OnTheMarket plc (AIM: OTMP ), has announced trading during the second half of the current financial year is ahead of expectations and now expects revenue and adjusted operating profit for the 12-month period to 31 January 2021 to be no less than £22.5m and £1.5m respectively.
Improving 2H 20/21 Trading
As of the half year report (1H20/21), the Company announced revenue for the six-month period to 31 July 2020 had increased 28% to £10.2m with adjusted operating profit improving £7.5m to £0.8m with further enhancements to its services expected to be delivered during the second half of the year expected to increase value for its customers with revenue and adjusted operating to “increase in the second half….from those reported for the six months to 31 July 2020”.
These expected results therefore reflect the measures taken during the year to support agents through customer discounts, whilst reducing costs and conserving cash, particularly through a significant reduction in marketing expenditure.
Following the update, investors can now expect FY 20/21 revenue to increase almost 20% to £22.5m (FY19; 18.8m) and adjusted operating profit to improve £10.7m to £1.5m (FY19: 9.2m loss).
Strengthening Balance Sheet
Further to the improving Income Statement, investors should also be pleased that cash as of 30 November 2020 improved to £10.9m (excluding deferred creditor payments of £0.4m), an effective increase of £2.2m to that reported as of 30 September 2020 of £10.3m and deferred creditor payments of £2.0m.
However, it is expected that increased marketing expenditure and further customer support initiatives will result in a small cash outflow during December and January.
Incoming CEO, Jason Tebb joins the Board
Further to the announcement made on 1 September 2020, the Company also confirmed today that Jason Tebb has now joined the Company and the Board as Chief Executive Officer with Clive Beattie, who has been Acting CEO in addition to his role as Chief Financial Officer, will resume his role as CFO.
The Company has granted Jason options pursuant to the Company's Long Term Investment Plan on 14 December 2020 over 379,249 ordinary shares of £0.002 in the Company in connection with his appointment.
The Options will vest on 14 December 2023, with a further two-year holding period following the vesting date before the Options are capable of exercise. All the Options have a nil exercise price and are subject to performance conditions based on the total shareholder return achieved by the Company relative to the FTSE AIM 100 Index in the three years prior to the relevant vesting date.
Shares in OTMP have recovered strongly from the 52wk lows of 30p in April this year to close at 122.5 prior to this trading update.
Improving Outlook
Given the improved trading and strong balance sheet, the Company is planning to increase investment in the business during FY 21/22, particularly in new products and services, people and training and restoring marketing expenditure to more usual levels. Marketing expenditure during FY 19/20 was approximately £12m.
It is expected this investment strategy for FY20/21 will position OnTheMarket to take advantage of the significant growth opportunities available, benefiting the Group in the medium and long term.
Clive Beattie, 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.”