McGrath offers insight into FY22 activities

Peter Lewis, McGrath chair, was first to address the network’s annual general meeting, held on Friday, 19 November, where he took the time to reflect on the company’s improved financial standing as a business-wide effort.

He said: “The commitment and leadership of our executives and all 2,000 of our team members have been key to the delivery of the group’s improved 2021 financial results.

“Evidence of this performance is in 17 McGrath agents featured in the annual Real Estate Business Top 100 rankings, with two in the top 10. Further, nine agents are listed in REB’s Top 50 Women rankings, with three in the top 10.”

Calling it “an extraordinary performance”, Mr Lewis went on to comment on the strong performance also seen in the Australian residential property market across 2021.

“Although there is always a level of uncertainty about future headwinds and market volatility, our company is in a strong financial position to deal with any such conditions and is well placed to consolidate our market-leading position, remaining dedicated to ensuring that rewarding times are ahead for all our stakeholders,” the chair concluded.

Shareholding changes

Coinciding with the meeting, it’s also been revealed that AL Capital, which currently holds approximately 17.5 per cent of issued shares in McGrath Limited, has indicated an intention to sell 3,592,000 shares – comprising approximately 2.15 per cent of the company’s issued shares.

The ASX statement outlined that Pacific Custodians Pty Limited, the trustee of the McGrath Limited Employee Share Trust (Share Plan Trustee) requires 2,244,000 McGrath shares to satisfy existing and future entitlements under the company’s long-term incentive plan.

As a result, the Share Plan Trustee has agreed to acquire that number of shares at the volume-weighted average price on the day of the sale.

It has also been confirmed that AL Capital has no current intention to sell any further shares in McGrath at this time beyond the 2.15 per cent.

FY22 update

McGrath has highlighted that it expects to achieve first half FY22 underlying EBIDTA to be in the range of $10 million to $11 million – representing a 60 per cent increase on the first half of FY21.

Despite that improvement, Net Profit After Tax (NPAT) over the six-month period is likely to be less than the first half of the prior year.

The ASX statement explained that the corresponding prior period included one-off abnormal items of at least $4 million, which had contributed to reported NPAT in that period.

Reflecting on the financial update, McGrath CEO Eddie Law said, “we are pleased with our first four month’s performance for FY22, achieved during a sustained period of COVID- 19 lockdown restrictions experienced across our eastern seaboard markets.

“We were able to successfully innovate many of our key processes through these lockdowns, conducting our business operations and transactions through advanced technology and digital solutions.” 

Some of these solutions included live-streamed auctions and virtual property inspections.

“Ultimately, our goal through all of this has been to keep our people and communities safe, and it has been inspiring to see how well our network and our clients adapted to the online environment throughout the lockdowns,” Mr Law expressed.

“The fundamentals of the property market remain strong, with liquidity and low-interest rates driving buyer demand. As we emerge from the COVID-19 lockdowns, we expect supply will increase over the coming months. Buyer demand may become constrained by affordability, helping to moderate some of the strong price gains we have seen. Our business is well-positioned for long-term future growth.” 

McGrath has indicated to the ASX that the full results for the first half of FY22 will be announced to the market on 21 February 2022.

FY21 financial results

At the AGM, the ASX-listed entity again highlighted its 34 per cent increase in revenue for FY21 to $122.4 million – while net profit was up by $18.3 million. 

The network has reported revenue of $122.4 million for the 12-month period – an increase of $30.7 million – or 34 per cent year-on-year.

Underlying EBITDA is now at $17.7 million – a $14 million increase from FY20.

All in all, McGrath recorded a $19 million statutory net profit, a growth of $18.3 million compared to the FY20 year.

Mr Law said the company’s balance sheet remains strong – and lends itself to the payment of a final fully franked dividend for the year.

“In the period, we have increased our cash balance to be $35.8 million as at 30 June 2021 with zero external debt. Off the back of this profit performance and solid financial position, we were pleased to pay a final fully franked dividend for the year of ¢1 per share in September 2021. This resulted in a ¢1.5 fully franked dividend per share declared for FY21,” he confirmed.

Looking ahead

The CEO also doubled down on the future focus, highlighting once again six areas in which McGrath is looking to deliver growth over FY22 and beyond, as previously reported on by REB and again outlined below:  

1. Agent productivity, attraction and retention

Implementation of growth strategies to improve productivity, attraction and retention.

2. Digital

A focus on digital service initiatives and leveraging off the success of data-centric approaches.

3. Property management

Mr Law expressed the belief that “there is further growth in the property management division with the revitalisation in this business from focusing on the overall customer experience”.

4. Projects division

According to the CEO, enhancement of the projects division will promote access third-party capital, and therefore increase their relevance in the space.

5. Growth in mortgage home loans

McGrath is looking to achieve enhanced scale and optimisation of Oxygen Mortgage Home Loan business by partnering with financial services and technology consortium

6. Industry consolidation

Mr Law sees many industry consolidation opportunities remaining in the industry, stating it remains “a highly fragmented sector”.