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McGrath diversifies in face of difficulty

Real estate agency McGrath is looking to build revenue streams outside of property sales after its full-year profit dropped 42 per cent to $4.87 million amid low listing volumes and the departure of key agents.

The Sydney-based firm, which debuted on the ASX in December 2015, said on Thursday that revenue for the 12 months to June 30 rose seven per cent to $129.36 million.

However revenue was hurt by the loss of high-performing agents and increased commission costs from a program designed to prevent further defections.

Chief executive Cameron Judson said it had been a difficult year but the company was debt-free and well-placed to build on its brand in services including property management, franchising and its Oxygen-branded mortgage broking.

"We continue to focus on improving the productivity and performance of each of our existing segments and McGrath is exploring new revenue opportunities in adjacent property services," Mr Judson said in a statement.

"Our aim is to continue to grow the relative contributions of each of our annuity businesses in property management, franchise and oxygen and de-risk the volatility of our earnings in company-owned sales."

McGrath said it remained vulnerable to fluctuations in the property market due to factors including housing affordability, unemployment, interest rates, investor growth, demand from overseas and consumer confidence.

McGrath now aims to keep its best performing agents through its recently established incentive scheme that offers commissions, shared ownership of referrals to the property management business, and an annuity stream.

McGrath declared a fully-franked final dividend of one cent a share, down 2.5 cents on the previous final payout.

Its shares were down four cents, or 5.2 per cent, to 73 cents at 1527 AEST.

MCGRATH'S MIXED YEAR

* Net profit down 42pct to $4.87m

* Revenue up 7pct to $129m

* Final dividend down 2.5 cents to 1.0 cent, fully franked.

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