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McGrath Limited has tumbled to a net loss after tax of $25.5 million, after announcing a trading halt earlier in the day and after a "media comment in relation to Mr McGrath" came to light.
Despite these challenging times, founder and incoming CEO John McGrath remains upbeat, saying that he is “proud and excited” to again be leading the business.
He said that despite the challenges the company has endured since listing, McGrath remains one of the best real estate businesses in Australia with outstanding talent throughout the group.
“Residential real estate is one of the largest industries in Australia, as well as being the country’s largest asset class, and we remain very well positioned to leverage our scale and quality brand for future success and growth.”
At a conference call with the media to present the group’s FY18 half-year results, CEO Cameron Judson revealed that the embattled real estate company’s woes continue, with revenue down by 23 per cent to $51.6 million, EBITDA down by 66 per cent to 3.2 million and with a statutory net loss after tax loss of $25.5 million.
Mr Judson said that the half-yearly earnings have been adversely affected by the underperformance of the company-owned sales businesses.
He said that given this underperformance, a review of the carrying value of the segment was completed, and it has led to a 21.8 million goodwill impairment charge.
Mr Judson also said that the company has completed the previously announced restructuring of the board, executive and corporate functions.
“These changes have delivered annualised savings of $5 million and a leaner organisational structure,” the CEO said.
“Other things being equal, this structure and cost base is consistent with the earnings guidance given on 22 January 2018.”
Mr Judson explained the trading halt as a “precautionary measure” in relation to speculation that new information about John McGrath has come to light.
He said that the board considers this to be a significant development and removing the trading halt is contingent on Mr McGrath providing more information.
Mr Judson added that this would occur in due course, when the matter is settled.
McGrath Limited also reported that it has $3.4 million in cash and held no bank debt, and that it’s national market share remains at 3 per cent.
Mr Judson said that the annuity, PM, franchise and Oxygen businesses have performed “largely to expectations”.
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