Onthehouse Holdings has appointed a new boss – and his first major challenge will be to offload part of the company.
Following a strategic review Onthehouse has decided to divest its loss-making Consumer Online division, which includes onthehouse.com.au and data assets.
Consumer Online consumes about $7 million in cash per year and was connected to recent pre-tax impairment charges of $10.5 million, which led to a $9.1 million half-yearly loss for the company.
However, it will be business as usual for Real Estate Solutions, a division that provides software for agents, and which generates about $9 million in free cash per year.
Onthehouse said one reason for the restructure is that there are limited synergies between the two businesses, which means they will operate more efficiently with different owners.
They will now have separate strategies, although they will continue to share data via licence agreements.
Consumer Online will be turned into a joint venture to be chaired by Onthehouse’s largest shareholder, Michael Dempsey, and in which Onthehouse will maintain an interest of between 30 and 49 per cent.
Mr Dempsey said Onthehouse was in discussions with several potential joint venture partners, with the new entity expected to be launched in about six months.
The Onthehouse board believes Consumer Online is likely to improve under a new owner, which is why it wants to retain a stake in the business.
The restructuring is also expected to give Real Estate Solutions the chance to reach its full potential, given that it will no longer have to fund a loss-making operation.
Onthehouse chairman Tony Scotton said the company would use Real Estate Solutions revenue to fund a next-generation, software-as-a-service platform.
“This project has already commenced and it is a key priority to the board,” Mr Scotton said.
Meanwhile, former Domain Group general manager Chris Meehan has been confirmed as Onthehouse’s new chief executive, a role he has fulfilled in an interim capacity since February.
“Chris has a track record of success in technology businesses, having been in charge of domain.com.au from 2000 to 2006 and the ASX-listed travel.com.au before it was sold to Wotif,” Mr Scotton said.