Turnover at Foxtons, the London estate agency, fell 12.1% in the final quarter of last year, but was up 3.4% for the full year.
In its trading update for the year ended 31 December 2014, the group said the fourth quarter fall was due to reduced property sales commission more than offsetting growth in lettings commission.
Foxtons reported that the residential property sales market continued to be subdued in central London, with volumes consistent with those seen in late 2012 and early 2013.
Despite Q4 sales commission being down 25.7% on the comparative period last year when the London sales market was operating at its highest level since 2008, full year sales commission of £70m was 3.6% up on prior year. As indicated in its October 2014 Interim Management Statement (IMS), Foxtons does not anticipate a recovery in sales volumes until after the General Election in May.
Residential lettings improved significantly during Q4 with growth in volumes leading to a 7.7% increase in lettings revenue versus the same quarter last year, which exceeds the long term growth trend of 6%. Full year lettings revenue was 1.5% up on the prior year. The lettings business accounts for approximately half the group’s revenue and continues to deliver a steady income stream.
The group anticipates full year adjusted earnings to be in the region of £46m, compared to £49.6m. Adjusted earnings margin is expected to be above 30%.
In its statement Fostons said: “The long term fundamentals of the London market remain sound. We are firmly committed to our organic growth strategy which will see between five and ten new branches each year. All our new branches are performing as we expected, with many of those branches located in areas outside the centre of London showing growth and having average selling prices that benefit from the recent stamp duty changes.”
Depsite the fall in turnover Foxtons remains profitable, cash generative and debt free. In September 2014 the company paid an interim and special dividend totalling £12.8m (4.54p per share (net)). At the Annual General Meeting on 20 May 2015, the company will propose a final and a further special dividend payment totalling £14.5m (5.16p per share (net)), resulting in total dividends declared in respect of 2014 of £27.3m (9.70p per share(net)). The final dividend, if approved by shareholders, will be paid on 29 May 2015 to shareholders on the register at close of business on 1 May 2015.
Foxtons’ shares fell 5.29% to 161p in early trading.