Last updated: March 11, 2014 4:26 pm

Foxtons announces special dividend as London house prices soar

Foxtons Estate Agents As Owner BC Partners Mulls Sale©Bloomberg

Foxtons has capitalised on the soaring London property market and unveiled a special dividend in its first annual results since returning to public markets in September.

The estate agent reported a 57 per cent rise in pre-tax profit in the 2013 calendar year as it pursued its aggressive expansion plans, opening seven branches, including Brixton. Foxtons floated last autumn, six years after it was sold at the top of the last UK housing boom by founder Jon Hunt to private equity group BC Partners for about £360m.

The company – famous for its fleet of green Mini Coopers – said its IPO, which raised £390m, had left it debt-free. Net free cash flow rose 41 per cent last year as sales rose by almost a quarter, with the average selling price at £493,000, compared with £475,000 in 2012.

Analysts at Credit Suisse said: “Clearly [fourth-quarter] house price and transaction momentum across London has substantially lifted Foxtons’ sales profitability.”

But Foxtons attributed the rise in sales to its expansion strategy and lamented what it called “somewhat lacklustre macroeconomic conditions” and a shortage of transactions throughout the UK, and in London in particular.

Average monthly sales transactions in the M25 region fell by two-thirds between July 2007 and June 2009, according to Land Registry and company data, and still lie about a third off the pre-crisis peak.

Meanwhile, house prices in London rose more than 12 per cent last year, according to official data – a function of restricted supply and the capital’s homes being seen as a haven by foreign investors.

This has prompted a sharp drop in home ownership in recent years, with increasing numbers of households being pushed towards the rental market.

Michael Brown, chief executive of Foxtons, said: “We expect the availability of housing stock for sale to be a key determinant of the level of growth in property sales transactions during the remainder of the year.”

The group hopes to counter any further slowdown in transactions by continuing its expansion – opening a further five branches in the first half of this year in locations including Stoke Newington – and relying on its lower-margin lettings business, which accounts for almost half of revenues.

Foxtons proposed a final dividend of 1.7p and a special dividend of 3.7p as part of a £15.4m payout. Earnings before interest, tax, depreciation and amortisation rose almost a third to £49.6m. The news prompted Numis Securities, the company’s house broker, to upgrade forecasts for this year’s ebitda by 10 per cent to £56m.

Foxtons said its mortgage broking arm, Alexander Hall, had finished the year with revenues up 42 per cent on 2012, thanks to “the beginnings of what we expect to be an improving mortgage market”.

The shares were up 0.2 per cent on Tuesday at 375.9p, having floated six months ago at 230p.

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