McGrath Limited founder John McGrath is taking a more hands on role as sales fail to hit target and the first reale estate agency to list on the ASX heads for a loss in the first half of 2018.
CEO Cameron Judson and Head of Corporate Services and Company Secretary, Morgan Sloper, are leaving the company. McGrath announced he would take the role of interim Executive Chairman when the current board of directors steps down.
Judson, a human resources expert, joined the company in 2016.
At the close, McGrath shares were down 12.2% to $0.50.
Chairman Cass O’Connor said: “Cameron and Morgan were engaged when we anticipated a higher volume of corporate activity. Their skill-sets are broader than the company currently needs.”
O’Connor and current Non-Executive Directors Elizabeth Crouch and Cath Rogers also announced their intention to resign following an “orderly transition” period, sometime after the release of the company’s Interim Results in February.
The company says it will post a loss of $50,000 for the six months when one off items are included. Excluding those, the EBITDA (Earnings before interest, taxes, depreciation, and amortisation) for the half year to December will be $1.63 million.
Full year EBITDA is expected to be between $5.8 million and $6.8 million after one off items. This would mean underlying earnings of $10.6 million to $11.6 million before one off items.
O’Connor said “The Board is disappointed with the recent performance of Company and its share price. The issue of historically low listing volumes finally seems to be abating, but it and other factors and their contribution to the underperformance primarily in the Company Owned Sales division have been well publicised. The cost cuts have gone as far as they can while leaving the Company with the resources to benefit from market improvement.”
In early trade, McGrath shares were down 7.9% to $0.525. The company floated in December 2015 at $2.10.
Founder McGrath said: “Like all shareholders I am very disappointed with the performance of the Company over the last two years. Now is the time for a new approach. Despite the challenges we have endured since listing, McGrath remains one of the best real estate businesses in Australia with outstanding talent throughout the Company. I am very excited and proud to once again be leading the team in the future.”
McGrath says earnings have been adversely affected by “underperformance” in the company owned sales division, including Project Marketing. The Franchise, Property Management and other businesses are performing largely to expectation.
The company also raised the possibility of writedowns.
“These estimates exclude any potential goodwill impairment which may arise when the carrying value of each division is reviewed in the course of preparing the half year accounts,” the company says.
McGrath says its cost cutting program is on track to remove just under $5 million over a full year.
In August last year, McGrath posted a 42% fall in full year profit to $4.871 million.
At that time the company reported property listings down 11% and the loss of a number of “high performing” sales agents.
The company then said Chinese buyer activity continued to decline in the north western Sydney region.