The group remains confident about prospects for the rest of
the year, to December (it would be astonishing if it didn’t, having floated only
several weeks ago): total turnover was up 18%, with revenues from property sales
29% higher.
But the group, which is focused overwhelmingly on the
capital and its environs, did “not expect to see a significant upturn in London
property sales transactions”.
A bit strange given the view expressed by many observers ahead
of the float (myself included) that its focus on the (supposedly) flourishing
London market was Foxtons’ Unique Selling Point.
Transactions, the statement explained, have “remained
relatively flat due to a shortage in the supply of property for sale and low
mortgage availability”. Furthermore, “it remains to be seen whether the Help to
Buy initiatives and early signs of a pick-up in mortgage activity ultimately
lead to a significant increase in market volumes but these dynamics are
expected to materialise slowly".
There was also a hint of reticence about margins. EBITDA
margins for the nine months to September were up to 36.0% from 33.2% a year
ago, reflecting the operational leverage associated with the higher revenue so
far. But margins for the final quarter would be lower, reflecting two new branch
openings, at Crystal Palace and Twickenham (along with the attendant Minis) and
the “higher on-going costs of operating as a listed company”. There was no “granularity” on how the margins
had progress during the three quarters so far this year.
Shares dipped by over 5% following the statement but recovered
ground by midday, suggesting management had soothed any concerns. But with
shares up 37% since the IPO in September, investors will be keeping their
fingers crossed that the tone of the next statement more faithfully reflects the
ebullience of the group’s flashy sales offices and racy Minis.
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