McGrath estate agents get $850,000 additional commission windfall to stop defections
Chairman Cass O’Connor and current non-executive directors Elizabeth Crouch and Cath Rogers have also announced their intention to resign on Monday.
Replacement directors have yet to be appointed, with suggestions a Sydney solicitor is among the likely replacements. Senior staff including Adrian Bo are set for elevated administrative roles in the new regime. Bo holds two post graduate degrees in business administration, including an MBA.
The company went into a trading halt until Monday.
''The reason for the trading halt is a pending announcement regarding recent media comment in relation to Mr McGrath," the company said.
"The event that will end the trading halt is the company issuing an announcement by Mr McGrath."
Meanwhile company owned sales generated $2.6 billion in sales value from 1,712 sales for 1H FY18 compared to $3.5 billion and 2,544 sales in 1H FY17.
Its franchise services offices exchanged 4,324 sales during 1H FY18 with a sales value of $3.9 billion compared to 4,222 sales with a sales value of $3.8 billion in 1H FY17.
As at 31 December 2017 the network comprised 27 company owned offices and 70 franchise offices with 583 agents.
Total agents decreased significantly. Agents in the franchise offices decreased 3% to 393 and agents in the company owned offices decreased 21% to 190.
McGrath's report advised it continued to have a "concerted focus on talent identification, to attract, develop and retain high performing agents and emerging sales agents."
"The company’s performance has fallen short of expectations, and is influenced by several factors including lower volumes of listings, lower agent numbers and a significant slow-down in the traditionally volatile project marketing segment," it advised.
The company posted a loss of $25.5 million after impairments of $22.9 million to goodwill.
The directors slashed the business’s goodwill which was on the balance sheet at the end of last year at $53 million.
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McGrath has $3.4 million cash, no debt, and net assets of $74.4 million.
Founder McGrath, who has taken back direct management control of the company, said a “new approach” was needed, and thanked investors for their loyalty.
“I am very proud and excited to again be leading the business,” he says.
“Despite the challenges we have endured since listing, McGrath remains one of the best real estate businesses in Australia with outstanding talent throughout the Group.
“Residential real estate is one of the largest industries in Australia, as well as being the country’s largest asset class, and we remain very well positioned to leverage our scale and quality brand for future success and growth.
“I have a clear plan to rebuild momentum but I will let our results speak for themselves from here.”
The company floated in December 2015 at $2.10. The shares last traded at $0.425 before it halted trading.
Outgoing CEO Cameron Judson says earnings have been adversely impacted “by the underperformance of our company owned sales business, including project marketing”.
“Our annuity businesses, Property Management, Franchise and Oxygen have performed largely to expectations,” he advised shareholders.
The company announced a $1 million write-down of acquired property management rights. Company owned property management decreased the number of properties under management (leased) to 7,449 at 31 December 2017, from 7,498 at 31 December 2016.
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Oxygen Home Loans settled $422 million in mortgages during the period, slightly down on last year (5%). The book value of loans under management has increased 12% year on year to $2.9bn. At 1H FY18, there were 33 brokers supporting the network, compared to 32 in 1H FY17.
Judson says the restructuring of the board, executive and corporate functions have delivered annualised savings of $5 million with in the leaner organisation.
Cost savings included space relinquished at its Edgecliff headquarters where the business gave up one of its three floors.
The McGrath network has 95 offices and 2,000 staff.
Keeping staff has seen a McGrath Future rollout which includes high performance bonus commission, recruitment trail commission and a property management equity partnership structure.
