McGrath Limited Announces Executive Changes; Provides Earnings Guidance for the Half Year Ended December 31, 2017 and Full Year of 2018
January 22, 2018 at 03:32 am IST
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McGrath Limited announced earnings guidance and significant changes to its Board and executive team. This includes the pending transition of founder and Executive Director John McGrath to interim Executive Chairman. As noted in November, part of Stage Two of the Company's structural review examined costs in non-customer facing roles, including among the Company's board and executive management level and roles where key expertise was unlikely to be required in the medium to long term. That expertise includes material expansion of Company owned offices and growth-oriented M&A initiatives. As a result of the structural review, McGrath CEO Mr. Cameron Judson and Head of Corporate Services and Company Secretary, Mr. Morgan Sloper, will leave the Company, with each serving appropriate notice periods to deliver a smooth transition to new leadership. McGrath's external Company Secretary support will remain with the Company. Nigel Dews has resigned from the Board, due to work commitments and as part of the Stage Two review. During 2017, Mr. Dews was appointed CEO of Message Media, which necessitated his move interstate. McGrath Chair, Cass O'Connor, and current Non-Executive Directors Elizabeth Crouch and Cath Rogers have announced their intention to resign following an orderly transition period. This period will include the release of the Company's Interim Results in February. John McGrath will then assume the role of interim Executive Chair.
Half year 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. Based on currently available information, the Board anticipates the Company's EBITDA for the half year ended 31 December to be $1.63 million before one off items and a small loss of $50,000 post one off items.
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. In establishing a leaner operational structure, the Company is enacting the second stage of its cost reduction initiatives, announced on 6 November 2017. The program is on track to remove just under $5 million in costs from McGrath on a full-year basis. On current indications, full year EBITDA is expected to be in the range of $5.8 million - $6.8 million after one off items. This would translate to underlying earnings of $10.6 million $11.6 million before one off items and assuming the cost initiatives were in place for a full year period.
McGrath Limited is an Australia-based residential real estate company. The Company is engaged in providing residential property sales, property management, residential project marketing, mortgage broking, auction services and career training. The Companyâs segments include Company owned sales, Company owned property management, Franchise services, and Other services and investments. The Company owned sales segment undertakes residential property sales on behalf of property vendors through Company owned offices and agents. The Company owned property management segment directly manages residential properties on behalf of ownerâs clients. The Franchise services segment manages franchise offices that undertake both property sales and property management activities. The Other services and investments segment has several other services and investments, which complement the service offerings of the segments. Its services include projects, new land estates, rural and livestock and home loans.