OnTheMarket has reported revenue last year of £16m, down from £17.8m the year before.
For the 12 months to January 31 this year, it has reported a set of complex figures.
There was an adjusted operating profit of £3.9m – but an operating loss of £10.8m, up from £1.7m the year before, and including £14.7m of exceptional items.
It reported having cash of £3.2m as at January 31, and said that revenue per agency advertiser branch per month was £235. Average numbers of branches listed at OTM in the financial year were 5,694, down from 6,306 the year before.
This morning’s final results, posted on the London Stock Exchange, highlight operational and strategic highlights. These were chiefly the litigation between Agents’ Mutual and Connells brand Gascoigne Halman. In July last year, the Competition Appeal Tribunal ruled in favour of Agents’ Mutual, upheld the ‘one other portal’ rule as lawful; and awarded Agents’ Mutual £1.2m as an interim payment.
In his report within the accounts, CEO Ian Springett gives this update: “In December 2017, having had an application to appeal to the Competition Appeal Tribunal refused, Gascoigne Halman Ltd was granted leave to appeal the judgment of the Competition Appeal Tribunal at the Court of Appeal.
“Should an appeal proceed, and having taken appropriate legal advice, the Directors remain confident that the judgment of the Competition Appeal Tribunal will be upheld.
“In addition, during the year ended 31 January 2017 a further deposit of £450,000 was required to be made to court in respect of litigation between Agents’ Mutual and Moginie James Ltd. Following the settlement of this case this deposit was repaid to Agents’ Mutual in February 2017.”
Narrative in the accounts refers to a “number of agents” not paying their contractually committed listing fees. The majority chose to breach the One Other Portal rule in their listing agreement.
The report says: “It is the intention of the company to engage with these customers in due course, to seek either payment of both fees outstanding and further fees as they fall due or to reach a compromise position such that historic debts are held in abeyance and potentially waived in the future in return for entering, and honouring, a new long term listing agreement with the company.
“As at 31 January 2018, should all arrears have been recovered, this would have amounted to approximately £5.9m.”
Exceptional costs of £1.4m, net of the £1.2m awarded, were incurred in connection with the Gascoigne Halman litigation during the year, plus the demutualisation and admission to AIM.
There was also a non-cash charge of £13.3m in relation to share option awards made to employees: “Under the terms of a management agreement with Agents’ Mutual that was first established in 2013 and revised in 2016, the founding management team were entitled to 18% of the fully diluted share capital of the Company at the point of the restructuring in September 2017.
“This entitlement was fulfilled by the issue of 7,799,327 nil cost share options. A further 763,008 nil cost options were issued to other group employees, of which 7,272 were forfeited in the period.”
The accounts posted this morning cover the period until just before OTM’s launch on the AIM market, on February 9. Of this, Springett says that OTM has benefited from growing agent support since admission “and is well positioned to continue its growth in agent offices listing”.
He says the group’s outlook is positive “with continued significant growth expected” in both agent numbers and in traffic to the site.
Looks pretty disappointing then.
Saying that disappointing has become synonymous with OTM
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I really admire the abstract idea of what they’re doing, but now they answer to investors I can’t see a way this ends well for agents, even if they do beat the other two portals.
I also understand they’ve taken a portal reps from RM & Z as well, which is unsettling.
As always, happy to hear opinions challenging me but I don’t think they can provide the long term solution for anybody.
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Why can they not supply the long term solution?
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Because (in my opinion), it means they are reliant on pleasing investors to ensure continual funding and survival (as well as lining senior staff pockets).
In order to please investors they will need to increase revenue year on year just like RM do, which they will do by raising prices.
This is all theoretical, but we’ve seen the same story with RM – they grew so quickly then realised they had to sustain with 10% growth year on year so they have to increase fees (or think they do).
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In the new 5 year contract the fees are fixed for the first 2 years with a fixed price escalator in the following 3 years.
So they can’t increase fees over and above that.
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From what I can see the only new thing of note to take from this is the £5.9m of arrears. We all knew that revenue would be down slightly.
Should connells appeal be unsuccessful then those arrears will need to be paid to OTM or those agents will need to enter into new 5 year agreements.
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Maybe Management Exclusive is more appropriate than Agents Mutual.Trousering £13 m worth of free shares. Having to write off bad debts to act as a sweetener.How much of the 30m has already been burned .Revenue loss and double staff costs.Further dilution of share value as more join the fold.Hoping for a white knight investor to save the day. Interesting times ahead Springo has his eye on a profitable exit.
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I bought shares on the basis that at some point a large international player will enter and this is a relatively low cost entry point.
OTM need to up the quality of their marketing if they are to attract views, their current campaign is very drab.
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