A relatively robust lettings market was not enough to counter a continued fall in sales revenue for London based estate agent Foxtons (FOXT). For much of 2018 it was very much a case of battening down the hatches and waiting for the market to improve.
However, little positive progress is likely to come from a subdued sales market where transactional volumes remain weak. Profits were also trimmed by a decision to launch an advertising campaign as well as investing in new technology. Sales revenue fell from £42.6m to £36.2m, while transactions dipped from 2,962 to 2,529. Management also took the decision to close six branches, incurring a cost of £5.9m, although no further closures are planned.
However, the lettings side of the business performed well given the uncertainties in the market, and revenue grew slightly from £66m to £67m. But there is concern over the effects of the ban on tenant fees that becomes law in June this year.
While the outlook remains bleak, Foxtons remains highly cash generative with a cash conversion rate of 118 per cent. There is no debt on the balance sheet, and cost synergies are expected to save £3m.
Analysts at Numis are forecasting pre-tax losses for the year to December 2019 of £3m and a loss per share of 0.89p, from losses of £3.5m and 1p, respectively, in 2018.
| FOXTONS (FOXT) | ||||
| ORD PRICE: | 60.9p | MARKET VALUE: | £ 168m | |
| TOUCH: | 60.4-61.4p | 12-MONTH HIGH: | 85p | LOW: 45p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 45p* | NET CASH | £17.9m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 144 | 42.1 | 11.9 | 4.9 |
| 2015 | 150 | 41.0 | 12.3 | 5 |
| 2016 | 133 | 18.8 | 5.7 | 2 |
| 2017 | 118 | 6.5 | 1.9 | 0.7 |
| 2018 | 112 | -17.2 | -6.3 | nil |
| % change | -5 | - | - | - |
| Ex-div: | - | |||
| Payment: | - | |||
| *Includes intangible assets of £110.8m, or 40p a share | ||||
