Revenue from the group’s Alexander Hall broking arm was down five per cent to £1.9m in the first three months of 2020, compared to £2m in the same period of 2019, first quarter results showed today.
All Foxtons’ branches have been closed and around 750 employees furloughed, but the company did not specify how many of these were mortgage advisers.
The Covid-19 crisis impacted the final two weeks of the trading period and has torn up the original outlook for the remainder of the year.
“Uncertainty around the scale, duration and impact of the Covid-19 pandemic on London property markets means it is impossible at this time, with a reasonable degree of precision, to determine the impact on our performance, particularly for the remainder of the financial year to 31 December 2020,” the Foxtons statement said.
“Instead, we have analysed a broad range of potential scenarios, primarily based on assumptions of the period of lockdown restrictions in London and the time period that it might subsequently take for the residential sales and lettings markets in London to recover to more normal levels of activity.”
Foxtons’ lettings revenue fell by five per cent in the quarter, sales revenue was flat, with group revenue falling three per cent to £23m.
Commissions earned in the first three weeks of the ‘lockdown’ period were down by more than half on the prior year.
Worst case scenario
In a “reasonable worst case scenario” of lockdown until the end of August and a slow recovery of London property markets, the company said it could face a liquidity gap.
Therefore, the group is looking to raise £22m with a share sale worth 20 per cent of the business.
Nic Budden, chief executive, said: “The London property market has been severely disrupted by the necessary measures the country has taken to contain the Covid-19 pandemic.
“Notwithstanding our current strong financial position, the board considers it prudent to raise additional capital at this time to enable the company to maintain liquidity in a reasonable worst-case scenario and preserve vital business capability to support customers when the Covid-19 pandemic subsides.
“This is an extremely challenging period for everyone but our people have been amazing in responding and I am confident we have taken the right measures both for our stakeholders and the business so that we can emerge from this crisis with the capability and financial position to thrive.”