Foxtons FOXT illustrate the dangers of companies having all or most of their eggs in one basket and at the same time being ignorant of the fact that the housing market does not have a history of boom and bust. Group revenue fell by only 11% in the year to the end of December, after a marked step down in the second half, especially in central London but the effects on the company were serious.
In fact the results forced CEO Nic Budden to dive into the excuses drawer and see what he could come up with in an attempt to absolve management and the board. It was of course that well worn one “severely impacted” this time the impact being caused by “an unprecedented sequence of events”. Note that events are never unprecedented when their impact is favourable. Then the Board and the CEO usually blame it on their wisdom and management skills
Profit before tax fell by 54.3% and basic earnings per share by 53.7%. At the interim stage the Board had lacked the perspicacity to see what was happening in their industry and maintained the interim dividend at 1.67p meaning that when the pain came, it really hurt. The final dividend was cut by 90% from 3.34p to 0.33p meaning that the full years pay out was cut from 11p to 2p.
Trading conditions for 2017 are expected to remain challenging.
John Menzies plc MNZS admits to being yet another company which has been transformed in 2016 by the collapse of sterling. It does however also claim some management responsibility for its success in that after all these years, iot gives credit to the new management structure which is in place. The big winner in the group, due to sterling weakness, was Menzies Aviation.
Profit before tax for the year to the end of December rose by 30% and operating profit by 48%. On a constant currency basis the figures were still strong at 17% and 27% respectively. Shareholders are rewarded for managements success with a final dividend of 13.1p per share making a total rise for the year of 10%.
4Imprint FOUR is raising its final dividend by 57% in sterling terms for the year to the end of December, after a 12% rise in revenue and 10% in profit before tax. The company sees large and attractive market opportunities and there has been a satisfactory start to 2017.