Foxtons' first year a success

Estate agent chain Foxtons has announced a special dividend after revenue and earnings growth for its first year as a listed company came in ahead of expectations.

Revenue grew by 16% to £139.2 million. Revenue was split evenly between sales and letting, which generated £67.4 million and £66.4 million respectively. Mortgage broking contributed a further £4.9 million. The strongest growth was seen in the mortgage broking business, up 31.9%. Lettings rose by 6.7% while sales rose by 22.5%.

The group also announced a final dividend for the year of 1.7p and a special dividend of 3.74p per ordinary share. It has a dividend policy of paying out between 35% and 40% of after-tax profits.

The group floated in September 2013 and these were its first annual results since returning to the public markets. It had previously been owned by private equity group BC Partners, who bought it from founder Jon Hunt at the height of the last UK property boom in 2007.

Foxtons said its future strategy would remain focused on the expansion of its branch network. The group has opened seven new branches over the past year, bringing the total to 44. It said all of these branches are operating in line with expectations. The group also plans to increase market share and improve profitability through economies of scale.

Analysis

Numis Securities analyst Chris Millington had forecast £37.4 million of pre-tax profit with the risk "firmly on the upside". The in-house broker has now upgraded 2014 EBITDA by 10% to £56 million and rates the shares an 'add'.

He says: "In our view Foxtons remains attractive given its potential to benefit from the reversion in housing transactions, its ability to self-finance its branch roll-out story whilst paying a strong dividend."

The shares were up 0.7p on Tuesday to 375.9p. They have had a strong run and are up around 40% since launch. The strength has partly been driven by the buoyancy of the London housing market.

However, Foxtons said that it would counter any potential slowdown with continued branch expansion.