Foxtons Reports Strong Revenues for Q1, Advances Acquisition Strategy

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Summary

  • Foxtons invested £3 million to acquire a stake in Boomin, a next-generation property venue.
  • The company’s first-quarter sales surged by 24 per cent year-on-year to GBP 28.5 million
  • Revenue from lettings increased by 6 per cent to £14.8 million.

London-based real estate company Foxtons Group Plc (LSE: FOXT) has recorded strong revenue for the first quarter ended 31 March 2021, the company announced on Wednesday. Not only there was strong growth in revenue, but the company also advanced its strategy during the reported period through the acquisition of Douglas & Gordon, a leading London agent and making further investment in data and technology. From the date of purchase, Douglas & Gordon company contributed £1.0 million in lettings sales to the company.

Q1 Financials

  • The estate agent reported a strong start to 2021, with first-quarter sales surging by 24 per cent year-on-year to GBP 28.5 million.
  • Revenue from lettings increased by 6 per cent to £14.8 million as compared with £13.9 million in Q1 2020. During the reporting period, rents in London remained under pressure, falling by about 12 per cent, but this was partially offset by increased volumes.
  • Sales increased by 60 per cent to GBP 11.4 million (Q1 2020: GBP 7.1 million), owing to sustained volume growth and a GBP 0.8 million contribution from Douglas & Gordon. The sales commission pipeline continued to expand during the quarter, despite the fact that it delivered materially higher levels of exchanges.
  • Mortgage broking sales increased by 20 per cent to GBP 2.3 million (Q1 2020: GBP 1.9 million), owing to increased new transaction operation.
  • After the GBP 14.25 million purchase of Douglas & Gordon, the Group's net cash balance as of 31 March 2021 was GBP 22.3 million, excluding lease liabilities.

Nic Budden, Group Chief Executive Officer, Foxtons commenting on the development, stated-

Acquisitions

Soon after the completion of the reporting period, Foxtons had put in £3 million to acquire a stake in rival company Boomin, a next-generation property venue, as part of its strategy to stay at the forefront of technological change in the property industry.

According to media reports, Channel 4 and Mortgage Advice Bureau are also participating in the deal to buy a stake.

Prior to that, in March, the company had bought the entire stake of Douglas & Gordon Estate Agents Limited ('D&G') and its subsidiaries for £14.25 million on a cash and debt free basis.

Douglas & Gordon, established in 1958, is a high-end London estate agent and a sizable lettings company that accounts for about 65 per cent of total revenue from 2,900 tenancies.

Furlough scheme

 

During the first lockdown last year, the government implemented the furlough scheme, which required employers to keep paying workers even when they were unable to work, a majority of which was to be compensated by the government.

Although Foxtons’ first quarter one of the best and mainly driven by company's acquisition strategy, but it remained silent on paying back the taxpayers money claimed through the furlough scheme. Foxtons is facing calls to return the £4.4 million of taxpayer money, it had claimed under the scheme.

Countering the demand that it has spent millions into buying the companies, including Boomin and D&G, and is not returning taxpayers money, the company has stated that it is under no obligation to repay the funds, and that the assistance helped the company escape layoffs when the UK property market collapsed last year. The money was paid directly to employees, not the corporation, according to the department, it added.

Foxtons’ Share price

Shares of Foxtons Group Plc, after a positive start at GBX 68.00 were trading lower by 1.19 per cent at GBX 66.20 at the time of writing this article (12:32 PM GMT+1). The stock with a market capitalisation of GBP 218.16 million has given a YTD return of 20.36 per cent.


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