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McGrath Limited has taken a modest step forward in its turnaround ambitions, posting a $5 million-dollar profit for FY18 amidst tightening market conditions, making good the guidance it previously provided.
For the 12 months to 30 June 2018 the company delivered an underlying EBITDA of $5.0 million, although revenue was down 23 per cent to $99.2 million.
In an exclusive results presentation webinar to the media this morning, McGrath reported that the results reflect the impact of a one-off restructuring cost of $4.0 million and impairment charges of $59.4 million.
It also reported that its balance remained liquid with no debt and $10.9 million cash in the bank, and that despite the well-documented departure of a clutch of its top performing sale agents, it has maintained market share at 3.1 per cent.
McGrath Limited said that it is important to note that the company’s core fundamentals are robust. It said it has one of Australia’s leading sales agent teams, brand, customer service offering and network reach.
“Decisively responding to the challenges faced, the new board and management team have put in place an operational plan that is stabilising the business, with early signs of positive momentum repositioning the business for a return to growth.”
Turnaround
CEO Geoff Lucas said there is a new momentum developing.
“With the new board and senior leadership team settled in, the last quarter of FY18 saw the beginning of a period of stabilisation, and we are in the midst of a business turnaround.
“We are already seeing good progress in culture and agent recruitment, and critically we are seeing some strong sales results within our key markets.”
Mr Lucas said the first area of focus has been to the stabilise the business, to reduce the churn.
“We have done that by increasing the focus on the communication and also in terms of supporting and building a support environment of productivity,” he said.
He said that was followed by a concentrated effort on recruiting new agents.
“We are quite selective in who we look to join our organisation, but it’s about dialing up an increase in the focus on our recruitment activity.
“This is a really important part of the business, and our leadership team are all charged with doing that – making contact and talking to people about the future.”
Mr Lucas added that the company is also concentrating on improving its learning and development infrastructure.
“You know McGrath for a long time has been seen as the leader in terms of education and so that has also been a very strong focus of ours,” he added.
“We have recently appointed a new head of learning and development and so we are strengthening the program, so that when people come to McGrath they know that they are going to be afforded then best training to make them as successful as possible.”
Performance
Mr Lucas said McGrath is looking to attract both new to industry and existing industry talent.
“Predominantly agents that do show promise or a record in their respective markets,” he said.
“But we have always been successful in attracting new people to the industry, and in putting them through our education process and most importantly, giving them access to our team of existing successful agents.”
He added that there are recruitment targets in place.
“We have a disciplined focus on this and have specific targets that we have charged our leadership team with, and through to their sales management team they have a very clear path to where we expect to move to.
“Now I am not at liberty to disclose those, but as I have said in the announcement earlier we are pleased with the modest progress that we have started to make, and we think that will continue.”
Against some rumours of some earlier agents looking to return to McGrath, Mr Lucas was circumspect in his choice of words.
“We see the agent pool as being very broad so we don’t focus on any one particular sector or group.
“Moreover, we are looking for agents that we think fit our philosophy, and so we don’t specifically target any particular group or organisation.”
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