Despite a particularly testy real estate market, real estate agency McGrath (ASX: MEA) has reported a profit, albeit lower than its FY22 levels.

Rounding up its FY23 results, McGrath revealed a statutory net profit after tax (NPAT) of $6.2 million. Its underlying EBITDA amounted to $6.1 million, and it ended the year with a decent balance sheet, comprising $27 million in cash with no debt. 

CEO & Founder, John McGrath, said, “Low listing levels and rising interest rates continue to be the greatest challenge for our industry, however with a possible plateauing of interest rates and signs of increased listings over the past few weeks, we feel that the worst is behind us. There continues to be strong buyer demand from owner occupiers in almost all markets we serve.”

With fewer properties up for sale and interest rates up twelve times, the property market was not an easy one to navigate. The number of deals done was almost 20% less than last year, and 5% below the usual for ten years. Also, house prices dropped about 5% compared to the same time last year. 

In FY23, its revenue fell by 27% on FY22 to $82.5 million, and underlying EBIT saw a 75% decline, falling from $16.8 million to just about $4.2 million. Its profit saw a decline of $5.5 million, but did avoid slipping into a loss.

The Company increased its number of agents and offices in FY23, even as listings, prices as well as company-owned properties under management declined. 

McGrath added, “The implementation of our strategies during the year, including signing on 18 new franchise offices and a further 8 per cent reduction in operating costs, has enabled the company to remain very profitable, as well as increasing market share in our key markets. We are very excited about the great opportunity to continue to expand our brand on the East Coast and we are laser focused and well poised to deliver our existing agents and franchisees the best tools and technology in the industry.”

Its $27 million cash balance is after the acquisition of a 30% stake in its Central Coast franchise, the payment of ordinary dividends, the current on-market share buyback and tax payments relating to FY23.

McGrath has announced a final dividend of 1.0 cent per share, which will be paid on September 14, 2023. During FY23, the Company made gains of about $4 million by transitioning certain office and rent roll assets from company ownership to franchise ownership. Thanks to this, McGrath is able to declare a special dividend of 2.5 cents per share, also payable on September 14, 2023. The Company plans on paying 3.5 cents in fully franked dividends, equating to 4.5 cents for the full year. 

What’s more, McGrath plans to continue with its on-market share buyback program, through which $3.9 million shares have been acquired to date.