March Quarter Update and Appendix 4C
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ASX MARKET RELEASE
30 April 2018
March Quarter 2018 Update
Growth Is on Track
Highlights
The Agency (West Coast)
• The Agency Group (WA) – total revenue of $10.6m YTD for March Quarter 2018, on target for
approx. 40% growth year on year.
• The Agency WA (real estate commissions only) – revenue $5.72m YTD for March Quarter 2018,
on track for 100% year on year growth
• Successfully acquires and integrates Sell Lease Property (SLP) into the business during the
quarter:
o The Agency and SLP ranked #1 and #2 respectively by REIWA for top office in WA in for
January, February and March 2018
o The Agency and SLP combined would be ranked 4th in property value sold for March 2018
having combined sales of $73.4m for the REIWA category of Franchise or marketing
Groups.
• Opening of Melbourne office - Highly- experienced Inner Bayside sales agent Michael Paproth
joins the new office located in prime inner suburb of Albert Park
March Quarter highlights
• Cash receipts for March were up 10% to $4.2m, the remainder of the financial year will include a
full quarter of SLP and is in line with our internal expectations
• Costs of goods sold was higher than previous quarter due to an increased repayment to ATO of
approximately $400k and make good on the old office premises of $50k
• Increased legal and corporate costs around Top Level and SLP acquisitions of approximately
$130k
• Without these abnormal items, net cashflows from operating activities progressing to break
even
• Under investing activities, we have initial payments for the SLP acquisitions of approximately
$330k and office openings costs for the Gold Coast and Melbourne was $332k
The Agency East Coast (Top Level Real Estate Pty Ltd)
• The Agency is focused primarily on pursuing a number of strategic acquisitions and finalising the
settlement of the Top Level acquisition.
• Exceptional results – 90 agents recruited, total sales of $695 million, total commissions of $10.2
million and 380 settlements up to 31st March 2018
Corporate
• Negotiations progressing with a number of top-tier advisers to raise additional funds
• Will look to raise additional capital required to fund aggressive national expansion plans
currently being reviewed
• Some twelve acquisition opportunities nationally being explored
The Agency Group Australia (ASX: AU1) (“The Agency” or “the Company”), is pleased to provide an
update for the March Quarter 2018.
Pleasingly, the March Quarter further highlights The Agency is achieving its stated goal of being the
fastest growing real estate brand nationally.
The Agency is witnessing significant benefits from the acquisition of Sell Lease Property (Western
Australia) during the March Quarter and proposed acquisition of Top Level Real Estate (East Coast).
These benefits are provided in the table below which shows key metrics of each of the entities (when
merged) for March Quarter 2018:
The Agency Group Australia
(ASX:AU1)
To be merged
The Agency SLP The Agency
(West Coast) (Nationally) (East Coast – Top
Level)
Combined Total
Group Revenue $10.6m $0.2m $14.2m $25m
Recruited Agents 71 106 90 267
No. of Settlements 503 3 308 814
Property Mgmts 500 - 3381 3881
Loan Book $1.185b - - $1.185b
Please note: Unaudited figures / SLP revenue figures only for March 2018 / SLP – unconditional sales were 55 in 1st month post-merger / SLP agents
nationally consists of 88 recruited agents in WA, 4 in Victoria and 14 in Queensland / The Agency East Coast figures for 11-month period from 1st April 2017.
National Expansion - Additional funding
The Agency is currently reviewing its funding requirements in light of opportunities being investigated.
This includes the potential acquisition of leading real estate businesses across Australia in addition to
Top Level which would provide the Company with a stronger sales presence in strong performing
markets.
The Company is currently evaluating up to twelve potential opportunities from both a strategic
perspective, which will increase its agent numbers and contribution to EBITDA.
In addition, by seeking additional funds as part of this capital raising, the Company will not need to go
back to the market in the foreseeable future to raise additional capital to progress its acquisition
strategy.
Negotiations are currently taking place with a number of top-tier fundraisers in regard to a revised
funding arrangement. The Company will provide an update to shareholders shortly on the outcome of
these discussions.
Aggressive acquisition strategy
The Agency’s acquisition strategy is to take advantage of a rapidly changing real estate market.
With both principals and agents under large franchise chains or independent models looking at moving
away from these traditional models, agents are forcing change as they want far greater value for their
efforts, higher revenue splits and a much broader value proposition in acknowledgement of their
results.
Success of The Agency model is based on addressing the needs of the agents and providing them with
the opportunities not currently offered in traditional real estate structures.
The Agency is disrupting the traditional model by reducing structural layers and focusing on the agent
rather than the brand - providing a significant value proposition compared to the traditional model.
The significance of our model is highlighted by the large number of big-name real estate agents across
the country who have been recruited by the Company along with transitioning Franchisees who are
concerned by the threat to their businesses.
The Agency continues to receive enquiries from agents and real estate firms across Australia who are
attracted to our model. The combined entity remains firmly on track for 300 recruited agents nationally
by July 2018.
SLP Acquisition – Significant benefits being realised
While only providing one month of revenue since settlement of acquisition, Sell Lease Property has
delivered strong results in only a short timeframe recording 55 unconditional sales and three
settlements for the month of March 2018.
In March 2018, The Agency and SLP in Western Australia ranked first and second respectively for top
office in the state and in the top five as a marketing group in the state (REIWA Numbers) as has been
the case in January and February. March figures as shown in the table below:
March 2018 WA Office Number Value of Sales
ranking # of of Sales
sales
The Agency 1st 64 $44.9m
SLP 2nd 55 $28.5m
Total Combined Group Sales 4th in $ value, 6th 119 $73.4m
in # of sales
Top Group in WA Comparison 164 $82.9m
The table also highlights that – as a combined group – the Company is closing in on claiming number
one ranking in WA for number and value of sales when compared with the top groups in the state.
Meanwhile, the real estate division is firmly on target for FY2018 revenue growth of ~ 100% year-on-
year in WA having already achieved last year’s total Gross Commission in the first nine months of the
year.
East Coast expansion gains momentum
Since inception in April 2017, The Agency East Coast (Top Level) has achieved exceptional results with
total sales of $695 million, total commissions of $10.2 million and 380 settlements for the year up to
31st March 2018.
During the quarter, the Company assisted with expansion into the key market of Melbourne with the
opening of a new office in the prime inner suburb of Albert Park.
Albert Park lies in a strategic location, only three kilometers south of Melbourne's central business
district.
Highly respected sales agent Michael Paproth joined the team in Melbourne, bringing significant
experience to the office. A renowned leader within the real estate industry, Mr Paproth has been
ranked as one of the top agents in the Port Phillip Bay area in Melbourne, specialising in the sale of
prestige property and building market-leading real estate teams.
If you require further information, please contact:
Investors
The Agency Australia Ltd
Paul Niardone
T: +61 08 9204 7955
Media
Chapter One Advisors
David Tasker / Colin Jacoby
T: +61 433 112 936 / +61 439 980 359
Appendix 4C
Quarterly report for entities subject to Listing Rule 4.7B
+Rule 4.7B
Appendix 4C
Quarterly report for entities subject to Listing Rule 4.7B
Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16
Name of entity
The Agency Group Australia Limited
ABN Quarter ended (“current quarter”)
52 118 913 232 31 March 2018
Consolidated statement of cash flows Current quarter Year to date
$A’000 $A’000
1. Cash flows from operating activities
1.1 Receipts from customers 4,156 11,481
1.2 Payments for
(a) research and development - (17)
(b) product manufacturing and operating (2,600) (5,669)
costs
(c) advertising and marketing (10) (125)
(d) leased assets (36) (81)
(e) staff costs (1,508) (6,280)
(f) administration and corporate costs (650) (1,252)
1.3 Dividends received (see note 3) - -
1.4 Interest received 1 4
1.5 Interest and other costs of finance paid - -
1.6 Income taxes paid - -
1.7 Government grants and tax incentives - -
1.8 Other - -
1.9 Net cash from / (used in) operating
(648) (1,939)
activities
+ See chapter 19 for defined terms
1 September 2016 Page 1
Appendix 4C
Quarterly report for entities subject to Listing Rule 4.7B
Consolidated statement of cash flows Current quarter Year to date
$A’000 $A’000
2. Cash flows from investing activities
2.1 Payments to acquire:
(a) property, plant and equipment (383) (722)
(b) businesses (see item 10) - -
(c) investments (370) (420)
(d) intellectual property - -
(e) other non-current assets - -
2.2 Proceeds from disposal of:
(a) property, plant and equipment - -
(b) businesses (see item 10) - -
(c) investments - -
(d) intellectual property - -
(e) other non-current assets - -
2.3 Cash flows from loans to other entities - -
2.4 Dividends received (see note 3) - -
2.5 Other – Cash acquired on acquisition of - -
businesses
2.6 Net cash from / (used in) investing (753) (1,142)
activities
3. Cash flows from financing activities
3.1 Proceeds from issues of shares - 1,920
3.2 Proceeds from issue of convertible notes - -
3.3 Proceeds from exercise of share options - -
3.4 Transaction costs related to issues of - -
shares, convertible notes or options
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings - -
3.7 Transaction costs related to loans and - -
borrowings
3.8 Dividends paid - -
3.9 Other (over subscriptions share placement) (16) 70
3.10 Net cash from / (used in) financing
(16) 1,990
activities
+ See chapter 19 for defined terms
1 September 2016 Page 2
Appendix 4C
Quarterly report for entities subject to Listing Rule 4.7B
Consolidated statement of cash flows Current quarter Year to date
$A’000 $A’000
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning of
quarter/year to date 2,529 2,203
4.2 Net cash from / (used in) operating (648) (1,939)
activities (item 1.9 above)
4.3 Net cash from / (used in) investing activities (753) (1,142)
(item 2.6 above)
4.4 Net cash from / (used in) financing activities (16) 1,990
(item 3.10 above)
4.5 Effect of movement in exchange rates on - -
cash held
4.6 Cash and cash equivalents at end of
1,112 1,112
quarter
5. Reconciliation of cash and cash Current quarter Previous quarter
equivalents $A’000 $A’000
at the end of the quarter (as shown in the
consolidated statement of cash flows) to the
related items in the accounts
5.1 Bank balances 706 2,154
5.2 Call deposits
5.3 Bank overdrafts
5.4 Other (Bank Guarantees) 406 375
5.5 Cash and cash equivalents at end of
1,112 2,529
quarter (should equal item 4.6 above)
6. Payments to directors of the entity and their associates Current quarter
$A'000
6.1 Aggregate amount of payments to these parties included in item 1.2 83
6.2 Aggregate amount of cash flow from loans to these parties included -
in item 2.3
6.3 Include below any explanation necessary to understand the transactions included in
items 6.1 and 6.2
Director salary $53k
Director fees $30k
+ See chapter 19 for defined terms
1 September 2016 Page 3
Appendix 4C
Quarterly report for entities subject to Listing Rule 4.7B
7. Payments to related entities of the entity and their Current quarter
associates $A'000
7.1 Aggregate amount of payments to these parties included in item 1.2 -
7.2 Aggregate amount of cash flow from loans to these parties included -
in item 2.3
7.3 Include below any explanation necessary to understand the transactions included in
items 7.1 and 7.2
8. Financing facilities available Total facility amount Amount drawn at
Add notes as necessary for an at quarter end quarter end
understanding of the position $A’000 $A’000
8.1 Loan facilities - -
8.2 Credit standby arrangements - -
8.3 Other (please specify) - -
8.4 Include below a description of each facility above, including the lender, interest rate and
whether it is secured or unsecured. If any additional facilities have been entered into or are
proposed to be entered into after quarter end, include details of those facilities as well.
9. Estimated cash outflows for next quarter $A’000
9.1 Research and development -
9.2 Product manufacturing and operating costs (3,300)
9.3 Advertising and marketing -
9.4 Leased assets (4)
9.5 Staff costs (1,200)
9.6 Administration and corporate costs (410)
9.7 Other (Bank Guarantee and Rental deposit) -
9.8 Total estimated cash outflows (4,914)
+ See chapter 19 for defined terms
1 September 2016 Page 4
Appendix 4C
Quarterly report for entities subject to Listing Rule 4.7B
10. Acquisitions and disposals of Acquisitions Disposals
business entities
(items 2.1(b) and 2.2(b) above)
10.1 Name of entity Nil Nil
10.2 Place of incorporation or
registration
10.3 Consideration for acquisition or
disposal
10.4 Total net assets
10.5 Nature of business
Compliance statement
1 This statement has been prepared in accordance with accounting standards and policies which
comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Sign here: ............................................................ Date: 30 April 2018
Company Secretary
Print name: Stuart Usher
Notes
1. The quarterly report provides a basis for informing the market how the entity’s activities have been
financed for the past quarter and the effect on its cash position. An entity that wishes to disclose
additional information is encouraged to do so, in a note or notes included in or attached to this
report.
2. If this quarterly report has been prepared in accordance with Australian Accounting Standards,
the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If
this quarterly report has been prepared in accordance with other accounting standards agreed by
ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this
report.
3. Dividends received may be classified either as cash flows from operating activities or cash flows
from investing activities, depending on the accounting policy of the entity.
+ See chapter 19 for defined terms
1 September 2016 Page 5