OnTheMarket plc (LON:OTMP), the majority agent-owned company which operates a property portal, has announced the following update on trading.
Current trading ahead of expectations
In the announcement of its interim results on 13 October 2020, OnTheMarket stated that the Group expected revenues and costs to increase in the second half of the year to 31 January 2021 from those reported for the six months to 31 July 2020, as it invests to enhance service and increase value to customers. The Group also announced expectations to achieve a broadly breakeven adjusted operating profit1 position for the full financial year.
As a result of continued operational progress and strong consumer engagement, the Company now expects to deliver revenues and adjusted operating profit above market expectations for the current financial year to 31 January 2021. Revenues are expected to be no less than £22.5m, with adjusted operating profit no less than £1.5m. These expected results reflect the measures taken during the year to support agents through customer discounts, whilst reducing costs and conserving cash, particularly through a reduction in marketing expenditure.
At 30 November 2020, the Company had net cash of £10.9m and, excluding deferred creditor payments of £0.4m, no borrowings. This represents an effective increase of £2.2m from 30 September 2020, when the Company had net cash of £10.3m and deferred creditor payments of £2.0m.
It is expected that marketing expenditure, to support consumer engagement and lead generation for advertisers, will be higher in December and January than in October and November. As such, the cash balance is likely to reduce slightly to 31 January 2021 but remain strong, with sufficient scope to invest in the business. Cash balances will also naturally fluctuate as creditor and taxation payments fall due; nevertheless, the Board continues to focus on balancing investment in the proposition whilst carefully managing the Group’s financial resources.
The Company continues to monitor the impact of COVID-19. At this stage, in light of the ongoing uncertainty and as a prudent measure until greater clarity exists, the Company is not providing financial guidance beyond the current financial year. With a strong cash position, the Company is planning to increase investment in the business in the coming year, particularly in new products and services, people and through restoring marketing expenditure to more usual levels. This will position OnTheMarket to take advantage of the significant growth opportunities available, benefiting the Group in the medium and long term.
Clive Beattie, OnTheMarket Chief Financial Officer, commented:
“As we approach our financial year end, I am pleased to report on a strong performance since our interim results announcement, achieved through the continued hard work and commitment of my colleagues and the support of our loyal customers.
“Our revenue growth and financial discipline form the strong platform from which we will continue to provide increasing value to our customers, whilst our agent ownership and support, and our commitment to fair pricing, will continue to differentiate OnTheMarket.”
1) Adjusted operating loss or profit is defined as operating loss or profit before share based payments (including charges relating to shares issued for agent recruitment), share of profit or loss from associates, specific professional fees and non-recurring items. This is an alternative performance measure and should not be considered an alternative to IFRS measures, such as revenue or operating loss or profit.