Domain delays dividend amid JobKeeper windfall
Domain received $8.3m in JobKeeper over the past year but gave no indication it would join the ranks of those paying it back.
Property listings company Domain insisted it has no plans to return any of the Federal Government’s $8.3m in JobKeeper cashit received over the past year, even as it unveiled a surge in first-half profit.
The property listings player was punished by investors worried about rising costs, with the benefit of the federal government’s JobKeeper scheme set to roll off.
Domain received a total of $8.3m in JobKeeper, with $1.8m relating to the last financial year, but gave no indication it wouldjoin the ranks of companies such as Super Retail Group or Nick Scali paying the government back despite earnings growth in the half.
Domain’s first-half earnings of $54.5m were 19 per cent up on a year earlier and came in 6 per cent ahead of market consensus,but the stock fall was attributed to concerns about costs. Shares slid by 6.8 per cent early Tuesday as it cited continued COVID-19 uncertainty for delaying its dividend until its full-year results.
The Nine Entertainment-controlled company’s shares recovered to be 3 per cent down at $5.13 when they closed. Some investors also quizzed the company about a rumoured corporate deal which has yet to materialise.
Domain chief executive Jason Pellegrino said any deal would have to be in keeping with the company’s strategy and pointed to its first year-on-year growth in market listings in two-and-a-half years while emphasising the company’s spending on technology.
Domain defended its receipt of JobKeeper as the residential market had appeared set for a major dive as the pandemic struck, citing the risks of further outbreaks.
“Jobkeeper was a fantastic policy, rapidly implemented to provide businesses like ours with confidence in decision making during deeply uncertain times. We delivered on the purpose of Jobkeeper, not only retaining jobs but also creating them,” Mr Pellegrino said.
“While we are pleased with current listing volumes, and the broad level of confidence in the property market, there continues to be uncertainty as witnessed by the snap COVID-19 lockdown in Victoria. Similar to the board’s decision to defer dividends until the final year, we will continue to monitor the situation concerning Jobkeeper repayment,” he said.
Mr Pellegrino said the company had 20 per cent like-for-like core digital earnings before interest, taxes, depreciation, and amortisation growth in the first half and is pouring capital into new products.
In the half Domain had a 5.5 per cent fall in revenue to $137m and like-for-like expenses reduced by 9.9 per cent, which it said was driven by cost discipline. The reported expense decline of 14.5 per cent included benefits from the JobKeeper scheme.
Domain said residential revenue increased 10.6 per cent year-on-year and 8.5 per cent on a like-for-like basis on modestly higher overall listing volumes.
The company said residential had a strong finish to the half, there was a bounce-back in Melbourne following lockdown and residential subscription revenue declined marginally.
Domain said trading in January reflected an encouraging start to the calendar year, saying it was seeing “atypical seasonal patterns”, particularly evident in the early listings strength in Melbourne.
Over this financial year total costs are expected to increase in the mid-to-high single digit range from the fiscal 2020 base of $177.2m and Domain warned that this half would reflect the absence of contributions from the JobKeeper scheme and its employee program, which benefited the last two halves.
Domain’s first-half earnings of $54.5m were 19 per cent up on a year earlier and came in 6 per cent ahead of market consensus but the stock fall was attributed to concerns about costs.
Macquarie said the forecast lift in costs was higher than it expected and also reflected the absence of JobKeeper.
Domain’s staff and employee related costs in the last half were net of government grants of $5.7m relating to JobKeeper, with a total of $6.5m received less $800,000 transferred to capitalised labour costs.