Headline Grabbing McGrath Posts Big Loss
Get More Commentary, Discussion & Market Information On -
For such a small, insignificant company, real estate group McGrath continues to generate a lot of publicity - all of it bad. Yesterday we saw a big loss, big fall in revenue, a results briefing cancelled and then trading in the shares halted at the company’s request, which is quite a mouthful for just one day.
The company listed in December 2015 at $2.10. The shares, before the trading halt yesterday had fallen to 42.5 cents. That valued it had just $57 million. it it a small company made smaller by all the bad publicity and underperformance.
First up yesterday it revealed a first-half net loss of $25.5 million, due to significant impairments and a poor performance by the company-owned sales business.
That consisted of a $21.8 million hit in goodwill and a $1.1 million goodwill impairment of its Property Management rights.
Revenue for the six months to December 31 slumped 23% to $51.6 million, there’s no interim dividend
Then the company had its shares suspended; called off a results briefing and said it would be making a statement by next Monday addressing recent media speculation about incoming executive chairman and founder John McGrath.
The speculation about Mr McGrath is that he owes $16 million to a bookmaker, and there are also reports his shares in the company could be pledged as collateral. ‘'The reason for the trading halt is a pending announcement regarding recent media comment in relation to Mr McGrath," the company said yesterday.
"The event that will end the trading halt is the company issuing an announcement by Mr McGrath."
Mr McGrath has been in the news recently, after Fairfax Media reported the gambling debt to a betting company run by bookmaker Tom Waterhouse (William Hill), prompting shares in McGrath Ltd to fall sharply. He has denied having any gambling debt.
The ASX is looking at the collateral claims. The company has disputed claims Mr McGrath has a $100 million margin-lending facility attached to his shares in the company.
McGrath’s chair and CEO the entire board, except Mr McGrath, last month announced plans to quit the company after its lower than expected earnings were leaked to the media.
The group on Thursday said chief executive Cameron Judson and chief financial officer Morgan Sloper would leave the company at the close of business on Friday.
Fairfax Media reported yesterday that Mr Judson said during another investor call yesterday“The company has become privy to further information, which I can’t comment on, and is seeking urgent clarification from John McGrath,”
"The board has considered this trading halt a significant development and let me assure you they have not taken this step lightly."
Late on Thursday evening Mr McGrath released a statement to the ASX criticising what he called “ridiculous recent press coverage”. He said that coverage was "distracting attention from the important work of the company to a point where I have concluded I need to make a statement to clear the air".
"Like many Australians, I enjoy a punt. I have a credit account with a bookmaker for this purpose," he said.
"That account is not secured by, or otherwise connected with, my shares in the company.
"The account is well within my means in the context of my net wealth."
Mr McGrath said he was in full compliance with the terms of that account.
"I have never, and would never, let what I might choose to do in my personal time impact upon the company," he said.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.