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McGrath real estate franchisee renew brand contract in spite of trending profit slump

McGrath real estate franchise profits slump

McGrath real estate franchisees in Townsville, Brad and Kaye Matheson have renewed their franchise agreement with the McGrath national real estate brand, in spite of its substantial slump in profits over two consecutive years by the Australian Stock Exchange (ASX) listed company.

The national real estate agency franchise, with its only North Queensland operation in Townsville, had reported a net loss for the second year in a row, thanks to falling property prices, reduced rental prices and a slide in the volume of properties coming onto the market for sale.

McGrath real estate annual report

In the company’s annual McGrath report to the Australian Stock Exchange (ASX), the franchise boasted 19 offices in Queensland, five of which are company owned with fourteen franchise offices, including its Townsville office located in North Ward.

McGrath’s national net loss totalled $15.6 million in the 12 months to June 30 following a $63.1 million loss in the previous corresponding period.

The company also reported that it’s full-year revenue from ordinary activities fell 17 per cent to $82.7 million.

“Despite the challenging conditions, we have gained market share based on sales transactions data published by CoreLogic,” McGrath CEO Geoff Lucas said.

McGrath real estate national founder, Mr John McGrath Photo: News Corporation

“We continue to re-invest into our operations to create the best possible environment to list, sell and manage real estate, ensuring our agents are best placed to efficiently deliver the best possible results to our clients,” Mr Lucas said.

McGrath real estate national picture

McGrath, which operates in NSW, the ACT, Queensland and Victoria, said sales volumes in the year to June slipped 21.9 per cent in Sydney, 27 per cent in Melbourne and 13.4 per cent in Brisbane.

The company calculated average home prices fell 9.9 per cent in Sydney, 9.2 per cent in Melbourne and 2.6 per cent in Brisbane. 

Mr Lucas said McGrath was optimistic about the future, adding that “we have seen improved buyer sentiment in recent months” and “this sounded the bell for property market stabilisation”.

The market conditions resulted in the lower revenues and underlying EBITDA lower at $6.4 million (before $3.7 million onerous contract charges), in line with market guidance.

In the company’s comments to the media, it reported a “strong balance sheet with no debt” and net assets of $30.8 million as at June 2019.

McGrath’s Property Management and Oxygen portfolio are valued by management on current market conditions at approximately $52 million, with only $11 million of this value included in the Balance Sheet.

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The company’s Adjusted Net Assets are estimated to be worth $72 million.

With 167.9 million shares on issue, this represents an estimated Adjusted Net Asset per share value of approximately 43 cents.

McGrath will not pay a final financial year 2019 dividend.

Local McGrath franchise committed to its clients, vendors and public

On the company’s Townsville website, Husband and wife Principals Brad and Kaye Matheson, said they are “committed to constant innovation through our marketing and a fresh approach to honest and transparent interaction with clients, vendors and the buying public.”

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Aaron M, Editior
Aaron is the founder and editor of TREN eMagazine with 15 years experience in the real estate industry investing and helping investors seek value, leverage value and capitalise on value, developing professional and technical skills and capabilities that have enabled his success in business from startups, adoption, asset growth, management and community leadership projects. Aaron also loves travelling, sports, his partner Jodie and helping people discover their "why" and find their few "what's" in life that realise the "wows. The " www" in is one of his why, what and wow's that strive to add valuable content and analysis for readers to participate and win.

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