An uplift in market sentiment and strong clearance rates has helped beleaguered real estate agency McGrath stem multi-year losses, according to its chief executive Geoff Lucas.
In its half-yearly results, the ASX-listed real estate agency posted a revenue increase of 15.1 per cent to $48.9 million following a five-year slump which began after listing in late 2015 at $2.10.
Over the past five years, the company's shares have plummeted 83.8 per cent, in contrast to the 35 per cent gain of the wider index, hit by the property downturn as well as high-profile allegations, terminations and internal turmoils.
Over the first half of the financial year, McGrath managed a net statutory loss of $980,000, a recovery from a $9.6 million loss in the previous first half.
McGrath, which has seen its shares lift by 4c to 33c, said it was without debt, holding $8.1 million in cash and $28.4 million in net assets.
The company said its rent roll is estimated to be worth $52.9 million, of which $39.7 million is not reflected on the balance sheet.
Lucas put the turnaround down to consolidating a number of its unprofitable franchises, an increased investment in marketing and a focus on the provision of new data and technology solutions for its agents.
The company, which operates in New South Wales, Queensland and Victoria, was also helped by the return of 32 company-owned stores over the past 18 months, after back-flipping on previously terminated long-standing agreements.
“Our focus on talent development, improved customer service and the execution of our strategy has allowed us to achieve solid results this half.”
Lucas also acknowledged the positive tailwinds in residential property market, notwithstanding the market’s lower listings, which helped stabilise the group's performance.
“The improved market conditions from the end of the 2019 calendar year have continued into into 2020, with strong clearance rates, fewer days on market and healthy buyer demand.
“Market listing volumes remain below prior year, continuing to contribute to stock shortage and solid price gains.”
Despite lower listings across the market, McGrath's number of properties sold lifted from 4,862 in the first half 2019 to 5,768 in the first half 2020, up 19 per cent.
Looking ahead, McGrath plans to grow its property management business through new acquisitions, providing the company with a stable annuity styled-income.
The national real estate agent will look to build closer partnerships with the company’s agents and franchisees to increase agent productivity.
The company is also planning a further roll out of new franchise offices in select key markets, with a distinct focus on Victoria.
