Foxtons’ shares fell on May 20 as they announced a substantial drop in sales revenue for the first three months of the year, and the shock departure of its Chief Financial Officer, Mark Berry.
This was accompanied by a shareholder rebellion in reaction to the bonuses awarded to senior management.
Foxtons revealed that their revenue had hit a historic low during the first three months of the year, with a drop of £1.1 million. Revenue for the end of the first quarter of 2019 stood at £23.8 million compared to £24.5 million in the same period of 2018.
Sales revenue was £7.1 million, down from £8.2 million, while lettings revenue was up slightly from £14.3 million to £14.6 million. Mortgage revenue held firm at £2 million.
A statement from Foxtons said: ‘Revenue in the sales business declined as conditions in the London property market remain very challenging’. The organisation went on to blame Brexit for market uncertainty in its statement: ‘Sales volumes continue to be at record low levels and ongoing Brexit uncertainty is impacting consumer confidence.’
While Foxtons revealed that it had a net cash balance of £15 million at the end of March, compared to £12 million at the same time the previous year, this was a fall from the £17.9 million held at the end of 2018.
Berry, who was also an executive director of the company, had held the position of CFO of Foxtons for just two and a half years, having joined the organisation from Hays, where he had spent a long period of his career.
Berry will maintain his position until the end of July but will step down from the Board on 24 June. The company have said that he ‘will receive a payment of three months’ salary as a notice period payment and in lieu of any bonus earned for full year 2019. The share options awarded to [him] in 2017 will be pro-rated for time, subject to existing performance tests.’
He will be replaced by Richard Harris, who will join the organisation in June. Harris was previously Group Financial Controller at electronics company Laird plc and, prior to that, spent eleven years at Marks and Spencers plc, in a variety of senior finance roles.
Garry Watts, chairman of Foxtons, said: ‘I would like to thank Mark for his substantial contribution over the past two and a half years, during which time the business has undergone a period of rapid change and development.’
Foxton’s AGM was accompanied by more turmoil, as shareholders objected to the remuneration packages awarded to the firm’s bosses.
While thirteen of the fourteen resolutions passed easily with agreement ranging between 94.76% and 100%, resolution 2 ‘to approve the annual statement from the remuneration chairman and the remuneration report,’ was supported by just 78.37% of shareholders.
Chief Executive Nick Budden and Mark Berry were awarded a bonus of £389,000, an increase from £371 the previous year, despite the company’s fall in revenue and share value. Budden earned, in total £910,000 while Berry received £480,000 for the year.
On Friday, Foxtons’ share price closed at 50p. They began the day with a fall of 6.5% but rallied slightly to finish at around 57p, a drop of 5%. This is in dramatic contrast to five years ago, when it stood at just under 330p.
House prices in inner, outer and Greater London have fallen compared to the same time last year. In inner London, prices have fallen an average of 3.8%, while in outer London they have fallen by almost one percent.
Homes in Greater London were, on average, 2.5% cheaper, a fall of £16,157. The average cost of a home in Greater London is now £621,589.