Onthehouse Ltd surprises

Management got away with cutting its dividend due to better than expected earnings and strategic deals with CBA and Westpac.

Online real estate company Onthehouse Holdings (OTH) is a rarity on the market. This isn’t about its product offering but the fact that is has managed to get away with cutting its final dividend.

The stock surged 10.4% to a near four-month high of 53 cents, making it the best performer on the Uncapped 100 this morning.

Shareholders were happy to overlook the dividend transgression when the company posted better than expected sales and earnings for the year ended June 2013 and announced strategic deals with the Commonwealth Bank and Westpac Banking Corporation.

Revenue jumped 19% to $24.1 million although underlying earnings before interest, tax, depreciation and amortisation dropped 13% to $7.1 million.

The fall in EBITDA is due to investments management is making to ramp up the business but both figures were still ahead of consensus estimates of $23.4 million and $7 million, respectively.

It’s cash position also increased materially. Operating cashflow jumped 13% to $7.2 million while its total cash holdings climbed 37% to $4.2 million.

Management decided not to pay a final dividend so it can use the cash to grow the business. However, the company did pay a 0.6 cents dividend last year.

Onthehouse differentiates itself from market leader REA Group by offering better real estate data and tools to real estate agents and consumers.

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