Against a backdrop of demanding market conditions, McGrath announced its FY16 first-half results. Unsurprisingly, they reflect the well-documented challenges the company has faced since launching an IPO more than a year ago.
Although McGrath reported an increase in market share in the first half of the 2016-2017 financial year – of close to 4 per cent against the same period in 2015-2016 – pro forma revenue was down 11 per cent to $67 million in the half. Pro forma EBITDA was down 37 per cent to $9.3 million and pro forma NPAT was down 72 per cent to $2.4 million.
However, statutory NPAT was up from $0.4 million to $2.7 million and the company ended the period with $5.3 million in cash and no bank debt.
McGrath CEO Cameron Judson said the recent loss of several sales agents, combined with low listings volumes and a drop in sales, created a “challenging market environment” for the company.
“Clearly the key asset we have in our company is our sales agents, and it was disappointing to lose the number of agents we lost over the December January period," Mr Judson told RPM sister title REB.
"The quality of some of those people will impact our earnings."
But he said the underlying strength of the McGrath business model allowed it to stay above water in the half, delivering a $9.3 million pro forma EBITDA.
Mr Judson also addressed the company’s annuity businesses in property management and franchise, which delivered revenue and EBITDA growth half-on-half.
“I would like to thank all of our team and franchise partners for their energy, commitment and dedication during what has been a challenging start to the year,” he said.
Mr Judson said McGrath is one of Australia’s largest residential real estate service companies, and it would continue to leverage the underlying strength of its brand and quality of its sales agents and network reach as it sets to recover lost ground.
“With a concerted, ongoing focus on talent identification, McGrath continues to attract, develop and retain emerging and high-performing sales agents,” he said.
“We have an unparalleled track record of growing and nurturing the best real estate agents in Australia, and have recently launched ‘McGrath Future’, a compelling remuneration and longer-term wealth creation framework specifically for high-performing agents.”
Mr Judson said McGrath has renewed its focus on improving productivity and performance, and is exploring new revenue opportunities.
“Our aim is to grow the relative contributions of our annuity businesses and de-risk the volatility of our earnings.
“We continue to take a disciplined approach to investment in the business to build long-term shareholder value.”
In the half, the company opened nine new offices. These include three company-owned offices in NSW and six franchise offices in NSW and Victoria, taking its network to 96 offices and 2,300 people.
McGrath declared a fully franked dividend of 1.0 cent per share to shareholders.