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September 2018
The Agency Group
Australia Ltd
ASX.AU1
Disclaimer
This presentation has been prepared by The Agency Group Australia Pty Ltd ABN 37 093 805 675 (the “Company” or “The Agency Group”) in connection with a proposed capital raising.
This presentation should not be relied upon as a representation of any matter that a potential investor should consider in evaluating the Company. The Company and its affiliates or any of its
directors, agents, officers or employees do not make any representation or warranty, express or implied, as to or endorsement of, the accuracy or completeness of any information, statements,
representations or forecasts contained in this presentation, and they do not accept any liability for any statement made in, or omitted from, this presentation.
Prospective investors should make their own independent evaluation of an investment in the Company.
Nothing in this presentation should be construed as a financial product advice, whether personal or general, for the purposes of Section 766B of the Corporations Act. This presentation consists
purely of factual information and does not involve or imply a recommendation or a statement of opinion in respect of whether to buy, sell or hold a financial product. The Company has not
considered any of your objectives, financial situation or needs.
This presentation has been prepared on a pro-forma basis post the acquisition of Top Level Real Estate Pty Ltd ACN 615 413 879.
The accompanying unaudited financial information in this presentation have been prepared by and are the responsibility of the Company’s management.
NOT AN OFFER
This presentation is for information purposes only. This presentation does not comprise a prospectus, product disclosure statement or other offering document under Australian law (and will not be
lodged with the Australian Securities and Investments Commission) or any other law.
SUMMARY INFORMATION
This presentation does not purport to be all inclusive or to contain all information about the Company or any of the assets, current or future, of the Company. This presentation contains summary
information about the Company and its activities which is current as at the date of this presentation. The information in this presentation is of a general nature and does not purport to contain all
the information which a prospective investor may require in evaluating a possible investment in the Company.
The Company does not undertake to provide any additional or updated information whether as a result of new information, future events or results or otherwise.
FORWARD LOOKING STATEMENTS
Certain statements contained in this presentation, including information as to the future financial or operating performance of the Company and its projects, are forward looking statements. Such
forward looking statements:
• are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant technical, business, economic,
competitive, political and social uncertainties and contingencies;
• involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward
looking statements; and
• may include, among other things, statements regarding estimates and assumptions in respect of prices, costs, results and capital expenditure, and are or may be based on assumptions and
estimates related to future technical, economic, market, political, social and other conditions.
The Company disclaims any intent or obligation to publicly update any forward looking statements, whether as a result of new information, future events or results or otherwise.
The words “believe”, “expect”, “anticipate”, “indicate”, “contemplate”, “target”, “plan”, “intends”, “continue”, “budget”, “estimate”, “may”, “will”, “schedule” and similar expressions identify forward
looking statements.
All forward looking statements contained in this Presentation are qualified by the foregoing cautionary statements. Recipients are cautioned that forward looking statements are not guarantees of
future performance and accordingly recipients are cautioned not to put undue reliance on forward looking statements due to the inherent uncertainty therein.
The Agency Disrupting the real-estate industry
Fully integrated
real estate and
financial services
company
293Agents
~$250m
Listings Value
194% 265%
Growth in group revenue for the year
June 2016 June 2017 June 2018
Growth in group GCI for the year
June 2016 June 2017 June 2018
$6.6m $10.0m $29.3m $2.0m $7.9m $28.8m
3
Overview
• The Agency Group (ASX.AU1) is one of Australia’s fastest growing real estate agencies – agent recruitment model to deliver
high growth while generating value for customers
• In 18 months since listing on the ASX, The Agency Group has grown to 293 sales agents across 2 brands and managing
over 4,000(1) rental properties
• With two distinct and differentiated models The Agency Group aims to disrupt the Australian real estate brokerage market
• Business has been built for scale with ability to materially grow to its number of agents and properties under management
with limited capital expenditure or increase in corporate overheads
• 190 Agents and 4,175(1) properties under • 103 Agents
management • Value brand with virtual presence predominantly
• Premium brand with 9 physical locations nationally across WA and QLD
• Full service offering, that provides agents with: • SaaS offering, that provides agents with:
‒ Progressive commission structure ‒ Progressive commission structure
‒ Opportunity for agents to participate in the value ‒ Opportunity for agents to participate in the value
of property management, mortgage broking, of property management and mortgage broking
financial planning and insurance ‒ Add on settlement services
• Recruited 100+ agents in the last 12 months with an • Unique technology supports the entire administrative
extensive pipeline process for real estate transactions
Notes:
(1) Subject to completion of rent roll acquisition of 210 Properties Under Management. Pre-acquisition number of Properties under Management is 3,965.
4
Market Size
• The real estate services industry is very large and fragmented:
‒ Market size of $14.2bn(1), with ~$300bn in gross value of housing sales in the last 12 months(2)
‒ Industry revenue is forecast to grow at an annualised rate of 1.7% p.a. over the next 5 years(1)
‒ ~40,000 individual businesses with 97% employing fewer than 20 people(1)
‒ ~55,000 real estate agents in Australia(3)
• Residential real estate transactions remain one of the most significant for most Australian’s – requires personalised service
• Notwithstanding housing price cycles real estate brokerage is driven by market volumes, with limited volatility
Number of Australian housing transfers per year(4) (‘000) Number of property listings as at 31 Dec 2017 (‘000)(5)
400
The Agency
QLD 59.5
Max: ~350,000 Group has
350 exposure to
VIC 43.9 ~180,000
property listings
NSW 41.8
300 through its two
brands, The
WA 32.2
Agency and SLP
250 Min: ~265,000
SA 17.1
200 TAS 5.5
NT 2.0
150
2004 2009 2014 2019 2024 ACT 1.7
Sources:
(1) Includes Property sales, Property management, Property leasing and Other services (Real Estate Services in Australia, IBISWorld, September 2017).
(2) Housing market update, National (CoreLogic, March 2018).
(3) Management estimates (June 2018).
(4) Real Estate Services in Australia Risk Ratings (IBISWorld, May 2018).
(5) Housing market update (CoreLogic, December 2017). 5
Market Opportunity
• Australian real estate brokerage is dominated by franchised based brand networks
‒ Of the $14.2bn market size, over 50% of revenue is captured by franchise companies(1)
‒ Whilst market concentration has increased with smaller franchisees joining larger brands for additional support,
fragmentation is still high, with the largest player representing less than 10% of market share(1)
• Primary alternative for agents has been to establish their own operations, either stand alone or with peers. In exchange for
a higher share or their fee income agents take on significant overhead cost and administrative burden
• Franchises create significant fee leakage away from agents with multiple layers of administration and costs
• The Agency brand provides an alternative to the traditional franchise model, returning previously leaked fees to the agent,
with the same level of support
• SLP brand provides independent operations with a cost efficient platform
• As a B2B offering The Agency Group’s brands have been positioned to provide Agents with and enhanced fee offering to
traditional franchise operations minus the administrative burden of a stand alone operation
% of Sales
Commission
to Agent
Independent
Operations
Traditional
Franchise
Sources:
Level of Support to Agent
(1) Real Estate Agency Franchises (IBISWorld, July 2017). 6
Market Position
The Agency and SLP provide overall larger profits to the agent (higher revenue and lower costs) than a traditional franchise or
independent operations.
Independent
Traditional Franchise
Operations
Franchisor Franchisee Agent Head Office Agent Head Office Agent Principal Agent
Revenue
Commission ~10% ~40% ~50% ~25% ~75% ~15% ~85% ~40% ~60%
Value Value
Property Management ✖ 100% ✖ ✔ ✔ 100% ✖
Option Option
Upfront Upfront Upfront
Mortgage ✖ ✖ Trail Trail ✔ ✖
+ Trail + Trail + Trail
Expenses ‒ Costs borne by Franchisee ‒ Costs borne by Head ‒ Costs borne by Head ‒ Costs borne by Agent
office office
‒ Agent has an optional ‒ Agent has $10,000 p.a.
desk fee of $6,000 p.a. member fee, $250 per
transaction fee, and IT
platform fee of $720 p.a.
Level of Support
Brand Support ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✖ ✖
Overhead Support ✖ ✔ ✔ ✖ ✔ ✖ ✔ ✖ ✖
Add-on Services ✖ ✔ ✖ ✔ ✔ ✔ ✔ ✖ ✖
Corporate Benefits ✖ ✖ ✖ ✔ ✔ ✔ ✔ ✖ ✖
7
Traction
• Over the last 12 months, the number of agents in The Agency Group increased from ~80 to 293 (annual growth of ~230%)
• Income from new agents typically materialises 6-12 months after recruitment. The 200+ agents recruited over the last 12
months are expected to achieve run-rate revenue over FY19 resulting in the group being EBITDA positive
• The Agency Group currently represents 0.5% of the Australian market. Compared to the largest group with an ~7.6%
market share(1), a strong value proposition presents an opportunity to materially increase agent numbers in a fragmented
market
Agent Ramp-up Profile*
A newly-recruited agent typically ramps-up
contribution to revenue over 6 – 12 months
~55,000 Run-rate revenue per agent
agents in
Australia(2)
1 2 3 4 5 6 7 8 9 10 11 12
*For illustration purposes only – revenue over the initial 12 months.
0.5%
The Agency Group EBITDA Positive Number of Agents*
At an estimated run-rate GCI per Agent of
$140,000, The Agency Group already has more
than the ~290 Agents needed to be EBITDA
positive
Existing focus
EBITDA positive point: ~290 agents
Target areas
293
Number of Agents WA NSW QLD VIC Total Agents
71 98 12 9 190
94 - 8 1 103 Settlements Exchanges Recruited
Total 165 98 20 10 293 *For illustration purposes only – contribution by agents to GCI. Based on an
estimated cost base of $10m+, calculated as operating expenses less revenue
Sources:
from property management
(1) Real Estate Agency Franchises (IBISWorld, July 2017).
(2) Management estimates (June 2018).
8
Growth
Existing locations
• Continued recruitment of agents
~$250m $2.3bn $3.9bn • Inbound momentum increasing traction
of Exchanges Value of • Customer paid advertising driving brand
Listings value(1)
completed since Properties under awareness
Inception(1) Management(2)
• Recruitment of Business Development
Managers to drive agent onboarding
Geographic expansions
• The Agency is significantly
underrepresented in Queensland and
Victoria
• SLP predominantly in Western Australia
with significant East Coast expansion
opportunities
Network effect of referrals
• Internal agents
‒ 1% of GCI referral reward
• Property management synergies
‒ Provide opportunities for listings
‒ Listings lead to additional property
management
Cross sell of complementary services
• Success of mortgage integration in Western
Australia shows opportunity for East Coast
• Cross sell of insurance e.g. landlord
insurance
Notes:
(1) As at June 2018.
(2) Weighted average using $1,000,000 property valuation for 3,374 properties and $600,000 property valuation for 801 properties. Subject to completion of rent roll acquisition of 210
Properties Under Management. Pre-acquisition number of Properties under Management is 3,965.
9
Performance
Number of Agents & Exchanges (#) Total Monthly GCI ($)
Agents
Series1 Exchanges
Series2 GCI
Series2 Average GCI
Series1
300 5,000,000
4,000,000
200
3,000,000
2,000,000
100
1,000,000
- -
Jul 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18 Jul 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18
Monthly GCI per Agent ($) Average Sale Price ($)
Series1
GCI per Agent Series2
Average GCI per Agent Sale Price
Series1 Average
Series2 Sale Price
25,000 1,600,000
20,000 1,400,000
15,000 1,200,000
10,000 1,000,000
5,000 800,000
- 600,000
Jul 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18
Jul 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18
Source: Management figures based on 1 July 2017 – 30 June 2018 data (unaudited).
10
Financials – Profit & Loss
Profit & Loss ($m)
Sep 17 Dec 17 Mar 18 Jun 18 FY18
Sales 2.7 3.9 3.9 4.6 15.2
Property Management 0.8 1.6 2.4 2.4 7.2
Other 1.5 1.6 0.9 3.0 7.0
Total Revenue 5.0 7.0 7.3 10.0 29.3
COGS (2.5) (3.3) (3.4) (5.2) (14.4)
Gross Profit 2.4 3.7 3.9 4.8 14.9
Gross Margin 49% 53% 53% 48% 51%
Expenses (4.6) (5.5) (5.3) (6.7) (22.1)
EBITDA (2.2) (1.8) (1.3) (1.9) (7.2)
EBITDA Margin (44%) (25%) (18%) (19%) (25%)
Key Metrics
Sep 17 Dec 17 Mar 18 Jun 18 FY18
# Agents 109 142 179 293 293
# Exchanges 264 310 355 623 1,552
GCI ($m) 5.2 5.7 6.5 11.3 28.8
GCI per Agent ($’000)(1) 53.7 44.4 38.7 43.5 175.9
Source: Management figures based on 1 July 2017 – 30 June 2018 data (unaudited).
Notes:
(1) Calculated as the GCI on the average number of agents in the respectively periods.
11
Financials – Pro-forma Balance Sheet & Key Assets
Assets and Liabilities ($m)(1) Shareholders Equity ($m)(1)
Assets Equity
Cash and cash equivalents 6.8 Contributed Equity 27.0
Trade & Other receivables 10.7 Reserves 0.7
Current tax asset 0.2 Accumulated losses (12.5)
Other current assets 0.0 Total Equity 15.3
Total current assets 17.7
Property, plant & equipment 3.0
Intangible assets 26.7(2)
Deferred Tax 3.9
Investments -
Other 0.5 Key Assets – Rent Roll
Total non-current assets 34.1
Properties under Management 4,175(3)
Total Assets 51.9
Estimated Monthly Management Fee $645,766
Liabilities
Trade and other payables 16.8
Estimated Annual Management Fee $7.7m
Borrowings 3.5
Provisions 0.8 Rent Roll Multiple 3.6x(4)
Total current liabilities 21.1 Estimated Rent Roll Value $27.9m
Borrowings 13.0
Other 0.4 Key Assets – Mortgage Book
Deferred tax liabilities 0.7
Estimated Monthly Mortgage Trail $165,000
Lease incentives liabilities 0.8
Provisions 0.6
Total non-current liabilities 15.5 Estimated Annual Mortgage Trail ($m) $2.0m
Total Liabilities 36.6
Mortgage Book Multiple 2.4x
Net Assets 15.3 Mortgage Book Value ($m) $4.8m
Source: Management estimates based on 30 June 2018 data (unaudited).
Notes:
(1) Figures are assumed to be post Capital Raise of $8,400,000.
(2) Excludes Mortgage Book asset – the Mortgage Book asset is held off-balance sheet.
(3) Subject to completion of rent roll acquisition of 210 Properties Under Management. Pre-acquisition number of Properties under Management is 3,965. 12
(4) Blended average based on Rent Roll Multiple estimates by geography.
Capital Raise (1)
Sources & Uses ($)
Sources Uses
Capital raise 8,400,000 Repayment of Existing debt 8,218,930
Debt to Equity swap 5,000,000 Cash for Working Capital 4,929,070
Transaction costs(2) 252,000
Total 13,400,000 Total 13,400,000
Capital Structure Pro-forma Shareholding Structure
Share Price $0.010(3)
Shares Outstanding 1,774m(4)
Pre-raise
Market Capitalisation $17.7m
Capital raise holdings
Net debt $23.3m 27%
Enterprise Value $41.1m
Share Price $0.010
Shares Outstanding 3,114m(4)
Post-raise
Existing holdings
Market Capitalisation $31.1m 73%
Net debt $9.7m
Enterprise Value $40.8m
Notes:
(1) The proposed capital raise is conditional subject to shareholder approval. Refer to indicative timetable on Page 14.
(2) Transaction costs are ~$500,000, with payment proportioned between cash and equity.
(3) As at 31 August 2018.
(4) Pre-share consolidation of 30:1. Shares outstanding expected to be 103.8m. 13
Indicative Timetable
19 October 2018: Shareholder Meeting
26 October 2018: Settlement
The company reserves the right to change this date without notice.
14
Board of Directors
Philip Re Paul Niardone Matt Lahood(1) John Kolenda Adam Davey
Chairman Executive Director Executive Director Non Executive Director Non Executive Director
Chartered Accountant, Previously Executive Director More than 30 years in real John is the co-founder and Adam is Director, Private
Chartered Secretary and a and founder of Professional estate sales; 2,000+ property Managing Director of Finsure Clients and Institutional at
Member of the Institute of Public Relations (WA), the sales worth over $2bn. Group, one of Australia's Patersons Securities. His
Company Directors. In largest PR and communications Previously Director of Sales fastest growing retail finance expertise spans over 25
recent years he has been firm in the State until he sold the for McGrath Real Estate, brokerages, writing over $1 years and includes capital
involved as a Director and business to WPP. Experience in responsible for market entry Billion in new mortgages every raising (both private and
Company Secretary for a marketing and strategic planning strategies and management month across 1300 brokers. He public), mergers and
number of public for clients in both Government of 22 company owned offices formed the Loan Market Group acquisitions, ASX listings,
companies involving and the private sector and over and more than 250 people. with Ray White and before that asset sales and purchases,
transactions in mining 15 years experience with public worked as the General transaction due diligence
exploration and production companies. Manager of Sales & and director duties.
and the renewable energy Distribution of Aussie Home
industry. Loans, where he was
responsible for the sales
performance of over 700
mortgage advisors.
Notes: (1) Pending completion of Acquisition of Top Level Real Estate.
15
Senior Management
Paul Niardone Matt Lahood(1) Andrew Jensen(1) Steven Chen(1) Maria Carlino(1)
Managing Director CEO – The Agency Chief Financial Officer Director of Projects – The Director of Property
Agency Management
Andrew Jensen has extensive
knowledge in the Over 20 years’ experience in Over 27 years of real estate
management of all aspects of real estate sales delivering over experience in key markets incl.
the finance function with 3,000 properties worth in excess Sydney, Brisbane and the Gold
strong commercial, strategic, of A$2.5bn. Ranked 16 in the Coast. Previous senior roles at
M&A, and change top 100 agents of 2016 by REB. RUN Property, Ray White and
management experience. He Previously Head of Projects for McGrath Real Estate where she
has financially led companies McGrath Real Estate where he was responsible for the
engaged in various fields was responsible for a team of management and growth
including real estate, financial eight Associate Directors and strategies of the rental portfolio
services, telecommunications over 50 agents and support staff and team across all company
and the franchising sectors across Sydney, Brisbane and owned offices.
both in Australia and Gold Coast.
Internationally.
Notes: (1) Pending completion of Acquisition of Top Level Real Estate.
16