TMH posts profit despite panel challenges

HotCopper and Gumtree owner The Market Herald says a return to profitability is testament to strategy endorsed by its board and management team, amid a tumultuous period for the company.

The Market Herald reported a 217 per cent increase in revenue to $81.6 million from the previous year’s $25.8 million, largely due to its October acquisition of classified businesses Gumtree, CarsGuide and Autotrader under the Gumtree Group umbrella.

Two months following the deal for Gumtree, the firm’s long-serving managing director Jag Sanger departed the organisation in a series of events put under the spotlight of a Takeovers Panel investigation beginning in February.

This week’s financials showed earnings before interest, tax, depreciation and amortisation turned around $13.9 million to come in at $12 million, with profit before tax growing by $8.9 million to $6 million.

Profit after income tax was $4.8 million.

The classifieds business propped up the group result, generating pre-tax profit of $17.5 million. The Market Herald also operates its eponymous digital media service, as well as digital investor relations and consulting under its Advisir brand.

The financials incorporated costs attached to the lengthy Takeovers Panel investigation into the company, as well as the discontinuation of the Subscribacar service and the Gumtree deal.

While it was not specified how much the investigation specifically cost the company, The Market Herald’s financials outlined other expenses – a figure excluding the cost of the Gumtree acquisition and discontinuation of Subscribacar – at $32.5 million.

Employee and director expenses were more than triple the previous year at $34.8 million.

In June, Takeover Panel costs, redundancies and debt write-offs were cited as The Market Herald revised its normalised EBITDA forecast down 14.7 per cent to $17.7 million.

Chief executive Tommy Logtenberg said despite headwinds, the company’s full-year results demonstrated strength in the group’s vision for the future.

“There were undoubtedly challenges throughout the year, but what this result shows is the transition to our new management team and our new strategy supported by the board is delivering for shareholders,” he said.

“First, we had to discontinue some activities which were loss-making and lacking a growth plan. Second, we had to maximise efficiencies in shared functions utilized by our various businesses inside the group.

“These core tasks were completed earlier in the year, where we then focused squarely on driving profitability.

“While the importance of Gumtree is evident in this strong profitability turnaround for the company, we have multiple strategic growth opportunities which we continue to invest in.”

The figures come a week after The Takeover Panel unveiled the reasons for its findings of unacceptable circumstances at the company, in relation to non-disclosure of the association between substantial shareholders – David and Gavin Argyle – in marketing materials for two entitlement offers.

The Takeover Panel concluded that the Argyles, who are father and son, had a shared goal of maintaining the family’s level of ownership to control or influence the company’s board composition but did not properly disclose their association in booklets for entitlement offers in 2022 and 2023.

The panel also found events which led to the removal of Mr Sanger in December 2022 demonstrated David and Gavin Argyle had a shared goal in relation to TMH, and was critical of the role independent chairperson Alec Pismiris played in the removal of Mr Sanger from the board.

The panel had earlier ordered that shares acquired by Gavin and David Argyle directly and through other parties be vested to the Commonwealth for the Australian Securities and Investments Commission to sell.

In July, ASIC appointed Morgan Stanley Wealth Management Australia to sell the shares.

Shares in The Market Herald have traded steadily this week, and currently sit at 29.5c.