a turnaround track record was
required. This process resulted in the identification of Guy Gittins as
a suitable candidate having significant sector and leadership
experience, having delivered significant profit growth in challenging
markets as Chief Executive of Chestertons, the London estate
agency. Guy started his career at Foxtons, after which he went on to
hold roles at Peter de Savary, Savills and Chestertons. Guy was
interviewed by the Chairman and the other members of the
Committee, following which, the Committee recommended the
appointment of Guy Gittins to the Board. On the Committee’s
recommendation, the Board agreed his appointment.
CFO succession
Following Richard Harris’ decision to step down from the Board, and
the Committee having evaluated a number of options, the Board
recommended the appointment of Chris Hough, previously the
Group’s Director of Finance, as Richard’s successor in the role of
CFO. Chris Hough was part of the Group’s succession plan for the
CFO role.
The Board has a formal procedure in respect of the appointment of new Directors, with the Nomination Committee leading the process and
making recommendations to the Board.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
78
/ NOMINATION COMMITTEE REPORT CONTINUED
Appointment of Non-Executive Directors in 2023
Subsequent to the year end, on 27 January 2023 the Company
announced the appointment of Annette Andrews and Jack Callaway as
a Non-Executive Directors with effect from 1 February 2023. Annette
Andrews will take over as Chair of the Remuneration Committee and
Chair of the ESG Committee at the 2023 AGM.
Fidelio Partners, an independent external search consultancy, was
engaged to assist with the search for both candidates with the search
process led by the Chairman. The search specification for the first
Non-Executive Director, who would also be appointed Remuneration
Chair, included experience of overseeing remuneration policies and
having the capability of chairing a listed Remuneration Committee.
The search specification for the second Non-Executive Director role
included corporate finance experience.
From a long list of potential candidates, a number were selected for
interview by a subcommittee of the Nomination Committee which
excluded the retiring Non-Executive Directors. After due
consideration, the Committee recommended the appointment of
Annette Andrews and Jack Callaway to the Board, which then agreed
their appointment. Biographical details can be found on
PAGE 65.
Directors’ service contracts
All of the Directors have service agreements or letters of
appointment which are available for inspection at the Company’s
registered office during normal business hours. Details of the letters
of appointment for Non-Executive Directors and the service
contracts for Executive Directors can be found in the Directors’
Remuneration Report on
PAGE 128. No other contract with the
Company or any subsidiary undertaking of the Company in which
any Director was materially interested subsisted during or at the
end of the financial year.
Board appointment criteria are considered automatically as part of
the Committee’s review of succession planning. Currently, all the
independent Non-Executive Directors and the Chairman have been
appointed for less than nine years. Non-Executive Directors are
typically expected to serve a minimum of two three-year terms,
and thereafter their appointment is reviewed on an annual basis. All
Directors must seek re-election at each AGM.
Directors’ induction and professional development
The Company has in place an induction programme, led by the
Chairman, for new Directors to provide them with a full, formal and
tailored introduction on joining the Board, which ensures that they
attain sufficient knowledge of the Company to discharge their
duties and responsibilities effectively. The programme includes
meeting with Senior Management, heads of departments, advisers
and visits to the Group’s branches.
The Board calendar is planned to ensure that Directors are briefed on
a wide range of topics, including updates on corporate governance,
regulatory matters and regular briefings on market conditions.
Throughout the year Directors are also given the opportunity and
encouraged to visit the Group’s branches and discuss aspects of the
business directly with branch managers and employees. As well as
internal briefings, Directors are encouraged to attend externally
facilitated training sessions to ensure their knowledge is up to date
on relevant legal, regulatory and financial developments or changes.
All Directors have access to the advice and services of the Company
Secretary who is responsible to the Board for ensuring the Board
procedures are complied with and that Directors have access to
independent and professional advice at the Company’s expense,
where they judge this to be necessary to discharge their
responsibilities as Directors.
Overview of Guy Gittins’ induction to the Board:
Guy Gittins received an induction post-appointment that
focused on the culture, operations, markets, risks and
opportunities for the Group. Key elements of the induction
comprised:
• An introductory meeting with the Chairman to discuss
the Board’s process, the Group’s culture and
stakeholders.
• A comprehensive document pack which included
analyst and market reports, governance reports,
financial reporting matter reports and other operational
data.
• A series of meetings with the CFO and Senior
Management. During these meetings, strategy,
operating and financial performance, budget and
forecasts, compliance, customer service, diversity and
people strategy were discussed.
• Meetings with external advisers to receive briefings on
listed company regulations and to obtain background
on relevant governance and shareholder matters.
• A head office meeting schedule to meet each head of
department in order to understand the department’s
role and strategy, the strength of departmental
leadership and relevant risks and opportunities.
• A branch visit schedule to understand local market
factors, branch competitive position, the strength of
leadership and speak to a range of employees to obtain
feedback on the culture of the business.
Election and re-election of Directors
The Board engaged with shareholders to better understand their
views following a significant minority cast votes against the
re-election of three of the Group’s Independent Non-Executive
Directors at the 2022 AGM. Certain of these shareholders were
dissatisfied with Foxtons’ management and the decisions previously
taken by the Board in 2021. As previously noted, with a new
Chairman, CEO and wider management team now complete and
in place, Alan Giles and Sheena Mackay have decided they will not
stand for re-election at the 2023 AGM. All other Board members
will stand for election and re-election at the 2023 AGM.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
79
The relevant experience and effectiveness of the Directors, and how
that furthers the Company’s business, is kept under review. The
Committee and the Board have concluded that each Director
standing for election and re-election at the AGM continues to
demonstrate the necessary skills, experience and commitment to
contribute effectively and add value to the Board. Biographies
setting out the skills, experience and knowledge of each Director
are available on
PAGES 64 AND 65. It is the Committee’s and
the Board’s view that the Directors’ biographies illustrate why each
Director’s contribution is, and continues to be, important to the
Company’s long-term sustainable success.
Details of the Board evaluation and effectiveness process can be
found on
PAGES 80 AND 81.
Succession planning
Through succession planning, the Committee ensures that the
Board is able to deal with strategic and operational opportunities
and challenges. Board succession planning takes into account the
Board diversity policy and the existing skills and experience of the
Board and future requirements.
The Board’s approach to Senior Management succession is to
develop a talent pipeline and promote from within wherever
possible. Due to the Company’s size, it is not always practicable for
the Company to have an internal successor identified for all Senior
Management roles. Where there is no obvious successor, the
Committee is satisfied that the Company has a plan for appropriate
short-term cover until a permanent successor can be recruited.
During 2023, the Committee will continue to review Board
succession and will review the new CEO’s Senior Management
succession plan.
Diversity
The Board recognises the importance and benefits of diversity
throughout the organisation and on the Board. We believe that the
business benefits from having a diverse workforce, at all levels and
in all roles, that reflects the communities in which the Group
operates as this enables us to better understand and meet the
needs of our customers. Diversity includes different nationalities,
race, religion, age, sexual orientation and gender, as well as different
personalities, education, backgrounds and culture.
Board diversity
The Board’s policy on diversity is to ensure that the Directors on the
Board have a broad range of experience, skills and knowledge, with
diversity of thinking, background and perspective. Appointments to
the Board are made on merit against objective criteria, having
regard to the benefits of diversity and the current and future needs
of the business and the other factors set out in the Code. When
identifying candidates for appointment to the Board, any search
firm engaged is instructed to include a range of candidates from
diverse backgrounds for consideration.
The Committee is mindful of the Financial Conduct Authority’s
(FCA) amendment to the listing rules requiring UK listed companies
to set out in their annual reports whether board diversity targets
have been met on a comply or explain basis. The specific targets set
by the FCA require at least 40% of board members to be women,
and a woman should hold at least one of the senior board positions
– the Chair, Chief Executive, Senior Independent Director, or Chief
Financial Officer. At least one member of the Board should come
from a minority ethnic background. The Committee will report
against the new rules, which are applicable for financial accounting
periods starting from 1 April 2022, in next year’s report.
Board composition as at 31 December 2022
Tenure
1
2
2
2
<1 year
1-2 years
3-4 years
Over 5 years
Role
1
2
4
Chair
Executive
Non-Executive
Board gender split
2
5
Female
Male
Board ethnicity
7
White
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
80
/ NOMINATION COMMITTEE REPORT CONTINUED
Outcomes
In December 2022, the Board reviewed the results of the
evaluation exercise and agreed actions for 2023.
The Nomination Committee reviewed the evaluation results
in December 2022 as far as responses impacted on Board size,
composition, induction and training.
The diagram on
PAGE 81 summarises the 2022 evaluation
outcomes and proposed actions. Additionally, we have set out
the 2021 evaluation outcomes and actions taken.
Evaluation
The Chairman reviewed the results of the evaluation exercise
and shared the findings with Board members ahead of the
December 2022 Board meeting.
Appraisal
Following receipt of the completed questionnaires during
November 2022, Link Company Matters Limited reviewed the
responses and produced a report which compiled the results
of the evaluation exercise.
Questionnaire
The evaluation process was conducted using a questionnaire
in which Board members were asked to score questions and
to provide additional commentary where appropriate.
Questions were designed to focus the evaluation by Board
members in a number of key areas and to cover the
performance of the Board and its Committees as well as that
of the Chairman and areas of focus for 2022.
The draft questionnaire was reviewed and agreed by the
Committee in July 2022.
Workforce diversity
The Committee continues to be broadly satisfied with the diversity at
employee level within the Group but aspires to improve the gender
balance and ethnic diversity at the senior level. Management has in
place a range of measures designed to address this, including
mentoring, development programmes and flexible working, and the
Committee will continue to monitor progress on behalf of the Board.
Details of the Group’s diversity and inclusion initiatives are set
out on
PAGES 52 AND 53. This includes details of the gender
and ethnicity breakdown of Directors, Senior Management and
other employees.
During the year, Foxtons published its gender pay gap figures as at
5 April 2022. The report can be found on the Group’s website at
www.foxtonsgroup.co.uk.
Board evaluation and effectiveness
An internal Board evaluation was completed in the second half of
2022. This exercise was carried out to review the performance of
the Board, its Committees and the individual Directors. The internal
Board evaluation was led by the Chairman and facilitated by Link
Company Matters Limited, the Group’s Company Secretary. The
evaluation took the form of a questionnaire which gave Directors
the opportunity to provide comments on areas of focus, including
the structure of the Board, effectiveness of the Board, and
Committee specific questions. The responses to the evaluation of
the Board and the Committees were collated and analysed by Link
Company Matters Limited. The actions agreed by the Directors will
be monitored by the Board during 2023.
As a separate exercise, the Senior Independent Director, together
with the Non-Executive Directors, conducted the Chairman’s
evaluation. The views of the Executive Directors were also taken
into account.
Overview: Our internal Board evaluation process
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
81
Annual evaluation of the Nomination Committee’s performance
As part of the internal Board evaluation this year, the performance of the Nomination Committee was reviewed and no material concerns
were identified.
Governance
During the year, the Committee received briefings from the Company Secretary on corporate governance matters. We have reported on the
Company’s compliance with the Code on
PAGE 68 of the Corporate Governance Report.
Priorities for 2023
In light of the significant changes to the Board and Executive Leadership Team, the Committee will focus on succession planning for both the
Board and Senior Management. Our succession planning will continue to take into account our diversity policy and the FCA’s Board diversity
rules applicable for 2023.
Nigel Rich CBE
Chairman of the Nomination Committee
6 March 2023
2021 outcomes and actions taken
2021 assessment outcomes Actions taken in 2022
• Noted it would be beneficial to spend more Board time
discussing the marketplace, broader strategy and progress
against the delivery of strategic initiatives.
• Noted the ongoing importance of proactively engaging
with shareholders to understand priorities and views.
• Seek to create further opportunities for the Board to
interact with the Senior Management team and
employees both formally and informally.
• The 2022 Board agendas were revised to include trading update
presentations from Senior Management and additional time to
review key performance indicators and market trends. The 2022
Board strategy day agenda was revised to enable an in-depth
discussion on the Group’s broader strategy and the findings from
the new CEO’s operational review.
• A review of our investor relations programme was carried out, with
regular shareholder engagement a priority for the Chairman and
CEO. Furthermore, the Board agendas were revised to enable the
Company’s corporate brokers to attend Board meetings to provide
investor feedback on a regular basis.
• The Executive Leadership Team regularly attended Board meetings in
2022 to report on their areas of responsibility, as well as attending
the Board’s strategy discussion. In addition, branch visits,
departmental shadowing and a Board dinner, including Senior
Management, supplemented these formal interactions.
2022 outcomes and proposed actions
2022 assessment outcomes Proposed actions
• Ensure updates from the Executive Leadership Team
articulate broader strategic progression as well as in
year performance.
• Noting the higher strategic priority of Financial Services,
more frequent Board engagement with Alexander Hall
leadership will be appropriate.
• Ensure sufficient time is available for Board and
Committee agenda items so that discussions can be
sufficiently detailed as required.
• With technology and data becoming an increasingly
important part of the strategy more discussion at the
Board level on IT strategy will be important.
• Following significant changes in Senior Management
succession planning will need to be a Nomination
Committee priority for 2023.
• 2023 Executive Leadership Team presentations to report against
the Group’s refreshed strategic priorities to enable medium-term
strategic progression to be tracked and monitored by the Board.
• Increased engagement with Alexander Hall’s leadership team,
including additional Board presentations and increased strategic
oversight of Alexander Hall.
• Timings of Board meetings to be reviewed to enable more
in-depth Board discussions. Additional opportunities for informal
Board discussion to be incorporated into the Board planner.
• Increased frequency of IT strategy discussion at the Board, with
updates to focus on progression against technology and data
related strategic priorities.
• Senior Management succession planning and review of the
Group’s broader talent pipeline will be a Nomination Committee
area of priority for 2023.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
82
/ ENVIRONMENTAL, SOCIAL AND
GOVERNANCE COMMITTEE REPORT
The ESG Committee was established in December 2021 and
provides an important forum for ESG matters to be discussed by
members of the Board and the Executive Leadership Team. The ESG
Committee has enabled the Board to allocate time to discuss the
Group’s ESG strategy and oversee a range of responsible business
topics including employee engagement matters, diversity and
inclusion matters, environmental matters and social matters.
Our Responsible Business report on
PAGES 38 TO 60 provides
details on a range of environmental and social matters, including
our environmental and social commitments.
2022 areas of focus
• Reviewing the Group’s ESG governance framework.
• Reviewing the Group’s environmental, social and
governance priorities.
• Reviewing ESG related targets, measures and commitments.
• Reviewing the Group’s environmental footprint and
compliance with the Task Force on Climate-Related Financial
Disclosures (TCFD).
• Consideration of proxy agency ESG views.
Sheena Mackay
Chair of the ESG Committee
The ESG Committee has
enabled the Board to allocate
focused time to discuss the
Group’s ESG strategy.
Members of the ESG Committee and
attendance at meetings
The membership of the Committee is set out below. All
Committee members are considered independent by the
Board and in accordance with the Code. Nigel Rich was
considered to be independent on his appointment as
Chairman of the Company. Biographical information can be
found on
PAGES 64 AND 65. Members’ attendance at
Committee meetings is set out in the table on
PAGE 72.
The Company Secretary acts as Secretary to the Committee.
The Committee Chair has relevant ESG experience having
previously held a number of HR Director roles and advised on
a range of ESG matters. Other Committee members have
relevant experience through other external appointments,
knowledge of the Group’s operations and broader experience
of working in customer facing businesses.
Chair: Sheena Mackay
1
Members as at 31 December 2022
2
: Nigel Rich, Alan Giles,
Peter Rollings
3
, Rosie Shapland
1
Sheena Mackay will retire from the Board at the 2023 AGM and Annette Andrews, who was appointed to the Board on 1 February 2023, will become Chair
of the ESG Committee upon Sheena’s retirement.
2
Annette Andrews and Jack Callaway were appointed to the Board and ESG Committee on 1 February 2023.
3
Peter Rollings temporarily stepped down as a member of the Committee from the date he was appointed as Interim CEO (30 May 2022) to the end of the
financial year (31 December 2022).
Environment matters
Although the Group has a relatively simple infrastructure and does not
operate in a high-risk environmental sector, our environmental targets
will reduce the Group’s environmental impact by lowering emissions
and reducing energy consumption. To support our target of reaching
net zero by 2050 (across Scope 1, Scope 2 and Scope 3 emissions), the
Committee has established an interim emissions target to reduce
Scope 1 and Scope 2 emissions by 30% by 2030 against the 2021
baseline. The commitment to electrify our vehicle fleet by 2030 and
the ongoing work to improve the efficiency of our offices will support
this goal.
Social matters
Retaining an engaged workforce is key to our success, and therefore
our workforce social programmes, including diversity and inclusion,
continue to be an area of focus. Externally, our social mobility
partnerships have enabled us to support the communities we
work within.
Governance
During the year, the Committee received briefings from the
Company Secretary on ESG related corporate governance matters
as relevant. We have reported on the Company’s compliance with
the Code on
PAGE 68 of the Corporate Governance Report.
The environmental and social governance framework has
been embedded in the year. The framework establishes the
reporting lines on environmental and social matters and
Senior Management responsibilities.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
83
Role and responsibilities and activities
undertaken during the year
The Committee’s main responsibilities, as outlined in its
terms of reference, are:
• To provide oversight of the governance framework
relating to environmental and social matters.
• To review the Group’s environmental and social strategy
to ensure alignment with the Group’s overall strategy,
including consideration of related risks and opportunities.
• To actively look for opportunities to promote
environmental and social matters within the Group.
• To receive updates on performance against the Group’s
environmental and social strategy and target.
• To receive updates on regulatory changes which
could impact the implementation of the Group’s
environmental and social strategy.
• To receive updates on the social and community
initiatives of the Group, including community
engagement and partnerships.
• To review the extent and effectiveness of the Group’s
external reporting of its environmental and social
performance, and to review the external social reporting
prior to its publication.
• To understand the objectives and expectations of the
Group’s shareholders on environmental and social matters.
• To review environmental and social related risks to the
Group and make recommendations to the Audit
Committee regarding inclusion in the Group’s risk
management practices.
Terms of reference were reviewed during the year and set
out in detail the Committee’s role and responsibilities. The
terms of reference can be found on the Group’s website at:
www.foxtonsgroup.co.uk.
Since the last ESG Committee Report, the Committee held three
scheduled Committee meetings. The Committee’s main activities
and areas of focus were as follows:
Environment
• Reviewing environmental measures and targets, including
setting an interim 2030 emissions target alongside our 2050 net
zero target (across Scope 1, Scope 2 and Scope 3 emissions).
• Reviewing the annual Streamlined Energy and
Carbon Reporting statement and other relevant key
performance indicators.
• Reviewing progress of the Group’s emission reduction initiatives,
including the vehicle fleet electrification programme and the
branch energy usage reduction programme.
Social - employees
• Reviewing the annual employee engagement survey results
and review of management’s response plan.
• Reviewing employee diversity and inclusion activities.
• Reviewing the Group’s health and safety governance
framework and performance.
• Reviewing the Group’s modern slavery statements
and ongoing compliance.
Social – communities
• Reviewing the Group’s community commitments
and initiatives including the Group’s social
mobility partnership.
Governance
The ESG Committee provided oversight of the environmental and
social governance framework, including:
• Reviewing the framework, strategy, activities and
commitments relating to the Group’s environmental and
social responsibilities.
• Agreeing the Committee’s agenda for 2022 and 2023.
• Reviewing ESG related Annual Report disclosures, including
TCFD reporting.
Annual evaluation of the ESG Committee’s performance
As part of the internal Board evaluation this year, the performance
of the ESG Committee was reviewed and no material concerns
were identified.
Priorities for 2023
The Committee will continue to monitor progress against the
Group’s environmental and social commitments.
Sheena Mackay
Chair of the ESG Committee
6 March 2023
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
84
The Committee’s work continues to focus on protecting the
interests of shareholders by monitoring the effectiveness of risk
management processes, internal controls and financial reporting
processes. These areas are becoming increasingly important as the
external risk environment continues to evolve and inevitably
impacts the markets the Group operates in. The Committee has
focused on monitoring and strengthening internal controls, risk
management processes and monitoring emerging risks, including
the impact of climate change.
The Group’s internal audit programme has continued to be delivered
by PwC with four internal audit reviews providing assurance over
significant risk or strategically important areas. Internal audit reviews
in the year have covered lettings and sales governance, health and
safety, HR policies and procedures and IT strategy.
During the year, the Committee reviewed a number of key financial
reporting matters including the annual brand impairment review,
presentation of adjusted items and alternative performance metrics,
accounting treatment of the fair value loss in PD Innovations Limited
(trading as Boomin) and the Group’s going concern assumption and
longer-term prospects and viability statement.
4
AUDIT, RISK AND
INTERNAL CONTROL
Role of the Audit Committee
The primary function of the Audit Committee is to assist the Board
in fulfilling its responsibilities to protect the interests of
shareholders with regard to the integrity of financial reporting, risk
management and internal controls and governing the relationship
with the internal and external auditors. Key responsibilities include:
• Monitoring the integrity of the financial statements and half
year report and other formal announcements relating to
financial performance.
• Monitoring, reviewing and challenging when necessary the
financial reporting processes, including significant financial
reporting issues, accounting policies and judgements.
• Recommending to the Board the appointment, reappointment
and removal of the external auditor, approving the terms
of engagement and remuneration and monitoring the
independence of the auditor and the provision of
non-audit services.
• Monitoring the statutory audit of the annual financial statements.
• Reviewing internal audit’s strategy, plans, programmes,
effectiveness, results of work undertaken and resolution of any
matters arising.
• Reviewing the Group’s systems and controls for the prevention
of bribery and procedures for detecting fraud.
• Reviewing the effectiveness of internal financial controls and
risk management policies and systems.
• Reviewing the Group’s processes and procedures for ensuring
that material risks are properly identified, assessed, managed
and reported and that appropriate systems of monitoring and
control are in place.
/ AUDIT COMMITTEE REPORT
Rosie Shapland
Chair of the Audit Committee
I am pleased to present the
report of the Audit
Committee setting out its
key activities and principal
and ongoing responsibilities.
Members of the Audit Committee and
attendance at meetings
The membership of the Committee is set out below. All
Committee members are considered independent by the
Board and in accordance with the Code. Biographical
information can be found on
PAGES 64 AND 65.
Members’ attendance at Committee meetings is set out in
the table on
PAGE 72. The Company Secretary acts as
Secretary to the Committee.
Chair: Rosie Shapland
Members as at 31 December 2022
1
: Alan Giles,
Sheena Mackay and Peter Rollings
2
1
Annette Andrews and Jack Callaway were appointed to the Board and Audit Committee on 1 February 2023.
2
Peter Rollings temporarily stepped down as a member of the Audit Committee from the date he was appointed as Interim CEO (30 May 2022) to the end of the
financial year (31 December 2022).
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
85
Significant financial reporting matters
The Committee considered the following significant financial
reporting matters which require judgement or are sources of
estimation uncertainty. The matters, and how they were
addressed by the Committee, are detailed below. The
matters are disclosed as critical accounting judgements and
key sources of estimation uncertainty within Note 1 of the
financial statements.
The Group has an indefinite life brand intangible asset with a
carrying value of £99 million:
• Useful economic life of the brand intangible asset
The Committee challenged the appropriateness of the
indefinite useful economic life assigned to the brand
intangible asset. It considered whether there had been
any changes in the period over which the brand asset is
expected to generate cash inflows. Following this
assessment, it was confirmed that there is no
foreseeable limit to the period over which the asset is
expected to generate cash inflows. Therefore, it
continues to be appropriate for the brand asset to be
assigned an indefinite useful economic life.
• Impairment of the brand intangible asset
The Committee challenged management’s impairment
review methodology of the indefinite life brand
intangible asset, including the relevant forecasts,
discount rates and long-term growth rates. The
Committee concurred with management’s view that no
impairment of the Group’s brand asset is required.
However, the Committee noted that a reasonable
possible change in key assumptions within the
impairment model would remove the headroom
between recoverable amount and carrying value of the
brand asset and appropriate sensitivity disclosure is
included within Note 10 of the financial statements.
The Committee’s terms of reference were reviewed during the year and
can be found on the Group’s website at: www.foxtonsgroup.co.uk.
Composition of the Committee
Each member of the Committee is an Independent Non-Executive
Director. The Chair, as a Chartered Accountant, former audit partner
with over 30 years of audit experience across multiple sectors
within public and private companies, and Chair of the Audit
Committee at both PayPoint plc and Workspace Group plc, satisfies
the requirement of having appropriate recent and relevant financial
experience. The Committee members as a whole have competence
relevant to the business, in addition to general management and
commercial experience.
The Audit Committee usually invites the full Board, our outsourced
internal audit partner and external auditor to attend each meeting.
Other members of management attend as and when requested.
The Committee holds private sessions with the external and internal
auditor as necessary without members of management being
present, and at least once a year.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
86
/ AUDIT COMMITTEE REPORT CONTINUED
Other relevant financial reporting matters
The Committee also reviewed other relevant financial reporting matters in the period.
• Adjusted items and alternative performance measures
The Committee considered the presentation and disclosure of £0.1 million of adjusted items which have been recognised in the
period (refer to Note 4 of the financial statements for further details). The Committee reviewed the nature of the adjusted items,
with reference to the Group’s adjusted items policy (refer to Note 1 of the financial statements), and concluded the classification
and disclosure of the items was appropriate and the policy had been consistently applied across financial years. No changes
have been made to the Group’s alternative performance measures in the year and the associated disclosure is considered to
be appropriate.
• Accounting for investment in PD Innovations Limited
As set out in Note 14 of the financial statements, as a result of PD Innovations Limited (trading as Boomin) entering liquidation,
the investment has been fair valued to nil at 31 December 2022, resulting in a £3.4 million fair value loss being recognised in the
period. The Committee is satisfied that the £3.4m loss on fair value has been recognised through other comprehensive income in
line with the investment being classified as a fair value through other comprehensive income (FVOCI) financial asset.
• Going concern and longer-term prospects and viability statement
The Committee reviewed management’s assessment of the Group’s going concern assumption and longer-term prospects and
viability statement. The review included consideration of forecast cash flows, specifically uncertainties in relation to the
macroeconomic outlook, the reverse stress scenario sensitivity and the Group’s liquidity over the relevant forecast period.
For the purposes of assessing the going concern assumption, an 18-month forecast period from the date of the approval of the
2022 financial statements was considered, including the results of a reverse-stress scenario. A longer period of five years was
used for assessing viability, which is consistent with the Group’s strategic planning period. The viability assessment included the
consideration of severe, but plausible, scenarios and the impact such scenarios have on the Group’s future financial position. In
all scenarios it is assumed the Group successfully renews the RCF facility in June 2024 under terms similar to those currently in
place. The Committee confirmed preparing the financial statements on a going concern basis continues to be appropriate and
recommended the approval of the long-term prospects and viability statement as set out on
PAGES 36 AND 37.
The Committee also reviewed other key estimates:
• Acquisition accounting
As set out in Note 13 of the financial statements, the Group acquired two businesses in the year. Management’s purchase price
allocation exercise identified £2.9 million of acquired intangible assets relating to customer contracts and relationships and
£8.3 million of goodwill has arisen on acquisition. The Committee reviewed the key valuation assumptions and is satisfied that
the acquisition accounting is appropriate.
• Property provisions
The Group has other provisions of £1.9 million (refer to Note 19 of the financial statements) which primarily relate to property
related liabilities. The Committee reviewed the key assumptions used to determine the year end provision balance and concluded
the valuation of the provision is appropriate.
• Branch impairment assessment
The Committee also reviewed management’s branch impairment assessment and is satisfied that the carrying value of branch
assets at 31 December 2022 is appropriate (refer to Note 4 of the financial statements).
• Impairment of trade receivables
The Committee reviewed the Group’s approach to measuring impairment of trade receivables and concluded the recognised
expected credit losses to be appropriate (refer to Note 16 of the financial statements).
The Committee also reviewed the continuing rationale for not recording client monies in the Group’s financial statements. The
Committee concluded there was no judgement in this area, and no amounts should be recorded in the Group’s financial statements,
since these funds belong to tenants. Refer to Note 25 of the financial statements for details of the value of client money held at
31 December 2022.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
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Financial reporting
The Committee regularly reviews the robustness of financial
reporting processes. The Group maintains a comprehensive financial
review cycle, which includes a detailed annual financial planning
process where budgets are prepared for challenge and approval by
the Board. Management reviews key performance indicators on a
regular basis which enable business performance and the market to
be monitored on an ongoing basis, allowing corrective action to be
taken as necessary. At a Group level, a comprehensive management
accounts pack, including income statements, a balance sheet, a cash
flow statement, and key performance indicators, is reviewed monthly
by the Board. Reforecasts of current year performance are carried out
as required, and at least every quarter. Management monitors the
publication of new accounting and reporting standards and reports
on any updates to the Committee.
Risk management and internal controls
The Committee, on behalf of the Board, keeps under review the
effectiveness of the Group’s risk management and internal control
systems through management update reports, output from the
executive risk committees and reports from PwC internal audit to
ensure that controls in place are effective in order to safeguard
shareholders’ investments and the Group’s assets. Such a system is
designed to manage rather than eliminate the risk of failure to
achieve business objectives and can only provide reasonable and not
absolute assurance against material misstatement or loss.
The Board has defined its risk appetite for strategic, financial,
operational and compliance risks as set out on
PAGE 31 of the
Strategic Report. A standard methodology for risk assessment is
applied across the Group to assist with monitoring gross and
residual risk and comparing residual risk against risk appetite. As
required by the Code, the Board, through the Audit Committee, has
carried out a robust assessment of the principal and emerging risks
facing the Group, including those that could threaten its business
model, future performance, solvency or liquidity. Further details
can be found on
PAGES 33 AND 34 of the Strategic Report.
The Group has the following key procedures and monitoring
processes in place to provide effective internal control:
• An ongoing process to identify, evaluate and manage
significant risks, which is monitored and regularly reviewed
by the Executive Leadership Team with significant issues
presented to the Board and Audit Committee.
• The Group’s compliance department continuously reviews
operations to ensure that transactions have been properly
authorised and procedures are adhered to across the Group.
• Appropriate segregation of duties and are embedded across
the organisation.
• Management reports to the Audit Committee on the
mechanisms in place to monitor the effectiveness of key
internal controls, which includes mapping key entity level
processes and controls to the Group’s three lines of defence.
• On behalf of the Board, the Audit Committee reviews fraud,
anti-bribery and whistleblowing policies and procedures and
considers any whistleblowing incidents, and the appropriate
response. There have been no recorded instances of bribery or
corruption during the period under review.
• An annual fraud risk assessment and financial risk assessment is
prepared and is subject to review by the Audit Committee.
• A system for planning, reporting and reviewing financial
performance, including performance against strategy and the
business plan as described above.
• The Environmental, Social and Governance (ESG) Committee
reviews the TCFD climate related disclosures.
• Key management personnel, including the Chief Financial
Officer, Chief Information Officer, Legal and Compliance
Director and Alexander Hall’s Risk and Compliance Committee,
provide regular risk and control updates to the Audit Committee.
• Compliance with the risk appetite statement is monitored through
the Group’s standard monitoring and reporting mechanisms. The
Board reviews the risk appetite statement annually.
• The Audit Committee reviews internal risks, including IT
systems and cyber risk, to ensure that the Group’s IT function
effectively implements preventative and detective controls to
monitor and mitigate risk.
On the basis of the above procedures and the monitoring processes
employed, the Board, supported by the Audit Committee, has
reviewed the effectiveness of the risk management and internal
control systems during 2022, and up to the date of the approval of
the Annual Report and Accounts. No significant failings or
weaknesses were identified during the period under review.
Internal audit
PwC is the Group’s outsourced internal audit partner and has the
remit to provide independent and objective assurance over the
Group’s operations. PwC’s internal audit plan is reviewed and
approved by the Committee annually and can be updated during the
year should the need arise. The internal audit plan is determined with
reference to the Group’s strategy and the risks that may prevent the
Group from meeting its strategy. Following each review, PwC issues
an independent report to the Committee with findings graded and
any remedial actions agreed as necessary. Remediation progress is
monitored and reported to the Committee on a regular basis by PwC.
During 2022 PwC reported on four internal audits relating to
lettings and sales governance, health and safety, HR policies and
procedures and IT strategy. The independent reports issued in these
areas were scoped with reference to the risk profile of each area and
all areas were reported to be satisfactory, with only low or medium
findings being reported against certain areas. Appropriate
remediation plans have been put in place to respond to the findings
with good progress made against these items in the year.
The Committee assesses the effectiveness of internal audit on a
regular basis.
Whistleblowing
The Group believes that it is important to have a culture of openness
and accountability in order to prevent situations relating to possible
impropriety, financial or otherwise, from occurring or to address
them when they do occur. The Group’s independent whistleblowing
helpline continues to be in operation and activity reports are
provided to the Committee, with any matters relating to Senior
Management being reported directly to the Audit Committee Chair.
Any material whistleblowing matters are raised to the Board and
responded to accordingly. The Committee is satisfied that the
whistleblowing policy and its administration remain effective.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
88
Fair, balanced and understandable
The Group has a comprehensive and thorough assurance process in
respect of the preparation, verification and approval of periodic
financial reports. The process involves:
• The involvement of qualified and appropriately experienced
staff, under the direction of the CFO.
• A comprehensive review and verification process which deals
with the factual content of the reports and ensures consistency
across various sections.
• A common understanding amongst senior staff which ensures
consistency and overall balance.
• A transparent process to ensure full disclosure of information
to the external auditor.
• Engagement of a professional and experienced external audit
firm who understands the Foxtons business and business model.
• Oversight by the Audit Committee which, among other
things, reviews:
• The key accounting judgements and key sources of
estimation uncertainty.
• The consistency of, and any changes to, significant
accounting policies and practices.
• Significant adjustments arising from the external audit.
• The Group’s statement on risk management and internal control.
• The going concern and viability assumptions.
The process outlined, together with the review and challenge of
management by the Committee and its recommendation to the
Board, provides comfort to the Board that the Annual Report and
Accounts taken as a whole is fair, balanced and understandable and
provides the information necessary for shareholders to assess the
Group’s business model, strategy, position and performance. The
Directors confirm this statement within the Directors’
Responsibilities Statement on
PAGE 133.
External auditor
BDO continued as external auditor in 2022, following appointment
at the 2020 AGM and the conclusion of a formal tender process for
the statutory audit contract. The 2022 audit was led by Tim
Neathercoat. Under the partner rotation rules set out in the
applicable ethical standards, his final year as partner will be 2024
after five years of service.
As noted, the Committee has reviewed the effectiveness and
quality of the external audit process. The Committee did this by:
• Reviewing the external auditor’s plan, with specific focus on
the auditor’s approach to auditing areas new or unique to the
2022 audit such as the fair value loss on the investment in
Boomin and the acquisition accounting for the two businesses
acquired in the year.
• Discussing the results of the external auditor testing, including
their views on material accounting issues, key judgements and
estimates, and their audit report.
• Considering the robustness of the audit process, specifically
how the auditor had challenged management’s key
assumptions and demonstrated professional scepticism. The
Committee assessed this area through discussion with the
audit partner, review of the auditor’s benchmarking of
management’s assumptions and consideration of the quality
and depth of the auditor’s observations and challenge.
• Reviewing the quality of people and service provided by BDO,
including a review of the FRC’s latest Audit Quality Review
of BDO.
• Confirming the independence and objectivity of BDO.
The Committee concluded that it was satisfied with the performance,
ongoing quality and independence of BDO as external auditor.
Non-audit services
In brief, there are certain services termed ‘excluded services’ that
are not permitted to be provided by the external auditor. Excluded
services comprise services prohibited under the applicable
regulatory and ethical guidance. All permitted non-audit services
provided by the external auditor are subject to prior approval by the
Committee. With the exception of the interim review performed
under International Standard on Review Engagements (UK and
Ireland) 2410 and an accountant’s report required as a
Propertymark member, there were no other non-audit services
undertaken during the year. Total non-audit fees for services
provided by BDO for the year ended 31 December 2022 were
£45,000 (2021: £37,500). Audit fees for the year were £375,000
(2021: £292,500).
Evaluation of the Audit Committee’s performance
As part of the internal Board evaluation this year, the performance of
the Committee was reviewed and there were no areas of concern and
it was concluded that the Committee had effectively fulfilled its role.
Conclusion
As a result of its work during the year, the Committee has
concluded that it has acted in accordance with its terms of
reference and has ensured the independence of the external auditor
during the year.
/ AUDIT COMMITTEE REPORT CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
89
Role Tasks
July
2022
Sept
2022
Dec
2022
Feb
2023
Financial
reporting
Monitoring and reviewing the Group’s accounting policies, practices and significant accounting
judgements, including any relevant changes in accounting or reporting standards.
● ● ● ●
Review of key financial reporting matters (key matters are set out on
PAGES 85 AND 86). ● ● ● ●
Reviewing the plan for the production of the 2022 Annual Report and Accounts, including the plans for
reporting on the UK Corporate Governance Code.
●
Receiving the annual and half-yearly financial statements and advising the Board on whether the Annual
Report and Accounts are fair, balanced and understandable. In fulfilling this task, the Audit Committee
reviewed the process undertaken to produce the Annual Report and Accounts, which included guidance
given to contributors, internal verification processes and content approval procedures.
The Committee also reviewed supporting papers to ensure the Annual Report and Accounts were
factually correct.
● ●
Reviewing the going concern paper which analysed the profitability and cash generation of the Group
and agreeing with the adoption of the going concern basis.
● ● ●
Reviewing the Group’s assessment of the Task Force on Climate-Related Financial Disclosures framework
and reviewing the related disclosures in the Annual Report and Accounts with reference to the ESG
Committee’s recommendations.
●
Considering and reviewing the viability statement and supporting sensitivity analysis which assessed the
potential impact of the principal risks on the future performance and liquidity of the Group over a
five-year period.
● ●
External
audit
Approving the appointment of the external auditor and their terms of engagement and fees for the
financial year 2022.
●
Considering the scope of work to be undertaken by the external auditor, assessment of the auditor’s
professional scepticism and reviewing the results of the work undertaken.
● ● ●
Receiving the external auditor’s audit planning paper for 2022 and reviewing materiality thresholds and
areas of risk where the auditor would concentrate.
●
Reviewing and monitoring the independence of the external auditor and approving their provision of
non-audit services.
● ●
Reviewing the effectiveness of the external audit process.
●
Reviewing the external auditor’s interim review, pre year end and year end report in which no material
issues were identified.
● ● ●
Internal
audit
Reviewing internal audit’s assurance map and risk assessment. Approving the internal audit plan
for 2023.
●
Reviewing internal audit reports following the completion of specific audits, monitoring progress against
the internal audit plan and assessing ongoing effectiveness of internal audit.
● ● ●
Internal
controls
Ensuring compliance with the UK Corporate Governance Code.
●
Reviewing the whistleblowing policy and helpline reports.
● ● ●
Reviewing internal control reports from external audit, internal audit and relevant management
committees; and advising the Board on the effectiveness of the Group’s systems of internal controls in
order to allow the Board to assert as such in the Annual Report and Accounts.
● ● ● ●
Risk
Management
Reviewing the Group’s risk appetite and risk monitoring systems which assess gross risk, mitigating controls
and residual risk across the Group and comparing residual risk against the Board’s risk appetite.
● ● ●
Reviewing controls within the IT function through reports received from the Chief Information Officer, the
internal auditor and the external auditor, including progress with the Group’s cyber security strategy,
response to cyber threats and attacks and the general IT control environment.
● ● ●
Receiving a report on legal and compliance matters within the Group including compliance with the
General Data Protection Regulation (GDPR).
●
Governance
Reviewing the Committee’s terms of reference.
●
Reviewing the Group’s non-audit services policy.
●
Rosie Shapland
Chair of the Audit Committee
6 March 2023
KEY ACTIVITIES
Since the last Audit Committee Report, the Committee has held four meetings, with the principal work being:
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
90
Overview statement from the Committee Chairman providing
relevant background for remuneration decisions and a summary
of key decisions.
An overview of our work in the year.
/ DIRECTORS’ REMUNERATION REPORT
5
REMUNERATION
Members of the Remuneration Committee and
attendance at meetings
The membership of the Committee is set out below. All of
the Non-Executive Directors who are Committee members
are considered independent by the Board and in accordance
with the Code. Nigel Rich was considered to be independent
on his appointment as Chairman of the Company.
Biographical information can be found on
PAGES 64
AND 65
. Members’ attendance at Committee meetings is set
out in the table on
PAGE 72. The Company Secretary
acts as Secretary to the Committee.
Chairman: Alan Giles
1
Members as at 31 December 2022
2
: Nigel Rich,
Sheena Mackay, Rosie Shapland, Peter Rollings
3
.
1
Alan Giles will retire from the Board at the 2023 AGM and Annette Andrews, who was appointed to the Board on 1 February 2023, will become Chair of the
Remuneration Committee upon Alan’s retirement.
2
Annette Andrews and Jack Callaway were appointed to the Board and Remuneration Committee on 1 February 2023.
3
Peter Rollings temporarily stepped down as a member of the Committee from the date he was appointed as Interim CEO (30 May 2022) to the end of the
financial year (31 December 2022).
A summary of remuneration in respect of 2022.
Details of the new policy that will be put to a binding
shareholder vote at the 2023 AGM.
Our Annual Report on Remuneration includes the following
sub-sections:
• Our approach to fairness and wider workforce considerations.
• How we implemented the current Policy in 2022.
• Additional information.
The 2022 Annual Report on Remuneration, including the Annual Statement from the Remuneration Committee Chairman, will be subject to
an advisory vote at the 2023 AGM.
Alan Giles
Chairman of the Remuneration Committee
The outcome of the Committee’s
full 2022 review is that the
Remuneration Policy remains fit
for purpose and aligned to the
business strategy. As such, the
proposed changes to the
Remuneration Policy are minor.
ANNUAL STATEMENT FROM THE REMUNERATION
COMMITTEE CHAIRMAN
Refer to
PAGES 91 TO 93
THE WORK OF THE COMMITTEE
Refer to PAGE 94
DIRECTORS’ REMUNERATION REPORT AT A GLANCE
Refer to PAGE 95 TO 102
OUR NEW 2023 DIRECTORS’ REMUNERATION POLICY
Refer to PAGES 103 TO 113
2022 ANNUAL REPORT ON REMUNERATION
Refer to PAGES 114 TO 129
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
91
On behalf of the Board, I am pleased to present the Remuneration
Committee’s report for the year ended 31 December 2022. This was
the third and final year of the implementation of the Remuneration
Policy agreed by shareholders in May 2020 and this annual
statement sets out the outcome for this year and how it was
reached, considering business performance and other factors, such
as the wider stakeholder experience.
In line with the three-year policy cycle, the Remuneration
Committee has conducted a full review of the 2020 Remuneration
Policy. This annual statement summarises the review and the key
changes for the 2023 Remuneration Policy, which will be put to a
binding shareholder vote at the 2023 AGM on 9 May 2023.
Introduction
In a year of significant external political and economic pressures,
driven by the war in Ukraine and unprecedented inflation levels,
Foxtons performance in 2022 was good, with adjusted operating
profit exceeding stretch targets underpinned by revenue growth
across all businesses and disciplined cost control. The Lettings
business performed particularly strongly, enhanced by the
contribution from the acquired D&G lettings portfolio, growth in
rental prices and market share growth.
Board changes
On 5 September 2022, we welcomed Guy Gittins as our new CEO.
Guy is an excellent addition to our management team and has
significant sector and leadership experience. Guy’s remuneration
arrangements have been set in line with the 2020 Remuneration
Policy, which can be found in detail on
PAGE 95, along with
details of his buyout awards on
PAGES 123 AND 124.
The Former CEO, Nic Budden stepped down from his role on
30 May 2022, and Peter Rollings, one of our Non-Executive
Directors was appointed as Interim CEO until Guy was able to join
us. Patrick Franco, the Group’s Former COO, also stepped down
from the Board on 1 April 2022 and departed the Company,
effective 30 April 2022.
As disclosed in detail in the 2021 Directors’ Remuneration Report,
Chris Hough was appointed as CFO, effective 1 April 2022 as an
internal promotion, following Richard Harris’ resignation from his
role as the Group’s Former CFO. Chris’ remuneration arrangements
have been set in line with the 2020 Remuneration Policy, which can
be found in detail on
PAGE 95.
We set out full details of the leaver arrangements for Nic Budden,
Richard Harris and Patrick Franco on
PAGES 125 AND 126 , which
are all in line with the shareholder approved Remuneration Policy.
2022 variable pay
Variable pay continues to form a core part of the reward for
Executive Directors, Senior Management and front line employees,
reflective of the culture at Foxtons, and in the residential property
industry more generally. 2022 was a good year for financial results
and wider non-financial KPIs. On a formulaic basis, this would result
in the payment of bonuses to Executive Directors, under the Bonus
Banking Plan (BBP), of 86% of maximum.
The Committee carefully considered the appropriateness of the
2022 BBP targets and the respective formulaic BBP outcomes in
light of the overall business performance on a holistic basis,
including consideration of the experience of stakeholders in 2022.
Whilst the targets remained appropriate and performance of the
business was good, leading to high outcomes versus the
performance measures, the Committee gave particular weight to
the disappointing share price performance during 2022, and the
write off of the investment in Boomin, and has therefore decided to
use its discretion to reduce the formulaic outcomes of the BBP for
2022 by 20%, resulting in payments to Executive Directors of
68.8% of maximum. This translates to bonuses of 103% of base
salary for the CEO and Former CEO and 86% of base salary for the
CFO and Former COO. The Former CFO was not eligible for a 2022
bonus award. Note that all bonuses vested on a time pro-rata basis
for time in role during the performance period. Further details are
set out on
PAGE 122 .
For similar reasons the Committee used its discretion to reduce the
grant sizes awarded to Executive Directors on 1 April 2022 under
the Restricted Share Plan from 100% to 75% of base salary for the
Former CEO (although that grant was subsequently forfeited upon
his departure), and 75% to 56.25% of base salary for the CFO.
Whilst neither of the current Executive Directors, nor the Former
CEO and Former CFO have 2020 RSP awards that will vest in May
2023, the Committee considered the issue of windfall gains given
that a pro-rated award is due to vest to the Former COO, Patrick
Franco. Following detailed consideration, the Committee has
determined that no adjustment would be appropriate to the vesting
of the award on the basis it was granted at a share price that was
stable for much of the period of 2020, and has not materially
increased over the vesting period, and therefore that there is no
windfall gain incorporated within the value of the award. The final
vesting of this award will be disclosed in the Directors’
Remuneration Report next year.
ANNUAL STATEMENT FROM THE REMUNERATION COMMITTEE CHAIRMAN
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
92
Our 2023 Remuneration Policy
In line with the three-year Policy cycle, the Remuneration
Committee conducted a full review of the 2020 Remuneration
Policy in 2022. Our updated 2023 Remuneration Policy will be put
to a binding shareholder vote at the 2023 AGM on 9 May 2023.
During 2021, and following extensive discussions with shareholders,
the Remuneration Committee undertook a comprehensive review
of the implementation of the 2020 Remuneration Policy, which
informed our approach to Executive remuneration for 2021 and
beyond. As set out in full details in our 2021 Directors’
Remuneration Report, these changes were within the provisions of
our 2020 Remuneration Policy and aimed to further align Executive
remuneration with shareholders.
Following the 2021 updates to the implementation of the
Remuneration Policy, and the subsequent successful recruitment of
our CEO, the outcome of the Committee’s full 2022 review is that the
Remuneration Policy remains fit for purpose and aligned to the
business strategy. As such, the proposed changes to the
Remuneration Policy are minor and are based on embedding the
improvements already implemented in practice such that they are
reflected in the Remuneration Policy itself. The changes being
proposed for the 2023 Remuneration Policy are therefore as follows:
• BBP deferral: 50% of the participant’s plan account
cumulative balance will be paid in cash for each of the first
three years of the plan (current wording states a maximum
of 70% will be paid in cash).
• Maximum pension contribution: The maximum pension
contribution for all Executive Directors is in line with that
provided to the majority of the workforce (which is currently
3% of salary).
• Salary Substitute Restricted Shares: A proportion of
Executive Director salaries can be paid in Salary Substitute
Restricted Shares, which allows flexibility on recruitment.
This has been implemented since April 2022 and will now
be formalised under the policy.
• Chairman and NED fees: Formalise the flexibility to
pay Chairman and NED fees partially in shares, on a
case-by-case basis.
We offered engagement on these proposed changes to ten of
our largest shareholders in November. All replies received were
fully supportive.
2023 Implementation
CEO base salary review
Following the recent appointment of the CEO at a salary of
£450,000, in line with the median for FTSE Small Cap companies and
22% lower than his predecessor, and given the wider context around
the cost of living crisis, the Remuneration Committee determined
that no increase will be awarded to the CEO for the year from
1 January 2023.
CFO base salary review
Chris Hough was appointed as CFO with a gross base salary of
£250,000 which is significantly below that of his predecessor
(£305,400) and below the market rate for a business of the size and
complexity of Foxtons. The Committee did this with the intention
of keeping his salary under review with the potential to move it
towards the market rate as the CFO developed and established
himself in the role.
Having reviewed the CFO’s performance, the Committee is
confident that since appointment on 1 April 2022 Chris has rapidly
established himself in the role and has demonstrated strong
performance over the period to date. The Committee has therefore
considered moving the CFO’s base salary to align with pay levels for
equivalent roles in the market.
To achieve this would require a salary increase in excess of that
awarded to the wider workforce. Given the current inflationary
pressures that our wider workforce has experienced and the broader
cost of living crisis, the Committee do not feel that it would be
appropriate to award the CFO a significant salary increase at this
time and as such, no increase will be awarded to the CFO for the
year from 1 January 2023, in line with the approach for the CEO.
The Committee will however keep this under review with the
intention of aligning the CFO’s salary with the market in 2024,
subject to continued performance in role. Any increase will be
disclosed in next year’s remuneration report along with the
supporting rationale.
2023 incentives
2023 incentives will be operated in line with the 2023
Remuneration Policy, subject to shareholder approval. As such, the
CEO and CFO will be eligible for a BBP opportunity of 150% and
125% of salary, respectively, and a RSP grant of 100% and
75% of salary, respectively.
The BBP will continue to be based on adjusted operating profit,
Sales market share growth, Lettings market share growth and an
assessment of the employee experience, and a qualitative holistic
underpin will continue to apply annually to the unpaid balance of
the BBP and at the point of vesting for the RSP.
The discretionary underpin allows the Remuneration Committee to
make adjustments to the level of vesting if the Committee believes
due to business performance, individual performance or wider
Company considerations that the vesting should be adjusted.
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
ANNUAL STATEMENT FROM THE REMUNERATION COMMITTEE CHAIRMAN CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
93
The Committee is satisfied that the operation of a holistic underpin
is the most appropriate approach for Foxtons. Given the challenges
inherent in setting long-term targets, it is essential that the
Committee retains the flexibility to assess performance ‘in the
round’ and review all elements of performance as a whole, rather
than implementing quantitative targets that may reduce the
relevance of the underpin at the point of final assessment.
To ensure that the qualitative underpin is robustly and thoroughly
assessed, the Committee has developed a framework to assess
performance over the period. In particular, the Committee will
reduce the vesting level of the BBP and RSP if any of the following
are considered to be below a satisfactory level:
• Underlying financial performance, considering key financial
performance indicators in particular.
• ESG performance and impact.
• Individual performance.
• Operational performance.
• Stakeholder experience, including, but not limited
to shareholders.
Wider workforce
As set out in detail on PAGE 114 of the wider Annual Report and
Accounts and in summary above, the Committee considers business
performance, as well as the wider stakeholder experience when
making remuneration decisions for Executives.
During 2022, rising inflation and the cost of living crisis have
impacted our workforce. In light of this, Foxtons reviewed wider
workforce salaries and awarded an average salary increase of 4%
across the business (excluding Directors). For those members of the
wider workforce who receive variable pay the average increase from
2021 was 22%.
For 2023, most employees will typically receive a base salary
increase of 5%, but with higher increases of 14% and 15%
respectively for Negotiators and branch support staff.
ESG measures
During the year the Committee has reflected on the growing use of
ESG measures in Executive incentive plans. Employee engagement is
a well-established component of our annual bonus performance
measures, and as disclosed last year, during 2022 the Committee
modified this approach to make a broader assessment of how
employees have been managed and their overall experience rather
than a single narrow engagement measure.
As described in the ESG Committee report the Group is committed to
reducing its environmental impact by lowering emissions and
reducing energy consumption, including an interim emissions target
to reduce Scope 1 and Scope 2 emissions by 30% by 2030 (from a
2021 baseline), a commitment to electrify our vehicle fleet by 2030
and ongoing work to improve the efficiency of our offices.
We will continue to review the importance of a range of ESG
measures, in particular those that relate to the environment,
but do not propose to introduce further measures into incentive plans
until we are sure they are material to our strategy and can
be robustly measured.
Conclusion
The performance in 2022 was strong on a range of metrics and the
Executive team have rapidly established themselves in role
following their respective appointments. We look forward to
receiving shareholder feedback on our Remuneration Report and
Remuneration Policy, and hope to receive support in favour of these
at our upcoming AGM.
After four years as Chairman of the Remuneration Committee I will
be stepping down after the 2023 AGM. I would like to take the
opportunity to thank members of the Committee, our internal and
external advisors and shareholders for their time and support, and I
am pleased to welcome Annette Andrews as my successor.
Alan Giles OBE
Chairman of the Remuneration Committee
6 March 2023
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
94
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
How many times did the Committee meet and what did we do?
We met as a Committee four times since the last Directors’ Remuneration Report. We believe it is important that the Committee keeps up to date
on an ongoing basis during the year to ensure discussions are timely where business decisions may affect remuneration. The Committee’s key
activities since the 2021 Directors’ Remuneration Report was issued are set out below.
Additional activities undertaken by the
Committee during 2022
• Considered and approved the leaver arrangements for
the Former CEO and Former COO.
• Considered and approved the remuneration
arrangements of the incoming CEO.
February 2023
Matters relating to 2022:
• Reviewed and approved the outturn of 2022 bonus
payments for Executive Directors and Senior Management.
• Reviewed and approved the 2022 Directors’
Remuneration Report.
• Reviewed workforce remuneration.
• Reviewed the latest Gender Pay Gap Report.
Matters relating to 2023, policies and other matters:
• Reviewed Executive Director remuneration, including 2023
packages, BBP 2023 targets and 2023 share awards.
• Reviewed Senior Management remuneration, including
2023 packages and share-based awards.
December 2022
• Reviewed the Remuneration Policy.
• Reviewed the likely outturn of the 2022 BBP for
Executive Directors.
• Reviewed Senior Management remuneration.
• Reviewed the Executive Directors’ and the Chairman’s
remuneration for 2022.
September 2022
• Reviewed the Remuneration Policy.
• Reviewed trends and governance developments.
• Reviewed the market share performance
measures methodologies.
July 2022
• Confirmed the remuneration implications of various
Senior Management changes.
• Agreed a workplan for the review of the
Remuneration Policy.
Who supports the Committee?
During the year, we sought internal support from the CEO
and CFO whose attendance at Committee meetings was by
invitation from the Chairman, to advise on specific questions
raised by the Committee and on matters relating to the
performance and remuneration of the Senior Management
team. The Company Secretary acts as Secretary to the
Committee. No Director was present for any discussions that
related directly to their own remuneration. Our adviser is
PwC, with further details provided on
PAGE 129.
What are the Committee’s responsibilities?
The key responsibilities of the Remuneration Committee are to:
• Determine the Remuneration Policy for Executive
Directors and Senior Management, in the context of pay
and conditions across the wider workforce.
• Review workforce remuneration and related policies
across the Company as a whole.
• Design specific remuneration packages which include
salaries, bonuses, equity incentives, pension rights
and benefits.
• Review the Executive Directors’ service contracts.
• Ensure failure is not rewarded and that steps are always
taken to mitigate loss on termination, within
contractual obligations.
• Approve the terms, recommend grants and approve the
vesting outcomes under the Group’s incentive plans.
The Committee’s terms of reference, which are reviewed
regularly, are set out on the Company’s website
(www.foxtonsgroup.co.uk).
Annual evaluation of the Remuneration
Committee’s performance
As part of the internal Board evaluation this year, the
performance of the Remuneration Committee was reviewed
and no material concerns were identified.
THE WORK OF THE COMMITTEE
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
95
Remuneration in respect of 2022
The Remuneration Policy operated as intended during the year. The following tables set out what our Executive Directors earned during the year:
Fixed components
Current Executive Directors
Guy Gittins, CEO (appointed CEO from 5 September 2022) Chris Hough, CFO (appointed CFO from 1 April 2022)
Salary: £450,000
Salary: £250,000
Pension: 3% of base salary Pension: 3% of base salary
Benefits: Company car (or allowance), life assurance and private
medical insurance
Benefits: : Company car (or allowance), life assurance and private
medical insurance
Former Executive Directors in role during the year
Nic Budden, Former CEO (stepped down on 30 May 2022) Richard Harris, Former CFO (stepped down on 1 April 2022)
Salary: £579,600 Salary: £305,400
Pension: 10% of base salary Pension: 3% of base salary
Benefits: Company car (or allowance), life assurance and private
medical insurance
Benefits: Company car (or allowance), life assurance and private
medical insurance
Patrick Franco, Former COO (stepped down on 1 April 2022) Peter Rollings, Interim CEO (30 May 2022 to 4 September 2022)
1
Salary: £305,400
NED fee increased to annual rate of £450,000 during this period
Pension: 3% of base salary
Benefits: Company car (or allowance), life assurance and private
medical insurance
1
Peter Rollings, currently an Independent Non-Executive Director, acted as Interim CEO following Nic Budden’s departure and until Guy took up his appointment.
During the period Peter was in role as Interim CEO and for a short handover period after Guy Gittins joined, Peter’s Non-Executive Director fee was increased to
an annual rate of £450,000, in line with the salary level for the new CEO.
Variable components
2022 Annual BBP outcome
Formulaic
bonus outcome
(% of maximum)
Discretionary
adjustment
(% of formulaic
outcome)
Final
bonus outcome
(% of maximum)
Maximum
bonus
(% of salary)
Salary
(pro-rated)
1
(£’000)
Bonus
outcome
2
(£’000)
Bonus
outcome
(% pro-rated salary)
CEO
Guy Gittins
86.0% (20.0)% 68.8%
150% 146.6 151.3 103%
CFO
Chris Hough
125% 187.5 161.3 86%
Former CEO
Nic Budden
150% 241.5 249.2 103%
Former COO
Patrick Franco
125% 76.4 65.7 86%
1
The salary used in the bonus calculation is that approved for the year and pro-rated for the time served as a Board member.
2
The annual bonus earned for the CEO, CFO, Former CEO and Former COO has been pro-rated for the time served as a Board member. For the Former CEO
and Former COO, amounts earned continued to be paid into the BBP at the normal time in early 2023 (with any cash distribution at that time). The plan
account will continue to be payable according to the original payout profile. The Former COO received a pro-rated bonus for the four months that he was
employed at the Company. As per the regulations, only three months of this value is included in the single figure table, as well as the table above, reflecting
the time that Patrick Franco was an Executive Director. Note that the Former CFO (Richard Harris) was not eligible for a 2022 BBP award, and as such,
has not been included in the table above.
DIRECTORS’ REMUNERATION REPORT AT A GLANCE
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
96
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
More detail on the performance condition outcomes and the adjustments made to the formulaic outcomes are set out on PAGE 122.
Each year the bonus outcome contributes to the participants’ plan account with a proportion paid out in cash and a proportion paid out in
shares. The table below summarises the movements in participants’ plan account from 31 December 2022 onwards:
CEO
Guy Gittins
(£’000)
CFO
Chris Hough
(£’000)
Former CEO
Nic Budden
(£’000)
Former COO
Patrick Franco
(£’000)
Value of deferred notional shares in plan account at 31 December 2022
(end of year three of the plan)
n/a n/a 163.4 71.8
Bonus contribution made at the start of 2023 in respect of performance over 2022
151.3 161.3 249.2
87.5
2
Cumulative account following contribution and dividends 151.3 161.3 415.2 160.4
Less: 2023 cash payment out of the plan account
1
(75.6) (80.6) (207.6) (80.2)
Value of deferred notional shares carried forward over to 2023
75.6 80.6 207.6 80.2
1
As described in last year’s report, the percentage of the BBP account that is deferred into shares was reviewed in 2021, and it was decided that the deferral
percentage would be increased from 30% to 50% in line with market best practice, implemented on a phased basis. As such, the deferral into shares is 50%
with respect to bonus outcomes for 2022 onwards. Note that the Former CFO (Richard Harris) forfeited all outstanding amounts in his plan account on
cessation and as such, he has not been included in the table above.
2
To reflect the full amount of bonus earned in 2022, the bonus contribution amount for Patrick Franco is pro-rated for the four months that he was employed
at the Company. As per the regulations, only three months of this value is included in the single figure table and the 2022 Annual BBP outcome table
(£65,661), reflecting the time that Patrick Franco was an Executive Director.
Long-term incentive plans vesting during 2022
Long-term incentives
CEO
Guy Gittins
actual
(£’000)
CFO
Chris Hough
actual
(£’000)
Former CEO
Nic Budden
actual
(£’000)
Former COO
Patrick Franco
actual
(£’000)
Share option award that vested based on a performance period ending in
the year
1
n/a n/a 0 0
No RSP awards were due to vest during the year
n/a n/a n/a
2
n/a
3
1
The Former CEO (Nic Budden) and Former COO (Patrick Franco) were awarded options over 6.5 million and 1 million ordinary shares, respectively, under the
2017 Share Option Plan. These were due to vest during the year, subject to the achievement of TSR targets over the five-year performance period to 16 May
2022. The TSR performance over the period was calculated to be -16.7% p.a., below the threshold performance level of 10% pa. As such, these awards lapsed in
the year. No discretion was applied by the Committee. The Former CFO’s 0.3 million of options were forfeited on cessation of employment.
2
In line with the default treatment, the Former CEO’s unvested RSP awards were forfeited on cessation of employment. This treatment also applied to the Former
CFO’s in-flight RSP awards.
3
The Former COO’s in-flight awards will be pro-rated for time to reflect the proportion of the vesting period in employment (to 30 April 2022).
DIRECTORS’ REMUNERATION REPORT AT A GLANCE CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
97
Total single figure of remuneration
Total single figure of remuneration
CEO
Guy Gittins
(£’000)
CFO
Chris Hough
(£’000)
Former CEO
Nic Budden
1
(£’000)
Former CFO
Richard Harris
(£’000)
Former COO
Patrick Franco
(£’000)
2022 603 504 534
2
86 146
2021 - - 1,707
3
751
3
742
3
1
Peter Rollings, currently an Independent Non-Executive Director, acted as Interim CEO following Nic Budden’s departure, and until Guy Gittins took up his
appointment. Peter Rollings’ single figure fee during his period as Interim CEO was £134,659.
2
As reported in last year’s Remuneration Report the Former CEO received a RSP grant on 1 April 2022 with a value of £434,700 in line with the Remuneration
Policy which was subsequently forfeited on his departure. As a result the value of this RSP award is not included in the above total single figure of remuneration
for 2022.
3
The Former CEO and Former CFO’s in-flight RSP awards were forfeited in full on cessation of employment, which constituted £579,600 of the single figure in
2021 for the Former CEO and £229,050 of the single figure in 2021 for the Former CFO. The Former COO’s in-flight RSP awards were pro-rated to reflect the
date of cessation with the lapsed amount constituting £146,345 of the Former COO’s 2021 single figure, above.
Note that in line with the remuneration reporting regulations, the RSP awards have been included in the year of grant, which impact both
the 2021 and 2022 total single figure. While the RSP award is included in the total single figure amount in the year of grant, it does not
actually vest until three years after grant and is then subject to a further two-year holding period. Only once it vests is the Executive
Director unconditionally entitled to the award.
When considering the appropriateness of incentive outcomes, the Committee considers these in light of business performance, as set out in
the Annual Statement from the Remuneration Committee Chairman, as well as the wider stakeholder experience. The table below sets out
the stakeholder experience in the year. On this basis, the Committee is satisfied that the above incentive outcomes are appropriate.
Experience during 2022
Employees
• The overall employee base of the Group has remained stable with fewer than 10 exit settlements in the year.
• Wider workforce inflationary basic salary increases of 4% (excluding Executive Directors) and wider workforce
variable pay outcomes of 22% up on 2021 (excluding Executive Directors).
• Bonus outcomes of 56% of maximum bonus opportunity for Senior Management.
• Maintained good employee engagement as evidenced through the independently administered employee
engagement survey (85% engagement score).
Investors
• Total 2022 dividend of 0.9p per share (interim dividend of 0.2p per share and final dividend of 0.7p per share
proposed), compared to a total 2021 dividend of 0.45p per share.
• Bought back £4.9 million of shares to return excess capital to shareholders following the strong trading
performance during the period.
• Share price decreased from 39.5p at the end of 2021 to 29.7p at the end of 2022.
Directors
• No increase to base salary or Non-Executive Director fees for year commencing 1 January 2023.
• CEO appointed on a reduced package compared to predecessor.
• CEO and CFO take 10% and 20% of salary in shares respectively with significant vesting and holding periods.
• Proportion of the BBP account plan paid in cash in relation to the 2022 performance year reduced to 50%.
Customers
• Continued to deliver high levels of customer satisfaction as evidenced by the 2022 Trustpilot score of 4.7 out of 5.
Wider society
• Environmental and social initiatives continue to be progressed, further details are provided in the ESG Committee’s
report set out on
PAGES 82 AND 83.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
98
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
The diagram below sets out the key components of Executive Director remuneration with each element colour coded and referred to throughout
the Report.
Base Salary Benefits Pension BBP RSP
+ + + +
=
Competitive
salary to attract
the right calibre
of Executive
Paid 10% and
20% in Salary
Substitute
Restricted Shares
for the CEO and
CFO, respectively
Competitive
benefits to attract
the right calibre
of Executive
Both Executive
Directors: In line
with workforce
(3%)
150% (CEO),
125% (CFO) of
salary maximum
Key financial,
operational and
stakeholder
performance
indicators
50% deferral in
shares
100% (CEO),
75% (CFO) of
salary maximum
Three-year
vesting subject
to underpin
Two-year holding
period
Total
Remuneration
Shareholding guidelines: 250% of salary for CEO and 200% for CFO,
extending in full for two years post-cessation of employment
SUMMARY OF PROPOSED CHANGES TO THE DIRECTORS’ REMUNERATION POLICY
AND IMPLEMENTATION IN 2023
Executive Director remuneration under the 2023 Remuneration Policy
The Remuneration Committee is required to put the new 2023 Remuneration Policy to a binding shareholder vote at the next AGM to be
held on 9 May 2023, as the current policy that was approved at the May 2020 AGM is approaching the end of its three-year approval period.
This new policy will take effect from the date of that meeting and is intended to apply for three years.
Following its detailed review, the Committee determined that the structure of the current Remuneration Policy remains fit for purpose.
Therefore, only minor changes to the policy are being proposed, in order to formalise recent improvements to how we operate pay. We have
implemented these amendments under the current policy and are taking the opportunity to reflect them in the new policy:
• BBP Deferral: 50% of the participant’s plan account cumulative balance will be paid in cash for each of the first three years of the plan
(current wording states a maximum of 70% will be paid in cash).
• Maximum pension contribution: The maximum pension contribution for all Executive Directors is in line with that provided to the
majority of the workforce (which is currently 3% of salary).
• Salary Substitute Restricted Shares: A proportion of Executive Director salaries can be paid in Salary Substitute Restricted Shares,
which allows flexibility on recruitment. This has been implemented since April 2022, and will now be formalised under the Policy.
• Chairman and NED fees: Formalise the flexibility to pay Chairman and NED fees partially in shares, on a case-by-case basis.
Full details of the proposed Remuneration Policy are set out on
PAGES 98 TO 102.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
99
A summary how the Policy is intended to operate in 2023 is set out in the following table.
Implementation in 2023
Base salary
Base salary from 1 April 2023:
• CEO: £450,000 (paid 90% in cash and 10% in Salary Substitute Restricted Shares) (0% rise)
• CFO: £250,000 (paid 80% in cash and 20% in Salary Substitute Restricted Shares) (0% rise)
Salary Substitute Restricted Shares that will be granted in 2023 vest after three years, subject to continued employment only. Following vesting,
subject to an additional two-year holding period.
Average all employee rise estimated to be c.5%.
Benefits
All Executive Directors: Company car (or allowance), life assurance and private medical insurance.
Pension
Set in line with the majority employer contribution for the wider workforce:
• CEO: 3% of base salary
• CFO: 3% of base salary
BBP
Maximum opportunity for 2023:
• CEO: 150% of base salary
• CFO: 125% of base salary
Performance measures for 2023:
• 60% adjusted operating profit
• 15% Sales market share growth
• 15% Lettings market share growth
• 10% assessment of the employee experience
Targets are considered commercially sensitive and will be disclosed
retrospectively for all information that is no longer commercially sensitive.
Threshold performance: 25% of the maximum payable.
Target performance: 50% of the maximum payable.
Upon annual assessment of performance by the Committee, a
contribution will be made by the Company into the participant’s
plan account and 50% of the cumulative balance will be paid in cash
for each of the first three years of the plan. Any remaining balance
will be converted into shares or share-linked units.
The deferred balance in the participant’s plan account is subject
to an annual discretionary forfeiture underpin. See below for
further details.
100% of the balance in the final fourth year of the plan will
normally be settled in the form of shares transferred or allotted
to the participant.
Malus and clawback provisions apply.
RSP
2023 grants:
• CEO: 100% of base salary
• CFO: 75% of base salary
No performance measures are associated with the grant of awards.
Awards vest after three years, subject to continued employment and
assessment of an underpin. Following vesting, an additional two-year
holding period will apply.
Malus and clawback provisions apply.
Vesting is subject to a discretionary underpin. See below for
further details.
Shareholding guidelines
The minimum shareholding guideline is 250% of gross basic salary for the CEO, and 200% of gross basic salary for other Executive Directors.
On cessation of employment, Executive Directors are required to retain the lower of their minimum shareholding requirement and actual
shareholding immediately prior to departure for two years.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
100
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
Framework to assess the BBP and RSP qualitative underpin
Payouts and vesting under the BBP and RSP are subject to a discretionary underpin that allows the Remuneration Committee to make
adjustments to the level of vesting if the Committee believes due to business performance, individual performance or wider Company
considerations that the vesting should be adjusted.
The Committee is satisfied that the operation of a holistic discretionary underpin is the most appropriate approach for Foxtons. Given the
challenges inherent in setting long-term targets, it is essential that the Committee retains the flexibility to assess performance ‘in the round’
and review all elements of performance as a whole, rather than implementing quantitative targets that may reduce the relevance of the
underpin at the point of final assessment.
To ensure that the qualitative underpin is robustly and thoroughly assessed, the Committee has developed a framework to assess
performance over the period, which will be used going forward. In particular, the Committee will reduce the vesting level of the BBP and RSP
if any of the following are considered to be below a satisfactory level:
• Underlying financial performance, considering key financial indicators in particular.
• ESG performance and impact.
• Operational performance.
• Individual performance.
• Stakeholder experience, including, but not limited to shareholders.
SUMMARY OF PROPOSED CHANGES TO THE DIRECTORS’ REMUNERATION POLICY AND IMPLEMENTATION IN 2023 CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
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How our BBP performance measures in 2023 support the implementation of our strategy
In executing our strategy, we aim to create sustainable value and positive outcomes for our shareholders and all other stakeholders. We
have reviewed the performance measures we use for our incentives to ensure that they support the delivery of our new strategy. The
diagram below demonstrates how our incentive measures align to our strategy.
Supports the delivery of sustainable shareholder value through the build-up of a material shareholding
and provides a shared ownership experience with the Group’s shareholders.
RSP
Measuring performance
Financial performance
Revenues
Transaction volumes
Adjusted operating profit
Net free cash flow
Employees and customers
Employee engagement
and experience
Customer satisfaction
Operational performance
Market share growth
Balance of business
Productivity
BBP
Adjusted operating profit
Market share growth
(sales and lettings)
Employee experience
The following 2023 performance measures support the implementation of our strategy:
Our strategic priorities
1. LETTINGS
ORGANIC
GROWTH
2. LETTINGS
ACQUISITIVE
GROWTH
3. SALES
MARKET SHARE
GROWTH
4. FINANCIAL
SERVICES
REVENUE GROWTH
Refer to PAGES 7 AND 15 of the Strategic Report
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
102
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
External relativities
The following charts show for the CEO and CFO the position of their base salary and on-target total remuneration compared to the FTSE
Small Cap. The charts demonstrate the normal annual package of the CEO and CFO, i.e. on a full year basis and excluding buyout awards
that were awarded to the CEO on appointment to compensate for the forfeiture of incentive arrangements held with his previous employer.
The charts demonstrate that the remuneration package of the CFO is positioned below the lower quartile versus the FTSE Small Cap for
salary and total remuneration. As set out in further detail in the Chairman’s letter, the CFO was appointed with a gross base salary
significantly below that of his predecessor (£305,400) and below the market rate for a business of the size and complexity of Foxtons. The
Committee did this with the intention of keeping his salary under review with the potential to move it towards the market rate as the CFO
developed and established himself in the role and intended to align the CFO’s salary with the market in 2024.
The CEO package is competitively positioned in relation to the FTSE Small Cap.
SUMMARY OF PROPOSED CHANGES TO THE DIRECTORS’ REMUNERATION POLICY AND IMPLEMENTATION IN 2023 CONTINUED
0
200
400
600
800
1000
1200
1400
1600
1800
Base
Salary
Total
Remuneration
29%
36%
24%
12%
CFO
£’000
Lower quartile to median
Median to upper quartile
CFO
0
200
400
600
800
1000
1200
1400
1600
1800
Base
Salary
Total
Remuneration
29%
36%
24%
12%
Lower quartile to median
Median to upper quartile
CEO
CEO
£’000
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
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The Remuneration Committee is required to put the new 2023 Remuneration Policy to a binding shareholder vote at the next AGM to be
held on 9 May 2023, as the current policy that was approved at the May 2020 AGM is approaching the end of its three-year approval period.
This new policy, set out below, will take effect from the date of that meeting and is intended to apply for three years.
Our remuneration principles / The Company applies the following remuneration principles throughout the organisation at all levels:
• The Company’s policy is to target a remuneration package that is at around median, for median performance, and in the upper quartile
for exceptional performance, and which is closely linked with the Company’s strategic objectives.
• In setting all elements of remuneration the Company seeks to benchmark itself against comparable companies.
• The aim of the Company’s policy is to attract, retain and continue to motivate talented employees while aligning remuneration with
the achievement of the Company’s strategic objectives.
In line with this, our key objective for the Remuneration Policy is to help promote the long-term sustainable success of the Company by
providing fair and competitive remuneration packages that attract, retain and motivate Executive Directors and Senior Management of the
right calibre to deliver the Company’s strategy, while aligning remuneration with shareholder interests. This is achieved by a significant
proportion of remuneration being in the form of variable pay, linked to the achievement of stretching targets that align with the Company’s
strategic goals, as well as a significant proportion of remuneration delivered in long term equity to encourage sustainable shareholder value
creation. The Committee aims to ensure that remuneration arrangements are clear, simple, not excessive and are aligned with the
Company’s purpose, culture and values, with mechanisms in place to ensure there are no rewards for failure. When setting the
Remuneration Policy, the Committee takes into account remuneration across the organisation as a whole, where variable pay is a relatively
high component throughout.
How did the Committee determine the new Remuneration Policy? / The process the Committee went through in determining the new
Remuneration Policy was as follows:
• The Committee considered the Company’s strategy, how the current Remuneration Policy related to and supported the strategy, and
formed its own views on the changes (if any) required to the policy to align with the strategy.
• The Committee considered feedback from shareholders and investor bodies on the 2020 Directors’ Remuneration Policy and recent
remuneration reports.
• The Committee sought advice from its independent remuneration consultant on market best practice, regulations and current investor
sentiment in formulating the new Remuneration Policy.
• The Committee considered implementation amendments that had been made within the flexibility of the 2020 policy, and the extent
to which these should be formalised in the new policy.
• The Committee reviewed the wider workforce remuneration and incentives to ensure the approach to Executive remuneration
is consistent.
• The Committee consulted with Executive Directors on the Remuneration Policy and potential changes.
• The Committee conducted a consultation exercise with major shareholders on the changes.
The Committee was mindful in its deliberations on the new Remuneration Policy of any potential conflicts of interest and sought to
minimise them through an open and transparent internal consultation process; by seeking independent advice from its external advisers and
by undertaking a shareholder consultation exercise.
OUR NEW 2023 DIRECTORS’ REMUNERATION POLICY
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
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OUR NEW 2023 DIRECTORS’ REMUNERATION POLICY CONTINUED
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
Factor How the Committee addressed these factors
Clarity
Remuneration arrangements
should be transparent and promote
effective engagement with
shareholders and the workforce.
• The BBP performance conditions are based on the core KPIs (which includes the employee experience)
of the strategy and therefore there is a clear link to all stakeholders between their delivery and reward
provided to management.
• The RSP and salary substitute shares provide annual grants of shares which must be retained for the
longer term to ensure a focus on sustainable performance in an inherently cyclical market. This
provides complete clarity of the alignment of the interests of management and shareholders.
Simplicity
Remuneration structures should
avoid complexity and their
rationale and operation should be
easy to understand.
• The performance conditions for the BBP are based on the Group’s KPIs. This alignment of reward with
the delivery of key markers of the success of the implementation of the strategy ensures simplicity.
Restricted shares are a simple mechanism and avoid the setting of long-term performance conditions
which tend to inherently make remuneration more complex.
Risk
Remuneration arrangements
should ensure reputational and
other risks from excessive rewards,
and behavioural risks that can arise
from target-based incentive plans,
are identified and mitigated.
The Policy includes:
• Requiring the deferral of a substantial proportion of the incentives in shares for a material period.
• Aligning the performance conditions with the strategy of the Group.
• Ensuring a focus on long-term sustainable performance through the RSP and Salary Substitute
Restricted Shares.
• Forfeiture thresholds.
• Ensuring there is enough flexibility to adjust payments through malus and clawback and an overriding
discretion to depart from formulaic outcomes.
These elements mitigate against the risk of target-based incentives by:
• Deferring the value in shares for the long-term which helps ensure that the performance earning the
award was sustainable and thereby discouraging short term behaviours.
• Aligning any reward to the agreed strategy of the Group.
• The use of an RSP supports a focus on the sustainability of the performance over the longer term.
• Reducing the awards or cancelling them if the behaviours giving rise to the awards are inappropriate.
• Reducing the awards or cancelling them if it appears that the criteria on which the award was based do
not reflect the underlying performance of the Group. We have enhanced this by setting out a clear
framework for assessing the BBP and RSP qualitative underpin.
Predictability
The range of possible values of
rewards to individual Directors and
any other limits or discretions
should be identified and explained
at the time of approving the Policy.
• Our Policy sets out clearly the range of values and discretions in respect of the remuneration
of management.
• The RSP increases the predictability of the rewards received by Executive Directors, and the BBP, being
based on annual targets, operates over a time cycle where performance is more predictable compared
with traditional long-term incentive plan schemes thereby allowing the Remuneration Committee to
more effectively ensure desirable remuneration outcomes for all stakeholders.
Proportionality
The link between individual
awards, the delivery of strategy
and the long term performance of
the Company should be clear.
Outcomes should not reward
poor performance.
• The BBP provides a clear link between the reward provided to management and the delivery of the
strategy through incentivising management to deliver the KPIs.
• The RSP and salary substitute shares provides a focus on the long-term sustainable performance of
Foxtons through the build up of a long-term locked in shareholding.
• Both the BBP and the RSP includes performance underpins that allow the Remuneration Committee to
exercise its discretion to override formulaic outcomes.
Alignment to culture
Incentive schemes should drive
behaviours consistent with
Company purpose, values
and strategy.
• The BBP drives behaviours consistent with Foxtons’ strategy.
• The RSP drives behaviours consistent with the Group’s purpose and values which are focused on the
long-term future of the business throughout the business cycle.
Alignment to Provision 40
In determining the new Remuneration Policy, the Committee paid attention to Provision 40 of the 2018 UK Corporate Governance Code.
The table below sets out how the Committee addresses the factors of clarity, simplicity, risk, predictability, proportionality and alignment
to culture, as set out in Provision 40 of the Code.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
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Policy for Executive Directors / Details of the Remuneration Policy for Executive Directors under the new policy are provided below.
Purpose and
link to strategy Operation Maximum Performance framework
Base
salary
Core element of
remuneration set at a
level to attract and
retain Executive
Directors of the
required calibre to
successfully deliver the
Group’s strategy.
Salary Substitute
Restricted Shares
increase alignment
to the shareholder
experience.
Salary increases are typically in line with those
of the wider workforce.
Typically reviewed on an annual basis
considering several factors, including:
• Scope and responsibilities of role.
• Individual skills, experience and
performance.
• Business performance and the external
economic environment.
• Appropriate market data.
• Pay and conditions elsewhere in Foxtons.
A portion of the salary will typically be paid in
Salary Substitute Restricted Shares. Note that
the full gross base salary (cash plus Salary
Substitute Restricted Shares) will be used to
calculate all other remuneration elements that
are set as a percentage of base salary. Salary
Substitute Restricted Shares will typically be
subject to a three-year vesting period, subject
to continued employment only. A two-year
holding period will typically apply after vesting.
Salary Substitute Restricted Share Awards are
subject to malus and clawback provisions (see
PAGE 108 for details).
There is no prescribed
maximum limit on salaries.
However, salary increases
will ordinarily be in line
with those of the
wider workforce.
Increases may be made
above this in certain
circumstances, including
(but not limited to):
• An increase in scale,
scope or responsibilities
of the role.
• Where individuals have
been recruited or
promoted with salaries
below the targeted
policy level initially
and have become
more established in
their role.
Not applicable. No
recovery provisions apply
to the cash portion of
base salary.
Proposed changes: A proportion of Executive Director salaries can be paid in Salary Substitute Restricted Shares, which allows
flexibility on recruitment (currently implemented, but not included in the 2020 policy).
Benefits
To provide Executive
Directors with market
competitive benefits
consistent with the role.
Benefits provided to Executive Directors may
include (but are not limited to) a Company car
or cash equivalent, life assurance, private
medical insurance, health club membership and
other benefits as appropriate.
Executive Directors are eligible to participate in
any all-employee share plans on the same basis
as other employees, should such plans be
implemented by the Group.
Additional benefits may be offered such as
relocation allowances, subject to the maximum
period over which allowances shall be provided
not exceeding two years.
Executive Directors may utilise the services of
the Company under the same preferential
terms as all other employees.
Benefits may vary by role and
individual circumstance and
are reviewed periodically.
There is no overall maximum.
Not applicable. No
recovery provisions.
Proposed changes: No proposed changes.
Pension
To provide funding for
Executive Directors’
retirement at market
competitive levels
consistent with the role.
Executive Directors may receive pension
contributions to a personal pension scheme
and/or cash allowances in lieu of contributions.
Pension contributions are set
in line with the majority
employer contribution for
the wider workforce
(currently 3% of base salary).
For any new appointment,
pension contributions will be
in line with the majority
employer contribution for
the wider workforce.
Not applicable. No
recovery provisions.
Proposed changes:
Formalising the position on pension contributions that all pensions are set in line with the majority employer
contribution for the wider workforce.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
106
Policy for Executive Directors / Details of the Remuneration Policy for Executive Directors under the new policy are provided below.
Purpose and
link to strategy Operation Maximum Performance framework
BBP
Variable pay
opportunity set at a
market competitive
level designed to
motivate and reward
Executive Directors for
the achievement of
business objectives on
an annual basis to
enable successful
implementation of the
Group’s strategy.
Aligns the interests of
Executives with
shareholders and
contributes to the
retention of key
individuals by deferring
part of the annual
bonus in shares or
share-linked units.
Annual performance conditions and targets are
set at the beginning of the plan year.
Upon annual assessment of performance by the
Committee, a contribution will be made by the
Company into the participant’s plan account
and 50% of the cumulative balance will be paid
in cash for each of the first three years of the
plan. Any remaining balance will be converted
into shares or share-linked units.
100% of the balance in the final fourth year of
the plan will normally be settled in the form of
shares transferred or allotted to the participant.
The Committee may award dividend
equivalents on shares or share-linked units held
under the plan to participants to the extent
that they vest.
The plan contains malus and clawback
provisions (Refer to
PAGE 108 for details).
Maximum opportunity is
150% of base salary.
For threshold performance
25% of the maximum will
be payable.
For target performance,
50% of the maximum will
be payable.
For maximum performance
100% of the maximum will
be payable.
Performance measures are
determined annually with
reference to the Group’s key
strategic business objectives
for the year and are
measured over a period of
one financial year.
A minimum of 50% of the
bonus is based on financial
measures. The remainder is
based on non-financial
measures aligned to the
strategic priorities of the
business and may also
contain individual
performance objectives.
The deferred balance in the
participant’s plan account is
subject to an annual
discretionary forfeiture
underpin that allows the
Remuneration Committee to
make adjustments to the
value of the plan account if
the Committee believes due
to business performance,
individual performance or
wider Company
considerations that the value
should be adjusted.
The Committee retains
discretion to change the
performance measures,
targets and weightings
part-way through a
performance year if there is a
significant and material event
which causes the Committee
to believe the original
measures, weightings and
targets are no longer
appropriate; and make
downward or upward
adjustments to the amount
of bonus contribution earned
resulting from the application
of the performance
measures, if the Committee
believes due to business
performance, individual
performance or wider
Company considerations that
the bonus outcomes should
be adjusted.
Any adjustments or
discretion applied by the
Committee will be fully
explained in the following
year’s Directors’
Remuneration Report.
Proposed changes: Policy previous stated that ‘up to 70%’ of the participant’s plan account would be paid in cash for each of the first
three years. Proposed Policy reduces the cash payment to 50% of the participant’s plan account for each of the first three years, in line
with commitments made last year.
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
OUR NEW 2023 DIRECTORS’ REMUNERATION POLICY CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
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Policy for Executive Directors / Details of the Remuneration Policy for Executive Directors under the new policy are provided below.
Purpose and
link to strategy Operation Maximum Performance framework
RSP
To encourage and
facilitate substantial
long-term share
ownership and
reward the delivery
of sustainable value
over time in a
cyclical business.
An award of conditional shares or nil cost
options may be granted annually. Awards vest
after three years, subject to continued
employment and assessment of an underpin.
Following vesting, an additional two-year
holding period will apply, such that shares are
not released until five years from grant.
The Committee may award dividend
equivalents on shares held under the plan to
participants to the extent that they vest.
The plan contains malus and clawback
provisions (Refer to
PAGE 108 for details).
Maximum award of 100%
of salary.
No performance measures
are associated with the
grant of awards.
Vesting is subject to a
discretionary underpin that
allows the Remuneration
Committee to make
adjustments to the level of
vesting if the Committee
believes due to business
performance, individual
performance or wider
Company considerations
that the vesting should
be adjusted.
Proposed changes: No proposed changes.
Legacy arrangements / The Committee reserves the right to make any remuneration payments and payments for loss of office (including
exercising any discretions available to it in connection with such payments) that are not in line with the policy set out in this report where
the terms of the payment were agreed before the policy came into effect or at a time when the relevant individual was not a Director of
the Company.
Minimum shareholding requirement / The Committee believes that Directors should build a sizeable shareholding in the Company over
time to ensure that they are as closely aligned as possible with the shareholder experience. The minimum shareholding guideline is 250%
of gross basic salary for the CEO, and 200% of gross basic salary for other Executive Directors. Executive Directors are required to retain
the post-tax number of vested shares from the RSP until the minimum shareholding requirement is met and maintained.
Shares that count towards the shareholding requirement include:
• Shares owned outright.
• Unvested shares which are not subject to further performance conditions, on a net of tax basis. Employment conditions and
performance underpins may apply to these shares i.e. unvested Salary Substitute Restricted Shares.
• Shares which have vested, but which remain subject to a holding period and/or clawback, may count towards the
shareholding requirement.
On cessation of employment, Executive Directors are required to retain their minimum shareholding requirement immediately prior to
departure for two years. Where their actual shareholding at departure is below the minimum shareholding requirement, the Executive
Director’s actual shareholding is required to be retained on the same terms and for the same periods. Shares purchased by Executive
Directors outside the Company’s incentive plans are excluded from this requirement. In addition, the Company is using the Employee
Benefit Trust or nominee accounts in which to hold shares to enable the post cessation requirements to be operated.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
108
Malus and clawback policies / Malus is the adjustment of annual bonus contributions or the balance in a participant’s plan account,
unvested RSP awards or unvested Salary Substitute Restricted Share Awards, because of the occurrence of one or more circumstances listed
below. The adjustment may result in the value being reduced to nil.
Clawback is the recovery of payments made under the annual bonus, vested RSP awards or vested Salary Substitute Restricted Share Awards as
a result of the occurrence of one or more circumstances listed below. Clawback may apply to all or part of a participant’s payment or award and
may be affected, among other means, by requiring the transfer of shares, payment of cash or reduction of awards or bonuses.
The circumstances in which malus and clawback could apply are as follows:
• Discovery of a material misstatement resulting in an adjustment in the audited accounts of the Group or any Group Company.
• If the assessment of any performance condition or condition was based on error, or inaccurate or misleading information.
• The discovery that any information used to determine the plan contribution or RSP award was based on error, or inaccurate or
misleading information.
• Action or conduct of a participant which amounts to fraud or gross misconduct.
• A material failure of risk management.
• Corporate failure.
• Events or the behaviour of a participant have led to the censure of a Group Company by a regulatory authority which has led to a
significant detrimental impact on the reputation of any Group Company provided that the Board is satisfied that the relevant participant
was responsible for the censure or reputational damage and that the censure or reputational damage is attributable to the participant.
BBP RSP
Malus Up to the date of a payment under the plan To the end of the three-year vesting period
Clawback Two years post the date of any payment under the plan Two years post-vesting
The Committee believes that the rules of the plans provide sufficient powers to enforce malus and clawback where required.
Discretion / The Committee will operate all incentive plans according to the rules and discretions contained therein to ensure that the
implementation of the Remuneration Policy is fair, both to the individual Director and to the shareholders. The discretions cover aspects
such as:
• Selection of participants.
• Timing of grant and vesting of awards.
• Size of awards (subject to the policy limits).
• Choice of measures, weightings and targets.
• Determining level of payout or vesting based on an assessment of performance.
• Settlement of awards in cash or shares.
• Treatment of awards on termination of employment and change of control.
• Adjustment of awards in certain circumstances, e.g. changes in capital structure, demerger, special dividend, distribution or any other
corporate event which may affect the current or future value of an award.
• Adjustment of performance conditions in exceptional circumstances provided the new targets are fair and reasonable and neither
materially more or less challenging than the original targets.
• Application of malus and/or clawback.
Any such use of discretion will be fully disclosed in the subsequent Directors’ Remuneration Report and may, as appropriate, be the subject
of consultation with the Company’s major shareholders.
Performance measure selection / Performance measures used under the annual bonus are selected annually to reflect the Group’s main
short- and long-term objectives and reflect both financial and non-financial priorities. The performance targets are set to be stretching but
achievable, taking into account a range of internal and external reference points and having regard to the particular strategic priorities and
economic environment.
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
OUR NEW 2023 DIRECTORS’ REMUNERATION POLICY CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
109
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Minimum On-target
470
1,258
100% 37%
27%
Maximum
Max + 50%
share price
growth
1,595
1,843
30%
42%
28%
26%
37%
24%
13%
CEO remuneration
Total fixed pay BBP RSP Share price growth
36%
(£000’s)
Illustrations of total remuneration opportunity
The charts below provide estimates of the potential future reward opportunities under the Policy for the CEO and CFO (annualised basis)
and the potential split between the different elements of remuneration under four different performance scenarios: ‘Minimum’, ‘On Target’,
‘Maximum’ and ‘Maximum with share price growth of 50% over three years’. The Minimum scenario includes base salary, pension and
benefits only (i.e. fixed remuneration).
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Minimum On-target
267
611
100%
44%
25%
Maximum
Max + 50%
share price
growth
767
886
35%
41%
24%
30%
21%
14%
CFO remuneration
31%
Total fixed pay BBP RSP Share price growth
(£000’s)
35%
Element Assumptions
Total fixed pay
Base salary: Effective 1 January 2023
CEO £450,000 (10% paid in Salary Substitute Restricted Shares)
CFO £250,000 (20% paid in Salary Substitute Restricted Shares)
Pension: 3% of salary for the CEO, 3% of salary for the CFO
Benefits: As disclosed in single figure table on
PAGE 120
BBP
Minimum: No payout
On-target: 50% of maximum (75% of salary for the CEO, 62.5% of salary CFO)
Maximum: 100% of maximum (150% of salary for the CEO; 125% of salary for CFO)
RSP
Minimum: No vesting due to operation of the underpin
On-target: 100% of maximum (100% of salary for the CEO, 75% of salary for the CFO)
Maximum: 100% of maximum (100% of salary for the CEO, 75% of salary for the CFO)
Share price growth
Impact of 50% share price appreciation on maximum remuneration over three years (on Restricted Shares
and Salary Substitute Restricted Shares).
Total fixed pay
BBP
RSP
Share price growth
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
110
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
Approach to remuneration on recruitment / In order to maintain the Group’s competitive advantage, it is important that we are able to
recruit and retain Directors of the calibre required to deliver successfully our strategic priorities. When determining the remuneration
arrangements of a new appointment to the Board, the Committee will seek to apply the following principles:
• Although we operate in a competitive market for talent, we are mindful to pay no more than is necessary to attract and retain
high-quality talent.
• The Committee will appoint new Executive Directors with a package that is in line with the policy in place at the time, as indicated in
the table below.
Approach on recruitment
Salary
The base salary of new appointees will be determined by reference to the individual’s role and responsibilities, experience
and skills, relevant market data and pay and conditions elsewhere in Foxtons.
Base salary may be higher or lower than the previous incumbent. Salary may be set at a lower level initially with the
intention of increasing at a higher than usual rate as the Executive gains experience in the role.
A proportion of salary may be paid in Salary Substitute Restricted Shares, if the Committee determines this appropriate.
Pension
New appointees will be eligible to receive pension contributions (or cash in lieu) in line with the policy.
Benefits
New appointees will be eligible to receive benefits in line with the policy, including relocation benefits if appropriate.
BBP
The structure described in the policy table will normally apply to new appointees with the relevant maximum being
pro-rated to reflect the proportion of the year served. The Committee retains the flexibility to determine that for the first
year of appointment any annual incentive award will be subject to such terms as it may determine.
RSP
New appointees will be eligible for awards under the RSP which will normally be on the same terms as other Executives, as
described in the policy table.
• To facilitate recruitment, it may be necessary to “buy-out” remuneration arrangements forfeited on leaving a previous employer. This
will be considered on a case-by-case basis and may comprise cash or performance and non-performance related share awards and
would be in such form as the Committee considers appropriate considering all relevant factors such as the form, performance
conditions, expected value, anticipated vesting and timing of the forfeited remuneration. The Committee’s intention is that the value
awarded would be no more than the commercial value of the awards forfeited.
• For internal promotions, the approach will be consistent with the policy for external appointees. Where an individual has contractual
commitments made prior to their promotion to Executive Director level, the Company will continue to honour these arrangements.
Similarly, if an Executive Director is appointed following Foxtons acquisition of or merger with another Company, legacy terms and
conditions would be honoured.
Service contracts / The current Executive Director service contracts can be terminated by not less than 12 months’ notice respectively given
in writing by either party to the contract. For any new appointments, an Executive Director may initially be hired on a contract requiring 24
months’ notice, which then reduces pro-rata over the course of the first year of the contract to 12 months’ notice. The Directors are subject to
annual re-election at the AGM. Executive Directors’ contracts are available to view at the Company’s registered office.
Policy on payment for loss of office / Where an Executive Director leaves employment, the Committee’s approach to determining any
payment for loss of office will normally be based on the following principles:
• The Committee’s objective is to find an outcome which is in the best interests of both the Group and its shareholders, while considering
the specific circumstances of cessation of employment. There should be no element of reward for failure.
• The Committee must satisfy any contractual obligations agreed with the Executive Director. This is dependent on the contractual
obligations being in line with the policy set out in this report, except where the terms of the payment were agreed before the policy
came into effect or at a time when the relevant individual was not a director of the Company.
• Other than in circumstances where the Company is entitled to terminate employment summarily, if the employment of an Executive
Director is terminated with immediate effect, a payment in lieu of notice may be made which would not exceed 12 months’ base salary.
This payment may be subject to mitigation if alternative employment is taken up during this period.
• The Committee may authorise payments for statutory entitlements in the event of termination, reasonable settlement of potential
legal claims, and payment of reasonable reimbursement of professional fees in connection with such agreements.
OUR NEW 2023 DIRECTORS’ REMUNERATION POLICY CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
111
The treatment of outstanding incentive awards will be governed by the relevant plan rules as set out in the table below:
Plan Good leavers
1
All other leavers Change of control
Salary
Substitute
Restricted
Share
Awards
• The award will normally be pro-rated for the
period worked during the 12 months
following the date of award.
• Award will vest in full if cessation occurs
more than 12 months after the date of award.
• The Committee has the following elements
of discretion:
• To determine that an Executive Director is
a good leaver (refer to footnote 1).
• To determine whether to pro-rate the
award to time if the leaver is within the
first 12 months from award.
• See treatment in column
to the left.
• Award will continue to vest and will
normally be pro-rated at the Board’s
discretion to take account of the date
the corporate event took place during
the normal first 12 months of the
Vesting Period.
• The Committee has discretion to
determine whether to pro-rate the
award to time.
BBP
Contribution for the year of cessation
• Performance conditions will be measured at
the normal measurement date and that
year’s bonus contribution normally
pro-rated for the period worked during the
financial year.
• The Committee has the following elements
of discretion:
• To determine that an Executive Director is
a good leaver (refer to footnote 1).
• To determine whether to pro-rate the
Company bonus contribution to time. The
Committee’s normal policy is that it will
pro-rate for time. It is the Committee’s
intention to use discretion to not pro-rate in
circumstances where there is an appropriate
business case which will be explained in full
to shareholders.
Deferred balance in the plan account
• The balance in the participant’s plan account
will be payable according to the original
payout profile.
• The Committee has the following elements
of discretion:
• To determine that an Executive Director is
a good leaver (refer to footnote 1).
• To determine whether to pro-rate the
balance of the participant’s plan account
payable on cessation for time. As the plan
account balance reflects prior year
achievement, subject to any malus or
clawback, the Committee’s normal policy
is that it will not pro-rate. The Committee
will determine whether to pro-rate based
on the circumstances of the Executive
Directors’ departure.
Contribution for the
year of cessation
• No bonus contribution
payable for year
of cessation.
Deferred balance in the
plan account
• The balance in the
participant’s plan account
will be forfeited on
cessation of employment.
Contribution for the year
of change of control
• Performance conditions will be
measured at the date of the change of
control, and the bonus contribution
normally pro-rated to the date of the
change of control.
• The Committee has discretion to
determine whether to pro-rate the
Company bonus contribution to time.
The Committee’s normal policy is that
it will pro-rate for time. It is the
Committee’s intention to use discretion
to not pro-rate in circumstances where
there is an appropriate business case
which will be explained in full to
shareholders.
Deferred balance in the plan account
• The balance in the participant’s plan
account will be payable on the change
of control.
• The Committee has the following
elements of discretion:
• To determine whether the payment
of the balance of the participant’s
plan account should be in cash or
shares or a combination of both.
• To determine whether to pro-rate
the balance of the participant’s plan
account for time. As the plan
account balance reflects prior year
achievement, subject to any malus
or clawback, the Committee’s
normal policy is that it will not
pro-rate. The Committee will
determine whether to pro-rate
based on the circumstances of
change of control.
1
The Committee has discretion to determine that an Executive Director is a good leaver. It is the Committee’s intention to only use this discretion in
circumstances where there is an appropriate business case which will be explained in full to shareholders. A good leaver is typically defined as an employee
who ceases to hold employment by reason of: death, injury, ill-health or disability; retirement with the agreement of the Group; redundancy; the participant’s
employing Company being transferred to an entity which is not a Group member; transfer of undertaking; or any other reason at the Committee’s discretion.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
112
The treatment of outstanding incentive awards will be governed by the relevant plan rules as set out in the table below:
Plan Good leavers
1
All other leavers Change of control
RSP
For the year of cessation
• The award will normally be pro-rated for the
period worked during the financial year.
• The Committee has the following elements
of discretion:
• To determine that an Executive Director is
a good leaver (refer to footnote 1).
• To determine whether to pro-rate the
Company award to time.
The Remuneration Committee’s normal
policy is that it will pro-rate for time.
It is the Committee’s intention to use
discretion to not pro-rate in
circumstances where there is an
appropriate business case which will be
explained in full to shareholders.
• To determine whether the award will vest
on the date of cessation or the original
vesting date. The Committee will make its
determination based amongst other
factors on the reason for the cessation
of employment.
• To determine whether the holding period
will apply in full or in part. The Committee
will make its determination based amongst
other factors on the reason for the
cessation of employment.
Subsisting awards
• Unvested awards will usually vest on the
original vesting date (except on death, when
awards may vest immediately), subject to
assessment of the underpin, and are normally
prorated for time.
• The Committee has the following elements
of discretion:
• To determine that an Executive Director is
a good leaver (refer to footnote 1).
• To determine whether to pro-rate the
award to the date of cessation. The
Committee’s normal policy is that it
will pro-rate. The Committee will
determine whether to pro-rate
based on the circumstances of the
Executive Directors’ departure.
• To determine whether the awards vest on
the date of cessation or the original
vesting date. The Committee will make
its determination based amongst other
factors on the reason for the cessation
of employment.
• To determine whether the holding period
for awards applies in part or in full. The
Committee will make its determination
based amongst other factors on the
reason for the cessation of employment.
For the year of cessation
• No award for the year
of cessation.
Subsisting awards
• Unvested awards will be
forfeited on cessation of
employment (unless
otherwise determined by
the Committee).
• Vested awards will
remain subject to the
holding period.
For the year of change of control
• The award will normally be pro-rated to
the date of the change of control.
• The holding period applicable to any
awards will end at the time of change
in control.
• The Committee has discretion to
determine whether to pro-rate the
award to time. The Committee’s normal
policy is that it will pro-rate for time. It
is the Committee’s intention to use
discretion to not pro-rate in
circumstances where there is an
appropriate business case which will be
explained in full to shareholders.
Subsisting awards
• Awards will vest on the date of the
change of control pro-rated to time and
the holding period will not apply.
• The Committee has the following
elements of discretion:
• To determine whether the
satisfaction of awards should be
in cash or shares or a combination
of both.
• To determine whether to pro-rate
the award to time. The Committee’s
normal policy is that it will pro-rate
for time. The Committee will
determine whether to pro-rate
based on the circumstances of the
change of control.
• Alternatively, awards may be
exchanged for new equivalent awards
in the acquiring Company.
1
The Committee has discretion to determine that an Executive Director is a good leaver. It is the Committee’s intention to only use this discretion in
circumstances where there is an appropriate business case which will be explained in full to shareholders. A good leaver is typically defined as an employee
who ceases to hold employment by reason of: death, injury, ill-health or disability; retirement with the agreement of the Group; redundancy; the participant’s
employing company being transferred to an entity which is not a Group member; transfer of undertaking; or any other reason at the Committee’s discretion.
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
OUR NEW 2023 DIRECTORS’ REMUNERATION POLICY CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
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Differences in Remuneration Policy for Executive Directors compared with other employees / See our section headed
“Our approach to fairness and wider workforce considerations” on
PAG E 114.
External appointments / It is the Board’s policy to allow Executive Directors to take up one Non-Executive position on the Board of
another company, subject to the prior approval of the Board. Any fee earned in relation to outside appointments is retained by the
Executive Director.
Consideration of employment conditions elsewhere in the Group / The Committee takes into consideration the internal relativities of
pay levels across the various grades in the organisation when setting Executive Pay. Currently, the Remuneration Committee does not
formally consult with employees on the Executive Remuneration Policy and framework. However, when making decisions on Executive
Director remuneration, the Committee considers pay and policies across the business. The Committee Chairman will discuss the
Remuneration Policy and practice for Executive Directors with the Group’s Employee Engagement Committee on 20 April 2023.
Policy for Chairman and Non-Executive Directors / The Non-Executive Directors, including the Chairman, do not have service contracts.
The appointment of the Chairman and each of the Non-Executive Directors is for an initial period of up to three years, which is renewable,
and is terminable by the Chairman/Non-Executive Director (as applicable) or the Company on three months’ notice. No contractual payments
would be due on termination. The Directors are subject to annual re-election at the AGM. Non-Executive Directors’ letters of appointment are
available to view at the Company’s registered office.
Non-Executive Directors do not receive benefits from the Company, and they are not eligible to join the Company’s pension scheme
or participate in any bonus or share incentive plans. Where specific cash or share arrangements are delivered to the Chairman or
Non-Executive Directors, these will not include share options or any other performance related elements. Any reasonable expenses that
they incur in the furtherance of their duties are reimbursed by the Company (including any tax liability thereon).
Details of the policy on Non-Executive Director fees are set out in the table below:
Purpose and
link to strategy Operation Fee levels
To enable the Group
to attract and retain
Non-Executive
Directors of the
required calibre
by offering market
competitive fees.
The Chairman is paid an annual all-inclusive fee for all
Board responsibilities.
Non-Executive Directors receive a basic annual Board
fee. Additional fees may be payable for additional Board
responsibilities such as chairmanship or membership of a
Committee, or the role of Senior Independent Director.
The Chairman and/or Non-Executive Directors may receive
part of their fee(s) in company shares.
The Chairman’s fee is determined by the Committee, and
fees to Non-Executive Directors are determined by the
Board. Fees are reviewed periodically, considering time
commitment, scope and responsibilities, and appropriate
market data.
Expenses incurred in the performance of non-Executive
duties for the Company may be reimbursed or paid for
directly by the Company, including any tax due thereon.
Fee increases are typically expected to be in line with wider
employee rises. In exceptional circumstances (including,
but not limited to, material misalignment with the market
or a change in the complexity, responsibility or time
commitment required to fulfil the role) the Board may make
appropriate adjustments to fee levels to ensure they remain
market competitive and fair to the Director.
The maximum annual aggregate fee for all Non-Executive
Directors will be within the limit set out in the Company’s
articles of association (currently £600,000).
Minor amendments / The Committee may make minor amendments to the policy set out above (for regulatory, exchange control, tax or
administrative purposes or to take account of a change in legislation) without obtaining shareholder approval for that amendment.
Consideration of shareholder views / The Committee takes an active interest in the views of shareholders and is always open to feedback.
This feedback helps shape the structure of the Group’s Remuneration Policy. During 2022, the Committee consulted with major
shareholders. Feedback received was supportive of the overall continuation of the Remuneration Policy and the minor changes proposed to
enhance the operation and alignment with shareholders.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
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/ DIRECTORS’ REMUNERATION REPORT CONTINUED
Our approach to fairness and wider workforce considerations
This section in the report brings visibility of remuneration across the entire workforce together in one place. In this section, we provide
context to Executive remuneration by explaining our employee policies and our approach to fairness, including the following:
• General pay and conditions in the Group.
• Gender and diversity.
• Comparison metrics on Executive and employee remuneration.
In order for the Committee to carry out its oversight review of wider workforce pay, policies and incentives the Committee receives a report
annually setting out key details of remuneration throughout the Group. A summary of the information reviewed by the Committee and
findings are set out below.
Overview of workforce remuneration and the Committee’s review
The table below summarises the Group’s approach to workforce remuneration across five employee groups.
Variable pay
2
Employee group
% of
workforce
Average
increase
in base
salaries
1
Commission
schemes
Annual
bonus
Share
plans
3
Pension
4
Benefits
5
Executive Directors <1% - No Yes Yes Yes Yes
Senior Management 5% 1% No Yes Some Yes Yes
Senior Sales Staff 16% 4% Yes Yes No Yes Yes
Sales and Sales Support Staff 62% 4% Revenue earners only No No Yes Yes
Administrative Staff 16% 5% No Role dependent No Yes Yes
Total 100% 4%
1
Base salaries
• Base salaries are market competitive and determined with reference to role type, experience and market practice.
• Annual salary increases are applied on an equitable and objective basis dependent on role type. The base salaries of sales focused employees are subject to
periodic market benchmarking rather than annual salary reviews due to the commission structures in place.
• Average increase in base salaries are for 2022 versus 2021, and have been calculated by comparing basic salaries at the start of the year to those at the end
of the year (for those in employment for the full year).
2
Variable pay
• In line with our approach to Executive Director remuneration, a significant proportion of the remuneration of the wider workforce is in the form of variable
pay, linked to the achievement of stretching targets that align with the Group’s strategic goals.
• Approximately 80% of the workforce benefit from variable pay which is linked to the Group’s performance in the form of commission schemes or annual
bonuses. Variable pay is determined with reference to financial performance and/or the achievement of objectives which are aligned to the Group’s
strategic priorities (refer to
PAGE 7 AND 15 of the Strategic Report).
• A new sales staff variable pay scheme was introduced in 2022 which increases the proportion of pay that is variable to incentivise and reward the highest
levels of sales intensity and to improve alignment with shareholders.
3
Share plans
• Senior Management restricted share awards were introduced in 2022 to increase alignment to the shareholder experience and cascade the principles of the
Executive Director arrangements. These awards are subject to a two-year vesting period and leaver provisions. No holding period applies.
4
Pension
• Employer contributions are consistent across the Group (3% employer contribution), with minor deviations appropriate for role type.
5
Benefits
• Consistent approach applied and determined with reference to role type, market practice and seniority.
2022 ANNUAL REPORT ON REMUNERATION
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
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The Committee does not seek a homogeneous approach to
workforce remuneration since the level and type of remuneration
will vary across the Group depending on the employee’s seniority
and role. The Committee, when conducting its review of workforce
remuneration, pays particular attention to:
• Whether the element of remuneration is consistent with the
Group’s remuneration principles see
PAGE 103.
• If there are differences, whether they are objectively justifiable.
• Whether the approach is fair and equitable in the context of
other employees.
The key findings and outcomes from the Committee’s 2022 review
are as follows:
• Average salary increases for employees across the Group are
being applied on an equitable and objective basis.
• In light of the impact that rising inflation and the cost of living
crisis has had on our workforce, Foxtons reviewed wider
workforce salaries and have awarded an average salary
increase of 4% across the business (excluding Directors), and
there have been limited redundancies.
• For those members of the wider workforce who receive
variable pay the average increase from 2021 was 22%.
• Senior Management share arrangements cascade the principles
applied to Executive Directors and increase alignment to the
shareholder experience for this population.
• The majority of our employees have the ability to share in the
success of the Group through incentive compensation in the
form of variable pay linked to performance.
• All employees are eligible for enrolment in a defined
contribution pension arrangement and the Executive Directors’
pension contributions are align to the wider workforce.
• Benefits are offered according to the level of seniority of the
role in line with market practice.
The Committee is satisfied that the approach to remuneration
across the Group is consistent with the Group’s principles of
remuneration, strategy and culture. Further, that in the
Committee’s opinion the approach to Executive and Senior
Management remuneration aligns with the wider Group approach
and that there are no anomalies specific to the Executive Directors.
Communication and engagement with employees
The Board is committed to ensuring there is an open dialogue with our
employees over various decisions and the Committee has the authority
to ask for additional information from the Group in order to carry out
its responsibilities.
PAGES 21, 55 AND 73 explain the key
approaches used by the Board to engage with employees during 2022.
Engagement approaches include the engaging with the EEC (refer to
PAGE 55 for more details), which facilitates effective
engagement between the Board and the workforce, with each
meeting attended by a Non-Executive Director. The Committee
Chairman discussed the Remuneration Policy and practice for
Executive Directors with the EEC in the year. At this meeting, the
Chairman provided employees with an overview of the Group’s
approach to Executive Remuneration, how Executive remuneration
aligns with wider company pay policy and the key elements of the
policy and key considerations. During the discussion there was a
good level of employee engagement with a range of topics debated.
The session further informed the Chairman of the views of the
workforce on the Group’s approach to pay.
Alongside the EEC, the Board commissions an employee engagement
survey, which is independently administered by WTW, as a platform
for employee voice and feedback. The output from each employee
engagement survey is reviewed by the Board and appropriate actions
taken in response to any findings. Its importance is reflected by the
inclusion of employee experience as a performance measure in the
BBP. Refer to
PAGE 55 for further details of the employee
engagement survey process and outcomes.
Living wage, equal opportunities and
diversity initiatives
A summary of the Group’s general policies in relation to living wage,
equal opportunities and diversity initiatives are as follows:
Policy Description
Living wage employer
Our policy is to ensure that all employees,
whatever their age, are paid the National
Living Wage or above.
Equal opportunities
and diversity
initiatives
The Group is committed to an active equal
opportunities policy from recruitment and
selection, through training and development,
performance reviews and promotion. All
decisions relating to employment practices
are objective, free from bias and based solely
upon work criteria and individual merit. The
Group is responsive to the needs of its
employees, customers and the community.
We are an organisation which uses everyone’s
talents and abilities, and where diversity is
valued. The Group ensures its promotion and
recruitment practices are fair and objective
and encourages the continuous development
and training of its employees, as well as the
provision of equal opportunities for the
training and career development of all
employees. Further details are provided in
the Strategic Report on
PAGE 56.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
116
2022 ANNUAL REPORT ON REMUNERATION CONTINUED
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
Gender pay gap
Having a diverse workforce which reflects the communities we serve in is important to us and means we can better serve our customers. As
set out on
PAGES 52 AND 53, we hire from diverse backgrounds, and our recruitment policies, salary and bonus structures are designed
to be gender neutral. Our gender balance across the Group is split 55% men and 45% women.
As set out in our Gender Pay Gap report, which is available at www.foxtonsgroup.co.uk/our-responsibility/gender-pay-gap, a gender pay gap
exists which is primarily due to there being a higher proportion of male employees in senior roles. We are taking steps to reduce the gender
pay gap and are progressing a number of initiatives to increase female representation at more senior levels within the organisation.
CEO pay ratio
We have set out the ratio of CEO pay (based on the single total figure of remuneration) to that of employees for 2019 -2022, in the table
below. The calculation has been performed in line with ‘Option A’ under the regulations in line with best practice and is based on the total
single figure of remuneration methodology.
CEO pay ratio
Financial year
Method
used
25th percentile
pay ratio
50th percentile
pay ratio
75th percentile
pay ratio
CEO total pay
(£000)
2022
1
Option A 47:1 35:1 21:1 1,272
2021
2
Option A 66:1 45:1 27:1 1,707
2020
2
Option A 61:1 44:1 28:1 1,605
2019 Option A 48:1 37:1 22:1 1,257
1
As reported in last year’s Remuneration Report, the Former CEO received a RSP grant on 1 April 2022 with a value of £434,700 in line with the Remuneration
Policy, which was subsequently forfeited on his departure. As a result, the value of this RSP award is not included in the total single figure of remuneration for
2022. As such, the 2022 single figure, and therefore pay ratio, is lower than if the 2022 RSP had not been forfeited due to the departure of the Former CEO.
2
The 2021 and 2020 single figure include £579,600 and £569,400 of RSP grants respectively which have been forfeited in full in 2022. Removing these grants
reduces the CEO 2021 and 2020 single figure to £1,127,000 and £1,036,000 respectively, which would reduce the CEO pay ratio at each of the percentiles as
explained further below.
Total remuneration for each employee was calculated on a full-time equivalent basis and the lower quartile, median and upper quartile
employees identified as at 31 December 2022. The hourly rates were annualised using the same number of contractual hours as the CEO.
Employee total remuneration includes: basic salary, maternity/paternity pay, annual cash bonus, commissions earned and benefits. The total
remuneration for the relevant employees was compared to that of the CEO.
In 2022, the employee total pay and benefits at the 25th, 50th and 75th percentile was £26,997, £36,000 and £61,693 respectively, and the
basic salary for the same employees, excluding variable pay, was £26,862, £36,000 and £53,958 respectively.
In 2022, the pay ratio decreased compared to 2021 at all three percentiles. The Former CEO received a RSP grant on 1 April 2022 with a
value of £434,700 in line with the Remuneration Policy which was subsequently forfeited on his departure. As a result, the value of this RSP
award is not included in the total single figure of remuneration for 2022. As such, the 2022 single figure, and therefore pay ratio, is lower
than if the 2022 RSP had not been forfeited due to the departure of the Former CEO.
The increase in the pay ratios in 2020/2021 compared to 2019 is due to 2020 being the first year of the implementation of the current
Remuneration Policy. In line with the remuneration reporting regulations for the CEO single figure, the RSP award has been included in the
year of grant for 2020 and 2021 (rather than in the year of vest as our previous share option scheme would be reported). Therefore, the CEO
single figure includes a long-term incentive in 2020 onwards, which it did not in 2019 and earlier.
However, note that on departure, the Former CEO forfeited the RSPs that are included in the total single figure of remuneration for 2021
and 2020. If these awards are removed to reflect their forfeiture, the CEO pay ratio at each of the percentiles would reduce as follows:
• 2021 CEO pay ratio: 43:1, 30:1 and 18:1 for the 25th, 50th and 75th percentile respectively.
• 2020 CEO pay ratio: 39:1, 28:1 and 18:1 for the 25th, 50th and 75th percentile respectively.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
117
In assessing our pay ratio versus last year’s market numbers from industry peers, we believe that we are well positioned comparably, but
note that annual and long-term incentive payments have varied considerably amongst this group. We also recognise that ratios will be
influenced by levels of employee pay and in the real estate sector employee pay will be lower than in many other sectors of the economy.
Over time, we expect that there may be significant volatility in the CEO pay ratio. We recognise that the ratio is driven by the different
structure of the pay of our CEO versus that of our employees (for example, the inclusion of a higher proportion of variable incentive pay), as
well as the make-up of our workforce. This ratio varies between businesses even in the same sector. What is important from our perspective
is that this ratio is influenced only by the differences in structure, and not by divergence in fixed pay between the CEO and wider workforce.
Where the structure of remuneration is similar, as for Senior Management and the CEO, the ratio is likely to be much more stable over time.
CEO and average employee pay against total shareholder return (TSR)
The chart below shows the single figure of remuneration for our CEO over time, and the pay of our average employee, each rebased to
September 2013 (date of listing). We have also included our TSR performance over this period against the FTSE Small Cap and FTSE All Share
indices, based on £100 invested at listing.
Pay performance: TSR chart (£’000)
0
50
100
150
200
250
300
350
01/09/2013 01/09/2014 01/09/2015 01/09/2016 01/09/2017 01/09/2018 01/09/2019 01/09/2020 01/09/2021 01/09/2022
Foxtons FTSE SMC FTSE All-Share CEO Single Figure Average Employee Pay
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
118
2013 2014
1
2015 2016 2017 2018 2019 2020 2021 2022
2
Incumbent M. Brown M. Brown /
N. Budden
N. Budden N. Budden N. Budden N. Budden N. Budden N. Budden N. Budden N. Budden
/ P. Rollings
/ G. Gittins
CEO single figure
of remuneration
– excluding RSP
awards (2020,
2021 and 2022
only) (£’000)
3
624 257 / 327 856 982 914 910 1,257 1,036 1,127 534 /
135 /
459
RSP awards (2020,
2021 and 2022
only) (£’000)
4
- - - - - - - 569 580 - /
n/a /
145
CEO single figure
of remuneration
(£’000)
624 257 / 327 856 982 914 910 1,257 1,605 1,707 534 /
135 /
603
Annual bonus /
BBP earning
(% of maximum)
5
n/a n/a / 20% 51.5% 36.5% 26.4% 30% 70% 45.6% 51.2% 68.8% /
n/a /
68.8%
Long-term
incentives
6
(% of maximum)
n/a n/a / n/a n/a 0% 0% 0% 0% 100% 100% n/a /
n/a /
100%
1
Michael Brown stepped down as CEO on 30 June 2014 and was replaced by Nic Budden on 1 July 2014.
2
Nic Budden stepped down as CEO on 30 May 2022. Guy Gittins was appointed Group CEO with effect from 5 September 2022. Peter Rollings, currently an
Independent Non-Executive Director, acted as Interim CEO between the date of Nic Budden stepping down and the date at which Guy Gittins took up his
appointment. The single figure for 2022, above, includes the amounts received by Nic Budden and Guy Gittins in relation to their Executive positions during the
year (excluding the 2022 RSP grant to the Former CEO which was forfeited on his cessation of employment), as well as the fee that Peter Rollings received
during his time as Interim CEO.
3
The CEO single figure of remuneration is shown excluding the restricted stock awards that have been granted from 2020 onwards. This is because, while the
regulations require the restricted stock to be disclosed at the time of grant, the value is not released to the CEO until the end of the three-year vesting period
following the assessment of an underpin, and the shares are then subject to a further two-year holding period. Therefore, for transparency we also show the
CEO’s single figure excluding the restricted stock award as it better reflects the value that he has earned and received in respect of that year.
4
From 2020 onwards the long-term incentive has been delivered in the form of an RSP award with a three-year vesting period subject to the achievement of the
underpin. Whilst the RSP grants are included in the above table, in line with the required single figure of remuneration treatment, we note that the Former
CEO’s in-flight awards were forfeited in full on cessation of employment, and the Interim CEO was not eligible to receive incentive awards. Therefore, the
Former CEO’s 2022 RSP award with a face value of £434,700 is excluded from the above table. The treatment of in-flight awards on cessation is set out in full
on
PAGE 126.
5
The 2022 annual bonus / BBP earnings figure relates to both the Former and current CEOs, who were both eligible to receive a pro-rated annual bonus for 2022.
The Interim CEO was not eligible to receive any incentive awards.
6
The 2016 to 2019 long-term incentive value of 0% relates to the historic LTIP and Share Option Plan awards which did not vest in those years due to
performance conditions not being achieved. The first award under the LTIP was granted in 2014 and had a three-year performance period and therefore no
awards were scheduled to vest in 2014 and 2015. The Former CEO (Nic Budden) also had options under the 2017 Share Option Plan that were due to vest
during the year. These options lapsed due to the TSR performance conditions and as such, paid out at 0% of maximum.
2022 ANNUAL REPORT ON REMUNERATION CONTINUED
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
119
The CEO’s remuneration has increased overall over the period while the Group’s TSR has decreased. The reduction in Group’s TSR in the
early part of the period since listing was significantly influenced by the prolonged sector downturn, accentuated by our own
underperformance. As described elsewhere in the Annual Report and Accounts, profit growth and strategic progress has been made in 2021,
but this has not yet been reflected in TSR and there is much more to do. Furthermore, as explained earlier in the report, the 2020, 2021 and
2022 single figure is significantly higher than earlier years because of the inclusion upon grant of the RSP awards whereas previous
long-term incentives would only have been included upon vesting.
The incentive structure developed as part of the 2020 Remuneration Policy and the changes that have been reflected in the 2023
Remuneration Policy have been designed to ensure that the Executive Directors are able to build a material shareholding, which we expect
to improve alignment with the shareholder experience over time. The chart shows that our average employee pay has similarly trended
upwards over the period. The greater volatility of our CEO pay is due to the higher proportion of incentive pay in his package compared with
that of our employees, which introduces a higher degree of variability in his pay each year.
Percentage change in Directors’ remuneration
The Committee monitors the changes year-on-year between our Directors’ pay and average employee pay. As per our Policy, base salary
increases applied to Executive Directors will typically be in line with those of the wider workforce. The table below shows the percentage
change in Executive Director and Non-Executive Director total remuneration compared to the change for the average of employees within
the Group. The comparator group is based on all employees of the Group.
Salary/fees Taxable benefits Short-term variable pay
1
2019 2020 2021
6
2022
2019 2020 2021
2022
2019 2020 2021
2022
Executive Directors
Guy Gittins
2
n/a n/a n/a
n/a
n/a n/a n/a
n/a
n/a n/a n/a
n/a
Chris Hough
2
n/a n/a n/a
n/a
n/a n/a n/a
n/a
n/a n/a n/a
n/a
Former Executive Directors
Nic Budden
2
1% (1%) 5%
-
17% 12% 15%
5%
135% (33%) 14%
34%
Richard Harris
2
n/a (3%) 5%
-
n/a 88% (40%)
107%
n/a (39%) 14%
(100%)
Patrick Franco
2
n/a (3%) 5%
-
n/a (34%) (51%)
50%
n/a 68% 14%
34%
Non-Executive Directors
Nigel Rich
2
n/a n/a n/a
-
n/a n/a n/a
n/a
n/a n/a n/a
n/a
Sheena Mackay
3
- (3%) 3%
16%
n/a n/a n/a
n/a
n/a n/a n/a
n/a
Alan Giles n/a 12% 3%
-
n/a n/a n/a
n/a
n/a n/a n/a
n/a
Rosie Shapland n/a n/a 6%
-
n/a n/a n/a
n/a
n/a n/a n/a
n/a
Peter Rollings
2,4
n/a n/a n/a
183%
n/a n/a n/a
n/a
n/a n/a n/a
n/a
All other
employees
5
7% 2% 2%
4%
14% 1% 5%
(4%)
23% (1%) 52%
22%
1
Short-term variable pay includes annual bonus and/or BBP and commission payments.
2
Where an individual has not been an Executive or Non-Executive Director for a full financial year, the figures have been annualised in order to allow for
year-on-year comparison. Ian Barlow’s salary increase from 2020 to 2021 is reflective of his appointment as Chairman of the Board on 1 March 2020.
3
Sheena Mackay’s fee increase in 2022 reflects the additional responsibility of Chairing the ESG Committee.
4
Peter Rollings acted as Interim CEO in the period between 30 May 2022 and 4 September 2022. During this period, and for a short handover period after the
incoming CEO joined, Peter Rollings’ annual Non-Executive Director fee was increased to an annual rate of £450,000. As such, his change in remuneration,
above is reflective of this increase in role.
5
Reflects the average of all employees of the Group due to the listed Parent Company only having two employees who are not Directors.
6
For Board members, the 2021 increase in salary has been calculated on a salary/fees paid basis (in line with the single figure methodology), which therefore
incorporates the impact of the 20% voluntary reduction in basic pay taken in April and May 2020 during the Covid pandemic. For ‘All other employees’, the
percentage change has been calculated by comparing basic salaries at the start of the year to those at the end of the year (for those in employment for the
full year), and therefore does not capture any voluntary pay reductions taken by the workforce in April and May 2020. As disclosed in the 2020 Directors’
Remuneration Report, the 2021 basic salaries of the CEO, CFO and COO increased by 1.8% (compared to 2020) which was in line with the average all other
employee increase.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
120
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
The net reduction in 2020 salaries for the CEO, CFO and COO was as a result of the 20% voluntary reduction that the Executive Directors
took in April 2020 and May 2020. This reduction is therefore reflected again in the 2021 increases, where full salaries recommenced.
The 2020 increase in the bonus for the COO was as a result of the change in his bonus entitlement effective 1 January 2020. The COO’s
2019 Annual bonus entitlement remained in line with his arrangements prior to his appointment to the Board (40% of base salary) and
moved to 125% of base salary, in line with the Policy from 1 January 2020.
The 2020 net increases for Ian Barlow and Alan Giles were as a result of their respective appointments as Chairman of the Board
(1 March 2020) and Chairman of the Remuneration Committee (13 November 2019) and the corresponding increase in fee, after
incorporating the 20% voluntary reduction that all Non-Executive Directors took in April 2020 and May 2020.
How we implemented the policy in 2022
This section provides details of how our Remuneration Policy was implemented during the financial year ended 31 December 2022.
Single figure of the Executive and Non-Executive Directors (audited)
The table below sets out a single figure for the total remuneration received by each Director for the year ended 31 December 2022 and the
prior year.
Salary /
fees paid
3
Taxable
benefits
4
BBP
5
RSP
6
Buyout
awards
7
Pension
8
Total
9
Total fixed
remuneration
Total variable
remuneration
Guy Gittins
2022 147 7 151 145 150 4 603 157 446
2021 n/a n/a n/a n/a n/a n/a n/a n/a n/a
Chris Hough
2022 188 9 161 141 n/a 6 504 203 302
2021 n/a n/a n/a n/a n/a n/a n/a n/a n/a
Nic Budden
2022 242 19 249 - n/a 24 534 285 249
2021 580 44 445 580 n/a 59 1,707 682 1,025
Richard Harris
2022 76 6 - - n/a 3 86 86 -
2021 305 12 195 229 n/a 9 751 327 425
Patrick Franco
2022 76 1 66 - n/a 3 146 81 66
2021 305 3 195 229 n/a 9 742 318 425
Nigel Rich
1
2022 150 - - - - - 150 150 -
2021 38 - - - - - 38 38 -
Sheena Mackay
2022 73 - - - - - 73 73 -
2021 63 - - - - - 63 63 -
Alan Giles
2022 73 - - - - - 73 73 -
2021 73 - - - - - 73 73 -
Rosie Shapland
2022 73 - - - - - 73 73 -
2021 73 - - - - - 73 73 -
Peter Rollings
2
2022 179 - - - - - 179 179 -
2021 5 - - - - - 5 5 -
2022 ANNUAL REPORT ON REMUNERATION CONTINUED
See notes on PAGE 121.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
121
The following charts show the total single figure of remuneration for the CEO and CFO compared to the Policy scenarios under the 2020
Remuneration Policy which applied during the year.
1
Nigel Rich assumed the role of Chairman from 1 October 2021 and in 2021 was paid £37,500 in fees, of which, £12,500 was paid in shares at the prevailing
market price. In 2022, his total fee was £150,000, of which, £50,000 was paid in shares at the prevailing market price.
2
Peter Rollings joined the Board as a Non-Executive Director with effect from 1 December 2021. In his role as Interim CEO, Peter Rollings’ annual Non-Executive
Director fee was increased to an annual rate of £450,000, paid monthly for the period Peter is in role as Interim CEO and a short handover period after Guy
Gittins joined on 5 September 2022 (handover period ended on 18 September 2022). Thereafter, his fees returned to the annual rate of £63,000 for
Non-Executive Directors. During his tenure as Interim CEO, Peter did not participate in any incentive arrangements, and his total fees received for his Interim
Executive role were £134,659.
3
Base salary includes salary paid in cash and Salary Substitute Restricted Shares for Executive Directors, and fees paid in cash and shares for Non-Executive Directors.
4
Benefits received in 2022 include a car or car allowance, medical and life assurance.
5
This column reflects the BBP contribution in respect of performance during the relevant year. In 2022, amounts earned under the BBP are paid into the
participant’s plan account, with 50% paid as cash and the remaining 50% held in shares or share-linked units in the participants plan account. This cash
percentage was 60% in 2021. Further details of the performance criteria, achievement and resulting awards for the 2022 BBP are set out on
PAGE 122.
6
This column reflects the RSP awards granted in March 2021 and April 2022 (refer to PAGE 123 for the face value of the April 2022 RSP award). We note that
the Former CEO and Former CFO’s in-flight awards were forfeited on cessation of employment, and the Former COO’s in-flight RSP awards were pro-rated to
reflect the date of cessation. Therefore the CEO’s 2022 RSP award with a face value of £434,700 is excluded from the above table. Full treatment of in-flight
awards on cessation for each Former Executive is set out on
PAGES 126 AND 127. The Former CEO and Former COO were awarded options over ordinary
shares under the legacy 2017 Share Option Plan. The TSR performance over the period was below the threshold performance level. As such, these awards lapsed
in the year.
7
Annual bonus buyout award totalling £150,000 awarded as cash in two equal tranches; half was paid in February 2023 and the other half will be paid in
February 2024.
8
During 2021 and 2022, the Executive Directors received a pension contribution or cash allowances in lieu of a pension contribution. For 2022, this was 10% of
salary for Nic Budden, and 3% of salary for the other Executive directors.
9
No share price appreciation (or estimate of) is included in the values included in the single figure table. The RSP is included in the single figure table based on the
value at grant. No performance measures are associated with the grant of awards; although the Committee will consider Group and individual performance
before determining any grant. Vesting is subject to a discretionary underpin that allows the Remuneration Committee to make adjustments to the level of
vesting if the Committee believes due to business performance, individual performance or wider Group considerations that the vesting should be adjusted.
Total fixed pay
Buy out awards
BBP
RSP
0
100
200
300
400
500
600
700
800
Minimum On-target
49%
564
51% 28%
27%
Maximum
674
603
23%
22%
33%
26%
25%
24%
25%
CEO remuneration
19%
(£000’s)
307
26%
22%
Single Figure
2022
0
100
200
300
400
500
600
700
800
Minimum On-target
49%
100% 44%
25%
Maximum
Single Figure
2022
578
504
35%
41%
24%
40%
32%
28%
CFO remuneration
31%
(£000’s)
203
460
Total fixed pay
BBP
RSP
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
122
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
Annual BBP outcome in respect of 2022 (audited)
Executive Directors’ objectives continue to be linked to the delivery of the Group’s strategic priorities. In determining the outcome of some
objectives, the Committee sought input from the wider Board and other Board Committees as appropriate. The Committee is committed to
providing as much retrospective detail of the measures as possible, setting out clearly the decision-making process and the levels of
attainment achieved, but mindful that any information which could be considered commercially sensitive cannot be disclosed.
The table below sets out the 2022 annual bonus targets, performance against these targets and the resulting annual formulaic bonus
outcome. The explanation for the application of the discretionary adjustment is in the Annual Statement from the Remuneration
Committee Chairman on
PAGE 91.
2022 annual bonus outcome
Weighting
Threshold
(25% payable)
Target
(50% payable)
Maximum
(100% payable) Actual
Outcome
(% of element)
Outcome
(% of
maximum)
Adjusted operating profit
70% 10.35 11.5 13.8 13.9 100% 70%
Lettings market share growth
10% 2.5% 5% 10% 12% 100% 10%
Sales market share growth
10% 2.5% 5% 10% (1.9)% 0% 0%
Maintain strong
employee experience
(holistic assessment)
10% Qualitative assessment
60%
60% 6%
Formulaic
bonus outcome
(% of maximum)
86.0%
Discretionary
adjustment
(% of formulaic
outcome)
(20.0)%
Adjusted bonus
outcome (% of
maximum)
68.8%
In making its holistic assessment of the employee experience in 2022 the Committee reviewed data on workforce pay, retention, internal
promotions, exit interviews, investment in recruitment and learning and development, employee engagement, health and wellbeing,
Glassdoor and Indeed reports, quality of internal communication, redundancies and grievances and whistleblowing, making comparisons to
2021 and, where possible, external benchmarks. It concluded that on most measures there had been a medium level of success during the
year, with some important measures demonstrating a high level of success.
Scheme interests granted during 2022 (audited)
RSP Share Awards
Executive Directors were granted the following nil-cost option awards over the Group’s ordinary shares under The Foxtons Group plc 2020 RSP.
Awards for Chris Hough and Nic Budden were granted on 1 April 2022, in line with the typical RSP grants. Guy Gittins’ Award was granted on
5 September 2022, on the date that he was appointed as Group CEO. Guy Gittins’ award was granted at a pro-rated quantum to reflect his
time as an Executive Director in the financial year. As set out in the section ‘Former CEO remuneration arrangements’, Nic Budden’s in-flight
RSP awards were forfeited on cessation.
No consideration was paid for the grant of the RSP Awards which are structured as nil cost options.
The number of ordinary shares granted under RSP Awards for Nic Budden and Chris Hough have been calculated using an ordinary share
price of 41.7 pence per share being the average of the closing share prices over the three dealing days preceding the date of grant. The
number of ordinary shares granted under the RSP Award for Guy Gittins have been calculated using an ordinary share price of 36.55 pence
per share being the average of the closing share prices over the three dealing days preceding the date of grant.
2022 ANNUAL REPORT ON REMUNERATION CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
123
The normal vesting date all RSP Awards granted in 2022 (both the RSP Share Awards, and the Salary Substitute Restricted Share Awards,
above) for Chris Hough will be 1 April 2025 and 5 September 2025 for Guy Gittins, being the third anniversary of the award dates. Once
vested, the RSP Awards will normally be exercisable until the day before the tenth anniversary of the award date. The RSP Awards are
subject to a two-year holding period commencing on vesting.
As set out in further detail on
PAGE 126, all in flight RSP awards for Nic Budden have since been forfeited on cessation of employment,
and his salary substitute shares held on cessation were forfeited, and the 20% of salary sacrificed earned between 1 April 2022 and 30 May
2022 was paid in cash (and the related Salary Substitute Restricted Share Award forfeited).
Incoming CEO – Annual bonus and LTIP buyout awards
As disclosed when Guy Gittins’ appointment was announced, he was granted buyout awards on appointment to compensate for the forfeiture
of both annual and long-term incentive arrangements held with his previous employer, Chesterton Global Limited.
Guy received an annual bonus buyout award totalling £150,000, awarded as cash in two equal tranches; half was paid in February 2023 and the
other half will be paid in February 2024. This value of the buyout award is less than the value that is being forfeited from Guy Gittins’ previous
employer and takes account of the original performance conditions, the performance period remaining and the form of the award.
Guy also received an LTIP award buyout, granted on 5 September 2022, on appointment, as nil cost options that vest three years after the
grant in 2025. No holding period applies. The number of Ordinary Shares granted was calculated using an Ordinary Share price of 36.32 pence
per share, being the average of the closing Ordinary Share prices over the three Dealing Days preceding 30 May 2022, the date that it was
announced that Guy Gittins would be the incoming Chief Executive Officer.
Executive
Number of
Ordinary Shares % of salary Face value
Share price
used for
calculation
Option
price Performance conditions
Guy Gittins 395,739 100%
(based on
pro-rated
salary)
£144,643 36.55p £Nil Awards will ordinarily vest after three years
subject to the grantee’s continued service and a
discretionary underpin that allows the
Remuneration Committee to make adjustments
to the level of vesting if the Committee believes
due to business performance, individual
performance or wider Group considerations that
the vesting should be adjusted. This will include
consideration of all relevant factors, including
any windfall gains.
Chris Hough 337,230 56.25%
1
£140,625 41.7p £Nil
Nic Budden 1,042,446 75%
1
£434,700 41.7p £Nil
1
The grant in 2022 for Chris Hough and Nic Budden was reduced by 25% to recognise the fall in share price since the 2021 grant. The figures above represent
the reduced figures.
Salary Substitute Restricted Share Awards
Executive Directors were granted the following nil-cost option awards over the Group’s ordinary shares under The Foxtons Group plc 2020
RSP in respect of their Salary Substitute Restricted Share Awards. Awards for Chris Hough and Nic Budden were granted on 1 April 2022, in
line with the typical timing. Guy Gittins’ award was granted on 5 September 2022, on the date that he was appointed as Group CEO, and
pro-rated for the proportion of the year from 1 April 2022 that he was in role.
The number of ordinary shares granted under the Salary Substitute Restricted Share Awards for Nic Budden and Chris Hough have been
calculated using an ordinary share price of 41.7 pence per share being the average of the closing share prices over the three Dealing Days
preceding the date of grant. The number of ordinary shares granted under the Salary Substitute Restricted Share Award for Guy Gittins has
been calculated using an ordinary share price of 36.55 pence per share being the average of the closing Ordinary Share prices over the three
Dealing Days preceding the date of grant.
The Salary Substitute Restricted Share Awards will ordinarily vest after three years subject to the grantee’s continued service.
Executive
Number of
Ordinary Shares Face value
Share price
used for
calculation Option price Performance conditions
Guy Gittins 70,015 £25,590 36.55p £Nil Awards will ordinarily vest after three years subject to
the grantee’s continued service.
Chris Hough 119,904 £50,000 41.7p £Nil
Nic Budden 277,985 £115,920 41.7p £Nil
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
124
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
Executive
Number of
Ordinary Shares Face value
Share price
used for
calculation Option price Performance conditions
Guy Gittins 6,883,891 £2,500,000 36.32p £Nil Performance requirement for the share price of an
Ordinary Share to be at least 70 pence for any 30
consecutive days during the vesting period. The award
is subject to the usual discretions available to the
Remuneration Committee under the Policy, for
example in the event of a change of control or other
corporate events.
BBP share awards
The following table sets out the BBP accounts for the Executive Directors as at the end of 2022 which shows the paying in of the second
bonus from 2021, the second payment from the bank in 2022, and subsequent deferral of notional shares over the remainder of 2022 and
into the start of 2023. The notional shares are subject to a discretionary underpin that allows the Remuneration Committee to make
adjustments to the level of vesting if the Committee believes due to business performance, individual performance or wider Group
considerations that the vesting should be adjusted. This will include consideration of all relevant factors, including any windfall gains.
Each year, subject to the achievement of annual BBP performance conditions, a contribution will be made into the participants’ plan accounts.
Following the contribution for amounts earned in respect of 2021 performance, 60% of the cumulative balance of each Executive Director’s
plan was paid in cash. Following the contribution for amounts earned in respect of 2022 performance, 50% of the cumulative balance of each
Executive Director’s plan account will be paid in cash.
These notional shares are a mechanism that allows the deferred element of the award to be linked to the share price. The Committee
confirms that there is no intention to issue actual shares until the end of the fourth year of the cycle, when the full bank value will normally
be settled in the form of shares transferred or allotted to the participant.
BBP year two – notional shares invested into participants’ bonus bank during 2022 (in respect of 2021 performance outcome)
Former CEO
Nic Budden
2
Former CFO
Richard Harris
3
Former COO
Patrick Franco
2
Number of deferred notional shares in account at the end of year two (31 December 2021) 242,672 106,547 106,547
Value of deferred notional shares in account at the end of year two (31 December 2021)
1
£98,206 £43,118 £43,118
Bonus contribution in 2022 in respect of performance over 2021 (contribution into the account) £445,133 £195,456 £195,456
Dividend equivalent contributed £437 £192 £192
Cumulative account following contribution £543,775 £238,766 £238,766
Less: 2022 payment out of the account £(326,265) £(167,136) £(143,259)
Less: Value forfeited - £(71,630) -
Value of deferred notional shares carried forward over to 2022
1
£217,510 - £95,506
Number of deferred notional shares carried forward at the end of year three (31 December 2022)
4
537,481 - 236,002
1
The price used to calculate the number of shares was the mid-market value of a share for the 30-day period to 31 December 2021, which was
40.5 pence per share.
2
As noted on PAGES 126 AND 127, the Former CEO’s and Former COO’s BBP account balance will continue to be payable according to the original
payout profile.
3
As noted in last year’s report, the Former CFO’s 2021 BBP was paid into the individual’s BBP account. 70% of this plan account was paid in cash in the
February 2022 payroll. The balance in the BBP account was forfeited, in line with the Remuneration Policy.
4
The current CEO and CFO were not eligible for a bonus in relation to performance over 2021, and therefore are not included in the table above.
2022 ANNUAL REPORT ON REMUNERATION CONTINUED
The face value of the LTIP buyout award granted to Guy Gittins is lower than the incentive awards that he forfeited on cessation from his
previous employer and takes account of the original performance conditions, the performance period remaining and the form of the award.
Further details are set out in the table below.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
125
External appointments
No Executive Directors hold any external appointments.
Relative importance of spend on pay
The chart on the following page ( PAGE 126) shows the Group’s actual expenditure on shareholder distributions (including dividends and share
buybacks) and total employee pay expenditure for the financial years ended 31 December 2020, 31 December 2021 and 31 December 2022.
Statement of Directors’ shareholding and share interests (audited)
The table below shows the interests of the Directors and connected persons in shares (owned outright or vested) as at 31 December 2022.
There have been no changes in Directors’ interests in the period between 31 December 2022 and 6 March 2023.
Outstanding scheme interests
6
Shares
owned
outright
Unvested
shares not
subject to
performance
1
Unvested
shares
subject to
performance
Unvested
share
options
subject to
performance
2
Notional
shares
held
3
Total
scheme
interests
Shareholding
guideline
(% of salary
Current
shareholding
(% of salary)
4
Guideline
met
Executive Directors
Guy Gittins - 465,754 - 6,883,891 - 7, 349,645
5
250% 16% No
Chris Hough 140,000 457,134 - - - 457,134 200% 45% No
Former Executive Directors
Nic Budden
5
454,660 - - - 537,481 537,481 Lower of
250% and
holding on
cessation
23% Yes
Richard Harris
5
276,106 - - - - - Lower of
200% and
holding on
cessation
27% Yes
Patrick Franco
5
20,000 479,117 - - 236,002 715,119 Lower of
200% and
holding on
cessation
27% Yes
Non-Executive Directors
Nigel Rich 1,119,963 - - - - - - - -
Alan Giles 150,000 - - - - - - - -
Sheena Mackay 90,000 - - - - - - - -
Peter Rollings 183,105 - - - - - - - -
Rosie Shapland 20,000 - - - - - - - -
1
Unvested shares not subject to performance are shares granted under the RSP and Salary Substitute Restricted Shares.
2
Since the lapse of shares under the 2017 Share Option Plan, no unvested share options subject to performance remain outstanding except for a buyout award to
compensate Guy Gittins for the forfeiture of incentive arrangements held with his previous employer, Chesterton Global Limited. The LTIP buyout award has a
face value of £2.5 million and is subject to a performance requirement for the share price of an Ordinary Share to be at least 70 pence for any 30 consecutive
days during the vesting period. The number of Ordinary Shares granted equivalent to £2.5 million has been calculated using an Ordinary Share price of 36.32
pence per share being the average of the closing Ordinary Share prices over the three Dealing Days preceding 30 May 2022, the date that it was announced that
Guy Gittins would be the incoming Chief Executive Officer.
3
Notional shares held are the number of deferred notional shares carried forward at the end of year three of the BBP scheme (31 December 2022).
4
Based on the share price on 31 December 2022 of 29.7p. Includes shares owned outright, shares which have vested but which remain subject to a holding period
and/or clawback, unvested Salary Substitute Restricted Share awards (on a net of tax basis) and unvested RSP awards (on a net of tax basis).
5
Shares owned outright as at the date of resignation from the Board.
6
No options were exercised by Directors in the year. There are no vested but unexercised options as at 31 December 2022.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
126
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
Additional information
The following table sets out the other elements of the Annual Report on Remuneration and where in the Directors’ remuneration report
they can be found (where relevant).
Element
Page
No long-term incentive plan award vested for performance ending in the 2022 financial year (audited)
PAGE 96
How we will apply the Policy in 2023
PAGE 99 TO 102
Payments for loss of office (audited)
PAGE 126 AND 127
No payments to former Directors during the 2022 financial year (audited)
n/a
Outgoing Executive Director remuneration arrangements and payments for loss of office
Former CEO remuneration arrangements
As set out in the Annual Statement from the Remuneration Committee Chairman, Nic Budden, the Former CEO stepped down from his role,
and departed the Company, effective 30 May 2022. The table below sets out Nic Budden’s leaver remuneration arrangements, in line with the
provisions of our Remuneration Policy, and as disclosed at the time of his departure. The treatment of Nic Budden’s pay on termination is in line
with the approved Remuneration Policy.
Element of remuneration Treatment
Base salary Paid monthly until the date of departure.
Pension and benefits As per the employment contract.
Payment in Lieu of Notice (“PILON”) On cessation, Nic Budden was eligible for a payment in lieu of notice in respect of 12 months of salary
(£579,600). Payments delivered monthly and subject to mitigation if he becomes employed elsewhere.
In-flight Salary Substitute Restricted Shares Salary substitute shares held on cessation (277,985 shares) in relation to the 12 months from 1
April 2022 were forfeited. The 20% of salary sacrificed between 1 April 2022 and 30 May 2022
was re-paid in cash for the period worked.
2017 SOP award
1
Awards lapsed on the vesting date of 16 May 2022 due to the performance conditions not being met.
2022 BBP
Nic Budden was eligible for an annual bonus in respect to the 2022 financial year. Performance
conditions were measured at the normal measurement date, and the outcome pro-rated for the period
worked during the financial year, as set out on PAGE 95.
As set out on
PAGE 96, amounts earned (£249,228) were paid into the BBP at the normal time in
early 2023. 50% of the account balance was paid in cash in February 2023 (£207,593), with the remaining
balance released in shares at the end of 2023 (in line with original payout profile). The Committee
considered this appropriate to reflect his continued contribution for the proportion of the year served.
Value in the BBP account On the basis that the plan account balance reflects prior years achievement, the Committee has
determined that the plan account will continue to be payable according to the original payout
profile, subject to malus or clawback for up to two years post payment.
In-flight RSP awards All in-flight RSP awards, all of which have not vested, will be forfeited, in line with the
Remuneration Policy. The Committee seeks to minimise the cost to shareholders in the event of
departures and so considered the forfeiture of these awards appropriate.
1
The Share Option Plan (SOP) was introduced in 2017 for Executive Directors and Senior Management.
Relative importance of spend on pay (£m)
0
10
20
30
40
50
60
70
80
2022
2021
Relative Importance of spend on pay (£m)
Total staff remuneration
74.6
2020
6.4
72.5
6.3
60.6
0.3
Distribution to shareholders
1
2022 ANNUAL REPORT ON REMUNERATION CONTINUED
1
Distribution to shareholders: £1.5 million through dividends
paid (2021: £0.6 million; 2020: £nil) and £4.9 million
through share buybacks (2021: £5.7 million; 2020: £0.3
million). 2021 distribution to shareholders comparative
restated so presented on the same basis as 2022.
0
10
20
30
40
50
60
70
80
2022
2021
Relative Importance of spend on pay (£m)
Total staff remuneration
74.6
2020
6.4
72.5
6.3
60.6
0.3
Distribution to shareholders
1
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
127
Former COO remuneration arrangements
As set out in the Annual Statement from the Remuneration Committee Chairman, Patrick Franco, the Former COO stepped down from the
Board on 1 April 2022, and departed the Company on 30 April 2022. The table below sets out Patrick Franco’s leaver remuneration
arrangements, in line with the provisions of our Remuneration Policy. The treatment of Patrick Franco’s pay on termination is in line with
the approved Remuneration Policy.
Element of remuneration Treatment
Base salary Paid monthly until the date of departure.
Pension and benefits As per the employment contract.
Payment in Lieu of Notice (“PILON”) On cessation, Patrick Franco was eligible for a payment in lieu of notice in respect of 11 months of
salary (£279,950).
Payments delivered monthly and subject to mitigation if he becomes employed elsewhere.
Patrick Franco also received a redundancy payment of £15,000 on cessation.
2017 SOP award
1
Patrick Franco retained his 2017 Share Option Plan (SOP) and 2017 Dividend Bonus Award Scheme,
subject to the applicable terms and conditions of the governing rules. Awards lapsed on the vesting date
of 16 May 2022 due to the performance conditions not being met.
2022 BBP Patrick Franco was eligible for an annual bonus in respect to the 2022 financial year. Performance conditions
were measured at the normal measurement date (as set out on PAGE 95), and the outcome was
pro-rated for the period worked during the financial year. As per the single figure table, £65,661 was earnt
under the BBP for the period of which Patrick Franco was an Executive Director. An additional £21,887 was
earnt for the one-month period to 30 April where Patrick Franco remained an employee.
As set out on
PAGE 96, amounts earnt (£87,548) were paid into the BBP at the normal time in early
2023. 50% of the account balance was paid in cash in February 2023 (£80,209), with the remaining balance
released in shares at the end of 2023 (in line with original payout profile). The Committee considered this
appropriate to reflect his continued contribution for the proportion of the year served.
Value in the BBP account On the basis that the plan account balance reflects prior years achievement, the Committee has
determined that the plan account will continue to be payable according to the original payout profile,
subject to malus or clawback for up to two years post payment.
In-flight RSP awards Awards will be pro-rated to reflect the cessation of employment (such pro-rated awards being options
over 354,675 ordinary shares in respect of the 2020 RSP Award and options over 124,442 ordinary shares
in respect of the 2021 RSP Award). RSP awards retained by Patrick Franco are subject to the original
vesting and holding periods. The Committee determined this appropriate to reflect the individual’s
contribution to the business during his period of employment.
2022 RSP Not eligible to receive a 2022 RSP grant.
1
The Share Option Plan (SOP) was introduced in 2017 for Executive Directors and Senior Management.
Former CFO remuneration arrangements
As set out in the Annual Statement from the Remuneration Committee Chairman and last year’s report, Richard Harris stepped down from
his role as CFO, effective 1 April 2022. The table below sets out Richard’s leaver remuneration arrangements, in line with the provisions of
our Remuneration Policy. Richard received no payments for loss of office.
Element of remuneration Treatment
Base salary Paid monthly until the date of departure.
Pension and benefits As per the employment contract.
2019 SOP award
1
Forfeited, in line with the Remuneration Policy.
2021 BBP Any bonus that is due will be paid into the individual’s BBP account. 70% of this plan account was paid in
cash in the February payroll (£167,100). The balance in the BBP account is forfeited, in line with the
Remuneration Policy.
2022 BBP Not eligible to receive an annual bonus with respect to 2022 given the timing of his departure
during the year.
In-flight RSP awards All in-flight RSP awards, all of which have not vested, will be forfeited, in line with the Remuneration
Policy. The Committee seeks to minimise the cost to shareholders in the event of departures and so
considered the forfeiture of these awards appropriate.
2022 RSP Not eligible to receive a 2022 RSP grant.
1
The Share Option Plan (SOP) was introduced in 2017 for Executive Directors and Senior Management.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
128
/ DIRECTORS’ REMUNERATION REPORT CONTINUED
2023 Non-Executive Director fees
Details of the Policy on Non-Executive Director fees are set out in the table below:
Implementation in 2023
Chairman and Non-Executive Director fees are as follows:
Chairman fee: £150,000 (paid £100,000 in cash and £50,000 in shares at the prevailing market price) (2022: £150,000 with £50,000 paid in
shares at the prevailing market price)
Senior Independent Director fee: £5,000, payable with effect from 9 May 2023
Non-Executive Director base fee: £63,000 (2022: £63,000)
Chair of Audit Committee incremental fee: £10,000 (2022: £10,000)
Chair of Remuneration Committee incremental fee: £10,000 (2022: £10,000)
Chair of ESG Committee incremental fee: £5,000 (2022: £10,000). Note that the ESG Committee was established in 2021, and the
corresponding Chair fee was introduced from 1 January 2022
Service contracts
The Executive Directors are employed under contracts of employment with Foxtons Group plc. The principal terms of the Executive
Directors’ service contracts are as follows. The service contracts of the Executive Directors are not of a fixed duration and therefore
have no unexpired terms.
Notice period
Executive Director Position
Effective date
of contract From Company From Director
Guy Gittins CEO 5 September 2022 12 months 12 months
Chris Hough CFO 1 April 2022 12 months 12 months
Nic Budden
1
Former CEO 1 July 2014 12 months 12 months
Richard Harris
2
Former CFO 24 June 2019 12 months 12 months
Patrick Franco
3
Former COO 1 October 2019 12 months 12 months
1
Nic Budden stepped down as CEO on 30 May 2022.
2
Richard Harris stepped down as CFO on 1 April 2022.
3
Patrick Franco resigned as COO on 1 April 2022 and departed the Company on 30 April 2022.
The Chairman and Non-Executive Directors have letters of appointment. Dates of the Directors’ letters of appointment are set out below:
Name
Date of original
appointment
Date of appointment/
last reappointment
at AGM Notice period
Nigel Rich 1 October 2021 15 June 2022 3 months
Sheena Mackay 14 September 2017 15 June 2022 3 months
Alan Giles 1 June 2019 15 June 2022 3 months
Rosie Shapland 5 February 2020 15 June 2022 3 months
Peter Rollings 1 December 2021 15 June 2022 3 months
2022 ANNUAL REPORT ON REMUNERATION CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
129
Who are the Committee’s advisers?
The Remuneration Committee received advice on Executive remuneration from PwC, following appointment by the Remuneration
Committee as independent adviser in 2019. PwC is a founding member of the Remuneration Consultants Group and voluntarily operates
under its Code of Conduct in its dealings with the Committee. PwC’s fees charged for the provision of independent advice to the Committee
during the year were £91,715 (2021: £35,150). Other than in relation to advice on remuneration, PwC provides support to management in
relation to tax compliance, internal audit and ad-hoc tax and accounting advice. The Committee is satisfied that PwC engagement partners
and teams which provided remuneration advice to the Committee, do not have connections with the Group that may impair their
objectivity and independence.
Shareholder voting at the Group’s AGMs
The table below sets out the results of the most recent shareholder votes on the Directors’ Remuneration Policy (2020 AGM) and the
advisory vote on the 2022 Annual Statement from the Remuneration Committee Chairman and the Annual Report on Remuneration at the
2022 AGM on 15 June 2022.
Percentage of votes cast Number of votes cast
Resolution
For and
Discretion Against
For and
Discretion Against Withheld
1
Approve the Directors’ Remuneration Policy 78.41% 21.59% 217,451,038 59,873,876 8,986
Annual Statement from the Remuneration Committee
Chairman and the Annual Report on Remuneration
84.19% 15.81% 177, 291,386 33,305,883 5,013,820
1
A withheld vote is not a vote in law and is not counted in the calculation of the proportion of votes cast for and against a resolution.
The Director’s Remuneration Report was approved by the Board and signed on its behalf by:
Alan Giles OBE
Chairman of the Remuneration Committee
6 March 2023
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
130
Corporate governance
A report on corporate governance and the Group’s compliance with
the UK Corporate Governance Code is set out on
PAGES 62 TO
75
and forms part of this report by reference.
The Board of Directors
The members of the Board of Directors and their biographical
details are shown on
PAGES 64 AND 65 and are incorporated
into this report by reference. On 30 May 2022 it was announced
that Guy Gittins would be appointed as CEO with effect from 5
September 2022. Peter Rollings was appointed as Interim CEO when
Nic Budden stepped down with effect from 30 May 2022.
With a new Chairman, CEO and wider management team in place,
Alan Giles and Sheena Mackay decided not to stand for re-election at the
2023 AGM. The Board appointed two new Directors, Annette Andrews
and Jack Callaway, as successors to Alan Giles and Sheena Mackay.
Appointment and replacement of Directors
The appointment and replacement of Directors is governed by the
Company’s Articles of Association (the ‘Articles’), the Companies
Act 2006 and related legislation. The Articles provide that the
Company may by ordinary resolution appoint Directors to the
Board. The Articles also provide that the Board may appoint
Directors to the Board. The Company must have not less than two,
or more than 12 Directors. Where Directors are appointed by the
Board, they may only hold office until the next AGM of the
Company where they will be eligible for election. Each Director
must then retire from office at the third AGM after the AGM at
which he was last elected. However, the Board has decided that all
Directors will seek re-election at each AGM in accordance with the
Code. The Company may remove a Director by special resolution or
by ordinary resolution where special notice has been given and the
necessary statutory procedures are complied with.
Directors’ indemnity and compensation for loss
of office
The Company has granted a third party indemnity to each of its
Directors against any liability that attaches to them in defending
proceedings brought against them, to the extent permitted by
English law, in connection with the discharge of their duties as a
Director of the Company and its subsidiaries. In addition, Directors
and Officers of the Company and its subsidiaries are covered by
Directors’ and Officers’ liability insurance, which gives appropriate
cover for legal action brought against the Directors.
The Company does not have arrangements with any Director that
would provide compensation for loss of office or employment
resulting from a takeover, except that provisions of the Company’s
share plans may cause options and awards granted under such plans
to vest on a takeover. Further information is provided in the
Directors’ Remuneration Report on
PAGES 110 TO 112.
Engagement with stakeholders
The long-term success of the Company is dependent on its
relationships with its stakeholders. In accordance with Section 172
of the Companies Act 2006, the Company’s statement on
engagement with its suppliers, customers, the community and
others can be found on
PAGES 18 TO 21.
Employee engagement and equal opportunities policy
The Company provides employees with information on the Group’s
performance and on matters concerning them on a regular basis. The
Board engages with employees through formal and informal channels
including the Employee Engagement Committee (EEC), as set out on
PAGES 55 AND 115.
Considerable value is placed on the involvement of employees, which
is reflected in the principles of Foxtons’ corporate practices and
related guidance, which require regular, open, fair and respectful
communication, zero tolerance for human rights violations, fair
remuneration and, above all, a safe working environment. Foxtons
operates an equal opportunities policy that aims to ensure that all
employees are treated fairly and without favour or prejudice
throughout selection, recruitment, training, development and
promotion. The Group’s policies and procedures are designed to
provide for full and fair consideration and selection of disabled
applicants, to ensure they are properly trained to perform safely and
effectively and to provide career opportunities that allow them to
fulfil their potential. Where an employee becomes disabled in the
course of their employment, the Group will actively seek to retain
them wherever possible by making adjustments to their work content
and environment or by retraining them to undertake new roles.
The details of wider workforces pay policies and the alignment of
incentives operated by the Group are set out on
PAG E 114.
Further information on the Group’s approach to diversity, inclusion
and career progression are contained in the Strategic Report on
PAGES 52 TO 56. Refer to PAG E 115 for details of how the
Board engages with employees.
Share capital
At 31 December 2022, there were 330,097,758 ordinary shares of
£0.01 each in issue. 25,954,957 ordinary shares were held in
Treasury. Each ordinary share carries one vote; therefore, the total
voting rights in issue at 31 December 2022 were 304,142,801. As at
6 March 2023, the date of this report, the Company held
26,283,806 shares in Treasury and the total voting rights in issue
were 303,813,952.
Details of the Company’s issued share capital and shares issued
during the year can be found in Note 20 of the financial statements.
The Company was granted a general authority by its shareholders
at the 2022 AGM to allot shares up to 33.33% of the Company’s
issued share capital. The Company also received authority to allot
shares for cash on a non-pre-emptive basis up to 5% of the
Company’s issued share capital. These authorities will expire at the
conclusion of the 2023 AGM or 30 June 2023.
A resolution will be proposed at the 2023 AGM to renew the
general authority to allot shares up to 33.33% of the Company’s
issued share capital. In addition, as recommended by the Pre-
Emption Group’s revised Statement of Pre-emption Principles (as
published in November 2022), the Company will propose Special
Resolutions at the 2023 AGM to seek shareholder authority to
disapply pre-emption rights of up to 10% of issued share capital
and a further 10% of issued share capital in relation to the financing
of a share issue in connection with an acquisition or specified
capital investment.
/ DIRECTORS’ REPORT
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
131
The Company was granted authority by its shareholders at the
2022 AGM to purchase up to 31,731,559 of its ordinary shares,
being 10% of the issued share capital. This authority will expire at
the conclusion of the 2023 AGM or 30 June 2023.
During the year, the Company announced the commencement of two
share buyback programmes and purchased 14,829,261 of its ordinary
shares, having an aggregate nominal value of £148,293, for a total
consideration of £4,912,141. The total number of shares purchased and
held in treasury (as at 31 December 2022) represented 7.86% of the
Company’s issued share capital as at 31 December 2022. These shares
were purchased through Numis Securities Limited at an average price
of 33.1 pence. All the shares purchased under the share buyback
programmes are held in treasury. As at 6 March 2023, the date of this
report, the Company has purchased a total of 15,158,110 of its ordinary
shares, having an aggregate nominal value of £151,581, for a total
consideration of £5,021,156. The total number of shares purchased and
held in treasury (as at 6 March 2023) represented 7.96% of the
Company’s issued share capital as at 6 March 2023.
In order to retain flexibility, the Company will propose a resolution at
the 2023 AGM to renew the Company’s authority to purchase up to
10% of its ordinary shares at the Directors’ discretion. If the resolution
is passed, the new authority will replace the existing authority, which
will lapse at the conclusion of the AGM on 9 May 2023.
Dividends
In line with the Company’s policy, the Directors are recommending the
payment of a final dividend on its ordinary shares for the year ended 31
December 2022 of 0.7 pence per ordinary share (2021: 0.27 pence).
Subject to the approval of shareholders at the forthcoming AGM, the
proposed final ordinary dividend will be payable on 31 May 2023 to
shareholders on the register at the close of business on 14 April 2023.
The ex-dividend date will be 13 April 2023.
Major shareholdings
The table below shows notifications received by the Company in
accordance with DTR 5 during financial year ended 31 December
2022. This information was correct at the date of notification. It
should be noted that these holdings may have changed since notified
to the Company. However, notification of any change is not required
until the next applicable threshold is crossed.
Institution
Voting
rights at
31 Dec 2022
% of
capital at
31 Dec 2022
Platinum Investment
Management Limited
30,441,089 9.62%
3G Capital Management LLC 21,710,000 7.10%
Hosking Partners LLP 19, 827,349 6.35%
Converium Capital Master Fund LP 9,333,202 3.01%
Australian Retirement Trust 9,389,457 3.00%
Credit Suisse London Nominees 8,509,181 2.69%
As at 6 March 2023, the date of this report, the Company had
received the following additional notifications:
Institution Voting rights % of capital
Azvalor Asset Management
9,513,579 3.13%
Rights and obligations attaching to shares
The Company has a single class of ordinary shares in issue. Holders
of the ordinary shares are entitled to receive dividends (when
declared) and a copy of the Company’s Annual Report and
Accounts, attend and speak at general meetings of the Company
and appoint proxies and exercise voting rights or the transfer of
voting rights. At any general meeting, on a show of hands, every
shareholder present in person or by proxy shall have one vote and,
on a poll, every shareholder present in person or by proxy, shall
have one vote for every share of which they are the holder. Subject
to certain thresholds being met, holders of ordinary shares may
requisition the Board to convene a general meeting or propose
resolutions at AGMs. On liquidation, holders of ordinary shares may
share in the assets of the Company.
None of the ordinary shares carry any special rights with regard to
control of the Company and there are no restrictions on voting rights
or the transfer of voting rights. Major shareholders have the same
voting rights per share as all other shareholders. The Company is not
aware of any arrangements under which financial rights are held by a
person other than the holder of the shares.
The Foxtons Group Employee Benefit Trust is an Employee Benefit
Trust which holds ordinary shares in the Company in trust for
employees within the Group. The Trustee of the Trust has the power
to exercise the rights and powers incidental to, and to act in
relation to, the ordinary shares subject to the Trust in such manner
as the Trustee in its absolute discretion thinks fit. The Trustee of the
Employee Benefit Trust has waived its rights to dividends on
ordinary shares held by the Trust as these have not yet vested
unconditionally in employees. Details of the ordinary shares held by
the Trust can be found in Note 22 of the financial statements.
There are no restrictions on the transfer of securities in the
Company and no requirement for any person to obtain the approval
of the Company, or other holders of the Company’s securities, in
order to transfer securities. The Company is not aware of any
agreements between shareholders that may result in restrictions on
the transfer of securities or on voting rights.
Significant agreements
With the exception of the revolving credit facility agreement with
Barclays Bank plc, which may be terminated by Barclays and all
outstanding loans declared immediately due and payable following
a change of control, the Group is not a party to any significant
agreements that would take effect, alter or terminate on a change
of control of the Group.
Streamlined Energy and Carbon Reporting and Task
Force on Climate-Related Financial Disclosures
Information on the Group’s Streamlined Energy and Carbon
Reporting and Task Force on Climate-Related Financial Disclosures
is set out in the Strategic Report on
PAGES 42 TO 49 and forms
part of this report by reference.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
132
/ DIRECTORS’ REPORT CONTINUED
Risk management and internal controls
The Board has carried out a robust assessment of the Group’s
principal and emerging risks as set out on
PAGES 32 TO 35 of the
Strategic Report.
The Group’s financial risk management objectives and policies,
including its use of financial instruments, are set out in Note 23 of
the financial statements.
Going concern
The financial position of the Group, its cash flows and liquidity
position are set out in the consolidated financial statements.
Furthermore, Note 23 of the financial statements includes the
Group’s objectives and policies for managing its capital, its financial
risk management objectives, details of its financial instruments and
its exposure to credit and liquidity risk.
The Directors believe 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 due to its existing, and
forecast, availability of cash resources. For this reason, they
continue to adopt the going concern basis in preparing the financial
statements. The Directors have made this assessment after
consideration of the Group’s budgeted cash flows and related
assumptions and in accordance with the ‘Guidance on Risk
Management, Internal Control and Related Financial and Business
Reporting’ published by the FRC in September 2014.
Auditor
The Directors holding office at the date of this annual report
confirm that, so far as they are each aware, there is no relevant
audit information of which the Group’s auditor is unaware. Each
Director has taken all the steps that they ought to have taken as a
Director to make themselves aware of any relevant audit
information and to establish that the Group’s auditor is aware of
that information.
BDO LLP, the external auditor of the Group, has advised of its
willingness to continue in office and a resolution to reappoint them
as auditor and the authority for their remuneration to be
determined by the Audit Committee will be proposed at the 2023
AGM. Further details on how the objectivity and independence of
the auditor is safeguarded and assessed can be found in the report
of the Audit Committee on
PAGE 88.
Information presented in other sections of this report
Certain information is required to be included in the Annual Report
and Accounts by Listing Rule 9.8.4. The following table provides
references to where this information can be found. If a requirement
is not shown, it is not applicable to the Group.
Section Listing Rule Requirement Location Page
12 and 13 Shareholder waivers of
dividends and future
dividends
Directors’
Report
131
Political Donations
No political donations were made or political expenditure incurred
for 2022 (2021: nil).
AGM
The Company’s AGM will take place at 10am on 9 May 2023 at the
Company’s registered office at Building One, Chiswick Park, 566
Chiswick High Road, London W4 5BE. The Notice of Meeting, which
sets out the resolutions to be proposed at the forthcoming AGM
and attendance arrangements, accompanies the Annual Report
and Accounts and can also be found on the Group’s website at
www.foxtonsgroup.co.uk.
Post balance sheet events and future developments
Refer to Note 28 of the financial statements for details of post
balance sheet events.
Details of the Group’s business activities and the factors likely to
affect its future development, performance and position are set out
in the Strategic Report on
PAGES 1 TO 61 and form part of this
report by reference.
On behalf of the Board
Guy Gittins
Chief Executive Officer
6
March 2023
Chris Hough
Chief Financial Officer
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
GOVERNANCE
133
/ DIRECTORS’ RESPONSIBILITIES STATEMENT
The Directors are responsible for preparing the Annual Report and
Accounts in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law, the Directors are required to
prepare the Group financial statements in accordance with
applicable law and international accounting standards in conformity
with the requirements of the Companies Act 2006 and UK adopted
International Financial Reporting Standards (IFRS) and have elected
to prepare the Parent Company financial statements in accordance
with Financial Reporting Standard 101 ‘Reduced Disclosure
Framework’. Under company law, the Directors must not approve
the accounts unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company of the profit
or loss of the Group for that period.
In preparing the Parent Company financial statements, the
Directors are required to:
• Select suitable accounting policies and then apply
them consistently.
• Make judgements and accounting estimates that are
reasonable and prudent.
• State whether Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’ has been followed, subject to any
material departures disclosed and explained in the
financial statements.
• Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
In preparing the Group’s financial statements, International
Accounting Standard 1 requires that Directors:
• Properly select and apply accounting policies.
• Present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and
understandable information.
• Provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users
to understand the impact of particular transactions, other
events and conditions on the entity’s financial position and
financial performance.
• Make an assessment of the Group’s ability to continue as a
going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that the
financial statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Group and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for preparing the Directors’ Report,
the Strategic Report, the Directors’ Remuneration Report and the
Corporate Governance Report in accordance with the Companies
Act 2006 and applicable regulations, including the requirements of
the Listing Rules and the Disclosure Guidance and Transparency
Rules of the FCA.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Group’s
website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
• The consolidated and Parent Company financial statements,
prepared in accordance with the relevant financial reporting
framework, give a true and fair view of the assets, liabilities,
financial position and loss of the Group and the undertakings
included in the consolidation taken as a whole.
• The Strategic Report and the Directors’ Report include a fair
review of the development and performance of the business
and the position of the Group and the undertakings included in
the consolidation taken as a whole, together with a description
of the principal risks and uncertainties that it faces.
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
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
Chief Executive Officer
6 March 2023
Chris Hough
Chief Financial Officer
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
134
/ INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF FOXTONS GROUP PLC
Opinion on the financial statements
In our opinion:
• The financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December
2022 and of the Group’s profit for the year then ended.
• The Group financial statements have been properly prepared in accordance with UK adopted international accounting standards.
• The Parent Company financial statements have been properly prepared in accordance with UK adopted international accounting
standards and as applied in accordance with the provisions of the Companies Act 2006.
• The financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Foxtons Group plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended
31 December 2022 which comprise the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated
Statement of Financial Position, Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement, notes to the financial
statements, Parent Company Statement of Financial Position, Parent Company Statement of Changes in Equity and notes to the Parent
Company financial statements, including a summary of significant accounting policies. The financial reporting framework that has been
applied in their preparation is applicable law and UK adopted international accounting standards and as regards the Parent Company
financial statements, as applied in accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is
consistent with the additional report to the Audit Committee.
Independence
Following the recommendation of the Audit Committee, we were appointed by the Directors on 13 May 2020 to audit the financial
statements for the year ending 31 December 2020 and subsequent financial periods. The period of total uninterrupted engagement is three
years, covering the years ending 31 December 2020 to 31 December 2022. We remain independent of the Group and the Parent Company
in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. The non-audit services prohibited by that standard were not provided to the Group or the Parent Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to
continue to adopt the going concern basis of accounting included:
• An assessment of the appropriateness of the approach and model used by the Directors when performing their going concern
assessment, including the following procedures:
• Subjected the going concern model to checks of the mechanical accuracy of the underlying formulae in both the base case and
reverse stress test case.
• Challenged the Directors on the accuracy of substantial non-profit cash flows and regular operating profit derived cash
movements within the going concern model (including working capital, capital expenditure, taxes and acquisition consideration)
by agreement to supporting documentation where available.
• Checked the covenant compliance calculations built into the going concern assessment model to ensure this was calculated
accurately and complied with the financial covenants built into the revolving credit facility agreement.
• Agreed the opening cash balance for 2023 to the audited consolidated statement of financial position.
• An evaluation and challenge of the underlying data and key assumptions used to make the assessment (focussing on revenue growth
rates, Group profitability and the timing and quantum of significant future cash flows). Challenge over assumptions included:
• Key assumptions (revenue growth, costs and profitability) challenged to supporting evidence and initiatives with business
segment leaders within the Group.
• Alignment of revenue growth estimates noted above against market research (both corroborative and contradictory) to
determine the reasonableness of the estimates made and the likelihood of the reverse stress test output occurring.
• Evaluation of the Directors’ historic forecasts against the achieved actuals for the year ended 31 December 2022 to establish
the accuracy with which cash flows have been budgeted.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
FINANCIAL STATEMENTS
135
• Additionally, we reviewed and challenged the results of the Directors’ stress testing, to assess the reasonableness of economic
assumptions in light of the impact of the current economic environment and potential future sales market volatility on the Group’s
solvency and liquidity position. Our review was benchmarked against our view on the achievability of the forecast assumptions for
revenue growth noted above (from market research performed), together with our consideration of post-year end revenue performance
against budget.
• We considered the availability of the revolving credit facility within the reverse stress test case as noted above based on covenant
compliance calculations.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Overview
Coverage
1
100% (2021: 95%) of Group profit before tax
98% (2021: 100%) of Group revenue
97% (2021: 99%) of Group total assets
2022 2021
Key audit matters
1. Impairment risk due to potential non-achievability of cash flows
underlying the brand asset value in use.
✓ X
2. Impairment risk due to the use of inaccurate assumptions included within
the weighted average cost of capital (‘WACC’) used in the brand asset
value in use.
✓ X
3. Valuation of the indefinite life brand asset.
X ✓
Key audit matter 3, “Valuation of the indefinite life brand asset”, has been replaced with key audit matters 1
and 2 on account of the disaggregation of the brand asset into two discrete risks on the implementation of ISA
315 (Revised 2019).
Materiality
Group financial statements as a whole
£1m (2021: £980k) based on 0.71% (2021: 0.75%) of revenue.
1
These are entities which have been subject to a full scope audit by the Group engagement team. These measures depict the consolidated total of the Group
including both continuing and discontinued operations.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
136
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control,
and assessing the risks of material misstatement in the financial statements. We also addressed the risk of Management override of internal
controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.
Significant components:
Component Nature of entity Type of work performed
Foxtons Limited Estate agency services (Sales and Lettings) Full scope audit
Foxtons Group plc Parent entity (including consolidation journals) Full scope audit
Non-significant components:
Other than the two significant components noted above, there were 14 other components within the Group which formed part of our
Group audit.
The following three non-significant components were subjected to a full scope audit on account of them being part of a non-small Group
and being entities that do not avail themselves of a parental guarantee from audit under s479A of the Companies Act 2006:
Component Nature of entity Type of work performed
Foxtons Intermediate Holdings Limited Intermediate holding entity Full scope audit
Foxtons Operational Holdings Limited Intermediate holding entity Full scope audit
Alexander Hall Associates Limited Mortgage broking services Full scope audit
All 11 of the remaining non-significant components were subjected to desktop review procedures. All audit work on all entities
(significant and non-significant) was undertaken by the Group audit team.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we
identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing
the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
/ INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FOXTONS GROUP PLC CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
FINANCIAL STATEMENTS
137
Key audit matter How the scope of our audit addressed the key audit matter
Impairment risk due to
potential non-
achievability of cash
flows underlying the
brand asset value
in use.
The Group has a historical brand asset of
£99 million (2021: £99 million) which has
an indefinite useful economic life and is
therefore subject to a mandatory annual
impairment review under IAS 36.
The audit of the cash flow assumptions
included within the impairment review of
the indefinite life brand asset is
considered to be a significant risk as it
requires consideration of value in use of
the business as a whole and includes a
high level of Management estimation
uncertainty in relation to the following
two key areas:
• Management’s assessment of future
cash flows from the estate agency
business, which include assessment
of revenue growth across the two
business segments and business
profitability (incorporating both
short term movements in 2023
and mid-term movements in
2024-2027).
• Management’s assessment of the
long-term growth rate applied to
the cash flows into perpetuity.
The level of audit work required on
the challenge of Management’s
judgements over future growth make
this a key audit matter.
Our audit work on the challenge of achievability of cash flows within the
indefinite life brand asset included the following procedures:
• Reconciled the cash flows from the impairment review model
to internal plans approved by the Board-approved internal
strategic plan.
• Challenged the key revenue assumptions within the model to
supporting evidence, including, inspection of support for internal
growth-driving actions, and benchmarking the achievability of key
growth metrics (including expected market volumes and unit pricing
in both the lettings and sales market) to both corroborative and
contradictory external market intelligence.
• Challenged Management’s assumptions around the future costs
within the model, including the inspection of inflation rates applied
to cost budgets for future years together with reconciling to growth
observed in costs from 2021 to 2022. We also reconciled the model
to confirm that future (uncommitted) cost savings had not been
incorporated into the model since these are prohibited by IAS 36.
• Reconciled the rental cash flows to the gross lease liabilities audited
as part of our audit work on leases.
• We reconciled the long-term growth rate used to discount the cash
flows into perpetuity back to long term growth indices expected
within the UK residential housing sector to external sources.
Key observations: Based on our audit procedures, we consider
Management’s judgments in respect of the impairment review cash flow
assumptions to be reasonable and achievable.
Impairment risk due to
the use of inaccurate
assumptions included
within the weighted
average cost of capital
(‘WACC’) used in the
brand asset value in use.
The preparation of the value in use model
to support the brand asset impairment
review under IAS 36 as above requires the
use of a WACC to discount the cash flows
to their net present value.
The WACC encompasses a number of
more complex judgments including:
• A “beta” rate sourced from
a judgemental basket of
market comparators.
• A number of more judgemental
premia including a small stock
premium together with a risk
premium.
The audit of these judgements requires
significant input by the Group’s
management and audit challenge,
together with the use of valuation
experts to corroborate or contradict the
sourcing of key elements within the
WACC (both factual and judgemental),
making it a key audit matter.
Our audit work included the following procedures on the WACC rate used
to discount the cash flows in the brand value in use model:
• Challenged the completeness of the market peer Group against
which the beta for the Group was derived by considering other listed
entities offering significant estate agency services.
• Checked the reasonableness of the discount rate (all input
assumptions) derived by Management with the assistance of BDO’s
valuations experts (who were determined under Auditing Standards to
be sufficiently independent of the Group and competent to perform
this work), including corroboration of WACC inputs to supporting
data sources.
• Reconciled the small stock premium included in the WACC to
relevant Valuations Handbooks and inspected the sensitivity within
the WACC that would be created from moving between different
brackets of this assumption range.
• Challenged the attribution by Management of an additional risk
premium to the WACC in relation to the risk of non-achievability of
key growth assumptions included within the cash flows of the value
in use model by obtaining typical risk premia ranges from BDO
valuation experts and considering Management’s risk premium to be
at a reasonable point on this range.
Key observations: Based on our audit procedures, we consider
Management’s judgments in respect of the WACC to be reasonable.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
138
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider
materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users
that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
Group financial statements Parent Company financial statements
2022
£’000
2021
£’000
2022
£’000
2021
£’000
Materiality
1,000 980 900 532
Basis for determining
materiality
0.75% of budgeted
revenues (equating to
0.71% of final audited
revenues).
0.75% of budgeted
revenues (equating to
0.74% of final audited
revenues).
90% of Group materiality 54% of Group materiality
Rationale for the
benchmark applied
We consider revenue to
be the most appropriate
materiality benchmark as
it provides a more stable
measure of year-on-year
performance and is a key
performance indicator for
the Group.
We consider revenue to
be the most appropriate
materiality benchmark as
it provides a more stable
measure of year-on-year
performance and is a key
performance indicator for
the Group.
The Parent Company
does not trade.
Materiality was set at a
percentage of group
materiality given the
assessment of
aggregation risk.
The Parent Company
does not trade.
Materiality was set at a
percentage of group
materiality given the
assessment of
aggregation risk.
Performance materiality
700 637 630 346
Basis for determining
performance
materiality
70% of Group materiality 65% of Group materiality 70% of Parent Company
materiality
65% of Parent Company
materiality
Performance materiality
The basis of computing performance materiality is as follows:
Year
2022
2021
Performance materiality
level
70% of relevant materiality level 65% of relevant materiality level
Reasoning
• Continued low level of historic and anticipated
misstatements and brought forward uncorrected
misstatements.
• Continued rationalisation in complex estimates in
the Group, reflecting a lower level of Management
judgement across the Group financial statements.
• Low level of historic and anticipated misstatements
and brought forward uncorrected misstatements.
• Management’s attitude to identified
misstatements.
• Limited complexity of the accounting estimates
and judgements within the Group.
/ INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FOXTONS GROUP PLC CONTINUED
Component materiality
We set materiality for each component of the Group based on a percentage of between 10% and 90% (2021: between 10% and 81%) of
Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component
materiality ranged from £93,000 to £900,000 (2021: from £95,000 to £801,000). In the audit of each component, we further applied
performance materiality levels of 70% of the component materiality to our testing to ensure that the risk of errors exceeding component
materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £40,000 (2021: £35,000).
We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
FINANCIAL STATEMENTS
139
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act
2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic Report and
Directors’ Report
In our opinion, based on the work undertaken in the course of the audit:
• The information given in the Strategic Report and the Directors’ Report for the financial year for which
the financial statements are prepared is consistent with the financial statements.
• The Strategic Report and the Directors’ Report have been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment
obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the
Directors’ Report.
Directors’ remuneration In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Matters on which we are
required to report by
exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• Adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit
have not been received from branches not visited by us; or
• The Parent Company financial statements and the part of the Directors’ Remuneration Report to be
audited are not in agreement with the accounting records and returns; or
• Certain disclosures of Directors’ remuneration specified by law are not made; or
• We have not received all the information and explanations we require for our audit.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the Annual Report and
Accounts other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Corporate Governance Statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Parent Company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or our knowledge obtained during the audit.
Going concern and
longer-term viability
• The Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting
and any material uncertainties identified as set out on PAGE 86.
• The Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers
and why the period is appropriate as set out on
PAGES 36 TO 37.
Other Code provisions
• Directors’ statement on fair, balanced and understandable as set out on
PAGE 88.
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks as set out
on
PAGE 132.
• The section of the Annual Report that describes the review of effectiveness of risk management and internal
control systems as set out on
PAGE 87.
• The section describing the work of the Audit Committee as set out on
PAGE 84.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
140
/ INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FOXTONS GROUP PLC CONTINUED
Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below:
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most
significant frameworks which are directly relevant to specific assertions in the financial statements are those that relate to the
reporting framework, the Companies Act 2006 and UK Corporate Governance Code, the Listing Rules of the FCA and the relevant tax
compliance regulations. We addressed these risks through completion of relevant disclosure checklists applied to the key financial
statements areas listed above and inspection of the claims listing maintained by Management, together with obtaining direct
correspondence from the Group’s legal advisers.
• We considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance
with which may be fundamental to the Group’s ability to operate. These include compliance with FCA regulations, the Estate Agents
Act 1979, the Money Laundering Regulations 2007, the Proceeds of Crime Act, and the Data Protection Act.
• We understood how the Group is complying with those frameworks by making enquiries of Management, those responsible for legal
and compliance procedures and the Company Secretary. We corroborated our enquiries through our review of Board minutes and
papers provided to the Audit Committee.
• We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur, by
meeting with Management from across the Group to understand where they have considered there was a susceptibility to fraud. Such
areas that were considered to be susceptible were as follows:
1) Impairment review of brand assets (achievability of cash flows and WACC used to discount those cash flows) given significant
judgement involved in forecasting and incentive to ensure impairment review results in no impairment being recorded (see
separate documentation of Key Audit Matters further up in this report which explains how this was addressed).
2) Break clause dates being consistent between the internal revenue recognition system and the underlying tenancy documentation
supporting the transaction, manipulation of which could affect revenue recognition and performance-related pay linked to this.
• We communicated relevant identified laws and regulations and potential fraud risks to the engagement team and remained alert to any
indications of fraud or non-compliance with laws and regulations throughout the audit.
• We obtained an understanding of the processes and controls that the Group has established to address the risk identified with
Management override of control, or that otherwise prevent, deter and detect fraud, and how Management monitors those processes
and controls.
• Our procedures included journal entry testing with a focus on large or unusual transactions based on our knowledge of the business;
enquiries with Alexander Hall’s Risk Compliance and Technology Director (to ascertain the extent of any potential compliance breaches
or potential claims lodged by customers of the FCA regulated mortgage broking business), the Legal and Compliance Director, and
Group Management.
• Third-party confirmations were obtained directly from the Group’s external legal counsel to assess the completeness of claims and
legal matters made available to us.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
FINANCIAL STATEMENTS
141
The engagement partner assessed the audit team as collectively holding the appropriate competence and capabilities to identify and/or
recognise non-compliance with laws and regulations. Where appropriate, additional specialists were involved as members of engagement
team discussions to direct the audit procedures toward identifying irregularities as above. No matters concerning non-compliance with laws
and regulations were required to be communicated with the engagement team.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit
procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in
the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state
to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions
we have formed.
Tim Neathercoat (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
55 Baker Street, London, W1U 7EU
6 March 2023
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
142
/ CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2022
Continuing operations Notes
2022
£’000
2021
£’000
Revenue
2 14 0 , 3 22 12 6 , 475
Direct operating costs
(4 9 , 0 11 )
(47, 9 3 3 )
Other operating costs
(7 7, 4 7 1 )
(70 ,9 54 )
Operating profit
Other losses
(35 )
(26 )
Finance income
5 137 37
Finance costs
5
(2 , 0 03 )
(2, 0 4 6 )
Profit before tax from continuing operations
Tax charge
6
(2 , 37 7 )
(6 , 893 )
Profit/(loss) for the year from continuing operations
(1 , 3 4 0 )
Discontinued operations
Loss after tax for the year from discontinued operations
7
(4 35 )
(4 , 8 2 6 )
Profit/(loss) for the year attributable to shareholders of the Company
(6 ,1 6 6 )
Earnings/(loss) per share
From continuing operations
Basic earnings/(loss) per share
9
(0 . 4 p)
Diluted earnings/(loss) per share
9
(0 . 4 p)
From continuing and discontinued operations
Basic earnings/(loss) per share
9
(1 . 9 p)
Diluted earnings/(loss) per share
9
(1 . 9 p)
Adjusted results
From continuing operations
Adjusted operating profit
1,4
2 13, 9 0 9 8 ,942
Adjusted earnings for the purposes of adjusted earnings per share
2,4
9 9,609 6 ,17 6
Adjusted basic earnings per share
3,4
9 3 .1 p 1. 9 p
Adjusted diluted earnings per share
3,4
9 3.0 p 1.9 p
1
Adjusted operating profit is an APM and is reconciled to statutory profit before tax in Note 2. Adjusted operating profit from continuing operations is
presented before charging £0.07 million of adjusted items (2021: £1.4 million) as set out in Note 4.
2
Adjusted earnings for the purposes of adjusted earnings per share from continuing operations is presented before charging £0.05 million of adjusted items
including associated tax credits (2021: £1.5 million) and £nil million of non-cash deferred tax accounting remeasurement charges (2021: £6.1 million), as set
out in Note 9.
3
Adjusted basic and diluted earnings per share from continuing operations is an APM and is reconciled to statutory earnings per share in Note 9.
4
Further details of the APMs are provided in Note 27.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
FINANCIAL STATEMENTS
143
Notes
2022
£’000
2021
£’000
Profit/(loss) for the year attributable to shareholders of the Company
(6 ,1 6 6 )
Other comprehensive (loss)/income:
Items that will not be reclassified to profit or loss (net of tax):
Changes in fair value of equity instruments at FVOCI
14
(3 , 7 11 )
Other comprehensive (loss)/income for the period (3 , 7 11 )
Total comprehensive income/(loss) for the period
(6 ,12 6 )
Total comprehensive income/(loss) attributable to shareholders of the Company arising from:
Continuing operations
(1 , 3 4 0 )
Discontinued operations
(4 35 )
(4 , 78 6 )
(6 ,12 6 )
/ CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2022
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
144
/ CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
Notes
2022
£’000
2021
£’000
Non-current assets
Goodwill
10 26,050 17, 7 1 6
Other intangible assets
10 10 9,3 0 9 1 0 7, 2 6 9
Property, plant and equipment
11 10,6 92 9 ,652
Right-of-use assets
12 4 2, 570 43 ,8 32
Contract assets
18 1,6 8 8 899
Investments
14 6 3 , 317
Deferred tax assets
6 1, 3 8 6 1 , 74 4
Current assets
Trade and other receivables
16 16,016 1 6 , 0 11
Contract assets
18 5,6 88 3, 657
Current tax assets
Cash and cash equivalents
Assets classified as held for sale
7 - 7, 4 1 2
Total assets
Current liabilities
Trade and other payables
17
(1 6 , 6 9 4 )
(14 , 4 8 5 )
Lease liabilities
12
(1 0 , 70 8 )
(8 ,8 25 )
Contract liabilities
18
(9,7 45 )
(8 , 2 31 )
Provisions
19
(1 , 5 0 6 )
(3 4 2 )
Liabilities classified as held for sale
7 -
(7, 41 2 )
(3 8 ,6 53 )
(39,295 )
Net current (liabilities)/assets (4, 1 77 )
Non-current liabilities
Lease liabilities
12
(35 ,75 3 )
(39 , 25 8 )
Contract liabilities
18
(2 89 )
(1,141 )
Provisions
19
(1 ,7 6 5 )
(1,4 8 6 )
Deferred tax liabilities
6
(2 7, 0 4 9 )
(26, 504 )
(6 4, 85 6 )
(68,389 )
Total liabilities (10 3,509 )
(1 0 7, 6 8 4 )
Net assets
Equity
Share capital
20 3 , 3 01 3 , 3 01
Merger reserve
21 20,568 20,568
Other reserves
21 2, 653 2, 653
Own shares reserve
22
(1 0 , 9 9 3 )
(6 ,059 )
Retained earnings
Total equity
The financial statements of Foxtons Group plc, registered number 07108742, were approved by the Board of Directors on
6 March 2023. Signed on behalf of the Board of Directors
Chris Hough
Chief Financial Officer
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
FINANCIAL STATEMENTS
145
/ CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Notes
Share
Capital
£’000
Merger
reserve
£’000
Other
reserves
£’000
Own
shares
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
Balance at 1 January 2022
(6, 05 9 )
Profit for the year attributable to
shareholders of the Company
Changes in fair value of equity
instruments at FVOCI
14 - - - -
(3 , 7 11 ) (3 , 7 11 )
Total comprehensive income for the year
Dividends
8 - - - -
(1 , 4 8 7 ) (1 , 4 8 7 )
Own shares acquired in the period
22 - - -
(4 , 9 41 )
(4 , 9 41 )
Credit to equity for share-based
payments
26 - - - - 17 8 178
Settlement of share incentive plan
(7 )
Balance at 31 December 2022
(1 0 , 9 9 3 )
Notes
Share
Capital
£’000
Merger
reserve
£’000
Other
reserves
£’000
Own
shares
reserve
£’000
Retained
earnings
£’000
Total
equity
£’000
Balance at 1 January 2021
(3 74 )
Profit for the year attributable to
shareholders of the Company
(6 ,1 6 6 ) (6 ,1 6 6 )
Changes in fair value of equity
instruments at FVOCI
14 - - - - 40 40
Total comprehensive loss for the year
(6 ,12 6 ) (6 ,1 2 6 )
Dividends
8 - - - -
(5 83 ) (5 83 )
Own shares acquired in the period
22 - - -
(5 , 6 97 )
(5 , 6 97 )
Credit to equity for share-based
payments
26 - - - - 1, 452 1,45 2
Settlement of share incentive plan
(12 )
Balance at 31 December 2021
(6 ,059 )
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
146
/ CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2022
Notes
2022
£’000
2021
£’000
Operating activities
Operating profit from continuing operations
2 13 , 8 4 0 7, 5 8 8
Operating loss from discontinued operations
7
(414 )
(5 , 0 51 )
Operating profit from continuing and discontinued operations
Adjustments for:
Depreciation of property, plant and equipment and right-of-use assets
11, 12 1 2 ,1 9 7 13 , 0 47
Amortisation of intangible assets
10 1, 551 1, 652
Held for sale impairment
7 - 3 , 227
Gain on disposal of the discontinued operations
7
(1 8 0 )
Net (reversal of impairment)/impairment of property, plant and equipment and right-of-use assets
4
(310 )
Investment in associate impairment
4 - 6 81
Gain on disposal of property, plant and equipment, right-of-use assets and intangibles
(73 )
(1 , 3 6 7 )
Increase in provisions
Cash settlement of share incentive plan
(7 )
Share-based payment charges
Operating cash flows before movements in working capital
Increase in receivables
(2 ,1 0 8 )
(2 , 0 6 2 )
Increase in payables
Cash generated by operations
Income taxes paid
(2,659 )
(17 9 )
Net cash from operating activities
Investing activities
Interest received
Proceeds on disposal of property, plant and equipment
11 53 15 4
Proceeds on disposal of associate and investments
14 - 16 0
Purchases of property, plant and equipment
11
(2 , 95 3 )
(1, 976 )
Purchases of intangibles
10
(755 )
(2 )
Purchases of investments
14
(4 0 0 )
(3,000 )
Acquisition of subsidiaries (net of cash acquired)
13
(8, 49 0 )
(11 , 4 5 1 )
Disposal of discontinued operations
7
(3 , 715 )
Net cash used in investing activities (16, 123 )
(1 6 ,1 0 0 )
Financing activities
Dividends paid
8
(1 , 4 8 7 )
(5 83 )
Interest paid
(3 8 )
(2 1 )
Repayment of lease liabilities
12
(12 , 6 8 6 )
(15,228 )
Sub-lease receipts
Purchase of own shares
22
(4 , 9 41 )
(5 , 6 97 )
Net cash used in financing activities (1 8 , 87 1 )
(2 1, 2 71 )
Net decrease in cash and cash equivalents (11 , 0 6 2 )
(13 , 8 9 5 )
Cash and cash equivalents at beginning of year
1
comprised:
Cash and cash equivalents at end of the year (continuing operations)
Cash included in assets held for sale at end of the year (discontinued operations)
7 3 , 715 -
Cash and cash equivalents at end of year
1
comprised:
Cash and cash equivalents at end of the year (continuing operations)
Cash included in assets held for sale at end of the year (discontinued operations)
7 - 3 , 715
1
Group balances, which include cash related to continuing and discontinued operations.
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
FINANCIAL STATEMENTS
147
/ NOTES TO THE FINANCIAL STATEMENTS
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
148
/ NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
150
/ NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
152
/ NOTES TO THE FINANCIAL STATEMENTS CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
FINANCIAL STATEMENTS
155
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
FINANCIAL STATEMENTS
165
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
170
/ NOTES TO THE FINANCIAL STATEMENTS CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
FINANCIAL STATEMENTS
175
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
182
/ NOTES TO THE FINANCIAL STATEMENTS CONTINUED
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
FINANCIAL STATEMENTS
183
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
184
/ PARENT COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
Notes
2022
£’000
2021
£’000
(restated)
Non-current assets
Investment in subsidiaries
31 38,354 38,266
Deferred tax asset
38 349
38,392 38,615
Current assets
Trade and other receivables
1
32 40,094 38,795
Cash and cash equivalents
1,999 3,311
42,093 42,106
Current liabilities
Trade and other payables
33
(11,451)
(8,909)
(11,451)
(8,909)
Net current assets
30,642 33,197
Net assets
69,034 71,812
Equity
Share capital
20 3,301 3,301
Merger reserve
34 20,568 20,568
Other reserves
34 2,653 2,653
Own shares reserve
22
(10,993)
(6,059)
Retained earnings
1
53,505 51,349
Equity attributable to owners of the Company
69,034 71,812
1
Retained earnings, and trade and other receivables, as at 31 December 2021 have been restated by £3.7 million to correct a misclassification of dividend
income received which was recognised within trade and other receivables. The Company’s net assets as at 31 December 2021 have consequently increased
by £3.7 million to £71.8 million, and the Company’s previously disclosed loss for the year of £2.2 million has been restated to a profit of £1.5 million. The
restatement has no impact on the Group’s consolidated financial statements.
The Company reported a profit for the financial year ended 31 December 2022 of £3.5 million (2021: £1.5 million (restated)).
The financial statements of Foxtons Group plc, registered number 07108742, were approved by the Board of Directors on 6 March 2023.
Signed on behalf of the Board of Directors
Chris Hough
Chief Financial Officer
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
FINANCIAL STATEMENTS
185
/ PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Notes
Share
capital
£’000
Own
shares
reserve
£’000
Merger
reserve
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
equity
£’000
Balance at 1 January 2022
3,301
(6,059)
20,568 2,653 51,349 71,812
Profit and total comprehensive income for the year
- - - - 3,480 3,480
Dividends
8 - - - -
(1,487) (1,487)
Own shares acquired in the period
22 -
(4,941)
- - -
(4,941)
Credit to equity for share-based payments
- - - - 82 82
Capital contribution given relating to
share-based payments
- - - - 88 88
Settlement of share incentive plan
- 7 - -
(7)
-
Balance at 31 December 2022
3,301
(10,993)
20,568 2,653 53,505 69,034
Notes
Share
capital
£’000
Own
shares
reserve
£’000
Merger
reserve
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
equity
£’000
Balance at 1 January 2021
3,301
(374)
20,568 2,653 48,959 75,107
Profit and total comprehensive income for the year
1
- - - - 1,515 1,515
Dividends
8 - - - -
(583) (583)
Own shares acquired in the period
22 -
(5,697)
- - -
(5,697)
Credit to equity for share-based payments
- - - - 202 202
Capital contribution given relating to
share-based payments
- - - - 1,268 1,268
Settlement of share incentive plan -
12
- - (12)
-
Balance at 31 December 2021
3,301
(6,059)
20,568 2,653 51,349 71,812
1
Retained earnings, and trade and other receivables, as at 31 December 2021 have been restated by £3.7 million to correct a misclassification of dividend
income received which was recognised within trade and other receivables. The Company’s net assets as at 31 December 2021 have consequently increased
by £3.7 million to £71.8 million, and the Company’s previously disclosed loss for the year of £2.2 million has been restated to a profit of £1.5 million.
The restatement has no impact on the Group’s consolidated financial statements.
At 31 December 2022, retained earnings were fully distributable.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
186
/ NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
Investments in subsidiaries are stated at cost, less any provision for impairment.
The subsidiary undertakings, all of which are wholly owned and included in the consolidated accounts, are shown in Note 15 of
the consolidated financial statements.
29. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied in preparing the financial statements for the years ended 31 December
2021 and 2022. The principal accounting policies adopted are the same as those set out in Note 1 to the consolidated financial
statements except as noted below.
Basis of preparation
The Company’s financial statements are prepared in accordance with the Companies Act 2006 and FRS 101 Reduced Disclosure
Framework as issued by the Financial Reporting Council. The financial statements have been prepared on the historical cost basis.
Historical cost is generally based on the fair value of the consideration given in exchange for the assets.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in
relation to share-based payments, financial instruments, compensation of key management personnel, capital management,
presentation of a cash flow statement, standards not yet effective and related party transactions.
Investments in subsidiary companies
Investments in subsidiaries are recognised at cost less provisions for impairment.
Going concern
After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in
operation for a period of at least 12 months from the date of approval of the financial statements. The assessment has taken into
consideration the Company’s financial position, liquidity requirements and reasonably possible changes in performance and
outlook. Accordingly, they have adopted the going concern basis in preparing the financial statements. Refer to Note 1 for a full
description of the Directors’ considerations made in respect to the Group’s going concern assessment.
30. PROFIT FOR THE YEAR
As permitted by Section 408 of the Companies Act 2006, the Company has elected not to present its own income statement for
the financial year. The Company’s profit for the year was £3.5 million (2021: £1.5 million (restated)).
The Company has two employees at 31 December 2022 (2021: five).
The auditor’s remuneration for audit and other services is disclosed in Note 3 to the consolidated financial statements.
31. INVESTMENT IN SUBSIDIARY UNDERTAKINGS
Investments in subsidiary undertakings were as follows:
£’000
At 31 December 2020
36,998
Capital contribution arising from share-based payments
1,268
At 31 December 2021
38,266
Capital contribution arising from share-based payments
88
At 31 December 2022
38,354
ANNUAL REPORT AND ACCOUNTS 2022 FOXTONS GROUP PLC
FINANCIAL STATEMENTS
187
Amounts falling due within one year:
2022
£’000
2021
£’000
Amounts owed by subsidiary undertakings
40,023
38,728
1
Prepayments and accrued income
71 67
40,094 38,795
1
Retained earnings, and trade and other receivables, as at 31 December 2021 have been restated by £3.7 million to correct a misclassification of
dividend income received which was recognised within trade and other receivables. The Company’s net assets as at 31 December 2021 have
consequently increased by £3.7 million to £71.8 million, and the Company’s previously disclosed loss for the year of £2.2 million has been
restated to a profit of £1.5 million. The restatement has no impact on the Group’s consolidated financial statements.
33. TRADE AND OTHER PAYABLES
Amounts falling due within one year:
2022
£’000
2021
£’000
(restated)
Amounts owed to subsidiary undertakings
(10,034)
(7,776)
Accruals
(1,417)
(1,133)
(11,451)
(8,909)
Amounts owed to subsidiary undertakings are unsecured, interest free and repayable on demand.
34. MERGER RESERVE AND OTHER RESERVES
Balance at 1 January and 31 December:
2022
£’000
2021
£’000
(restated)
Merger reserve
20,568 20,568
Other capital reserve
2,582 2,582
Capital redemption reserve
71 71
23,221 23,221
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.
32. TRADE AND OTHER RECEIVABLES
Amounts owed by subsidiary undertakings are unsecured, interest free and repayable on demand.
FOXTONS GROUP PLC ANNUAL REPORT AND ACCOUNTS 2022
188
/ INFORMATION FOR SHAREHOLDERS
Company registration number
07108742
Registered and head office
Foxtons Group plc, Building One, Chiswick Park, 566 Chiswick High Road, London W4 5BE
2023 Financial calendar
2022 financial year end 31 December 2022
Year end trading update 26 January 2023
Preliminary announcement 7 March 2023
Publish Annual Report and Accounts 30 March 2023
First quarter trading update 20 April 2023
Annual General Meeting 9 May 2023
Interim period end 30 June 2023
Announcement of interim results 27 July 2023
Third quarter trading update 26 October 2023
Corporate website
You can access the corporate website at www.foxtonsgroup.co.uk. The Foxtons Group plc website provides useful information including
annual and half year reports, results announcements and presentations, share price data and financial news.
Shareholder enquires
For shareholder enquiries please contact our Registrars, Link Group. For general enquiries please call Link Group’s Customer Support Centre on:
0371 664 0300 (lines are open between 09:00 – 17:30, Monday to Friday excluding public holidays in England and Wales), or alternatively
email: shareholderenquiries@linkgroup.co.uk.
Electronic communications
Help us to save paper and get your shareholder information quickly and securely by signing up to receive your shareholder communications
by email. To register for electronic communications, visit www.foxtonsshares.co.uk. Please note, you will need your investor code, which can
be found on your share certificate or your dividend tax voucher.
Useful contacts
Company secretary
Link Company Matters Limited
6th Floor
65 Gresham Street
London
EC2V 7NQ
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Legal adviser
Dickson Minto
Broadgate Tower
20 Primrose Street
London
EC2A 2EW
Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Principal bankers
Barclays Bank plc
Churchill Place
Canary Wharf
London
E14 5HP
Stockbrokers
Numis Securities
45 Gresham Street
London
EC2V 7BF
Singer Capital Markets
1 Bartholomew Lane
London
EC2N 2AX
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Foxtons Group plc Annual Report and Accounts 2022
Foxtons Group plc
Building One
Chiswick Park
566 Chiswick High Road
London W4 5BE