Foxtons Group Plc. (FOXT.L) reported Wednesday a surge in first half profit with higher margin and revenues, and announced a maiden interim dividend and a special dividend. Looking ahead, the real estate agent expects the growth in transaction volumes to slow from the rapid rate seen in the first half. The shares declined around 6 percent in the early morning trading in London.
For the first half, profit before tax increased 57.1 percent to 23.1 million pounds from 14.7 million pounds last year.
Profit for the period improved to 18.17 million pounds from 11.14 million pounds in the prior year. Earnings per share were 6.4 pence, up 48.8 percent from 4.3 pence last year.
Group revenue climbed 16.2 percent to 72.8 million pounds from 62.6 million pounds, driven by strong sales and mortgage broking growth.
Group Adjusted EBITDA, a key earnings metric, up 28.7 percent to 24.9 million pounds from 19.4 million pounds last year. Group adjusted EBITDA margin grew 330 bps to 34.3 percent as the benefits of branch expansion and centralised support continue to flow through.
The company noted that its organic expansion strategy, together with improving market share in more mature branches, helped drive performance in estate agency business, resulting in a growth of 19.6 percent in property sales volumes.
In the lettings market, demand has naturally been dampened by a particularly strong sales market leading to broadly flat revenue. Meanwhile, Alexander Hall, the firm's mortgage broking arm, has continued the strong performance with revenue up 46.8 percent.
Nic Budden, CEO, said, "The combination of higher sales and mortgage volumes, together with the efficiency of our operating model has led to a significant increase in revenue and profits."
Budden added that performance, together with its strong cash flow generation, has enabled the firm to declare a special dividend in addition to its maiden interim dividend.
For 2014, an interim dividend for the year of 1.77 pence and a special interim dividend of 2.77 pence per ordinary share will be paid on September 26, to shareholders on the register on September 5.
Our five newly opened branches were delivered on time and to budget and are performing in line with expectations.
Looking ahead to the second half, the company expects the growth in transaction volumes to slow from the rapid rate seen in the first half as the policy initiatives introduced in 2014 aimed at controlling mortgage lending, together with the expectation of increases in interest rates, are now having an impact on short term demand among buyers.
In London, Foxtons shares were losing 19.06 pence or 6.48 percent, and trading at 275.24 pence.
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