Restructure Showing Headway for McGrath

The combination of spending packages from federal and state governments and the record low interest rates and $1.88 billion in cheap money lent to the banks to onlend to customers has helped another Australian government improve its position on the year to June 30.

The flood of money into financial markets and through them, the housing sector – both home building and established housing markets – helped McGrath real estate business stage a significant turnaround in performance in the year to June.

The company saw an $18.3 million turnaround in net profit, a long way from the loss of $700,000 in the previous year when the group was undergoing a deep restructure.

The company said on Monday that underlying profit improved $14 million on an earnings before interest tax depreciation and amortisation (EBITDA) basis to $17.7 million.

That saw the company pay a final 1 cent a share fully franked, resulting in total dividend of 1.5 cents a share, for the year.

Underlying EBITDA result was at the top end of the guidance range provided at the company’s trading update on April 26.

It excludes $2.1 million worth of Government COVID-related grants, a $2.2 million gain on the conversion of the Parramatta and Blacktown businesses to become a collective franchise, and a $3.1 million gain on the part sale of the Oxygen home loans business.

McGrath chief executive Eddie Law said the focus on combining the strong annuity style income derived from property management and franchise operations, alongside our company owned sales offices, is delivering strong results.

“We note that positive market sentiment, price stability in McGrath’s key markets and strong clearance rates contributed to our sales businesses performing significantly better in 2020-21. Our property management business continues to contribute solid results,” he said.

“The residential property market has proved to be very resilient during the ongoing COVID-19 pandemic, compared with other sectors. Notwithstanding the challenges during the ongoing COVID-19 pandemic and continued lockdowns, McGrath has demonstrated our ability to continue to transact successfully and efficiently in servicing our clients.”

“Despite sporadic lockdowns throughout various states, the first eight weeks of the new financial year have seen trading in line with our expectations and our business well positioned for long-term future growth,” Mr Law said.

The shares rose 3.7% to 55 cents at the close.

About Glenn Dyer

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.

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