31st Jan 2019 10:11
LONDON (Alliance News) - Foxtons Group PLC on Thursday said 2018 was one of its "toughest" years, resulting in a significant fall in earnings, and it expects challenging conditions to remain throughout 2019.
The estate agency said revenue for the three months to the end of December 2018 totalled GBP23 million, down 4.2% from GBP24 million reported for the same period in 2017. This resulted in revenue for 2018 of GBP111 million, down 5.9% from GBP118 million reported in 2017.
Adjusted earnings before interest, taxes, depreciation, and amortization for the year is expected to be GBP3 million, 80% lower compared to GBP15 million the year prior.
The reduction in adjusted Ebitda was driven mainly by the fall in sales volumes alongside planned increases in operating expenses, as the company said it has invested in its people, technology and brand.
In addition, Foxtons said it expects to recognise a non-recurring charge of GBP16 million, relating to the branch closures and goodwill in the sales segment.
The company said it considers this write-down to be an appropriate course of action given the prolonged nature of the current downturn in the sales market.
The branch closures and other cost saving initiatives undertaken in the second half are expected to deliver GBP3 million of cost savings during 2019, Foxtons highlighted.
On a divisional basis, the Lettings unit continued to deliver a consistent and recurring revenue stream for the company, with revenue for 2018 totalling GBP67 million, up 1.5% year-on-year. Lettings revenue in the final quarter of 2018 was GBP12 million, up 4% versus the prior year.
Revenue in the Sales division for 2018 was GBP36 million, down 16% year-on-year. Sales revenue in the final quarter of 2018 was at GBP9 million, down 10%, which was a solid performance amidst ongoing reduced transaction levels, Foxtons said.
The Alexander Hall mortgage broking unit revenue for the year was GBP8 million, down 11% from GBP9 million the year before, reflecting the wider sales market.
"Looking ahead, we expect trading conditions in the sales market to remain challenging throughout 2019," said Chief Executive Nic Budden.
"We have become accustomed to operating in these conditions and are well placed to withstand them given our leaner cost base and continued strong balance sheet with no debt," added Budden.
The company intends to report its 2018 results on February 28.
Foxtons shares were trading 0.7% lower on Thursday morning at 53.13 pence a share.
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