Results from London-focused estate and lettings agent Foxtons (FOXT) suggest reports of a demise for the capital’s property market may have been a bit premature, with the shares rising 2.4% to 60.4p.
Synonymous with the boom in London property prices in the last decade and more the company had endured a tough time even before the pandemic as the market cooled, although a strong balance sheet at least provided a measure of protection.
This balance sheet strength remains evident with net cash increasing from £15.5 million to £37 million year-on-year as at the end of 2020.
Alongside otherwise better than expected full year numbers the company said the improving performance seen in its second half had continued in 2021.
For 2020 as a whole, pre-tax losses narrowed to £1.4 million from £8.8 million as revenue fell to £93.5 million from £106.9 million.
Lettings revenue fell to £57.2 million from £65.7 million, sales revenue fell to £28.2 million from £32.6 million and mortgage broking revenue slipped to £8.1 million from £8.5 million.
BIG SECOND HALF RECOVERY
‘The spring lockdown forced the closure of our branches and head office for 10 weeks during the second quarter of the year, meaning revenues were severely constrained over this usually busy period,’ the company said. But performance recovered in the second half of the year and continued the trend in 2021.
‘Following the recovery of profitability in the second half of 2020, Foxtons’ financial performance has continued to improve into 2021,’ the company said. ‘Group revenue for the first two months of 2021 is well ahead of 2020 (and 2019) and continued tight cost control has resulted in significant growth in group operating profit over that period,’ it added.
Numis analyst Chris Millington commented: ‘In our view this is a robust update and it appears that Foxtons is building back market share, through organic and acquisitive means. This alongside improving market volumes is key to the group rebuilding profits ? given the initial c.80% drop-through margin in sales.’
