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Foxtons under pressure to repay furlough cash

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·3-min read
A Foxtons estate agent's 'To Let' sign seen outside a residential property in London. Photo: Dinendra Haria/SOPA/LightRocket via Getty
A Foxtons estate agent's 'To Let' sign seen outside a residential property in London. Photo: Dinendra Haria/SOPA/LightRocket via Getty

London estate agent Foxtons (FOXT.L) is facing pressure to hand back £4.4m ($6m) of taxpayer cash claimed under the furlough scheme as it pays out millions of pounds to shareholders.

Foxtons announced financial results on Wednesday, showing its best bottom-line performance since 2017. The company managed to narrow losses and turn an underlying profit despite the pandemic, crediting "decisive management action as well as government support".

Chief executive Nic Budden told the Financial Times Foxtons has had the busiest start to the year since 2016 and predicted momentum would continue as Britain continues to unlock. Shares in the business surged 10% on the update.

READ MORE: Page Group plans to pay back furlough cash even as profit tumbles

Foxtons announced a £3m share buyback in December and has so far handed £1.8m to investors. Last week the company also bought rival estate agency Douglas & Gordon for £14.25m.

Foxtons made no mention of repaying furlough cash in Wednesday's update. The accounts show Foxtons claimed £4.4m through the scheme. A spokesperson for Foxtons declined to comment on whether the company intended to repay furlough cash in future.

Darren Jones MP, chair of the Business Energy and Industrial Strategy Committee, said businesses like Foxtons should repay government cash before making payouts to investors.

"As the business committee has said time and time again, business leaders need to act in good faith when using taxpayers' money during the pandemic," Jones told Yahoo Finance UK.

"We have called out businesses who have passed on taxpayers' money to shareholders, instead of using it to keep workers in their jobs or returning it to the Treasury if it’s no longer required."

READ MORE: 125,000 UK employers have handed back £700m in furlough grants

Foxtons said it was "very grateful" for state support, which helped it avoid "lots of short-term redundancies" during an "extremely challenging year." The company said it "used it as it was intended and for as shorter time as possible".

"We didn’t just rely on government help to keep the business viable," a spokesperson said. "We made our own cost savings of some £9m, including pay reductions for the highest paid in the business.

"We also raised more than £20m from shareholders to help us through lockdown and provide a cushion against further closures which fortunately did not materialise.

"We therefore had excess capital, so much later in the year, with the business trading again and with more confidence about the future, began returning some of this to our shareholders in the form of a £3m share buyback.”

Foxtons pointed out it was still loss-making and did not plan to pay a dividend.

"Our furloughed staff received money directly from government during this period and as such there is no surplus to repay," the company said.

READ MORE: Rishi Sunak extends furlough until September

Businesses are under no obligation to repay furlough money but many have chosen to do so. Yahoo Finance UK reported last week that 125,000 employers have now returned £700m in furlough grants.

Balfour Beatty (BBY.L) on Wednesday became the latest major business to announce furlough repayment, saying it would hand back £19m. The announcement came as the construction group reinstated its dividend. Other businesses like Halfords (HFD.L) and recruiter Page Group (PAGE.L) have also publicly pledged to return cash.

Jones said the chancellor should "explore powers to claw back money when businesses see Covid related support as a commercial opportunity instead of a necessity during a national emergency."

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