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McGrath back in the black with $9.1m turnaround

McGrath Real Estate Group is back in the black after announcing a $9.1 million turnaround in its net profit after tax, posting NPAT of $8.1 million for the first half of the 2021 financial year.

This compared with a loss of $1 million in the previous corresponding half year.

The turnaround, highlighted by a $5 million rise in underlying EBITDA to $6.6 million, which was at the top end of the guidance range provided by the company at its Annual General Meeting on November 26 last year, has allowed a return to the payment of a fully franked interim dividend of 5 cents a share.

This underlying EBITDA result excludes both the $2.1 million worth of Government COVID-related grants and a $1.9 million gain on the conversion of the Parramatta business to become a franchise.

The group posted a 16 per cent lift in revenue to $56.7 million for first half FY21 and a 23 per cent rise in sales per agent for the period, despite lower listing volumes in the market.

McGrath said positive market sentiment, price stability in key markets and strong clearance rates, despite lower listing numbers, contributed to sales businesses performing significantly better in the first half of FY21. 

It said its property management business also continued to contribute solid results despite volatility in the rental market due to COVID-19.

McGrath CEO Eddie Law said the residential property market had proved to be resilient during the ongoing COVID-19 pandemic compared to other sectors.

“Cashed up homeowners, many of whom are prevented from travelling either domestically and internationally, are now largely working from home and as such, are reassessing their lifestyle and surroundings,” Mr Law said. 

“This is positive for our industry as it results in homeowners either transacting or improving the asset value of their current home.

“We are very pleased as foreshadowed at the AGM, to return to the payment of dividends to shareholders as the business continues to recover and grow”, he added.

McGrath finished the period with no borrowings, $24.6 million in cash and $38.1 million in disclosed net assets. 

The company noted that its rent roll has a market value estimated to be worth $50.6 million at balance date, of which $36.9 million is not reflected on the balance sheet. 

The group’s board declared the 0.5 cent per share fully franked interim dividend would be payable on March 23.  It will be the first dividend the group has paid since 2017.

Mr Law said the combination of improving consumer sentiment, record low interest rates, limited listings in the market and the emerging COVID vaccine rollout had combined to deliver strong price growth in recent months. 

“The first seven weeks of the new year have started positively and we are optimistic for the second half, with the McGrath business well-positioned for long-term future growth,” he said.

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