Foxtons this morning reported pre-tax losses of £2.5m in the first half of this year, after sales revenue plunged £17.2m – down 23%.
This time a year ago, it reported pre-tax profits of £3.8m.
Its group revenue in the six months to the end of June was £53m, down from £58.5m in the same period last year.
The performance meant a loss per share of 1.1p, instead of an earning of 1.2p, and there will be no dividend.
However, Foxtons said it continues to be debt-free, and as at the end of June had a cash balance of £11.8m. Its group adjusted EBITDA of £7.1m for the first half of this year turned to just £0.1m in the same period this year.
Its income per property sold rose very slightly, to £14,450. Lettings represented 60% of revenue, at £31.7m, but even this was slightly down on a year ago, when it stood at £32.1.
Foxtons also said that in the first half of this year, it invested £1m in technology company Propology, which provides white-label digital agency software – Foxtons said it may potentially leverage this in future.
CEO Nic Budden said: “The property sales market in London is undergoing a sustained period of very low activity levels with longer and less visible transaction outcomes, which clearly impacts our business.
“We continue, however, to achieve market leading share of listings giving us confidence that our service led, results based model remains highly relevant to consumers. Going forward we will continue to invest in our proposition to enable us to maintain our differentiation in the minds of buyers, sellers, landlords and tenants.
“Looking ahead, availability of mortgage finance, absorption of Stamp Duty costs, and the return of confidence to the market will, amongst other factors, determine the timing and rate of increased activity levels.
London though remains an important global city. Our franchise is well known and we remain debt free.
“Our ability continuously to improve quality, adapt our business models to underlying shifts – such as the expansion of digital capability and institutional investment in the private rented sector – and keep a tight focus on operating costs puts us in a strong position to benefit both from the momentum in our lettings business and to capitalise on increased sales activity as it returns. We remain confident of our long term prospects.”
High fixed overheads will no doubt be a worry, but an excellent cash poisition gives them time to sort themselves out.
There will be many in a much worse position.
Excellent average fee per sale. This must be under threat though.
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Foxton’s problems are a reflection of operating in one geographic location. When I was looking at some numbers 18 month ago some parts of London had transaction prices 23% over trend with volumes under tend by a similar amount.
When any market hardens up prices fall back faster than volumes recover.
These numbers aren’t a shock they are just down to Foxton’s local market conditions.
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It just goes to show that you should never take for granted how fickle this business can be. September 2013 the shares were trading at 230p valuing the company at £649m. The difference between profit and loss has always been a fine line for most of us.
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