OnTheMarket group revenue up 22% to £23 million

OnTheMarket plc (LON:OTMP), the majority agent-owned company which operates the OnTheMarket.com property portal, has announced its audited results for the year ended 31 January 2021.

Highlights of the year

·      Revenue and ARPA up 22% and 16% respectively

o  In part reflects increased revenues from new home developers and despite COVID-19 related customer support discounts of £2.6m and the curtailment of contract conversion activity in H1 FY21.

o  Conversion activity resumed in H2 FY21 with 93% of agency advertisers on paying contracts at year end (2020: 68%).

·      Delivered first full year of profitability with profit after tax of £2.7m (2020: loss after tax of £11.5m).

·      Cost base carefully managed in response to the pandemic – administrative expenses reduced by 26% against 2020.

·      Cash generated from operating activities of £5.1m (2020: £(7.0)m).

·      Strong balance sheet with year-end cash of £10.7m before deferred creditor payments of £0.4m (31 January 2020: £8.7m before deferred creditors of £0.7m).

·      Strong operational performance with growing consumer engagement amongst active property-seekers

o  Visits and average monthly leads per advertiser up 13% and 22% respectively, despite the effective suspension of UK housing market activity during the first lockdown and the curtailment of advertising expenditure (down 51% on FY20 to £5.9m).

o  Once property market restrictions were lifted, H2 FY21 visits and average monthly leads per advertiser were up 30% and 31% respectively to 151m (H2 FY20: 116m) and 130 (H2 FY20: 99).

Strategic and corporate developments

·      An in-depth strategic assessment has been completed and the business has a clear vision to build a differentiated, technology-enabled property business providing services for agents, housebuilders, advertisers and consumers that offers ‘best in class’ products and platforms across the broader property ecosystem, consisting of:

o  an engaging and relevant property portal;

o  software solutions to meet evolving customer needs;

o  the provision of market leading data and market intelligence; and

o  a leading property communications and marketing capability, both on behalf of, and in conjunction with, our customers.

·      Following the year end OnTheMarket has announced a number of corporate developments including:

o  the acquisition of the remaining 80% of Glanty Limited, a property technology business which specialises in providing solutions to the UK residential estate and lettings sectors;

o  a media partnership with Reach plc, the UK’s largest commercial news publisher, to enhance consumer engagement and support our agents’ brands;

o  new agreements with both Canopy and Sprift Technologies, to provide agent customers with free tenant referencing checks and enhanced Market Appraisal Guides; and

o  the launch of three new areas of website functionality to support interactions between agents and consumers.  

·      Given the strong performance, strength of balance sheet and confidence in the future, the Company will be repaying to HMRC the grants of £449k it received under the Coronavirus Job Retention Scheme.

Outlook

·      Positive start to FY22 with current trading in line with the Board’s expectations.

·      Marketing activity has resumed and is driving consumer engagement and ARPA is anticipated to continue to grow as agent conversions to paying contracts annualise in FY22, FY21 discounts unwind and as the migration of customers on reduced rate contracts towards full-tariff continues.

·      The Group has a strong balance sheet which the Board has a reasonable expectation is sufficient to support the Group’s organic growth strategy. Having achieved profitability in FY21, the Board expects to be able to invest further operationally into the business and return to normalised levels of marketing expenditure without damaging the Group’s prospects for the foreseeable future, assuming no materially adverse unforeseen circumstances arise.

·      Cash at 31 May 2021, after the acquisition of Glanty, was £10.0m (before borrowings and deferred creditor payments within Glanty of £0.2m).

·      The Board believes that the Group’s recent considerable operational and financial progress, together with a substantial, loyal advertiser base, provides a strong platform for the implementation of its strategy, in order to drive long-term profitable growth.

Jason Tebb, Chief Executive Officer, commented:

“I am delighted to be reporting a strong performance in my first set of results. Despite the unprecedented conditions we have faced, we have continued to grow the business and achieve profitability. Our operational and financial progress is a testament to the efforts of team and, since joining OnTheMarket in December, I have been incredibly impressed by them and the underlying strength of the business.

OnTheMarket has come a long way since its launch by agents in 2015. From this position of strength, it is now time for the next stage of our development and our new strategy is based on a clear vision of building a tech-enabled property business. We will become more than just a portal and provide best in class products and services that benefit agents, housebuilders and consumers.

We have achieved a great deal in the last six months. We have engaged and listened to agents. We know what they want and their support and belief in the business remains strong. We have completed the acquisition of Glanty, a property technology business, and launched a number of commercial partnerships to enhance our offering. We have launched a number of new products at OnTheMarket.com to drive greater interaction between consumers and customers. Our agents, housebuilder customers, partners and colleagues are all aligned, and, with a lot more to come, I am confident that we will continue to increase value to all our stakeholders.  

We look to the future with great excitement. The UK property market continues to be very active and our significant market opportunity remains. With our strong foundations and a new vision and strategy, we are well positioned to succeed.”

1)     Adjusted operating profit or loss is defined as operating profit or loss before share-based payments (including charges relating to shares issued for agent recruitment), specific professional fees and non-recurring items. This is an alternative performance measures and should not be considered an alternative to IFRS measures, such as revenue or operating profit. Please see the Financial Review and Key Performance Indicators section below for a reconciliation of operating profit / loss to adjusted operating loss / profit.

2)     Average revenue per property advertiser, being revenues due from property advertisers for a period divided by the average number of property advertisers for that period. ARPA presented herein is the average of the monthly ARPAs for the year. A property advertiser is a listed agency branch or a new home development advertising on OnTheMarket.com.

3)     Advertisers are either estate and lettings agent branches or new homes developments listed at OnTheMarket.com.

4)     Visits comprise individual sessions on OnTheMarket.com’s web based portal or mobile applications by users for the period indicated as measured by Google Analytics.

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