Half Year Accounts
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THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
Contents
Corporate Directory 2
Directors Report 3
Auditor’s Independence Declaration 7
Condensed Consolidated Statement of Profit or Loss
and Other Comprehensive Income 8
Condensed Consolidated Statement of Financial Position 9
Condensed Consolidated Statement of Changes in Equity 10
Condensed Consolidated Statement of Cash Flows 11
Notes to the Condensed Financial Statements 12
Directors’ Declaration 22
Independent Review Report 23
1
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
Directors Andrew Jensen
Chairman
Paul Niardone
Executive Director
John Kolenda
Non Executive Director
Adam Davey
Non Executive Director
Matthew Lahood
Non Executive Director
Company Secretary Stuart Usher
Managing Director Paul Niardone
Registered Office Suite 1, 437 Roberts Road
Subiaco WA 6008
Principal Place of Business 68 Milligan Street
Perth WA 6000
Solicitors Steinepreis Paganin
Level 4, Next Building
16 Milligan St
Perth WA 6000
Mills Oakley
Level 2, 225 St. Georges Terrace
Perth WA 6000
Share Registry Advanced Share Registry Services
110 Stirling Hwy
Nedlands WA 6009
Auditors Bentleys Audit & Corporate (WA) Pty Ltd
PO Box 7775
Cloisters Square
Perth WA 6850
2
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
DIRECTORS REPORT
Your Directors present their report on The Agency Group Ltd (“the Company”) formerly
Ausnet Financial Services Limited, and its controlled entities (“the Consolidated Entity”) for
the half- year ended 31 December 2018.
Directors
The names of Directors in office at any time during or since the end of the half- year are:
• Paul Niardone
• John Kolenda
• Adam Davey
• Andrew Jensen (Appointed 18 February 2019)
• Matthew Lahood (Appointed 17 January 2019)
• Philip Re (Resigned 18 February 2019)
Directors have been in office since the start of the half- year unless otherwise stated.
Operating and financial review
Financial Review
The Consolidated Entity continues to achieve strong exponential revenue growth, delivering
net revenue from continuing operations of $10,479,073 for the six-month period ending 31
December 2018, representing a 52 per cent increase on the previous comparative period 31
December 2017 revenue (HY2017: $6,877,278). This also represents 62% of the FY18 Annual
revenues.
Commissions for the Consolidated Entity for the six-month period totaled $7,011,868,
representing a 46 per cent increase on the previous comparative period 31 December 2017
revenue (HY2017: $4,798,945). This also represents a 67% of the previous financial year’s
total commissions (FY2018: $10,528,108).
While the Consolidated Entity reported a loss before tax of $2,110,461 (Dec 2017:
$2,148,445 loss), it is important to note that more than $615,000 in one-off costs associated
with legal expenses and corporate advisory were incurred in relation to the acquisition of
Top Level Pty Ltd.
Revenue and commission growth will be maintained during the upcoming period and
significantly enhanced as a result of the acquisition of Top Level Real Estate Pty Ltd which
settled post 31 December on 11 January 2019.
• Loss before tax slightly down to $1.97 million (HY2018: $2.11 million loss)
• One off costs of $615,000 associated with legal expenses associated with
acquisitions and corporate advisory.
3
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
DIRECTORS REPORT (Continued)
• Normalised loss of $1.34 million highlights reduced cash burn rate and is a further
marked improvement operationally on previous years. The Company expects the
WA operations (real estate, mortgage, and settlement businesses) to be cash flow
positive from the start of the 2019.
• Costs associated with the Company’s aggressive expansion nationally with the
acquisition of Top Level didn’t impact on the Company’s loss for the six-month
period.
• Cash and cash equivalents at $1.2 million as at 31 December 2018 ($1 million as at
30 June 2018).
• Net liabilities of the Consolidated Entity were $1.4 million at 31 December 2018,
compared to net assets of $0.4 million at 30 June 2018. This was due to the delay in
the finalisation of the Top Level acquisition which affected the delay in the capital
raising and does not include the value of the loan book of $4 million which is off
balance sheet.
• The financial statements have been prepared on a going concern basis, which
contemplates the continuity of normal business activity and the realisation of assets
and the settlement of liabilities in the ordinary course of business.
Subsequent Events
Top Level Real Estate Pty Ltd
On 17 January 2019, The Agency completed its acquisition and settlement of Top Level Pty
Ltd (“Top Level”), by The Agency’s wholly-owned subsidiary Ausnet Real Estate Services Pty
Ltd, after all conditions precedent to the transaction were satisfied. The total cost of the
acquisition was $5,000,000.
As announced on 12 February 2018, the Company and its wholly-owned subsidiary, Ausnet
Real Estate Services Pty Ltd, entered into an amended and restated option agreement with
Top Level Real Estate Pty Ltd and Top Level’s Majority Shareholders for Ausnet to acquire all
of the Top Level Shares held by the Majority Shareholders and offer to acquire all of the Top
Level Shares held by the Minority Shareholders. It was a condition precedent to Settlement
that the Minority Shareholders accept Ausnet’s offer to acquire their Top Level Shares.
As set out in the Company’s ASX announcement of 12 February 2018, Ausnet has exercised
the option to acquire all of the Majority Shareholders’ Top Level Shares. On 19 September
2018 the Company announced that it had executed a further Amended and Restated Option
Agreement
Top Level is a proprietary company limited by shares incorporated in New South Wales. Top
Level is a real estate business which is currently focused on residential real estate sales in
New South Wales.
4
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
DIRECTORS REPORT (Continued)
Subsequent Events
Completion of the acquisition occurred after the following conditions were satisfied.
• Consideration Shares issued to majority and minority shareholders of Top Level Real
Estate Pty Ltd;
• Conversion of Top Level unrelated and related party loans totaling $5,000,000 from
debt to equity;
• Successful capital raise of $8,400,000;
• 840,000 Ordinary Shares issued on 11 January 2019 to Lead Manager; and
• Election of Mr. Matthew Lahood to the Board on 17 January 2019.
Full details of the acquisition were contained in a Notice of Meeting held on 28 November
2018. Accompanying this notice was an Independent expert’s report. Addendum dated 13
November 2018 was also issued that contained an updated Pro forma statement of financial
position.
The initial accounting for the acquisition of Top Level Pty Ltd has not been provisionally
determined at the end of the reporting period. At the date of this interim financial report,
the necessary identification and fair value assessment of the separately identifiable
intangible assets acquired have not been finalized due to the close proximity to the
reporting date the company is unable to provide accurate information at that point in time.
As part of the post-acquisition settlement process, the Company has re-negotiated the
existing Top Level Macquarie Bank financing, with a new debt facility executed, for a term
extending from 17 January 2019 to July 2019. The facility has a first ranking charge over all
the consolidated group companies
Vicus Residential Pty Ltd
The Agency completed the acquisition of Vicus Residential - the residential sales and
management division of The Vicus Property Group – completed on 11 January 2019 with
settlement of 2,666,667 shares and a $75,000 cash payment as payment for all of Vicus
Residential’s issued shares after receiving shareholder approval on 15 November 2018 (refer
to ASX announcement 15 November 2018). The total acquisition cost is $875,000.
The initial accounting for the acquisition of Vicus Residential has not been provisionally
determined at the end of the reporting period. At the date of this interim report, the
necessary identification and fair value assessment of the separately identifiable intangible
assets acquired have not been finalised due to the close proximity to the reporting date the
company is unable to provide accurate information at that point in time.
5
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
DIRECTORS REPORT (Continued)
Future Developments, Prospects and Business Strategies
Likely developments, future prospects and business strategies of the operations of the
Consolidated Entity and the expected results of those operations have not been included in
this report as the Directors believe that the inclusion of such information would be likely to
result in unreasonable prejudice to the Consolidated Entity.
Auditor’s Independence Declaration
The lead auditor's independence declaration under section 307C of the Corporations Act
2001 (Cth) for the half-year ended 31 December 2018 has been received and can be found
on page 7 of the Interim Financial Report.
Signed in accordance with a resolution of the Board of Directors.
Paul Niardone
Managing Director
Dated this 28th day of February 2019
6
To the Board of Directors
Auditor’s Independence Declaration under Section 307C of the
Corporations Act 2001
As lead audit partner for the review of the financial statements of iCollege Limited for the
period ended 31 December 2018, I declare that to the best of my knowledge and belief,
there have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to
the review; and
any applicable code of professional conduct in relation to the review.
Yours faithfully
BENTLEYS MARK DELAURENTIS CA
Chartered Accountants Partner
Dated at Perth this 28th day of February 2019
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
CONDENSED CONSOLIDATED STATEMENT OF
PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Dec Dec
Note 2018 2017
$ $
Revenue from continuing operations 2 10,479,073 6,877,278
Less Expenses
Salaries & employee benefits expenses (9,128,308) (6,286,513)
Depreciation and Amortisation (219,392) (264,755)
Doubtful debts (9,410) -
Consultancy Fees (216,700) (395,691)
Advertising & Promotion expenses (150,967) (336,497)
Legal, Professional & Valuation fees (997,159) (576,484)
Rent & Outgoings (46,282) (236,606)
Interest expense (340,780) -
Other expenses (1,480,536) (929,177)
Net loss before income tax (2,110,461) (2,148,445)
Income tax benefit 152,452 156,839
Loss from continuing operations (1,958,009) (1,991,606)
Other comprehensive income - -
Total comprehensive income / (loss) for the period
attributable to the members of The Agency Group
Australia Ltd (1,958,009) (1,991,606)
Basic and diluted earnings/(loss) per share (cents
per share) attributable to the members of The
Agency Group Australia Ltd 3 (5.37) (6.29)
The accompanying notes form part of these financial statements
8
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note Dec June
2018 2018
$ $
Current Assets
Cash and cash equivalents 1,161,436 1,021,887
Trade and other receivables 3,888,354 2,997,142
Current tax assets 191,102 191,102
Total Current Assets 5,240,892 4,210,131
Non-Current Assets
Property, Plant and Equipment 525,804 520,607
Financial Asset 448,586 408,182
Intangible Assets 5 4,300,483 4,462,505
Total Non Current Assets 5,274,873 5,391,294
Total Assets 10,515,765 9,601,425
Current Liabilities
Trade and Other Payables 6 9,552,444 7,308,707
Application Monies Payable 570,000 70,000
Borrowings 1,350,000 1,100,000
Provisions 398,132 388,221
Total Current Liabilities 11,870,576 8,866,928
Non Current Liabilities
Deferred tax liabilities 35,768 188,220
Provisions 85,093 63,940
Total Non Current Liabilities 120,861 252,160
Total Liabilities 11,991,437 9,119,088
Net Assets (1,475,672) 482,337
Equity
Contributed Equity 5 11,480,382 11,480,382
Reserves 566,430 566,430
Accumulated Losses (13,522,484) (11,564,475)
Total Equity (1,475,672) 482,337
The accompanying notes form part of these financial statements
9
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Contributed Accumulated Reserves
CONSOLIDATED Equity Losses Total
Balance 30 June 2018 11,480,382 (11,564,475) 566,430 482,337
Profit / (Loss) for the year - (1,958,009) - (1,958,009)
Other comprehensive income - - - -
Total comprehensive income for the period - (1,958,009) - (1,958,009)
Transactions with equity holders in their capacity as
owners:
Share Subscriptions (net of transaction costs) - - - -
Options issued - - - -
Balance 31 December 2018 11,480,382 (13,522,484) 566,430 (1,475,672)
Contributed Accumulated Reserves
CONSOLIDATED Equity Losses Total
Balance 1 July 2017 9,706,731 (7,744,612) 476,195 2,438,314
Profit / (Loss) for the year - - - -
Other comprehensive income - (1,991,606) - (1,991,606)
Total comprehensive income for the period - (1,991,606) - (1,991,606)
Transactions with equity holders in their capacity as owners:
Share Subscriptions (net of transaction costs) 1,773,651 - - 1,773,651
Balance 31 December 2017 11,480,382 (9,736,218) 476,195 2,220,359
The accompanying notes form part of these financial statements
10
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Dec Dec
Note 2018 2017
$ $
Cash flows from operating activities
Receipts from customers 9,463,450 6,432,477
Payments to suppliers and employees (9,413,532) (7,570,781)
Interest received - 17,276
Interest paid (340,780) (62,585)
Net cash inflows/(outflows) from operating activities (290,862) (1,183,613)
Cash flows from investing activities
Payments for Property Plant and Equipment (53,578) (521,465)
Payment for financial assets (343,865)
Payments for deferred consideration (266,011) (172,621)
Net cash inflows/(outflows) from investing activities (319,589) (1,037,951)
Cash flows from financing activities
Proceeds from issue of shares - 2,006,000
Proceeds from share subscriptions 500,000 -
Proceeds of borrowings 250,000 -
Repayments of borrowings - (338)
Net cash inflows/(outflows) from financing activities 750,000 2,005,662
Net increase in cash held 139,549 (215,902)
Cash at the beginning of financial year 1,021,887 2,202,655
Cash at the end of financial year 1,161,436 1,986,753
The accompanying notes form part of these financial statements
11
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
a) Basis of preparation
These general purpose financial statements for the interim half-year reporting period ended 31
December 2018 have been prepared in accordance with requirements of the Corporations Act 2001
and Australian Accounting Standards including AASB 134: Interim Financial Reporting. Compliance
with Australian Accounting Standards ensures compliance with International Financial Reporting
Standard IAS 34 ‘Interim Financial Reporting’.
These half-year financial statements do not include all the notes of the type normally included in
annual financial statements and therefore cannot be expect to provide as full an understanding of the
financial performance, financial position and financing and investing activities of the company as the
full financial statements. Accordingly, this interim financial report is to be read in conjunction with
the annual financial statement for the year ended 30 June 2018 and any public announcements made
by Ausnet Financial Services Limited during the half-year reporting period in accordance with the
continuous disclosure requirements of the Corporations Act 2001.
The interim financial statements have been prepared in accordance with the accounting policies
adopted in the Company's last annual financial statements for the year ended 30 June 2018.
The accounting policies have been applied consistently throughout the Company for the purposes of
preparation of these interim financial statements.
b) Going concern
This report has been prepared on the going concern basis, which contemplates the continuity of
normal business activity and the realisation of assets and liabilities in the normal course of business.
The Consolidated Entity has incurred a loss after tax for the period ended 31 December 2018 of
$1,958,009 (Dec 2017: loss of $1,991,606). The loss for 31 December 2018 includes one off
transaction costs directly related to the acquisition of Top Level of $615,000. In addition the
consolidated entity experienced net cash outflows from operating activities of $290,862 (Dec 2017:
cash outflows of $1,183,613) and there was a working capital deficit of $6,629,683 at 31 December
2018 (30 June 2018: $4,656,797 deficit).
The ability of the Company to continue as a going concern is principally dependent on the following:
• The Consolidated Entity improves profitability of operations across all business units;
• As disclosed in Note 6, the Consolidated Entity acquired Top Level Pty Ltd subsequent to the
reporting period adding revenue and profitability to the group;
• Re-negotiation of the Macquarie Bank debt facility;
12
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
• Raising additional finance through its leverage on its rent roll assets;
• Further re-negotiation or conversion of related party loans and subordinated debt totaling $5,4M;
and
• Continued support from creditors and suppliers.
These conditions indicate a material uncertainty that may cast significant doubt about the ability of
the Consolidated Entity to continue as a going concern. In the event the above matters are not
achieved, the Consolidated Entity will be required to raise funds for working capital from debt or
equity sources.
The directors have prepared a cash flow forecast, which indicates that the Consolidated Entity will
have sufficient cash flows to meet all commitments and working capital requirements for the 12
month period from the date of signing this financial report. In particular:
• As at the date of this report, the Company has re-negotiated the existing Top Level Macquarie
Bank debt facilities, with a new facility of $12.65M which extends from 17 January 2019 to July
2019. The facility has a first ranking charge over all the assets of the consolidated group
companies;
• In January a capital raise was successfully completed to raise $8,400,000;
• Re-negotiated an extension of the repayment date on an existing $1,350,000 loan until June
2019;
• Included in the forecast is an improvement in operations of core business units, which
management expect to generate profitable operations within the next 12 months;
• The payment in full of all ATO debt liabilities;
• The continued support of the Company’s creditors. At the date of the report there were no
outstanding statutory demands made against the company; and
• Managing cash flows in line with available funds.
If the Company is unsuccessful in any of the above, it will be required to immediately raise funds for
its working capital requirements and settlement of its debt instruments from debt or equity sources.
Based on the cash flow forecasts and other factors referred to above, the directors are satisfied that
the going concern basis of preparation is appropriate. In particular, given the Consolidated Entity’s
history of raising capital to date, the directors are confident of the Consolidated Entity’s ability to raise
additional funds as and when they are required.
Should the Consolidated Entity be unable to continue as a going concern it may be required to realise
its assets and extinguish its liabilities other than in the normal course of business and at amounts
different to those stated in the financial statements. The financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying amounts or to the
amount and classification of liabilities that might result should the Consolidated Entity be unable to
continue as a going concern and meet its debts as and when they fall due.
13
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
c) Adoption of new and revised standards
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant to its operations and effective for an accounting
period that begins on or after 1 January 2018.
New and revised Standards and amendments thereof and Interpretations effective for the current year
that are relevant to the Group include:
• AASB 9 Financial Instruments and related amending Standards
• AASB 15 Revenue from Contracts with Customers and related amending Standards
• AASB 2016-5 Amendments to Australian Accounting Standards – Classification and Measurement
of Share-based Payment Transactions
AASB 9 Financial Instruments and related amending Standards
In the current year, the Group has applied AASB 9 Financial Instruments (as amended) and the related
consequential amendments to other Accounting Standards that are effective for an annual period that
begins on or after 1 January 2018. The transition provisions of AASB 9 allow an entity not to restate
comparatives however there was no material impact on adoption of the standard.
Additionally, the Group adopted consequential amendments to AASB 7 Financial Instruments: Disclosures.
In summary AASB 9 introduced new requirements for:
• The classification and measurement of financial assets and financial liabilities,
• Impairment of financial assets, and
• General hedge accounting.
AASB 15 Revenue from Contracts with Customers and related amending Standards
In the current year, the Group has applied AASB 15 Revenue from Contracts with Customers (as
amended) which is effective for an annual period that begins on or after 1 January 2018. AASB 15
introduced a 5-step approach to revenue recognition. Far more prescriptive guidance has been added in
AASB 15 to deal with specific scenarios.
There was no material impact on adoption of the standard and no adjustment made to current or prior
period amounts.
14
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
NOTE 2: REVENUE
Consolidated Entity
Dec Dec
2018 2017
$ $
Revenue from continuing operations:
Commissions 7,011,868 4,798,945
Fees 2,521,730 1,414,426
Management fees 910,190 634,438
Interest received 9,765 58
Other income 25,520 29,411
Total Revenue 10,479,073 6,877,278
NOTE 3: EARNINGS PER SHARE (EPS)
Consolidated Entity
Dec Dec
2018 2017
$ $
Loss for the half-year 1,958,009 1,991,606
Weighted average number of ordinary 36,468,962 31,682,875
shares outstanding during the half-
year used in the calculation of basic
EPS
Basic and diluted EPS (cents per share) (5.37) (6.29)
At the end of the half-year ended 31 December 2018, the Consolidated Entity has 10,335,928 unissued
shares under options (Dec 2017: 7,224,757). The Consolidated Entity does not report diluted earnings per
share on annual losses generated by the Consolidated Entity. During half-year ended 31 December 2018
the Group's unissued shares under option were anti-dilutive.
The weighted average number of ordinary shares outstanding during the period and for all periods
presented have been adjusted for the bonus share issue and the share consolidation that was completed
during the reporting period. The number of ordinary shares outstanding before the event, being the
comparative period ended 31 December 2017, is adjusted for the proportionate change in the number of
ordinary shares outstanding as if the event has occurred at the beginning of the earliest period presented,
being 31 December 2017.
15
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
NOTE 4: TRADE AND OTHER PAYABLES
Consolidated Entity
Dec June
2018 2018
$ $
Trade creditors 2,306,037 1,271,763
Employees’ remuneration – commissions payable 1,123,034 1,035,821
Superannuation – employees 607,870 486,107
Payroll tax 491,243 388,971
Sundry creditors and accrued expenses 494,769 43,549
Lease incentive liability 98,870 109,855
Deferred consideration on acquisitions 410,000 440,000
GST and PAYG payables 3,936,385 3,182,394
Retention payable (Inglewood Real
84,236 350,247
Estate)
9,552,444 7,308,707
NOTE 5: CONTRIBUTED EQUITY Consolidated Entity
Dec June
2018 2018
$ $
December 2018: 36,468,962 (June 2018: 683,793,034)
fully paid ordinary shares 11,480,382 11,480,382
Ordinary Shares
At the beginning of the reporting period - 9,706,731
Shares issued during the year for cash - 1,920,000
Transaction costs relating to share issues - (146,349)
At reporting date 11,480,382 11,480,382
Number of Ordinary Shares
At the beginning of the reporting period 683,793,034 587,793,034
Shares issued during the year for cash - 96,000,000
Bonus issue of shares 410,275,820 -
Shares before share consolidation 1,094,068,854 -
Share consolidation – 30 for 1 basis 36,468,962 -
At reporting date 36,468,962 683,793,034
16
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
NOTE 6: SEGMENT REPORTING
Description of reportable segments
The Consolidated Entity has identified its operating segments based on the internal reports that are
reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance
and determining the allocation of resources
The Consolidated Entity is now managed primarily on the basis of service offerings as the diversification of
the Consolidated Entity’s operations inherently have notably different risk profiles and performance
assessment criteria. Operating segments are therefore determined on the same basis.
Types of services by segment
(i) Real Estate and Property Services
This represents revenue received for provision of real estate services including selling of property,
settlement agent services and property management
(ii) Mortgage Origination Services
This represents revenue received for provision of mortgage broking services.
(iii) Other (includes financial planning, head office etc)
This represents non-reportable segments including head office, financial planning, property
investments and other services.
Basis of accounting for purposes of reporting by operating segments
a. Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors, being the chief operating
decision makers with respect to operating segments, are determined in accordance with accounting
policies that are consistent with those adopted in the annual financial statements of the Consolidated
Entity.
b. Intersegment transactions
An internally determined transfer price is set for all intersegment sales. This price is reset quarterly
and is based on what would be realised in the event the sale was made to an external party at arm’s
length. All such transactions are eliminated on consolidation of the Consolidated Entity’s financial
statements.
Corporate charges are allocated to reporting segments based on the segments’ overall proportion of
revenue generation within the Consolidated Entity. The Board of Directors believes this is
representative of likely consumption of head office expenditure that should be used in assessing
segment performance and cost recoveries.
Intersegment loans payable and receivable are initially recognised at the consideration received/to be
received net of transaction costs. If intersegment loans receivable and payable are not on commercial
terms, these are not adjusted to fair value based on market interest rates. This policy represents a
departure from that applied to the statutory financial statements.
17
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
c. Unallocated items
The following items of revenue, expenses, assets and liabilities are not allocated to operating
segments as they are not considered part of the core operations of any segment:
- head office and corporate costs;
- net gains on disposal of available-for-sale investments;
- impairment of assets and other non-recurring items of revenue and expense;
- income tax expense;
- current and deferred tax assets and liabilities;
- other financial assets;
- intangibles assets; and
- discontinued operations.
d. Segment information
The Consolidated Entity’s operations are from Australian sources and therefore no geographical
segments are disclosed.
Assets and liabilities have not been reported on a segmented basis as the Board of Directors is
provided with consolidated information.
18
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Dec 2018 Real Estate Mortgage Total
Property Origination Reportable Other Consolidated
Services Services Segments Segments Total
$ $ $ $ $
External revenues 8,925,238 1,528,515 10,453,553 25,520 10,479,073
Inter-segment revenues - - - 438,000 438,000
Segment revenue 8,925,238 1,528,515 10,453,553 468,520 10,917,073
Unallocated revenue
Eliminations (438,000)
Consolidated revenue 10,479,073
Segment loss before interest, (954,165) 421,078 (533,087) (50,479) (583,566)
tax, depreciation and
amortisation
Unallocated corporate costs - - - (966,723) (966,723)
EBITDA (1,550,289)
Depreciation/amortisation (209,006) (1,419) (210,425) (8,967) (219,392)
Unallocated corporate
depn/amort
Net finance costs (196,594) (16,678) (213,272) (127,508) (340,780)
Loss before income tax (2,110,461)
Dec 2017 Real Estate Mortgage Total
Property Origination Reportable Other Consolidated
Services Services Segments Segments Total
$ $ $ $ $
External revenues 5,285,666 1,495,343 6,781,009 66,801 6,847,810
Inter-segment revenues - - - 244,086 244,086
Segment revenue 5,285,666 1,495,343 6,781,009 310,887 7,091,896
Unallocated revenue 29,468
Eliminations (244,086)
Consolidated revenue 6,877,278
Segment loss before interest,
tax, depreciation and (1,091,604) 357,265 (734,339) (61,196) (795,535)
amortisation
Unallocated corporate costs (1,085,278)
EBITDA (1,880,813)
Depreciation/amortisation (199,222) (2,050) (201,272) (63,481) (264,753)
Unallocated corporate (2,879)
depn/amort
Net finance costs -
Loss before income tax (2,148,445)
19
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
NOTE 7: SUBSEQUENT EVENTS
Top Level Real Estate Pty Ltd
On 17 January 2019, The Agency completed its acquisition and settlement of Top Level Pty Ltd (“Top
Level”), by The Agency’s wholly-owned subsidiary Ausnet Real Estate Services Pty Ltd, after all conditions
precedent to the transaction were satisfied. The total cost of the acquisition was $5,000,000.
As announced on 12 February 2018, the Company and its wholly-owned subsidiary, Ausnet Real Estate
Services Pty Ltd, entered into an amended and restated option agreement with Top Level Real Estate Pty
Ltd and Top Level’s Majority Shareholders for Ausnet to acquire all of the Top Level Shares held by the
Majority Shareholders and offer to acquire all of the Top Level Shares held by the Minority Shareholders. It
was a condition precedent to Settlement that the Minority Shareholders accept Ausnet’s offer to acquire
their Top Level Shares.
As set out in the Company’s ASX announcement of 12 February 2018, Ausnet has exercised the option to
acquire all of the Majority Shareholders’ Top Level Shares. On 19 September 2018 the Company
announced that it had executed a further Amended and Restated Option Agreement
Top Level is a proprietary company limited by shares incorporated in New South Wales. Top Level is a real
estate business which is currently focused on residential real estate sales in New South Wales.
Completion of the acquisition occurred after the following conditions were satisfied.
• Consideration Shares issued to majority and minority shareholders of Top Level Real Estate Pty
Ltd;
• Conversion of Top Level unrelated and related party loans totaling $5,000,000 from debt to
equity;
• Successful capital raise of $8,400,000;
• 840,000 Ordinary Shares issued on 11 January 2019 to Lead Manager (In accordance with
Shareholder approval at a General Meeting of Shareholders held on 28-Nov 2018 Resolution 9);
and
• Election of Mr. Matthew Lahood to the Board on 17 January 2019.
Full details of the acquisition were contained in a Notice of Meeting held on 28 November 2018.
Accompanying this notice was an Independent expert’s report. Addendum dated 13 November 2018 was
also issued that contained an updated Pro forma statement of financial position.
The initial accounting for the acquisition of Top Level Pty Ltd has not been provisionally determined at this
date. At the date of this interim financial report, the necessary identification and fair value assessment of
the separately identifiable intangible assets acquired have not been finalized due to the close proximity to
the reporting date the company is unable to provide accurate information at that point in time.
As part of the post-acquisition settlement process, the Company has re-negotiated the existing Top Level
Macquarie Bank financing, with a new debt facility executed, for a term extending from 17 January 2019 to
July 2019. The facility has a first ranking charge over all the consolidated group companies
20
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
Vicus Residential Pty Ltd
The Agency completed the acquisition of Vicus Residential - the residential sales and management division
of The Vicus Property Group – completed on 11 January 2019 with settlement of 2,666,667 shares and a
$75,000 cash payment as payment for all of Vicus Residential’s issued shares after receiving shareholder
approval on 15 November 2018 (refer to ASX announcement 15 November 2018). The total acquisition
cost is $875,000.
The initial accounting for the acquisition of Vicus Residential has not been determined at this date. At the
date of this interim report, the necessary identification and fair value assessment of the separately
identifiable intangible assets acquired have not been finalised due to the close proximity to the reporting
date the company is unable to provide accurate information at that point in time.
NOTE 8: COMMITMENTS
There is no change in the Company's commitments or contingencies since the year ended 30 June 2018 to
date of this report.
NOTE 9: CONTINGENT LIABILITIES
There has been no change in contingent liabilities since the last annual reporting period.
21
THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
And its Controlled Entities
Interim Financial Report
December 2018
DIRECTORS’ DECLARATION
The directors of the Company declare that:
1. The financial statements and notes, as set out on pages 8 to 21, are in accordance with the
Corporations Act 2001, and:
(a) comply with Accounting Standard AASB 134: Interim Financial Reporting; and
(b) give a true and fair view of the Consolidated Entity’s financial position as at 31 December
2018 and of its performance for the half year ended on that date.
2. In the directors' opinion there are reasonable grounds to believe that the Consolidated Entity will be
able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors made pursuant to
s.303(5) of the Corporations Act 2001 and is signed for and on behalf of the directors by:
Paul Niardone
Managing Director
Dated this 28th day of February 2019
22
Independent Auditor’s Review Report
To the Members of iCollege Limited
We have reviewed the accompanying financial report of iCollege Limited (“the
Company”) and Controlled Entities (“the Consolidated Entity”) which comprises the
condensed consolidated statement of financial position as at 31 December 2018 , the
condensed consolidated statement of profit or loss and other comprehensive income,
condensed consolidated statement of changes in equity and condensed consolidated
statement of cash flows for the half year ended on that date, a statement of accounting
policies, other selected explanatory notes and the directors’ declaration of the
Consolidated Entity, comprising the Company and the entities it controlled during the
period.
Directors Responsibility for the Financial Report
The directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and
the Corporations Act 2001 and for such control as the directors determine is necessary
to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express a conclusion on the financial report based on our review.
We conducted our review in accordance with Auditing Standard on Review
Engagements ASRE 2410 Review of a Financial Report Performed by the Independent
Auditor of the Entity, in order to state whether, on the basis of the procedures described,
we have become aware of any matter that makes us believe that the financial report is
not in accordance with the Corporations Act 2001 including: giving a true and fair view of
the Consolidated Entity’s financial position as at 31 December 2018 and its performance
for the half year ended on that date; and complying with Accounting Standard AASB 134
Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of the
Consolidated Entity, ASRE 2410 requires that we comply with the ethical requirements
relevant to the audit of the annual financial report.
A review of a financial report consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an audit conducted in
accordance with Australian Auditing Standards and consequently does not enable us to
obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Independent Auditor’s Review Report
To the Members of iCollege Limited (Continued)
Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe
that the financial report of iCollege Limited and Controlled Entities is not in accordance with the Corporations
Act 2001 including:
a. Giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2018 and of
its performance for the period ended on that date; and
b. Complying with Accounting Standard AASB 134: Interim Financial Reporting and Corporations
Regulations 2001.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the Consolidated Entity incurred a net
loss of $339,120 during the half year ended 31 December 2018. As stated in Note 1, these events or conditions,
along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant
doubt on the Consolidated Entity’s ability to continue as a going concern. Our conclusion is not modified in
respect of this matter.
BENTLEYS MARK DELAURENTIS CA
Chartered Accountants Partner
Dated at Perth this 28th day of February 2019