FRANCHISE NEWSNEWS

McGrath celebrates stellar financial turnaround

McGrath has finished the 2021 financial year on a high, announcing an $18.3 million turnaround on its previous financial year results.

This morning, the McGraph group reported net profits of $19 million for the year ending June 30, compared with a profit of $0.7 million for the corresponding period last year.

They also reported a revenue increase of 34 per cent to $122.4 million, and revealed a final dividend of 1 cent per share.

Making the announcement on the Australian Securities Exchange (ASX) earlier today, the group noted the “significant improvement” was highlighted by a $14 million rise in underlying earnings before interest tax depreciation and amortisation (EBITDA) to $17.7 million.

“The underlying EBITDA result is at the top end of the guidance range provided at the company’s trading update on 26 April 2021, and excludes the $2.1 million worth of government COVID-related grants, a $2.2 million gain on the conversion of the Parramatta and Blacktown businesses to become a collective franchise and a $3.1 million gain on the part divestment of the Oxygen home loans business,” the group stated.

McGrath’s revenue rose 34 per cent from $91.6 million to $122.4 million for the 2021 financial year. They also enjoyed a 38 per cent rise in sales per agent for the period, despite total lower listing volumes in the market.

Chief Executive Officer of McGrath, Eddie Law, said the group’s business model had helped drive the results.

“McGrath’s unique business model of combining the strong annuity style income derived from property management and franchise operations, alongside our company owned sales offices, is delivering strong results,” Mr Law said.

“We note that positive market sentiment, price stability in McGrath’s key markets and strong clearance rates contributed to our sales businesses performing significantly better in FY21. Our property management business continues to contribute solid results.

“The residential property market has proved to be very resilient during the ongoing COVID-19 pandemic, compared with other sectors.

“Notwithstanding the challenges during the ongoing COVID-19 pandemic and continued lockdowns, McGrath has demonstrated our ability to continue to transact successfully and efficiently in servicing our clients.”

Mr Law also noted McGrath remains optimistic about the future and the strength of the economy, with the group anticipating the economy would rebound quickly once high vaccination levels allow businesses to resume operation and international borders reopen.

“Naturally the pandemic has highlighted a re-calibration of lifestyle choices that will continue to impact the residential market,” Mr Law said.

The group’s continued business improvement initiatives and growth strategies include:

• Implementation of growth strategies to improve agent productivity

• Continued traction from data centric website and other digital solutions

• Revitalisation of the property management businesses, with a focus on improving the overall customer experience

• Projects division capability and relevance to developers enhanced with the execution of an alignment agreement with a third-party capital provider.

• Enhanced scale and optimisation of mortgage home loan business by partnering with a financial services and technology consortium.

• Industry consolidation opportunities to complement existing businesses

McGrath closed off the period with no borrowings, $35.8 million in cash and $47.9 million in disclosed net assets.

The company noted management’s valuation of the rent roll was estimated at $48.9 million at balance date, of which $36.6 million is not reflected on the balance sheet.

“We are particularly pleased with our performance across the multiple markets in which we operate and our business improvement initiatives across our business segments contributed to our overall results,” Mr Law said.

“We acknowledge there may be some COVID related volatility, however the fundamentals of the property market remain strong.

“Despite sporadic lockdowns throughout various states, the first eight weeks of the new financial year have seen trading in line with our expectations and our business well positioned for long-term future growth,” he concluded.

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Cassandra Charlesworth

Cassandra Charlesworth is a features writer for Elite Agent Magazine with over 15 years’ journalism experience in metropolitan and regional newsrooms. She has a specialist interest in real estate, tech disruption and a good old-fashioned “yarn”.