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ASX ANNOUNCEMENT
4 March 2020
INVESTOR PRESENTATION
The Agency Group Australia’s (ASX:AU1) (“The Agency” or “the Company”) is pleased to update the market with
an investor presentation.
This announcement has been authorised by the Board.
Your faithfully,
Stuart Usher
Company Secretary
September 2018
The Agency Group
Australia Ltd
Investor Presentation - March 2020
ASX:AU1
Executive summary
The Agency Group Australia Ltd (The Agency
Highlights for 6 Months to Dec 31st 2019 Group or the Company) (ASX:AU1) is one of
Australia’s fastest growing integrated real estate
services companies
In over 3 years since listing on the ASX, the
Company has established a national presence
(1) across key metropolitan markets in Australia led
by an industry-leading management team
The Agency Group today has built a fully
serviced real estate firm creating an
organisation designed to scale
(4) The only Company to offer dual property sales
business model, offering both premium (full-
service) and independent brand offering
underpins its strategy to reach leadership
across Australia in terms of agent market share
(2) Integrated services, from property sales,
property management and ancillary services
(3) provides the Company with cross-sell
opportunities, capturing revenue across the
value chain
The traditional landscape of the real estate
agency offering in the current economic
environment provides great opportunities for
The Agency Group to bring further consolidation
to the industry.
Notes: (1) Prior to adoption of AASB 16 - EBITDA of $1.5 million post adoption of new accounting standard AASB
16 (2) Gross Commission Income (3) $180k per agent annualised (4) Properties Under Management
2
Unique business model
Our agents are our clients and are at the core of our model
One of the highest
commission models in the
market place and provision of
support services driving
recruitment growth
Head Office
Franchisor
c.15%-35% (1)
c.10%
Franchisee Principal
c.40% c.40%
Traditional Independent
Franchise Operations
Agent Agent
c.50% Agent c.60%
Brand support c.65%-85% (1)
ₓ Brand support
Overhead support ₓ Overhead support
ₓ Add-on services Admin & Sales support ₓ Add-on services
ₓ Corporate benefits Brand support ₓ Corporate benefits
Overhead support
Add-on services
Corporate benefits
Mentoring for building The Agency has a unique, scalable business model,
teams under agents disrupting the real estate services industry by returning
value, previously given to franchisees and offices, to
agents and shareholders.
The Agency continues to expand its agent network by
recruiting the industry’s top talents and establishing
market leadership based on property transaction
volumes across Australia.
Notes: (1) Commission structure is tailored dependent on brand (The Agency or SLP) and agent performance.
3
What Differentiates us from our Competitors?
TRADITIONAL REAL ESTATE & FIN TECH
Clear focus – the agent is our client and the core of the model • Unclear focus – franchisor / vendor
Removed red tape and unnecessary franchise layers • Offices in every location competing against each other
No franchise fees and marketing levies • Excessive franchise fees and marketing levies
Agile and flexible workplace arrangements from central hubs • Inflexible branding and marketing templates with little agility to adapt
Ability to create annuity streams through numerous verticals to specific market places
• No Distribution channels
Owns extensive database and national network that continues to
Corporate grow • Number of unnecessary layers i.e.. Corporate, State, Franchisee, all
Differences Platform to plug and play best technology taking a cut of the remuneration
Central control of tech provides greater efficiencies • Essentially a Tech Service only
• Unaligned goals
Proven Real Estate experience, leadership and strategic direction in
all facets of the business • Limited company-owned assets i.e. rent roll and database
Best support offering from listing to sales • Lack of control over technology leads to inefficiencies
• Require large marketing budgets
Complete service offering to clients (sales, mortgages, property
management, finance and settlements) • Recruit anyone
The best value proposition for agents in the market • No wealth creation opportunities at an agent level
Industry best remuneration and incentive structure • Lower remuneration and no incentive structure
Agent Ability to build your own business within a business • Pay for your own support
Differences Wealth creation by building an asset and additional revenue stream
Attraction model for high performing sales agents
Flexibility to operate from home or one of our “plug-in” office locations
4
Accelerating national presence
In over 3 years since listing on the ASX, the Company has established a national presence with 10 hubs across key
metropolitan markets in Australia. Led by an industry-leading management team, The Agency has achieved and continues to
capture Australia’s prominent property sales
#1 office in WA market
#3 in sales value in WA market(1)
#1in Lower North Shore and Eastern Suburbs (NSW)
market (2)
Highest number of exchanges recorded since inception in
the December Q of 2019
Highest residential sale result of c.$24m in Australia in
CY19 (3)
6 QLD Significant listings including beachside property with price
guide of c.$17m (4)
agents
Landmark sales including Lang Road, Centennial Park c.
The Agency Perth $11.9m 5
68 Milligan Street
Perth WA 6000
100 NSW
The Agency Hawthorn agents
Level 1, 585 Burwood Road
Hawthorn VIC 3122
150 WA The Agency Albert Park
The Agency Central Coast
PO Box 3223
The Agency Eastern Suburbs
180 Campbell Parade
Wamberal NSW 2260 Bondi Beach NSW 2026
agents 89 Victoria Avenue
Albert Park VIC 3206
The Agency Neutral Bay The Agency Inner West
Level 1, 3 Young Street 103 Johnston Street
Neutral Bay NSW 2089 Annandale NSW 2038
22 VIC The Agency Wollongong
agents 2/63 Burelli Street
Wollongong NSW 2500
The Agency Canberra
Notes: (1) Based on value of listings sold in September 2019. (2) Based on number of listings sold in the Lower North Shore and Eastern Suburbs (NSW) area (September 2019) and
the number of properties currently listed (September 2019). (3) 20B Tivoli Avenue, Rose Bay, Sydney. Sold by Ben Collier. (4) 125 year old heritage-listed home, “Le Fanu”, Cottesloe, 5
Perth. On market by Pamela Wilkinson. (5) August 2019.
Company overview
The Agency Group is comprised of three service categories, including property sales, property
management and ancillary services
The Agency Group’s divisions
Property sales Property management Ancillary services High-Level Support
Conducts sales of residential Manages residential Provision of ancillary Superior support provided
properties on behalf of properties on behalf of services provides cross-sell via:
property vendors. property owners. opportunities
• Agent’s own admin team
Operates a unique agent Operates a unique agent • Mortgage financing
recruitment model that incentive model that that assist throughout the
services: mortgage loan
delivers high growth to the encourages agent whole process from
book with c.4300 loans
company while generating performance and in turn and $1.9m in annualised listing to settlement
value for customers. generating stable, recurring trail income (1)
revenue for the business. • Centralised office and
Disrupting the Australian real • Conveyancing: hubs
estate brokerage market with The Agency Group’s settlement services
its two differentiated property management • Cloud-based platform.
offerings under the brands division operates under The • Financial planning:
The Agency and Sell Lease Agency brand. provision of risk products Instead, the traditional
Property (SLP). and advice to clients models burden agents with
undertaking new significant overhead costs
mortgages and administrative costs
which impacts on their
Premium, full service offering profits.
Value, SaaS support offering
Notes: (1) Calculated from September 2019 monthly trail income.
6
Property sales
Revenue model
The Agency’s dual offering, including a premium brand (The Agency) and a value brand (SLP) enables it to attract sales
agents across the spectrum of potential requirements and needs
Revenue model
Upon the successful sale of a residential property, a vendor commission, a percentage of the property’s sale value, is
charged. This commission is subsequently split between The Agency Group and the agent.
NATIONAL PRESENCE VIRTUAL PRESENCE
ACROSS 10 PHYSICAL LOCATIONS PREDOMINANTLY ACROSS WA AND QLD
The Agency is a premium brand with a SLP is a value brand with a SaaS
full service offering that provides agents offering, boasting unique technology that
with a progressive commission structure. supports the entire administrative process
for real estate transactions.
An agent will typically retain c.75% of the
vendor commission, with The Agency SLP provides agents with a progressive
Group receiving the remaining c.25%. commission structure. An agent will
typically retain c.85% of the vendor
Additional revenue to the business is commission, with The Agency Group
generated from: receiving the remaining c.15%.
• if an agent chooses to have a physical
desk provided, a desk fee of $6,000 Additional revenue to the business is
p.a.; and generated from:
• $250 per transaction fee. • $10,000 p.a. member fee;
• $720 p.a. I.T. platform fee; and
• $250 per transaction fee.
7
Property sales
Market position – The Best Value Proposition
The Agency’s offerings across both brands boast a superior financial and non-financial value to sales
agents above independent operations and traditional franchises
Portion of High commission High commission
Enhanced fee offering across the market commission Low support Strong support
to an agent
• Franchised based brand networks
create significant fee leakage away from Fin Techs
agents with multiple layers of Operations
administration and costs that sit above
an agent, including the franchisee and
the franchisor.
• The primary alternative for agents has
been to establish their own operations,
either standalone or with peers. In
exchange for a higher share of their fee
income agents take on significant
Independent
overhead cost and administrative 50% Operations Traditional
burden and risk. Franchise
• The Agency and SLP brands provide
overall larger profits to the agent than a
traditional franchise or an independent
operations, respectively:
‒ The Agency brand returns
previously leaked fees to the agent,
with a better level of support than a
traditional franchise
‒ The SLP brand enables agents to
operate an independent operation Low commission Low commission
with a highly sophisticated cost Strong support
Low support
efficient technology platform
Level of support to agent
8
Key financial assets
Property management PUM(#)
Mortgage financing
Revenue under the property Mortgage financing is one of The Agency’s ancillary services,
management division is predominantly 4800 4,678 under the brand Mortgage and Financial Solutions. The
composed of management fees. For all 4600 Agency’s mortgage book currently consists of c.4300 loans.
properties under management (PUM), Revenue predominantly consists of upfront fees and trail
the management fee, a percentage of 4400 income.
rental income, is retained by The
Agency Group. 4200
4000 (5)
3800
(1)
3600
Unlike traditional property managers, Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19
The Agency incentivises agents through
a long-term value proposition.
As at 31 December 2019 WA NSW VIC QLD Total Asset Value ($m)
PUM Rent Roll 24.24
Number of properties # 1122 3,437 89 30 4,678 Mortgage Book 4.8
Total 29
Annualised rental income $m 19.96 117.76 3.27 0.96 141.95 Loan facilities 12.09
Rental income per property (2) $’000 19,344 36,847 41,376 34,154 32,745 Loan to Value (LVR) ratio(6) 42%
Management fee % 6.96% 4.56% 3.42% 5.50% 4.88%
Annualised management fee(1) $m 1.39 5.37 0.11 0.05 6.93
Value of Rent Roll (1,3) $m 4.9 18.8 0.39 0.18 24.24
Notes: (1) Calculated from Dec 2019 monthly management fee and excludes ancillary and other PM revenue. (2) Calculated on occupied properties under management of 4335 PuM.
(3) Calculated on a blended valuation multiple of 3.5x. (4) Calculated on a valuation multiple of 2.4x on annualised trail income calculated from Dec 2019 monthly trail income. (5) 9
Calculated from Dec 2019 monthly trail income. (6) Excluding cash
Operational metrics – Demonstrated strong growth
Despite the significant downturn experienced across the national property market over the past few years, The Agency
experienced strong year-on-year growth across key operating metrics. This highlights that in tough markets, agents are
drawn to our enhanced fee offering, reduced risk and the high level of support compared to high fees and costs associated
with franchises or running a small business.
N U M B E R O F A G E N T S ( # ) (1) NUMBER OF NEW LISTINGS (#) NUMBER OF PUM (#)
The Agency SLP 2500 Up 87% Y-o-Y Up 11%Y-o-Y
1955
4,678
2000
1500 4,209
3,382
92 63 1044
1000
492
200 215 500 251
32 64
0
HY FY17 HY FY18 HY FY19 HY FY20 HY FY17 HY FY18 HY FY19 HY FY20 HY FY18 HY FY19 HY FY20
GCI ($M) VALUE OF EXCHANGES ($M)
The Agency SLP Up 23% Y-o-Y
Up 41% Y-o-Y 1517
1235
2.7
3.3
22.2
14.4 190.5
10.9 97.5
3.8
HY FY17 HY FY18 HY FY19 HY FY20 HY FY17 HY FY18 HY FY19 HY FY20
Notes: (1) Following Fair Work Australia’s recent legislative changes the Company performed a strategic review of the SLP agent network.
10
Income Statement
HY 2020 HY 2020
• EBITDA of $1.58m for 1H20, after
$m HY2019 pre AASB16 post AASB16
adoption of new reporting standard
Revenue 10.48 25.62 25.62 AASB16.
Operating costs (12.03) (25.09) (24.14)
• EBITDA (excluding AASB16) of $533k for
EBITDA (1.55) 0.53 1.48 1H20, a significant improvement on
previous corresponding period.
Depreciation & amortisation (0.22) (2.20) (3.04)
Loss before interest (1.77) (1.67) (1.56) • Total revenue of $25.62m – up 145%
on previous corresponding period
Interest (0.34) (0.85) (1.05) ($10.48m: 1H2019).
Net Loss Before Tax (2.11) (2.52) (2.61)
• Loss after tax of $1.67m for 1H20 –
Net Loss After Tax (1.96) (1.58) (1.67) reduced from loss of $1.96m in
previous corresponding period.
Basic and diluted EPS (5.37) (0.80)
• Continued growth in revenue and key
metrics across the Company expected
in the second-half FY20 on back of
improving market conditions
Results include Rent Roll Amortization expenses of $1.8m from rent roll acquisitions (as required under the accounting
standards) - however the rent roll asset value has grown to $24.2m in estimated market value – refer slide 9 notes. 11
Pro-Active Cost Reduction Program
• Pro-active cost reduction program
has been implemented across the
combined group during FY20 as part
of the integration of The Agency’s
East Coast and West Coast
operations.
• During the HY FY20, wage savings of
approx. $678,000 have been realised
as a result of streamlining the
business post-merger with Top Level
Real Estate
• Cost reductions of $2.5 million are
expected to be delivered in FY20 with
The Agency on target to meet these
reductions.
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Key management
Senior management
Paul Niardone Matt Lahood
Managing Director Chief Executive Officer – The Agency
Previously Executive Director and founder of Professional Public Relations (WA), the largest PR More than 30 years in real estate sales; 2,000+ property sales worth over $2bn. Previously
and communications firm in the State until he sold the business to WPP. Experience in marketing Director of Sales for McGrath Real Estate, responsible for market entry strategies and
and strategic planning for clients in both Government and the private sector and over 15 years management of 22 company owned offices and more than 250 people.
experience with public companies.
Thomas McGlynn Maria Carlino
Director of Sales Director of Property Management
Armed with close to 15 years of experience, Thomas has conducted over 4,000 auctions and run Over 27 years of real estate experience in key markets incl. Sydney, Brisbane and the Gold
thousands of training and one-on-one coaching sessions. It is the rare combination of hands-on Coast. Previous senior roles at RUN Property, Ray White and McGrath Real Estate where she
sales experience, general management and auctioneering that make Thomas a trusted and was responsible for the management and growth strategies of the rental portfolio and team across
dependable leader at The Agency. all company owned offices.
Andrew Jensen Arjan van Ameyde
Chief Operating Officer Chief Financial Officer
Andrew, formerly CFO of Ray White, has extensive knowledge in the management Arjan has over 25 years’ experience in senior finance roles in listed companies and SME. He has
of all aspects of finance with strong commercial, strategic, M&A, and change previously founded short-term lending and insurance businesses and established the treasury for
a listed multinational group. Most recently he was Chief Operating Officer/Chief Financial
management experience. He has financially led companies engaged in various
Officer(Australia and UK) of ASX listed Ensurance Limited (ASX: ENA).
fields including real estate and ancillary services sectors globally. Fellow of IPA and
member of the AICD.
Board of directors
Paul Niardone Matt Lahood
Managing Director Chief Executive Officer – Real Estate
Adam Davey Mitchell Atkins
Non-Executive Director Non-Executive Director
Adam is Director, Private Clients and Institutional at Patersons Securities. His expertise spans
Mitchell is Founder and CEO of Magnolia Capital Group, a diversified group
over 25 years and includes capital raising (both private and public), mergers and acquisitions,
ASX listings, asset sales and purchases, transaction due diligence and director duties. with direct investments in fitness, property, financial services and advisory
businesses. Magnolia Capital Group has recently transacted over A$200m across a
diverse range of development, debt and equity opportunities around Australia.
Andrew Jensen
Interim Executive Chairman
13