Foxtons increases dividend but house broker cuts forecasts

Foxtons proposed a final and further special dividend after a solid year of revenue growth and margins stability despite an 11% decline in property transactions in its London heartland in 2015.

A trading update from the group, which dropped out of the FTSE 250 in December, revealed that revenue rose 4% to £150 on a 4% increase in volumes and 32% sales growth from mortgage broker Alexander Hall.

It added that the sales pipeline for 2016 was "encouraging".

Foxtons said a particularly encouraging performance in the second half of the year, with margins had remained over 30% and it now expects group adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) would be in line with last year's £46.2m.

This is short of forecasts from house broker Numis of £47m, which cut its 2016 Earnings before interest, tax, depreciation and amortisation forecasts to £50m from £52m to reflect the slight shortfall versus its estimates and continued uncertainty surrounding London transaction volumes, which were down 18% in Central London in the first 10 months of last year.

The final and further special dividend will total 6.23p per share, bringing the full year dividend to 11.0p per share, an increase of 13.4% on 2014.

Foxtons added that December's share buyback programme, and any future buyback programmes, were not intended to lead to a change in its dividend policy.

"Although it is too early to predict residential property sales transaction trends for 2016 the company enters 2016 with an encouraging sales pipeline, a strong lettings book and a proven strategy for further growth through organic branch expansion," it added.

Numis argued that despite the reduction in estimates, it believed the second-half performance was "a creditable performance in light the depressed nature of London transaction volumes".

Shares in Foxtons were up 1.8% to 167.5p by 0925 GMT on Wednesday.