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The ASX-listed company increased its EBITDA by 60 per cent in the first half of the 2022 financial year, up to $10.6 million, placing it in a prime position to “capitalise on future growth opportunities”, according to chief executive Eddie Law.
In the year ahead that will reportedly include investing in tech-focused adjacent entities, as well as itself – the company will commence a share buy-back program on 28 March that will last up to 12 months.
Chair Peter Lewis explained the move to company shareholders.
“We have extensively surveyed the Australian residential real estate industry for acquisition opportunities and right now we believe that the best asset available to us for investment is McGrath share scrip at these levels,” Mr Lewis said.
The company ended the period with a 5 per cent increase in revenue, bringing the total to $59.4 million. It reported no borrowings, $41.3 million in cash and $50.8 million in disclosed net assets. The estimated market value of its rent roll sits at just over $50 million, of which $36.6 million is not reflected on the balance sheet.
M Law said the board was pleased with these results, especially given the roadblocks encountered during the period.
“The performance of the group continued to be very strong despite the operational challenges presented by COVID restrictions. The number of properties sold by the McGrath network rose 13 per cent to 7,797 properties, with the value growing 42 per cent to $10.8 billion, during the half year,” Mr Law said.
The positive growth led the company to declare a 1.0c per share, fully franked interim dividend, payable on 23 March 2022.
Capital gains reported during the 2021 financial year totalling approximately $5 million – owing to the partial selldown of the Oxygen Home Loan business and the sale of their Parramatta office – allowed McGrath to announce an additional, one-off special dividend of 1.5c per share, fully franked, also payable on 23 March 2022.
The high level of cash reserves and current McGrath share price, coupled with what the board sees as limited investment opportunities, motivated them to allocate $2.5 million for the buy-back.
But McGrath founder and executive director John McGrath noted that they are keeping a keen eye on the tech space for future growth and investment, following a $6.5 million deal with digital insurance startup Honey Insurance.
“We strongly believe in the ongoing digitisation of the real estate sales process to remove friction, speed up the process and deliver both buyers and sellers a better outcome,” Mr McGrath said of the company’s interest in the sector.
“We are committed to both investing in what we believe are the best tech platforms and also developing bespoke technology internally to achieve this. The future will belong to the companies that bring together the very best people with the very best technology.”
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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