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DESPITE disruptions to the residential property market due to the pandemic, real estate agents McGrath (ASX: MEA) has changed its fortunes, swinging back to profit strongly in the first half year.

McGrath reported a net profit of $8.1 million for the six months to December 31 compared with a loss of $1 million in the previous corresponding period. Underlying EBITDA rose by $5 million to $6.6 million, allowed a return to the payment of a fully franked interim dividend of 0.5 cents per share.

This underlying EBITDA result is at the top end of the guidance range and excludes both the $2.1 million worth of government COVID-related grants and a $1.9 million gain on the conversion of the Parramatta business to become a franchise.

The result was underpinned by a 16% growth in revenue to $56.7 million and a 23% rise in sales per agent for the period, despite lower listing volumes in the market.

CEO Eddie Law said the residential property market has proved to be very resilient during the ongoing COVID-19 pandemic, compared with other sectors.

“Cashed up homeowners, many of whom are prevented from travelling either domestically and internationally, are now largely working from home and as such, are reassessing their lifestyle and surroundings. This is positive for our industry as it results in homeowners either transacting or improving the asset value of their current home.

“Despite a challenging year navigating the various lockdowns, McGrath has demonstrated our ability to continue to transact successfully and efficiently should further COVID restrictions are deemed necessary in the future,” he added.

McGrath has no borrowings, $24.6 million in cash and $38.1 million in disclosed net assets. The company’s rent roll has a market value estimated to be worth $50.6 million at balance date, of which $36.9 million is not reflected on the balance sheet.

Law said the combination of improving consumer sentiment, record low interest rates, limited listings in the market and the emerging COVID vaccine rollout has driven strong price growth in recent months.

“The first seven weeks of the new year have started positively and we optimistic for the second half, with the McGrath business well positioned for long-term future growth,” he concluded.

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