Annual Report to shareholders
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THE AGENCY GROUP AUSTRALIA LTD
ABN 52 118 913 232
and its controlled entities
ANNUAL REPORT
30 June 2020
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Corporate directory
Current Directors
Andrew Jensen Executive Chairman and Chief Operations Officer
Paul Niardone Managing Director
Matthew LaHood Executive Director
Adam Davey Non-executive Director
Company Secretary
Stuart Usher
Registered Office and Head Office Share Registry
Street: 68 Milligan Street Advanced Share Registry Limited
PERTH WA 6000 Street + Postal: 110 Stirling Highway
Postal: PO Box 7768 NEDLANDS WA 6009
CLOISTERS SQUARE WA 6850 Telephone: 1300 113 258 (within Australia)
Telephone: +61 (0)8 9204 7955 +61 (0)8 9389 8033 (International)
Facsimile: +61 (0)8 9204 7956 Facsimile: +61 (0)8 6370 4203
Email: info@theagencygroup.com.au Email: admin@advancedshare.com.au
Website: theagencygroup.com.au Website: www.advancedshare.com.au
Auditors Securities Exchange
Bentleys Audit & Corporate (WA) Pty Ltd Australian Securities Exchange
Level 3, 216 St Georges Terrace Level 40, Central Park, 152-158 St Georges Terrace
PERTH WA 6000 Perth WA 6000
Telephone: +61 (0)8 9226 4500 Telephone: 131 ASX (131 279) (within Australia)
Telephone: +61 (0)2 9338 0000
Solicitors Facsimile: +61 (0)2 9227 0885
Steinepreis Paganin Website: www.asx.com.au
Level 4, The Read Buildings ASX Code AU1
16 Milligan Street
Perth WA 6000
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Contents
◼ Chairman’s letter......................................................................................................................................................................1
◼ Managing Directors report .......................................................................................................................................................2
◼ Directors' report .......................................................................................................................................................................3
◼ Auditor's independence declaration ......................................................................................................................................20
◼ Consolidated statement of profit or loss and other comprehensive income.........................................................................21
◼ Consolidated statement of financial position .......................................................................................................................22
◼ Consolidated statement of changes in equity ........................................................................................................................23
◼ Consolidated statement of cash flows ...................................................................................................................................24
◼ Notes to the consolidated financial statements ....................................................................................................................25
◼ Directors' declaration .............................................................................................................................................................76
◼ Independent auditor's report.................................................................................................................................................77
◼ Corporate governance statement ..........................................................................................................................................82
◼ Additional Information for Listed Public Companies..............................................................................................................83
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Chairman’s letter
Dear shareholders,
I would like to take this opportunity to thank our shareholders, board, staff and sales agents for the strong commitment they
have shown to our business during the past 12-months.
Despite the impact of COVID-19 pandemic, FY2020 was a milestone year for The Agency Group Australia (ASX:AU1) where we
delivered our first ever full year EBITDA profit and cashflow, strong year-on-year revenue growth and growth across key metrics.
While The Agency - like everyone else in the real estate sector - was not immune from the COVID-19 fallout, the strength of our
disruptive model and cloud-based platform allowed us to continue to deliver our high-quality services with no interruptions.
Our model was originally built on a foundation that all our agents and staff could seamlessly work externally without having to
be reliant on an office.
The ability for agents to work from anywhere is highly attractive and will be an important recruitment driver for agents in the
future.
With the relaxation of COVID-19 restrictions in most key markets, we pleasingly experienced a strong last month of FY20 which
is testament to the robustness of our business model and the strength and tenacity of our sales agents and administrative staff.
These strong results are now flowing through to the FY2021 with a record 446 listings for the month of July, a 68% increase on
the same monthly period last year.
FY2020 has been a significant year in our short history, one in which we have delivered milestones across the company. While
COVID-19 did impact numbers in the last quarter of the financial year, the rebound we witnessed in the first few months of the
new financial year fills us with optimism and positions us to continue our growth trajectory for FY2021 and beyond.
Thank you for your continuing loyalty and we look forward to what promises to be another significant year for the company.
ANDREW JENSEN
Executive Chairman
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Managing Directors report
Dear shareholders,
The hard work and dedication of our team of highly experienced agents and staff has been the keystone of The Agency Group
Australia’s (ASX:AU1) success in disrupting the Australian real estate market and this effort was particularly evident during the
COVID-19 pandemic.
In the face of a significantly challenging real estate market, The Agency team pulled together and helped each other through
COVID-19. We were forced to make some difficult decisions in the early stages of the pandemic including temporary reduction in
working hours across all staff and management. However, making these decisive decisions early ensured The Agency Group is
now well positioned for a strong start to FY2021.
Despite these unprecedented headwinds, we are pleased to have delivered a company-making year in which we delivered our
maiden EBITDA profit and positive cashflow performance, while aggressively growing our brand into new markets and expanding
into existing markets within a sustainable financial framework.
The effectiveness of our disruptive model can be seen in the 48% year-on-year increase in combined revenue for 2020. This
follows 68% growth and 75% growth during the prior two years and takes into account only six months of operations following
the completion of the Top Level Real Estate Pty Ltd acquisition in January 2019.
The increase in revenue was driven by strong growth in the number and value of property sales during the year, in which growth
in combined gross commission income was bolstered by 3,153 sales and $2.9 billion worth of property sold across the combined
group.
Our unique model has and always will continue to attract the best talent and I am extremely proud of our team who continue to
negotiate the best results for our clients amid uncertain conditions. We continue to grow our fundamentals and reach, with
increasing numbers of agents, listings, and properties under management.
We remain confident organic growth will continue to drive revenue growth. The ongoing recruitment of highly-experienced
agents remains strong with the company having 283 agents at 30th June 2020. Meanwhile, our listings have grown 15% from the
previous year to 3,957 listings, and our portfolio of properties under management grew to a record total of 4,838 as at 30th June
2020.
Recognising the evolving challenges placed on the real estate industry, we continue to identify and implement efficiencies into
our business while taking steps to strengthen the balance sheet to repay existing loans and provide the necessary funds to
accelerate The Agency’s growth plan in key real estate markets.
The integration of The Agency’s East Coast and West Coast operations, following the acquisition of Top Level, is continuing to
deliver cost synergies as planned with the full year benefit of these to be achieved in the next financial year.
There remain significant intangible assets off the balance sheet, including part of the rent roll and the mortgage book, both of
which have grown from the previous year and deliver strong recurring revenue to the business.
With cost savings being delivered, a strong balance sheet and a full year of synergies from cost savings and new agents recruited
over the past year, The Agency is well placed to deliver significant improvements to its financial performance over the next 12
months.
Outlook
Looking forward, the priority of the board and the Company is to maintain a healthy balance sheet as well as provide and deliver
the essential services and support to our agents and our customers which will enable a stronger sustainable and financial position
in the years ahead for our shareholders.
We thank our loyal shareholders for their support and look forward to exciting times ahead.
PAUL NIARDONE
Managing Director
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Directors' report
Your Directors present their report on the Group, consisting of The Agency Group Australia Ltd (The Agency or the Company)
and its controlled entities (collectively the Group), for the financial year ended 30 June 2020.
The Agency is listed on the Australian Securities Exchange (ASX:AU1).
1. Directors
The names of Directors in office at any time during or since the end of the year are:
◼ Andrew Jensen Executive Chairman and Chief Operations Officer
◼ Paul Niardone Managing Director
◼ Matthew LaHood Executive Director
◼ Adam Davey Non-Executive Director
◼ Mitchell Atkins Non-executive Director (Appointed 1 October 2019, resigned 8 May 2020)
◼ John Kolenda Non-executive Director (Resigned 20 December 2019)
(collectively the Directors or the Board)
Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. For additional
information of Directors including details of the qualifications of Directors please refer to paragraph 6 Information relating to the
Directors of this Directors Report.
2. Company secretary
The following person held the position of Company Secretary at the end of the financial year:
◼ Stuart Usher
Qualifications B.Bus, CPA, Grad Dip CSP, MBA, AGIA, ACIS
Experience Mr Usher is a CPA and Chartered Company Secretary with 25 years of extensive
experience in the management and corporate affairs of public listed companies. He holds
an MBA from the University of Western Australia and has extensive experience across
many industries focusing on Corporate & Financial Management, Strategy & Planning,
Mergers & Acquisitions, and Investor Relations & Corporate Governance.
3. Dividends paid or recommended
There were no dividends paid or recommended during the financial year ended 30 June 2020.
4. Significant Changes in the state of affairs
There have been no significant changes in the state of affairs of the Group during the financial year ended 30 June 2020 other
than disclosed elsewhere in this Annual Report.
5. Operating and financial review
5.1. Nature of Operations Principal Activities
The principal activity of the Group for the financial year was real estate services and related activities. There were no
significant changes in the nature of the Group’s principal activities during the financial year.
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Directors' report
5.2. Operations Review
a. Key Metrics
ANNUAL GROUP REVENUE ($m) GCI ($m)
60
Up 48% Y-o-Y 50
Up 26% Y-o-Y
45
40 40
35
30 30
25 47.9
20 41.86 20 37.9
15 28.3 28.8
10 10
16.8
5 9.6 3.8
0
0
FY17 FY18 FY19 FY20
FY17 FY18 FY19 FY20
NUMBER OF NEW LISTINGS (#) NUMBER OF PUM (#)
Up 15% Y-o-Y Up 12%Y-o-Y
5000 6,000
3957 4,838
4000 5,000
3430 4,337
4,000 3,347
3000
3,000
1776
2000
2,000
1000 639
1,000
0 0
FY17 FY18 FY19 FY20 FY18 FY19 FY20
VALUE OF EXCHANGES ($B)
3.5 Up 21% Y-o-Y
2.9
3
2.4
2.5
2 1.8
1.5
1
0.5 0.2
0
FY17 FY18 FY19 FY20
All key metrics increased during the year across our businesses as demonstrated above, reinforcing the sustained growth
the business has been able to achieve year on year for the past three years. This is despite the impact of the COVID-19
pandemic and resultant impact from restrictions on the real estate sector nationally during the latter part of the March
and June quarters 2020. The Agency delivered strong operating results for FY2020 including its first full year EBITDA profit
since inception.
For FY2020, the Group reported Annual Group Revenue of $41.86 million, a 48% increase year-on-year (FY20191: $28.34
million), which further highlights the effectiveness of the Company’s model.
1 Note: FY19 reflects six months of operating results of Top Level Pty Ltd
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Directors' report
The increase in revenue was primarily due to a 26% increase year-on-year in Combined Gross Commission Income to
$47.9 million (FY19: $38 million). This figure was bolstered by 3,153 sales (up from 2,419 sales for FY19) and $2.9 billion
worth of property sold across the combined group for the FY2020 (FY19: $2.5 billion).
Property management continues to grow with The Agency reporting a record total of 4,838 Properties Under Management
as at 30 June 2020, up 12% on the prior corresponding period, generating $9 million revenue annually.
The Agency also witnessed growth in its Mortgage Solutions Australia (MSA) business with home loan approvals for FY2020
up 11% year-on-year from $124.2 million to $137.4 million.
As at 30 June 2020, The Agency was comprised of a combined 283 sales agents (East Coast: 142, West Coast: 141), with
average Gross Commission Income (GCI) increasing by over 20% over the past twelve months. The Agency’s model of
allowing our high-quality agents to focus on sales and providing support is being demonstrated by the year-on-year increase
in GCI.
The Agency will be looking to boost agent numbers in the coming quarters. Based on the Company’s existing platform and
cost structure, which is largely fixed, any future recruitment will directly contribute to EBITDA performance.
The Agency Group reported cash receipts of $42.53 million for the FY2020, a 42% year-on-year increase (FY2019: $29.93
million).
Pleasingly, The Agency rebounded in June across key metrics as COVID-19 restrictions eased in major markets. Results
delivered in June are now flowing through with a strong sales pipeline into Q3 2020.
Please see below table highlighting year-on-year growth across key metrics:
The Agency Group FY20 FY19 % Change
Revenue ($M) 41.86 28.3 +48%
EBITDA ($M) 2.66 (4.25) +161%
EBITDA - pre AASB16 ($M) 0.71 (4.25) +116%
GCI ($M) 47.92 37.97 +26%
PUM 4,838 4,337 +12%
Home Loan Approvals (MSA) ($M) 137.4 124.2 +11%
5.3. Financial Review
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.
The Agency continued its growth during FY2020 delivering three quarters of positive EBITDA as well as positive cash flow,
a first for the Company. For FY2020, the Group recorded EBITDA profit of approximately $2.66 million. EBITDA was
calculated as provided below:
EBITDA calculation 2020 2019
$ $
Loss before tax (10,357,057) (9,255,448)
Interest income (17,988) (12,958)
Depreciation and amortisation 6,038,609 2,266,548
Impairment 5,230,330 1,378,379
Interest and finance costs 1,769,193 1,242,675
Share-based payments expense - 133,663
EBITDA 2,663,087 (4,247,141)
AASB16 Leases impact (1,951,373) -
EBITDA (pre-AASB16 Leases impact) 711,714 (4,247,141)
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Directors' report
EBITDA was $2.66 million. Pre-adoption of the new AASB16 Leases standard, which was applied during FY2020, EBITDA
profit for the year came to $711,714 which compares to an EBITDA loss of $4.25 million for FY2019, a $6.91 million
turnaround.
The Group’s revenue for the year ended 30 June 2020 was recorded at $41.86 million as compared with the previous year
ended 30 June 2019 which recorded $28.34 million.
The net assets of the Group have increased from 30 June 2019 by $2.58 million to $11.61 million at 30 June 2020 (2019:
$9.03 million).
The Group incurred a net loss before tax for the year of $10.36 million (2019: $9.26 million loss). It is important to note
that this was primarily impacted by interest and finance costs ($1.77 million), depreciation and amortisation ($6.04 million)
and impairment of goodwill ($5.23 million).
The Board has taken a conservative view on the review of its goodwill on historical acquisitions and believed it was
appropriate to impair by $5.23 million for FY2020, in light of market uncertainty as a result of COVID.
As at 30 June 2020, the Group's cash and cash equivalents increased from 30 June 2019 by $126,843 to $2.72 million at
30 June 2020 (2019: $2.60 million).
2020
$’000
Cash at bank (reference financial statements note 5.1) 2,724
Cash classified as
◼ Cash on deposits 482
◼ Cash on deposit with funder plus bank guarantees 770
◼ Convertible Note funds 1,000
Reporting in the 30 June 2020 Appendix 4C 4,976
Government incentives and related grants have been received during the last quarter of the year and were used to also
support employee sales agents in Perth. These have been included in operational cash flows.
5.4. Events Subsequent to Reporting Date
There are no other significant after balance date events that are not covered in this Directors' Report or within the financial
statements as disclosed in note 14 Events subsequent to reporting date on page 61.
5.5. Future Developments, Prospects and Business Strategies
The Group remains focussed on maintaining a sustainable financial framework and continues to identify and implement
efficiencies into its business.
To this end, the Group is currently finalising arrangements to bring bank debt down to a manageable level.
The Company continues to work proactively with its primary bank debt provider and other parties regarding a resolution
of its current financing facility on or before 30 September 2020.
The Agency is active in pursuing a range of strategic partnerships and JV opportunities it believes will drive agent
recruitment and sales revenue in the coming reporting periods.
There remain significant intangible assets off the balance sheet, these include the rent roll and the Mortgage Book. These
assets contribute an annuity income to the business in excess of $10 million per annum. Total estimated market asset value
of the rent roll and loan book is approximately $27 million.
Other likely developments, future prospects and business strategies of the operations of the Group and the expected
results of those operations, not otherwise disclosed in this report, 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 Group.
5.6. Environmental Regulations
The Group's operations are not subject to any significant environmental regulations in the jurisdictions it operates in.
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Directors' report
6. Information relating to the Directors
◼ Mr Paul Niardone Managing Director
Non-independent
Qualifications MBA, BA
B
Experience Mr Niardone was the Executive Director and founder of Professional Public Relations (WA), the
largest PR and communications firm in the State until he sold the business to WPP. He has
experience in marketing and strategic planning for clients in both Government and the private
sector. With a degree in Politics and Industrial Relations and a Master’s in Business
Administration, he started his career in the Department of Cabinet and Parliamentary Services.
He was appointed inaugural Manager of the Peel Region Business Enterprise Centre, and was
then appointed as the first Marketing Manager for the entire Enterprise Centre Network
comprising 36 centres throughout WA.
Mr Niardone's marketing skills were recognised by Westpac in its decision to appoint him as
one of the first Business Banking Managers in Australia without a banking background.
His career to date has provided him with a unique opportunity to gain experience, insights and
contacts in a wide range of industries at the CEO and Board level.
He has sat on the boards of a number of public and private companies and not for profit
organisations.
Interest in Shares and Indirect 4,239,023 Ordinary Shares
Options 411,111 Performance Shares
99,142 Options
Directorships held in MinQuest Limited
other listed entities
during the three years
prior to the current year
◼ Mr Adam Davey Non-executive Director
Non-independent
Experience Mr Davey is a Director, Private Clients and Institutional at Patersons Securities.
Mr Davey's expertise spans over 25 years and includes capital raising (both private and public),
mergers and acquisition, ASX listings, asset sales and purchases, transaction due diligence and
director duties.
Mr Davey has been involved in significantly growing businesses in both the industrial and
mining sector. This has been achieved through holding various roles within different
organisations, including Chairman, Managing Director, Non-executive director, major
shareholder or corporate adviser to the board.
Mr Davey is also the Chairman of Teen Challenge Foundation, the largest Youth Drug and
Alcohol Rehabilitation Centre in Western Australia.
Interest in Shares and Direct 266,667 Performance Shares
Options Indirect 1,064,307 Ordinary Shares
338,095 Options
Directorships held in Ensurance Limited
other listed entities Painchek Ltd
during the three years
prior to the current year
◼ Mr Andrew Jensen Executive Chairman and Chief Operating Officer
Non-independent
Qualifications FIPA, MAICD
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Directors' report
Experience Mr Jensen previously held the position of Chief Financial Officer for International and leading
Australian Companies, which will greatly assist the Company in its next phase of national
growth under the two prominent brands of The Agency and Sell Lease Property.
Mr Jensen has strong commercial, strategic, and M&A experience and has financially led
companies engaged in various fields including real estate, financial services,
telecommunications, and the franchising sectors both in Australia and Internationally.
He is an accomplished CFO with over 18 years’ experience in senior finance and management
roles. Previously, Mr Jensen was the CFO and Director of Australasia’s largest real estate group
Ray White, with over $20 billion in annual sales and one of Australia’s largest independent
mortgage broking businesses Loan Market. He has also been the CFO of VGC Food Group Pty
Ltd, a private diversified manufacturing and franchising group.
Mr Jensen was also CFO and COO of Digicel PNG (Papua New Guinea) part of Digicel Group
Limited (Digicel), one of the South Pacific’s largest and most successful telecommunications
companies. He is also a fellow of the Institute of Public Accountants and member of the
Australian Institute of Company Directors.
Interest in Shares and Indirect 1,903,492 Ordinary Shares
Options
Directorships held in RESA Group Limited
other listed entities Freedom Insurance Group Limited (resigned 29 April 2019)
during the three years
prior to the current year
◼ Mr Matthew Lahood Executive Director (Appointed 17 January 2019)
Non-independent
Experience Mr Lahood is synonymous with Australian real estate, during more than two decades at the
forefront of the industry, he has honed his expertise in everything from property sales to
auctioneering. Having personally coached and mentored many of the industry’s finest sales
agents to become million-dollar writers, Mr Lahood knows what it takes to significantly grow
their businesses. He is also well known around Australia for his outstanding leadership skills
and for building super sales and operational teams. He has been recognised with countless
performance awards and is considered a thought leader within the Australian real estate
space. Mr Lahood provides media commentary on a national level and is a regular keynote
speaker at real estate and financial events.
Mr Lahood’s love of real estate is only outshone by his passion for helping people grow
personally and professionally. For over 28 years, he has stood firmly by his values of humility,
transparency and integrity, values that he has passed onto many who have been lucky enough
to work alongside him.
Interest in Shares and Indirect 24,804,398 Ordinary Shares
Options 9,622,044 Options
Directorships held in Nil
other listed entities
during the three years
prior to the current year
Former Directors
◼ Mr Mitchell Atkins Non-executive Director (Appointed 1 October 2019, resigned 8 May 2020)
Non-independent
Experience Mr Atkins currently serves as Founder and CEO at Magnolia Capital Group, a diversified group
with direct investments in fitness, property, financial services, and advisory businesses.
Magnolia Capital Group, led by Mr Atkins, has recently transacted over A$200m across a
diverse range of development, debt, and equity opportunities around Australia.
Prior to founding Magnolia in 2013, Mr Atkins served as a Senior Analyst in the financial
advisory services business at Deloitte and as an Investment Analyst at a boutique private equity
firm in Sydney.
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Directors' report
Interest in Shares and Direct 344,797 Ordinary Shares (at date of resignation)
Options Indirect 52,624,442 Ordinary Shares (at date of resignation)
29,811,994 Options (at date of resignation)
Directorships held in Nil
other listed entities
during the three years
prior to the current year
◼ Mr John Kolenda Non-executive Director (resigned 20 December 2019)
Non-independent
Experience Mr Kolenda is the co-founder and Managing Director of the Finsure Group, one of Australia's
fastest growing retail finance brokerages, writing over $1 billion in new mortgages every
month across 850 brokers.
Prior to founding Aura and Finsure Group, Mr Kolenda founded X Ino, which was merged with
Ray White to form Loan Market Group. From 1994 to 2004, John worked as the General
Manager of Sales & Distribution of Aussie Home Loans, where he was responsible for the sales
performance of over 700 mortgage advisors.
As Chairman of Aura Group, Mr Kolenda leads corporate strategy for the group and supports
the business through his network of strategic and institutional partners. Mr Kolenda’s
leadership has given Aura Group the ability to execute on its growth plans to date.
Mr Kolenda has significant board experience in both the public and private sector.
Interest in Shares and Direct 266,667 Performance Shares (at date of resignation)
Options Indirect 24,749,544 Ordinary Shares (at date of resignation)
Directorships held in Disruptive Investment Group
other listed entities Global Reviews
during the three years iBuyNew Group Ltd
prior to the current year
Goldfields Money Ltd
7. Meetings of Directors and committees
During the financial year, 24 meetings of Directors (including committees of Directors) were held. Attendances by each Director
during the year are stated in the following table.
DIRECTORS' REMUNERATION AND FINANCE AND OPERATIONS AUDIT
MEETINGS NOMINATION COMMITTEE COMMITTEE COMMITTEE
Number Number Number Number
eligible to Number eligible to Number eligible to Number eligible to Number
attend Attended attend Attended attend Attended attend Attended
Paul Niardone 24 24
Andrew Jensen 24 24
At the date of this report, the Audit, Nomination, and Finance and Operations Committees
Adam Davey 23 20 comprise the full Board of Directors. The Directors believe the Company is not currently of
a size nor are its affairs of such complexity as to warrant the establishment of these
Matthew Lahood 24 22 separate committees. Accordingly, all matters capable of delegation to such committees
are considered by the full Board of Directors.
Mitchell Atkins 17 16
John Kolenda 4 2
8. Indemnifying officers or auditor
8.1. Indemnification
The Company has paid premiums to insure each of the current and former Directors and officers against liabilities for costs
and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity
of Director or Officer of the Company, other than conduct involving a wilful breach of duty in relation to the Company. The
Company has not given any further indemnity or entered into any other agreements to indemnify, or pay or agree to pay
insurance premiums.
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Directors' report
No indemnities have been given or insurance premiums paid, during or since the end of the period, for any person who is
or has been an auditor of the Company
8.2. Insurance premiums
The contract of insurance prohibits disclosure of the nature of liability and the amount of the premium.
9. Options
9.1. Unissued shares under option
At the date of this report, the unissued ordinary shares of the Company under option (listed and unlisted) are as follows:
Grant Date Date of Expiry Exercise Price Number under Vested &
$ Option Exercisable
20 Dec 2017 20 Dec 2020 0.750 266,667 266,667
20 Dec 2017 20 Dec 2020 1.200 66,667 66,667
28 Nov 2018 11 Jan 2022 0.300 333,333 333,333
30 Sep 2019 31 Dec 2020 0.065 101,515,093 101,515,093
25 May 2020 25 May 2022 0.040 2,000,000 2,000,000
104,181,760 104,181,760
No person entitled to exercise the option has or has any right by virtue of the option to participate in any share issue of
any other body corporate.
9.2. Shares issued on exercise of options
No ordinary shares have been issued by the Company during the financial year as a result of the exercise of options
(2019: nil).
10. Non-audit services
During the year, Bentleys Audit & Corporate (WA) Pty Ltd (Bentleys), the Company’s auditor, provided no non-audit services
(2019: nil), in addition to their statutory audits. Details of remuneration paid to the auditor can be found within the financial
statements at note 18 Auditor's Remuneration on page 62.
In the event that non-audit services are provided by Bentleys, the Board has established certain procedures to ensure that the
provision of non-audit services are compatible with, and do not compromise, the auditor independence requirements of the
Corporations Act 2001 (Cth). These procedures include:
◼ non-audit services will be subject to the corporate governance procedures adopted by the Company and will be reviewed
by the Board to ensure they do not impact the integrity and objectivity of the auditor; and
◼ ensuring non-audit services do not involve reviewing or auditing the auditor's own work, acting in a management or
decision-making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.
11. Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 (Cth) for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on
behalf of the Company for all or part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the
Corporations Act 2001.
12. Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of The Agency support
and have substantially adhered to the best practice recommendations set by the ASX Corporate Governance Council. For a
detailed analysis of the Company’s Corporate Governance Policies, visit the corporate governance section of our website at
www.investors.theagency.com.au/corporate-governance.
13. Auditor's independence declaration
The lead auditor's independence declaration under section 307C of the Corporations Act 2001 (Cth) for the year ended
30 June 2020 has been received and can be found on page 20 of the annual report.
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Directors' report
14. Remuneration report (audited)
This report outlines the remuneration arrangements in place for Directors and key management personnel of the Company for
the year ended 30 June 2020. The information in this remuneration report has been audited as required by s308(3C) of the
Corporations Act 2001 (Cth).
14.1. Key management personnel (KMP)
This remuneration report details the remuneration arrangements for KMP who are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Company and the Group,
directly or indirectly, including any director (whether Executive or otherwise) of the parent company, and includes those
Executives in the Parent and the Group receiving the highest remuneration. KMP comprise the Directors of the Company
and key executive personnel:
◼ Andrew Jensen Executive Chairman and Chief Operations Officer
◼ Paul Niardone Managing Director
◼ Adam Davey Non-Executive Director
◼ Matt Lahood Executive Director
◼ Mitchell Atkins Non-Executive Director (appointed 1 October 2019, resigned 8 May 2020)
◼ John Kolenda Non-Executive Director (resigned 20 December 2019)
◼ Arjan van Ameyde Chief Financial Officer (appointed 1 February 2020)
14.2. Principles used to determine the nature and amount of remuneration
a. Remuneration Policy
The remuneration policy of The Agency Group Australia Limited has been designed to align director and management
objectives with shareholder and business objectives by providing a fixed remuneration component, and offering
specific long-term incentives, based on key performance areas affecting the Group’s financial results. The Board
believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best management
and directors to run and manage the Group, as well as create goal congruence between directors, executives and
shareholders.
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was
developed by the Board.
All remuneration paid to Directors and executives is valued at the cost to the Company and expensed.
The Board policy is to remunerate non-executive Directors at the lower end of market rates for comparable companies
for time, commitment, and responsibilities. The maximum aggregate amount of fees that can be paid to non-executive
Directors is subject to approval by shareholders at the Annual General Meeting (AGM). Fees for non-executive Directors
are not linked to the performance of the Group.
b. Performance Conditions Linked to Remuneration
The Group seeks to establish and maintain The Agency Group Australia Limited Performance Rights Plan (Plan) to
provide ongoing incentives to any full time or part time employee, consultant or any person nominated by the Board
(including director or company secretary of the Company who holds salaried employment with the Company on a full
or part time basis) (Eligible Participants) of the Company.
The Board adopted the Plan to allow Eligible Participants to be granted Performance Rights to acquire shares in the
Company.
The objective of the Plan is to provide the Company with a remuneration mechanism, through the issue of securities in
the capital of the Company, to motivate and reward the performance of Eligible Participants in achieving specified
performance milestones within a specified performance period. The Board will ensure that the performance milestones
attached to the securities issued pursuant to the Plan are aligned with the successful growth of the Company’s business
activities.
c. Remuneration structure
In accordance with best practice corporate governance, the structure of Non-Executive Director and Executive
compensation is separate and distinct.
(1) Non-executive director remuneration
The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract
and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
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Directors' report
14. Remuneration report (audited)
The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non‐executive directors shall
be determined from time to time by a general meeting. An amount not exceeding the amount determined is then
divided between the Directors as agreed. The latest determination was at the Annual General Meeting held on 29
April 2016 when shareholders approved an aggregate remuneration of $250,000 per year. The Board considers
advice from external consultants when undertaking the annual review process.
(2) Executive remuneration
Senior executives, including Executive Directors, are engaged under the terms of individual employment contracts.
Such contracts are based upon standard terms drafted by the Company’s lawyers. Executive Directors do not receive
any directors’ fees in addition to their remuneration arrangements. Base salary/consulting fees are set to reflect
the market salary for a position and individual of comparable responsibility and experience. Base salary/consulting
fees are regularly compared with the external market and during recruitment activities generally. It is the policy of
the Company to maintain a competitive salary structure to ensure continued availability of experienced and
effective management and staff.
Executives are prohibited from entering into transactions or arrangements which limit the economic risk of
participating in unvested entitlements.
Details of the nature and amount of each element of each Director, including any related company and each KMP
are set out below.
d. Employment Details of Members of KMP
(1) Executive Services Agreement (ESA) – Paul Niardone
Mr Paul Niardone entered into an ESA, revised on 11 January 2019, with the Company to be employed as Managing
Director upon and subject to the terms and conditions of the ESA. The key terms of this agreement are disclosed
below:
(A) Remuneration
(i) Mr Niardone will receive a salary, exclusive of superannuation, of $390,000 per year, exclusive of
superannuation, which will be reviewed annually by the Company (Salary)(as revised on 11 January 2019).
(ii) Mr Niardone will not receive any further director’s fees in addition to the Salary from the Company during
such period as Mr Niardone serves as a director of the Company as determined by the Board.
(iii) In addition, the Company may at any time during the term of the ESA pay Mr Niardone a performance-
based bonus of not less than 50% of the total employment cost over and above the salary. In determining
the extent of any performance-based bonus, the Company shall take into consideration the key
performance indicators of Mr Niardone and the Company, as the Company may set from time to time, and
any other matter that it deems appropriate.
(iv) The Company shall provide to Mr Niardone, at its own cost, life insurance protection on similar terms to the
life insurance protection currently offered by the Company.
(v) The Company will make employer superannuation contributions on behalf of Mr Niardone.
(vi) The Company will reimburse Mr Niardone for all reasonable travelling intra/interstate or overseas,
accommodation, and general expenses incurred in the performance of all duties in connection with the
business of the Company and its related bodies corporate.
(vii) Mr Niardone is entitled to all leave in accordance with the National Employment Standard (NES) and
Western Australian long service leave legislation.
(B) Termination by the Company without reason
The Company may at its sole discretion terminate employment by giving twelve months' written notice and, at
the end of that notice period, making a payment to Mr Niardone equal to the salary payable over a twelve-
month period. The Company may elect to pay Mr Niardone the equivalent of the twelve months' salary and
dispense with the notice period (as revised on 11 January 2019).
(C) Termination by Mr Niardone
Mr Niardone may at his sole discretion terminate the Employment in the following manner:
(i) if at any time the Company commits any serious or persistent breach of any of the provisions contained in
the ESA and the breach is not remedied within 28 days of receipt of written notice from Mr Niardone to the
Company to do so, by giving notice effective immediately; or
(ii) by giving three months' written notice to the Company.
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Directors' report
14. Remuneration report (audited)
(2) ESA – Matthew Lahood
(A) Remuneration
(i) Mr Lahood will receive a salary, exclusive of superannuation, of $500,000 per year, on a total employment
cost basis, which will be reviewed annually by the Company (Salary).
(ii) Mr Lahood will also receive additional director’s fees of $36,000 per year, from the Company in addition to
the Salary from the Company during such period, as Mr Lahood serves as a director of the Company as
determined by the Board.
(iii) In addition, the Company may at any time during the term of the ESA pay Mr Lahood a performance-based
bonus over and above his salary. In determining the extent of any performance-based bonus, the Company
shall take into consideration the key performance indicators of Mr Lahood and the Company, as the
Company may set from time to time, and any other matter that it deems appropriate.
(iv) The Company will provide a motor vehicle allowance of up to $22,000 per year.
(v) The Company will make employer superannuation contributions on behalf of Mr Lahood.
(vi) The Company will reimburse Mr Lahood for all reasonable travelling intra/interstate or overseas,
accommodation, and general expenses incurred in the performance of all duties in connection with the
business of the Company and its related bodies corporate.
(vii) Mr Lahood is entitled to all leave in accordance with the NES.
(B) Termination by the Company without reason
The Company may at its sole discretion terminate employment by giving three months' written notice and, at
the end of that notice period, making a payment to Mr Lahood equal to the salary payable over a five-month
period. The Company may elect to pay Mr Lahood the equivalent of the six months' salary and dispense with
the notice period
(C) Termination by Mr Lahood
Mr Lahood may at his sole discretion terminate the Employment in the following manner:
(i) if at any time the Company commits any serious or persistent breach of any of the provisions contained in
the ESA and the breach is not remedied within 28 days of receipt of written notice from Mr Lahood to the
Company to do so, by giving notice effective immediately; or
(ii) by giving three months' written notice to the Company.
(3) Letter of Appointment – Adam Davey
On 16 August 2016, Adam Davey executed a letter of appointment to become a non-executive Director of the
Company.
(A) Term
Mr Davey’s service commenced on the date of completion of the acquisition of Ausnet Real Estate Services Pty
Ltd by the Company and will cease when he resigns, retires or is removed from office in accordance with the
Company’s constitution or the Corporations Act 2001 (Cth).
(B) Fee
Mr Davey will be paid a fee of $48,000 per annum for his role as a non-executive Director of the Company.
Any fees paid to Mr Davey will in any event be subject to annual review by the Board of the Company and
approval by Shareholders (if required). The Company will reimburse Mr Davey for all reasonable expenses
incurred in performing his duties
(4) Letter of Appointment – Andrew Jensen
On 15 February 2019, Andrew Jensen executed a letter of appointment to become a non-executive Director of the
Company effective from Settlement.
(A) Term
Mr Jensen’s service commenced from the date of the incumbent, Non-executive Director and Chairman Mr
Phillip Re resigned from office being from 18 February 2019, and will cease when he resigns, retires or is
removed from office in accordance with the Company’s constitution or the Corporations Act 2001 (Cth).
(B) Fee
Mr Jensen will be paid a fee of $60,000 per annum for his role as a non-executive Director of the Company. Any
fees paid to Mr Jensen will in any event be subject to annual review by the Board of the Company and approval
by Shareholders (if required). The Company will reimburse Mr Jensen for all reasonable expenses incurred in
performing his duties.
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Directors' report
14. Remuneration report (audited)
(5) Executive Services Agreement (ESA) – Andrew Jensen
Mr Andrew Jensen entered into an ESA with the Company to be employed as Chief Operations Officer upon and
subject to the terms and conditions of the ESA. The key terms of this agreement are disclosed below
(A) Remuneration
(i) Mr Jensen will receive a salary, inclusive of superannuation, of $350,000 per year, on a total employment
cost basis, which will be reviewed annually by the Company (Salary).
(ii) Mr Jensen will continue to receive director’s fee as detailed in (4) above.
(iii) In addition, the Company may at any time during the term of the ESA pay Mr Jensen a performance-based
bonus.
(iv) The Company will make employer superannuation contributions on behalf of Mr Jensen.
(v) The Company will reimburse Mr Jensen for all reasonable travelling intra/interstate or overseas,
accommodation, and general expenses incurred in the performance of all duties in connection with the
business of the Company and its related bodies corporate.
(vi) Mr Jensen is entitled to all leave in accordance with the National Employment Standard (NES) and Western
Australian long service leave legislation.
(B) Termination by the Company without reason
The Company may at its sole discretion terminate employment by giving three months' written notice and, at
the end of that notice period, making a payment to Mr Jensen equal to the salary payable over a three-month
period. The Company may elect to pay Mr Jensen the equivalent of the six months' salary and dispense with
the notice period
(C) Termination by Mr Jensen
Mr Jensen may at his sole discretion terminate the Employment in the following manner:
(i) if at any time the Company commits any serious or persistent breach of any of the provisions contained in
the ESA and the breach is not remedied within 28 days of receipt of written notice from Mr Jensen to the
Company to do so, by giving notice effective immediately; or
(ii) by giving two months' written notice to the Company.
(6) Letter of Appointment – Mitchell Atkins
On 30 September 2019, Mr Atkins executed a letter of appointment to become a non-executive Director of the
Company effective from Settlement. This agreement terminated upon Mr Atkins’ resignation 8 May 2020.
(A) Term
Mr Atkins service commenced on 1 October 2019 and ceased when he resigned on 8 May 2020.
(B) Fee
Mr Atkins was paid a fee of $48,000 per annum for his role as a non-executive Director of the Company. Any
fees paid to Mr Atkins were in any event be subject to annual review by the Board of the Company and approval
by Shareholders (if required). The Company reimbursed Mr Atkins for all reasonable expenses incurred in
performing his duties.
(7) Letter of Appointment – John Kolenda
On 16 August 2016, John Kolenda executed a letter of appointment to become a non-executive Director of the
Company effective from Settlement. This agreement terminated upon Mr Kolenda’s resignation 20 December 2019.
(A) Term
Mr Kolenda’s service will commence on the date of completion of the acquisition of Ausnet Real Estate Services
Pty Ltd by the Company and ceased when he resigned on 20 December 2019.
(B) Fee
Mr Kolenda was paid a fee of $48,000 per annum for his role as a non-executive Director of the Company. Any
fees paid to Mr Kolenda were in any event be subject to annual review by the Board of the Company and
approval by Shareholders (if required). The Company reimbursed Mr Kolenda for all reasonable expenses
incurred in performing his duties.
(8) Executive Services Agreement (ESA) – Arjan Van Ameyde
Mr Arjan Van Ameyde entered into an ESA, revised on 11 December 2019 (commencing 1 February 2020), with the
Company to be employed as Chief Financial Officer upon and subject to the terms and conditions of the ESA. The
key terms of this agreement are disclosed below:
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Directors' report
14. Remuneration report (audited)
(A) Remuneration
(i) Mr Van Ameyde will receive a salary, exclusive of superannuation, of $250,000 per year, exclusive of
superannuation, which will be reviewed annually by the Company (Salary).
(ii) Mr Van Ameyde shall be entitled to payment of $10,000 following the one-year anniversary of the
1 February 2020, subject to achievement by the CFO of key performance indicators.
(iii) In addition, the Company may at any time during the Term pay to Mr Van Ameyde a performance-based
bonus over and above the Salary
(iv) Mr Van Ameyde shall be entitled to participate in an Executive Share Scheme
(v) The Company will make employer superannuation contributions on behalf of Mr Van Ameyde and will
reimburse Mr Van Ameyde for all reasonable travelling, accommodation, and general expenses incurred in
the performance of all duties.
(vi) Mr Van Ameyde is entitled to all leave in accordance with the National Employment Standard (NES) and
Western Australian long service leave legislation.
(B) Termination by the Company without reason
The Company may at its sole discretion terminate employment by giving three months' written notice and at
the end of that notice period, making a payment to Mr Van Ameyde of one month’s salary. The Company may
elect to pay Mr Van Ameyde the equivalent of the four months’ salary and dispense with the notice period.
(C) Termination by Mr Van Ameyde
Mr Van Ameyde may at his sole discretion terminate the Employment in the following manner:
(i) if at any time the Company commits any serious or persistent breach of any of the provisions contained in
the ESA and the breach is not remedied within 28 days of receipt of written notice from Mr Van Ameyde to
the Company to do so, by giving notice effective immediately; or
(ii) by giving three months' written notice to the Company.
e. Voting and comments made at the Company’s 2019 Annual General Meeting (AGM)
At the Annual General Meeting held on 29 November 2019, the Company received 53,990,661 (97.5%) Yes votes and
1,389,138 (2.5%) Against and Nil Abstain on its remuneration report for the 2019 financial year. The Group did not
employ a remuneration consultant during the year.
14.3. Performance-based remuneration
The following table provides employment details of persons who were, during the financial year, members of KMP of the
Group. The table also illustrates the proportion of remuneration that was performance based and the proportion of
remuneration received in the form of options.
Position Held as at Contract Proportions of Elements of Proportions of Elements of
Group KMP 30 June 2020 and any Commencement / Remuneration Related to Performance Remuneration Not Related to
change during the Termination Date Performance
year Non-salary Fixed Salary/ Fixed Salary/
Cash-based Shares / Options / Fees – cash Fees – share
Incentives Units Rights based based Total
% % % % % %
Andrew Jensen Executive Chairman Appt. 18.02.2019 (Dir) - - - 100 - -
and COO Appt. 1.02.2020 (COO)
Paul Niardone Managing Director 11.01.2019 - - - 100 - -
Adam Davey Non-Executive 16.08.2016 - - - 100 - -
Director
Matthew Lahood Executive Director 17.02.2019 - - - 100 - -
Mitchell Atkins Non-Executive Appt. 1.10.19 - - - 100 - -
Director Res. 8.05.20
John Kolenda Non-Executive Res. 20.12.19 - - - 100 - -
Director
Arjan van Ameyde Chief Financial Appt. 1.02.20 - - - 100 - -
Officer
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Directors' report
14. Remuneration report (audited)
14.4. Directors and KMP remuneration
Details of the nature and amount of each element of the remuneration of each of the KMP of the Company (the Directors)
for the year ended 30 June 2020 are set out in the following tables:
There were no cash bonuses paid during the year and there are no set performance criteria for achieving cash bonuses.
The following table of benefits and payments represents the components of the current year and comparative year
remuneration expenses for each member of KMP of the Group. Such amounts have been calculated in accordance with
Australian Accounting Standards.
2020 – Group
Short-term benefits Post- Long-term Termination Equity-settled share- Total
Group KMP employment benefits benefits based payments
benefits
Salary, fees Profit share Non- Other Super- Other Equity / Options
and leave and bonuses monetary annuation Perf. Rights
$ $ $ $ $ $ $ $ $ $
Andrew Jensen(4) 176,256 - - - 10,752 - - - - 187,008
Paul Niardone(4) 315,000 - - 24,752 21,003 - - - - 360,755
Adam Davey(4) 46,982 - - - - - - - - 46,982
Matthew Lahood 500,267 - - 20,167 25,000 - - - - 545,434
Mitchell Atkins(1) 32,000 - - - - - - - - 32,000
John Kolenda(2)(4) 18,182 - - - - - - - - 18,182
Arjan van Ameyde(3) 76,282 - - - 7,247 - - - - 83,529
1,164,969 - - 44,919 64,002 - - - - 1,273,890
(1) Appointed 1 October 2019, resigned 8 May 2020
(2)
Resigned 20 December 2019
(3) Appointed 1 February 2020
(4)
The following shares were issued to Directors to settle accrued outstanding Amount Shares
Directors’ fees from the prior year:
S No.
Paul Niardone 116,719 1,795,682
Andrew Jensen 118,500 1,823,077
John Kolenda 87,494 1,346,061
Adam Davey 66,000 1,015,385
Total 388,713 5,980,205
2019 – Group
Short-term benefits Post- Long-term Termination Equity-settled share- Total
Group KMP employment benefits benefits based payments
benefits
Salary, fees Profit share Non- Other Super- Other Equity Options(3)
and leave and bonuses monetary annuation
$ $ $ $ $ $ $ $ $ $
Philip Re(1) 40,000 - - - - - - - - 40,000
Paul Niardone 300,000 - - 29,006 20,531 - - 116,667 - 466,204
John Kolenda 48,000 - - - - - - - - 48,000
Adam Davey 48,000 - - - - - - - 16,996 64,996
Matthew Lahood(2) 255,496 - - - 12,504 - - - 268,000
Andrew Jensen(3) 78,283 - - - 5,376 - - - - 83,659
769,779 - - 29,006 38,411 - - 116,667 16,996 970,859
(1) Resigned 18 Feb 2019
(2) Appointed 17 Jan 19
(3) Appointed 18 Feb 19
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Directors' report
14. Remuneration report (audited)
14.5. Share-based compensation
The Group believes that encouraging its directors and executives to become shareholders is the best way of aligning their
interests with those of its shareholders. At present the Group does not have an active employee share option plan.
The Company issued 5,980,205 ordinary shares to Directors to settle accrued outstanding Directors’ fees (refer note 7.1.4).
No shares or options were issued as share-based compensation during the year. During the 2019 financial year 833,333
shares were issued to Mr Niardone (refer note 20.2.2a), and 333,333 options were issued to Mr Davey (refer note 20.2.2b).
There were no equity instruments issued during the year to Directors as a result of options exercised that had previously
been granted as compensation.
a. Securities received that are not performance-related
No members of KMP are entitled to receive securities that are not performance-based as part of their remuneration package.
b. Options and Rights Granted as Remuneration
No equity instruments were granted in the financial year ended 30 June 2020. During the financial year ended 30 June 2019
333,333 options were granted to Mr Davey as remuneration as detailed note 20 Share-based payments.
14.6. KMP equity holdings
a. Fully paid ordinary shares of The Agency Group Australia Ltd held by each KMP
The number of ordinary shares of The Agency Group Australia Ltd held, directly, indirectly or beneficially, by each KMP,
including their personally-related entities for the year ended 30 June 2020 is as follows
2020 – Group Balance at start of Received during Received during the
year or the year as year on the exercise Other changes Balance at end of
Group KMP appointment compensation of options during the year year or resignation
No. No. No. No. No.
Andrew Jensen(4) 80,415 1,823,077 - - 1,903,492
Paul Niardone(4)(5) 1,475,825 1,795,682 - 967,516 4,239,023
(4)
Adam Davey 48,922 1,015,385 - - 1,064,307
Matthew Lahood 5,412,369 - - 19,392,029 24,804,398
Mitchell Atkins(1) 51,225,117 - - 1,744,123 52,969,240
(2)(4)(7)
John Kolenda 17,620,972 1,346,061 - 5,782,511 24,749,544
Arjan van Ameyde(3) - - - - -
75,863,620 5,980,205 - 27,886,179 109,730,004
(1) Appointed 1 October 2019, resigned 8 May 2020
(2) Resigned 20 December 2019
(3) Appointed 1 February 2020
(4) Shares issue to settle outstanding fees as disclosed in note 7.1.4
(5) Mr Niardone received 769,231 shares in lieu of consulting fees to Chapter One (of which he was a director and beneficiary) and
198,285 were issued on a shortfall taken on an entitlement prospectus
(6) Mr Lahood received 19,244,088 shares issued in respect to off-market conversion of loans of $1,250,865 as disclosed in 7.1.3, and
147,941 shares purchased on-market
(7) Mr Kolenda received 5,782,511 shares issued in respect to off-market conversion of loans of $375,866 as disclosed in 7.1.3.
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Directors' report
14. Remuneration report (audited)
b. Options in The Agency Group Australia Ltd held by each KMP
The number of options over ordinary shares in The Agency Group Australia Ltd held, directly, indirectly or beneficially,
by each KMP, including their personally-related entities for the year ended 30 June 2020 is as follows:
2020 – Group Balance at Granted as Balance at
start of year or Remuneration Exercised Other changes end of year or Vested and
Group KMP
appointments during the year during the year during the year resignation Exercisable Not Vested
No. No. No. No. No. No. No.
Andrew Jensen - - - - - - -
Paul Niardone(4) - - - 99,142 99,142 99,142 -
Adam Davey 338,095 - - - 338,095 338,095 -
Matthew Lahood(5) - - - 9,622,044 9,622,044 9,622,044 -
Mitchell Atkins(1) 29,811,994 - - - 29,811,994 29,811,994 -
John Kolenda(2) - - - 2,891,275 2,891,275 2,891,275 -
Arjan van Ameyde(3) - - - - - - -
30,150,089 - - 12,612,461 42,762,550 42,762,550 -
(1) Appointed 1 October 2019, resigned 8 May 2020
(2)
Resigned 20 December 2019
(3)
Appointed 1 February 2020
(4) Mr Niardone received 99,142 options issued on a shortfall taken on an entitlement prospectus
(5)
Mr Lahood received 9,622,044 options issued in respect to off-market conversion of loans of $1,250,865 as disclosed in 7.1.3.
c. Performance Shares of The Agency Group Australia Ltd held by each KMP
The number of Performance Shares in The Agency Group Australia Ltd held, directly, indirectly or beneficially, by each
KMP, including their personally-related entities for the year ended 30 June 2020 is as follows
2020 – Group Received during
Balance at Received during the year on Balance at
Group KMP start of year or the year as the exercise of Other changes end of year or Maximum value
appointments compensation options during the year resignation yet to vest
No. No. No. No. No. No.(1)
Andrew Jensen - - - - - -
Paul Niardone 411,111 - - - 411,111 -
Adam Davey 266,667 - - - 266,667 -
Matthew Lahood - - - - - -
Mitchell Atkins(2) - - - - - -
John Kolenda(3) 266,667 - - - 266,667 -
(4)
Arjan van Ameyde - - -
944,445 - - - 944,445 -
(1) The maximum value of the performance shares yet to vest was estimated based on the fair value of shares granted which was
valued at nil. The minimum value of the performance shares yet to vest is nil, as the shares will be forfeited if the vesting
conditions are not met
(2) Appointed 1 October 2019, resigned 8 May 2020
(3) Resigned 20 December 2019
(4) Appointed 1 February 2020
The Incentive Performance Shares vest upon:
(i) achieving a 10% growth in the mortgage and finance business loan book within 18 months of settlement; and
(ii) achieving a 20-day volume VWAP on the ASX which equals or exceeds 3 times the re-quotation price of $0.02, at
any time within 24 months of settlement (second milestone).
If the relevant milestone is not achieved by the required date, then the total number of Performance Shares on issue
to each holder will not convert into one ordinary share in the Company.
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AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Directors' report
14. Remuneration report (audited)
14.7. Other Equity-related KMP Transactions
There have been no other transactions involving equity instruments other than those described in the tables above relating
to options, rights, and shareholdings.
14.8. KMP Loans
There are no loans to or from KMP as at 30 June 2020 (2019: nil)
During the year MA SOF 56 Pty Ltd, (a Company of which Mr Mitchel Atkins was a director) provided a loan to the Group
of $150,000 of which the principal plus interest and fees was repaid in full. Interest and fees associated with the loan was
$91,820.
Refer to 14.6 for KMP loans settled by way equity during the year.
14.9. Other transactions with KMP and or their Related Parties
Some Directors or former Directors of the Group hold or have held positions in other companies, where it is considered
they control or significantly influence the financial or operating policies of those entities. During the year, the following
entities provided professional and corporate services to the Group.
Total Transactions Payable Balance
Entity Nature of transactions KMP 2020 2019 2020 2019
$ $ $ $
Regency Partners Professional services Philip Re - 30,000 - -
Daring Investments Pty Licence fees John Kolenda - 17,886 - 17,886
Ltd
Chapter One Advisers Public Relations Paul Niardone 59,000 120,000 11,000 42,000
Aura Capital Pty Ltd Placement fees / John Kolenda 415,089 791,968 71,509 416,558
transaction fees
Matt Lahood Advance commissions / Matt Lahood 44,050 - 52,783 (147,750)
Future fund
Magnolia Capital Professional services Mitchell Atkins 30,170 - - -
There have been no other transactions in addition to those described in the tables or as detailed in note 17 Related party
transactions.
END OF REMUNERATION REPORT
This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of
Directors made pursuant to s.298(2) of the Corporations Act 2001 (Cth).
PAUL NIARDONE
Managing Director
Dated this Wednesday, 30 September 2020
P a g e | 19
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Auditor's independence declaration
Under Section 307c Of The Corporations Act 2001 (Cth)
To The Directors Of THE AGENCY GROUP AUSTRALIA LTD
TO BE RECEIVED FROM
AUDITORS
P a g e | 20
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Consolidated statement of profit or loss and other comprehensive income
for the year ended 30 June 2020
Note 2020 2019
$ $
Continuing operations
Revenue 1.1 41,861,521 28,337,806
Other income 1.2 1,012,487 177,891
42,874,008 28,515,697
Advertising and promotion expenses (1,242,399) (670,123)
Computers and information technology expenses (1,330,334) (1,006,107)
Consultancy fees (1,918,495) (1,195,372)
Depreciation and amortisation (6,038,609) (2,266,548)
Impairment 2.1 (5,230,330) (1,378,379)
Interest and finance costs (1,769,193) (1,242,675)
Legal and professional fees (998,384) (1,907,502)
Occupancy costs (984,139) (2,178,362)
Salaries and employment costs 2.2 (31,070,020) (24,024,002)
Share-based payments expense 20 - (133,663)
Other expenses (2,649,162) (1,768,412)
Loss before tax (10,357,057) (9,255,448)
Income tax benefit 4.1 1,291,720 1,424,843
Net loss for the year (9,065,337) (7,830,605)
Other comprehensive income, net of income tax
◼ Items that will not be reclassified subsequently to profit or loss - -
◼ Items that may be reclassified subsequently to profit or loss: - -
Other comprehensive income for the period, net of tax - -
Total comprehensive income attributable to members of the parent entity (9,065,337) (7,830,605)
Earnings per share: ₵ ₵
Basic loss per share (cents per share) 19.4 (3.60) (12.71)
Diluted loss per share (cents per share) 19.4 N/A N/A
2,663,087 (4,247,141)
The consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
P a g e | 21
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Consolidated statement of financial position
as at 30 June 2020
Note 2020 2019
$ $
Current assets
Cash and cash equivalents 5.1 2,724,142 2,597,299
Trade and other receivables 5.2.1 4,601,222 4,079,873
Financial assets 5.3.1 1,600,000 -
Other current assets 5.4.1 550,476 413,492
Total current assets 9,475,840 7,090,664
Non-current assets
Trade and other receivables 5.2.2 269,655 282,772
Financial assets 5.3.2 170,388 1,142,387
Property, plant, and equipment 6.1 2,039,814 2,577,550
Right of use asset 6.2.1 4,645,320 -
Intangible assets 6.3 30,376,355 39,036,212
Total non-current assets 37,501,532 43,038,921
Total assets 46,977,372 50,129,585
Current liabilities
Trade and other payables 5.5.1 9,773,151 13,555,575
Borrowings 5.6.1 13,843,235 21,126,603
Provisions 6.4 2,286,835 1,112,833
Leases 6.2.2 1,979,900 -
Total current liabilities 27,883,121 35,795,011
Non-current liabilities
Trade and other payables 5.5.2 - 35,308
Provisions 6.4 337,054 600,402
Leases 6.2.2 3,895,077 -
Deferred tax liabilities 4.6 3,250,774 4,667,857
Total non-current liabilities 7,482,905 5,303,567
Total liabilities 35,366,026 41,098,578
Net assets 11,611,346 9,031,007
Equity - -
Issued capital 7.1.1 39,395,942 27,765,049
Reserves 7.4 928,715 583,426
Accumulated losses (28,713,311) (19,317,468)
Total equity 11,611,346 9,031,007
(18,957,757) (29,117,839)
11,611,346 9,031,007
The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
P a g e | 22
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Consolidated statement of changes in equity
for the year ended 30 June 2020
Note
Contributed Accumulated Options Total
equity Losses Reserve equity
$ $ $ $
Balance at 1 July 2018 11,480,382 (11,486,863) 566,430 559,949
Loss for the year attributable owners of the parent - (7,830,605) - (7,830,605)
Other comprehensive income for the year attributable
owners of the parent - - - -
Total comprehensive income for the year attributable
owners of the parent - (7,830,605) - (7,830,605)
Transaction with owners, directly in equity
Shares issued during the year (net of costs) 7.1.1 16,284,667 - - 16,284,667
Options granted during the year 7.3 - - 16,996 16,996
Balance at 30 June 2019 27,765,049 (19,317,468) 583,426 9,031,007
Balance at 1 July 2019 27,765,049 (19,317,468) 583,426 9,031,007
Change in accounting policy 24 - (330,506) - (330,506)
Restated total equity at the beginning of the financial
year 27,765,049 (19,647,974) 583,426 8,700,501
Loss for the year attributable owners of the parent - (9,065,337) - (9,065,337)
Other comprehensive income for the year attributable
owners of the parent - - - -
Total comprehensive income for the year attributable
owners of the parent - (9,065,337) - (9,065,337)
Transaction with owners, directly in equity
Shares issued during the year (net of costs) 7.1.1 11,630,893 - - 11,630,893
Options granted during the year 7.3 - - 345,289 345,289
Balance at 30 June 2020 39,395,942 (28,713,311) 928,715 11,611,346
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
P a g e | 23
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Consolidated statement of cash flows
for the year ended 30 June 2020
Note 2020 2019
$ $
Cash flows from operating activities
Receipts from customers 42,529,458 32,724,160
Payments to suppliers and employees (40,821,013) (37,763,237)
Interest received 17,988 12,958
Finance costs (1,391,729) (1,405,068)
Net cash used in operating activities 5.1.2a 334,704 (6,431,187)
Cash flows from investing activities
Purchase of property, plant, and equipment (282,527) (241,107)
Advancement of bank guarantee (481,498) (600,000)
Return of bank guarantee 346,078 -
Purchase of intangibles (192,758) -
Deferred purchase consideration paid (15,000) (75,000)
Purchase of subsidiary, net of cash acquired 11.1 - 594,258
Net cash used in investing activities (625,705) (321,849)
Cash flows from financing activities
Proceeds from issue of shares 5,611,773 8,400,000
Share issue costs (397,861) (277,200)
Repayments of borrowings 5.1.2b (2,731,516) (44,352)
Proceeds from borrowings 5.1.2b - 250,000
Leases payments (2,064,552) -
Net cash provided by financing activities 417,844 8,328,448
Net increase in cash and cash equivalents held 126,843 1,575,412
Cash and cash equivalents at the beginning of the year 2,597,299 1,021,887
Cash and cash equivalents at the end of the year - 5.1 2,724,142 2,597,299
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
P a g e | 24
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
In preparing the 2020 financial statements, The Agency Group Australia Ltd has grouped notes into sections under five key
categories:
◼ Section A: How the numbers are calculated ............................................................................................................................26
◼ Section B: Risk..........................................................................................................................................................................51
◼ Section C: Group structure ......................................................................................................................................................56
◼ Section D: Unrecognised items ................................................................................................................................................61
◼ Section E: Other Information ...................................................................................................................................................62
Significant accounting policies specific to each note are included within that note. Accounting policies that are determined to be
non-significant are not included in the financial statements.
The presentation of the notes to the financial statements has changed from the prior year and is supported by the IASB’s
Disclosure Initiative. As part of this project, the AASB made amendments to AASB 101 Presentation of Financial Statements which
have provided preparers with more flexibility in presenting the information in their financial reports.
The financial report is presented in Australian dollars, except where otherwise stated.
P a g e | 25
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
SECTION A. HOW THE NUMBERS ARE CALCULATED
This section provides additional information about those individual line items in the financial statements that the Directors
consider most relevant in the context of the operations of the entity, including:
(a) accounting policies that are relevant for an understanding of the items recognised in the financial statements. These cover
situations where the accounting standards either allow a choice or do not deal with a particular type of transaction.
(b) analysis and sub-totals.
(c) information about estimates and judgements made in relation to particular items.
Note 1 Revenue and other income 2020 2019
$ $
1.1 Revenue
Commissions 27,523,456 18,430,266
Fees 5,056,193 4,919,575
Management fees 9,281,872 4,987,965
41,861,521 28,337,806
1.2 Other Income
Interest income 17,988 12,958
Other income 994,499 164,933
1,012,487 177,891
1.3 Accounting policy
1.3.1 Revenue from contracts with customers
Revenue is measured based on the consideration specified in a contract with a customer. The Group recognises revenue
when performance obligations have been met.
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of
returns, trade allowances and amounts collected on behalf of third parties.
1.3.2 Revenue is recognised for major business activities based on the following performance obligations:
a. Settlement fee income: on settlement of real estate transaction.
b. Upfront commissions for mortgage origination: on approval of finance to clients and settlement of real estate
transaction.
c. Trail commissions: on receipt, based on maintaining clientele.
d. Real estate commissions: upon settlement and/or sale of property is unconditional
e. Training seminars and functions: on date function is held.
All revenue is stated net of the amounts of goods and services tax (GST).
1.3.3 Interest income
Interest revenue is recognised in accordance with note 3.1 Finance income and expenses.
1.3.4 Government Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be
received, and the Group will comply with all attached conditions.
a. The Group received government grants from the Australian Government's JobKeeper Payment scheme. There are no
unfulfilled conditions or other contingencies attaching to these grants. Grants related to income are presented as
part of profit or loss as a deduction in reporting the related expense (refer note 2.2).
P a g e | 26
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 1 Revenue and other income (cont.)
1.3.5 Critical judgements – Recognition of trailing commission revenue & trailing commission expense
The Group receives trailing commissions from lenders on loans they have settled that were originated by the Group. The
trailing commissions are received over the life of the loans based on the individual loan balance outstanding. The Group also
makes trailing commission payments to brokers based on the individual loan balance outstanding.).
As disclosed in note 1.3.2c above, revenue from trailing commission on receipt. The Directors considered the detailed criteria
for the recognition of revenue from the rendering of services set out in AASB 15 Revenue from contracts with customers, in
particular whether the recognition of revenue on the trail satisfied the probability requirements. The Directors determined
that at the contract level, the Group cannot reliably determine the likelihood of that individual remaining with the Group or
the period that they will continue for, resulting in revenue only being recognised upon receipt.
Trailing commission expenditure is recognised on the same basis as trailing commission revenue and is recognised upon
receipt of trailing commission revenue.
Note 2 Loss before income tax Note 2020 2019
$ $
The following significant revenue and expense items are relevant in explaining the
financial performance:
2.1 Impairment:
◼ Doubtful debts (recovered) / expense (74,050) 208,728
◼ Impairment of goodwill and other intangibles 6.3.4a 5,304,380 1,169,651
5,230,330 1,378,379
2.1.1 Accounting policy
a. Impairment of financial assets
Refer to note 5.7.1d
b. Impairment of non-financial assets
Refer to note 6.5.1
2.2 Salaries and employment costs Note 2020 2019
$ $
◼ Commissions 19,558,045 14,062,716
◼ Director fees 535,980 484,000
◼ Salary and wages 8,475,768 6,353,731
◼ Superannuation 1,369,231 1,567,847
◼ Other employment related costs 2,210,996 1,555,708
◼ Government grants received in connection with employment costs 1.3.4a (1,080,000) -
31,070,020 24,024,002
2.2.1 Accounting policy
a. Short-term benefits
Liabilities for employee benefits for wages, salaries and annual leave that are expected to be settled within 12 months of
the reporting date represent present obligations resulting from employees' services provided to the reporting date and are
calculated at undiscounted amounts based on remuneration wage and salary rates that the Group expects to pay at the
reporting date including related on-costs, such as workers compensation insurance and payroll tax.
Non-accumulating non-monetary benefits, such as medical care, housing, cars and free or subsidised goods and services,
are expensed based on the net marginal cost to the Group as the benefits are taken by the employees.
P a g e | 27
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 2 Loss before income tax (cont.)
b. Other long-term benefits
The Group's obligation in respect of long-term employee benefits other than defined benefit plans, such as long service
leave, is the amount of future benefit that employees have earned in return for their service in the current and prior periods
plus related on-costs; that benefit is discounted to determine its present value, and the fair value of any related assets is
deducted. The discount rate is the Reserve Bank of Australia's cash rate at the report date that have maturity dates
approximating the terms of the Company's obligations. Any actuarial gains or losses are recognised in profit or loss in the
period in which they arise.
c. Retirement benefit obligations: Defined contribution superannuation funds
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions onto a
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to
defined contribution superannuation funds are recognised as an expense in the income statement as incurred.
d. Termination benefits
When applicable, the Group recognises a liability and expense for termination benefits at the earlier of: (a) the date when
the Group can no longer withdraw the offer for termination benefits; and (b) when the Group recognises costs for
restructuring pursuant to AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the costs include
termination benefits. In either case, unless the number of employees affected is known, the obligation for termination
benefits is measured based on the number of employees expected to be affected. Termination benefits that are expected
to be settled wholly before 12 months after the annual reporting period in which the benefits are recognised are measured
at the (undiscounted) amounts expected to be paid. All other termination benefits are accounted for on the same basis as
other long-term employee benefits.
e. Equity-settled compensation
The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair
value is measured at grant date and spread over the period during which the employees become unconditionally entitled to
the options. The fair value of the options granted is measured using the Black-Scholes pricing model, considering the terms
and conditions upon which the options were granted. The amount recognised is adjusted to reflect the actual number of
share options that vest except where forfeiture is only due to market conditions not being met.
Note 3 Other Significant Accounting Policies related to items of profit and loss
3.1 Finance income and expenses
Finance income comprises interest income on funds invested (including available-for-sale financial assets), gains on the
disposal of available-for-sale financial assets and changes in the fair value of financial assets at fair value through profit
or loss. Interest revenue is recognised on a time proportionate basis that considers the effective yield on the financial
asset.
Financial expenses comprise interest expense on borrowings calculated using the effective interest method, unwinding
of discounts on provisions, changes in the fair value of financial assets at fair value through profit or loss and impairment
losses recognised on financial assets. All borrowing costs are recognised in profit or loss using the effective interest
method.
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a
substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time
as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in income in
the period in which they are incurred.
Foreign currency gains and losses are reported on a net basis.
P a g e | 28
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 4 Income tax Note 2020 2019
$ $
4.1 Income tax expense
Current tax - -
Deferred tax (1,291,720) (1,424,843)
(1,291,720) (1,424,843)
Deferred income tax expense included in income tax expense comprises:
◼ (Increase) / decrease in deferred tax assets 4.5 (528,761) (536,743)
◼ Increase / (decrease) in deferred tax liabilities 4.6 (888,324) (888,100)
◼ Adjustment in respect to the adoption of AASB 16 Leases 24.1 125,365 -
(1,291,720) (1,424,843)
4.2 Reconciliation of income tax expense to prima facie tax payable
The prima facie tax payable/(benefit) on loss from ordinary activities
before income tax is reconciled to the income tax expense as follows:
Accounting loss before tax (10,357,057) (9,255,448)
Prima facie tax on operating loss at 27.5% (2019: 27.5%) (2,848,191) (2,545,248)
Add / (Less) tax effect of:
Unrecognised income tax benefit in respect of current year losses and
1,132,815 259,895
timing differences
Non-deductible expenses 423,656 860,510
Timing differences -
Deferred tax asset not brought to account -
Income tax expense/(benefit) attributable to operating loss (1,291,720) (1,424,843)
% %
4.3 The applicable weighted average effective tax rates attributable to
operating profit are as follows: 12.47 15.39
a. The tax rates used in the above reconciliations is the corporate tax rate
of 27.5% payable by the Australian corporate entity on taxable profits
under Australian tax law. There has been no change in this tax rate
since the previous reporting year.
4.4 Balance of franking account at year end of the parent nil nil
P a g e | 29
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 4 Income tax (cont.) Note 2020 2019
$ $
4.5 Deferred tax assets
Employee benefits 465,221 365,843
Accrued expenses 918,680 795,960
Provisions 52,397 41,250
AASB16 Leases - Lease Liability 154,253 -
Other 141,261 -
1,731,812 1,203,053
Set-off deferred tax liabilities 4.6 (1,731,812) (1,203,053)
Net deferred tax assets - -
Less deferred tax assets not recognised - -
Net deferred tax assets - -
4.6 Deferred tax liabilities
Intangible Asset - Rent Roll 4,875,336 5,870,910
Accrued income 107,250 -
4,982,586 5,870,910
Set-off deferred tax assets 4.5 (1,731,812) (1,203,053)
Net deferred tax liabilities 3,250,774 4,667,857
4.7 Tax losses and deductible temporary differences
Unused tax losses and deductible temporary differences for which no
deferred tax asset has been recognised, that may be utilised to offset tax
liabilities:
◼ Revenue losses attributable to Australia 3,315,284 3,310,276
3,315,284 3,310,276
4.8 Potential deferred tax assets attributable to tax losses have not been brought to account at 30 June 2020 because the
Directors do not believe it is appropriate to regard realisation of the deferred tax assets as probable at this point in time.
These benefits will only be obtained if:
i. the Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the
deductions for the loss to be realised;
ii. the Company continues to comply with conditions for deductibility imposed by law; and
iii. no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the loss.
Balances disclosed in the financial statements and the notes thereto, related to taxation, are based on the best estimates
of the Directors. These estimates consider both the financial performance and position of the Company as they pertain
to current income taxation legislation, and the Directors understanding thereof. No adjustment has been made for
pending or future taxation legislation. The current income tax position represents that Directors' best estimate, pending
an assessment by tax authorities in relevant jurisdictions.
The parent company has accumulated tax losses of $12,055,578 (2019: $12,037,367) which are expected to be available
indefinitely for offset against future taxable profits of the parent company in which the losses arose. The recoupment of
these losses is subject to assessment of the Australian Taxation Office.
P a g e | 30
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 4 Income tax (cont.) Note
4.9 Accounting policy
The income tax expense or benefit for the period is the tax payable on the current period's taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary difference and to unused tax losses.
The current income tax charge is calculated based on the Australian tax laws enacted or substantively enacted at the end of the
reporting period being where the Group and its associates operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate based on amounts expected to be paid to the tax authorities.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from
or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the balance date, in Australia.
Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities (DTL) are recognised for all taxable temporary differences except:
◼ when the DTL arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business
combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
◼ when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint
ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred income tax assets (DTA) are recognised for all deductible temporary differences, carry-forward of unused tax assets
and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:
◼ when the DTA relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; or
◼ when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint
ventures, in which case a DTA is only recognised to the extent that it is probable that the temporary difference will reverse
in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of DTA is reviewed at each balance date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the DTA to be utilised.
Unrecognised DTA are reassessed at each balance date and are recognised to the extent that it has become probable that future
taxable profit will allow the deferred tax asset to be recovered. DTAs and DTLs are measured at the tax rates that are expected
to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted at the balance date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. DTAs and DTLs are
offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the DTAs and DTLs
relate to the same taxable entity and the same taxation authority.
4.9.1 Tax consolidation
The Agency Group Australia Ltd and its wholly-owned Australian subsidiaries have formed an income tax consolidated group
(the Tax Group) under the tax consolidation legislation. Each entity in the Tax Group recognises its own current and deferred
tax liabilities, except for any DTLs resulting from unused tax losses and tax credits, which are immediately assumed by the parent
entity. The Group notified the Australian Tax Office that it had formed a Tax Group to apply from 1 July 2010. The Tax Group
has entered a tax sharing agreement whereby each company in the Tax Group contributes to the income tax payable in
proportion to their contribution to the net profit before tax of the Tax Group.
As at the date of this report, The Agency Group Australia Limited, Top Level Real Estate Pty Ltd, and Beaufort Realty Pty Ltd
have not been included in the tax consolidated group.
P a g e | 31
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 5 Financial assets and financial liabilities
5.1 Cash and cash equivalents 2020 2019
$ $
Cash at bank 2,724,142 2,597,299
2,724,142 2,597,299
5.1.1 The Group's exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in note
8 Financial risk management.
2020 2019
5.1.2 Cash Flow Information $ $
a. Reconciliation of cash flow from operations to loss after income tax
Loss after income tax (9,065,337) (7,830,605)
Cash flows excluded from loss attributable to operating activities - -
Non-cash flows in loss from ordinary activities:
◼ Depreciation and amortisation 6,038,609 2,266,548
◼ Net share-based payments expensed - 133,663
◼ Impairment 5,230,330 1,378,379
◼ Income tax expense/(benefit) (1,291,720) (1,424,843)
◼ Non-cash interest adjustments 366,326 -
Changes in assets and liabilities, net of the effects of purchase and
disposal of subsidiaries:
◼ (Increase)/decrease in receivables (609,334) 1,014,017
◼ Decrease/(increase) in financial assets 371,999 (626,074)
◼ (Decrease) in trade and other payables (1,616,823) (653,002)
◼ Increase/(decrease) in provisions 910,654 (689,270)
Cash flow (used in) from operations - 334,704 (6,431,187)
- -
P a g e | 32
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 5 Financial assets and financial liabilities (cont.)
5.1 Cash and cash equivalents (cont.)
5.1.2 Cash Flow Information (cont.)
b. Reconciliation of liabilities arising from financing activities
Non-cash changes
Foreign Other Changes due
2018 Cash flows Acquisitions Exchange Changes to AASB 16 2019
$ $ $ $ $ $ $
Short-term borrowings 1,100,000 205,650 19,641,660 - 179,293 - 21,126,603
Total liabilities from
financing activities 1,100,000 205,650 19,641,660 - 179,293 - 21,126,603
-
Non-cash changes
Foreign Other Changes due
2019 Cash flows Acquisitions Exchange Changes(i) to AASB 16 2020
$ $ $ $ $ $ $
Short-term borrowings 21,126,603 (2,731,516) - - (4,551,852) - 13,843,235
Long-term borrowings - - - - - - -
Leases - (2,064,552) - - 473,581 7,465,948 5,874,977
Asset finance - - - - - - -
Total liabilities from
financing activities 21,126,603 (4,796,068) - - (4,078,271) 7,465,948 19,718,212
- -
(i)
Other changes include non-cash movements including conversion to shares as described in 5.1.2d below and 7.1.3, interest paid (classified
under operating activities), and restricted cash in connection with a convertible note as per 5.6.1d.
c. Credit and loan standby arrangement with banks
Refer note 5.6.3 Financing facilities available.
d. Non-cash investing and financing activities
2020
During the year, and as detailed in in note 7.1.3:
◼ 89,889,649 shares and 44,944,639 options were issued to settle $5,798,388 in loans
◼ 714,286 options were issue as a debt facilitation fee with a fair value of $14,297.
◼ 12,899,074 options with a fair value of $258,192 were issued in consideration for capital raising services.
2019
Nil
5.1.3 Accounting policy
For Statement of Cash Flow presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call
with financial institutions, other short-term, highly liquid instruments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank
overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the Statement of Financial Position.
P a g e | 33
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 5 Financial assets and financial liabilities (cont.)
5.2 Trade and other receivables 2020 2019
$ $
5.2.1 Current
Trade debtors 3,677,980 3,189,133
Recoverable commissions / wages 876,861 871,650
Provision for non-recovery of trade debtor and commissions / wages (339,702) (258,728)
Other receivables 386,083 277,818
4,601,222 4,079,873
5.2.2 Non-current
Trade debtors 269,655 282,772
269,655 282,772
5.2.3 The Group's exposure to credit rate risk is disclosed in note 8 Financial risk management.
5.2.4 The average credit period on rendering of services ranges from current to 30 days. Interest is not charged.
No allowance has been made for estimated irrecoverable trade receivable amounts arising from past sale of goods and
rendering of services, determined by reference to past default experience. Amounts are considered as ‘past due’ when the
debt has not been settled, within the terms and conditions agreed between the Group and the customer or counter party to
the transaction.
5.2.5 Accounting policy
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for
doubtful debts. Trade receivables are due for settlement within no more than 30 days. Marketing allowances and upfront
commissions paid to employees and agents are recovered against future sales commissions received by the employee or
agent.
a. Determining the stage for impairment
At each reporting date, the Group assesses whether there has been a significant increase in credit risk for exposures since
initial recognition by comparing the risk of default occurring over the remaining expected life from the reporting date
and the date of initial recognition. The Group considers reasonable and supportable information that is relevant and
available without undue cost or effort for this purpose. This includes quantitative and qualitative information and also,
forward-looking analysis.
An exposure will migrate through the ECL stages as asset quality deteriorates. If, in a subsequent period, asset quality
improves and also reverses any previously assessed significant increase in credit risk since origination, then the provision
for doubtful debts reverts from lifetime ECL to 12-months ECL. Exposures that have not deteriorated significantly since
origination are considered to have a low credit risk. The provision for doubtful debts for these financial assets is based
on a 12-months ECL. When an asset is uncollectible, it is written off against the related provision. Such assets are written
off after all the necessary procedures have been completed and the amount of the loss has been determined. Subsequent
recoveries of amounts previously written off reduce the amount of the expense in the consolidated Statement of Profit
or Loss and Other comprehensive Income.
The Group assesses whether the credit risk on an exposure has increased significantly on an individual or collective basis.
For the purposes of a collective evaluation of impairment, financial instruments are accompanied on the basis of shared
credit risk characteristics, taking into account instrument type, credit risk ratings, date of initial recognition, remaining
term to maturity, industry, geographical location of the borrower and other relevant factors
P a g e | 34
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 5 Financial assets and financial liabilities (cont.)
5.3 Financial assets 2020 2019
$ $
5.3.1 Current
Restricted cash 1,600,000 -
1,600,000 -
5.3.2 Non-current
Bank guarantees and restricted cash 170,388 1,085,476
Financial assets carried at FVOCI – Listed shares - 56,911
170,388 1,142,387
5.3.3 Movements assets carried at Fair Value through Other Comprehensive 2020 2019
Income (FVOCI) 5 $ $
Carrying amount at 1 July 56,911 -
Acquisition - 50,000
Revaluation of Shares - 6,911
Change in fair value through Other Comprehensive Income - -
Disposals (56,911) -
Carrying amount at 30 June - 56,911
5.3.4 Other financial assets consist of investments in ordinary shares, and therefore have no fixed maturity date or coupon rate
and are measured by reference to values quoted on the Australian Securities Exchange.
5.3.5 Accounting policy
a. Financial assets carried at FVOCI
Refer to note 5.7.1
5.4 Other assets Note 2020 2019
$ $
5.4.1 Current
Prepayments 7,636 397,285
Other deposits 5.4.2 542,840 16,207
550,476 413,492
5.4.2 Other deposits in 2020 relate to current bank guarantees comprising of $481,716 and rental deposits of $61,124 (2019:
Sundry deposit $16,207)
P a g e | 35
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 5 Financial assets and financial liabilities (cont.)
5.5 Trade and other payables 2020 2019
$ $
5.5.1 Current
Unsecured
Trade payables 2,483,388 4,179,473
Employees’ remuneration – commissions payable 1,869,045 1,177,955
Payroll tax 1,152,496 1,121,583
Superannuation – employees 401,358 577,520
Sundry creditors and accrued expenses 843,601 2,017,403
Lease incentive - 719,158
GST and PAYG payable 2,916,649 3,255,827
Retention payable - 506,656
Other 106,614 -
9,773,151 13,555,575
5.5.2 Non-current
Other - 35,308
- 35,308
5.5.3 Trade payables are non-interest bearing and are normally settled on 30-day terms. Other payables are non-trade
payables, are non-interest bearing and have an average term of 1 month.
5.5.4 Accounting policy
a. Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which
are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within 12 months.
5.6 Borrowings Note 2020 2019
$ $
5.6.1 Current
Loans 5.6.1a 750,000 1,350,000
Bank loans 5.6.1b 12,093,235 12,593,235
Shareholder loans 5.6.1c - 7,157,366
Convertible note 5.6.1d 1,000,000 -
Other - 26,002
13,843,235 21,126,603
a. Loan payable to Kalonda Pty Ltd with an interest rate of 10.5% for a term until 30 June 2020; now rolled over to 30
September 2020 with an interest rate of 16%, with an option to renew for a further 3 months, subject to mutual
agreement. Shares are held as security for the debt. The existing loan from Kalonda Pty Ltd has been rolled over,
under the same terms and conditions, for another 3 months to 31 December 2020
b. The Macquarie Bank debt facility agreement has a first ranking change over all the consolidated Group. During the
year the Group executed a number of amendment agreements extending the term of the facility. The facility expires
on 30 September 2020, and as at the date of this report, the Group is in the process of finalising an Amendment Deed
to revise the terms and extend the facility. Refer note 23.1.3 for further details. As at 30 June 2020, the facility attracts
interest of 8.55% per annum.
c. Shareholder loans nominal interest rates vary between 6% to 18%. The loans have been settled with equity as
disclosed in 7.1.3.
P a g e | 36
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 5 Financial assets and financial liabilities (cont.)
5.6 Borrowings (cont.)
d. Convertible note of $1,000,000 for funds provided by Peters Investments Pty Ltd to be used as a standby working
capital facility, as required by Macquarie Bank under its debt repayment extension agreement, as detailed below:
◼ Interest rate 9%
◼ Security Second security ranking behind Macquarie Bank Free attaching
◼ Options 2,000,000 Options exercisable at the lower of 4 cents and a 20% discount to 15-day
volume-weighted average trading price of shares (VWAP) prior to the date of issue of
the Options, on or before 2 years from date of issue.
◼ Term & Maturity Date Unless converted to shares the Notes will be repaid in cash on the earlier of 31 .12.20
or when all amounts owing by the Company to Macquarie Bank have been repaid.
◼ Conversion At Noteholders election the Notes can be converted into shares in The Agency at the
lower of $0.04 per share and a 20% discount to the 15-day VWAP prior to the
conversion date, up until the Maturity Date.
◼ Other Conditions Noteholder will have the first right of refusal to replace the Macquarie Bank loan on
commercial terms and conditions to be reasonably agreed between the Noteholder
and The Agency.
5.6.2 Assets pledged as security
As disclosed in note 5.6.1b and 5.6.1d, security is held over all the consolidated group companies.
5.6.3 Financing facilities available
At balance date, the following Total facilities Facilities used Facilities unused
financing facilities had been
2020 2019 2020 2019 2020 2019
negotiated and were available:
$ $ $ $ $ $
Working capital facility 12,843,235 21,126,603 (12,843,235) (21,126,603) - -
Leases (see note 6.2.2) - - - - - -
Total facilities at balance date 12,843,235 21,126,603 (12,843,235) (21,126,603) - -
5.6.4 Accounting policy
a. Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised
in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of
loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility
will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is
probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and
amortised over the period of the facility to which it relates.
The fair value of the liability portion of a convertible note is determined using a market interest rate for an equivalent non-
convertible note. This amount is recorded as a liability on an amortised cost basis until extinguished on conversion or
maturity of the note. The remainder of the proceeds is allocated to the conversion option. This is recognised and included
in shareholders' equity, net of income tax effects.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged,
cancelled, or expired. The difference between the carrying amount of a financial liability that has been extinguished or
transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is
recognised in profit or loss as other income or finance costs. Borrowings are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.
b. Leases
Until the 2019 financial year, leases of property, plant and equipment were classified as either finance leases or operating
leases, see note 24.1 for details. From 1 July 2019, leases are recognised as a right-of-use asset and a corresponding liability
at the date at which the leased asset is available for use by the Group.
P a g e | 37
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 5 Financial assets and financial liabilities (cont.)
5.7 Other Significant Accounting Policies related to Financial Assets and Liabilities
5.7.1 Investments and other financial assets
a. Classification
The Group classifies its financial assets in the following measurement categories:
◼ those to be measured subsequently at fair value (either through OCI or through profit or loss), and
◼ those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of
the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in
equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election
at the time of initial recognition to account for the equity investment at fair value through other comprehensive income
(FVOCI).
The Group reclassifies debt investments when and only when its business model for managing those assets changes.
b. Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits
to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial
assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of
ownership.
c. Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows
are solely payment of principal and interest.
i. Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and
the cash flow characteristics of the asset. There are three measurement categories into which the group classifies its
debt instruments:
◼ Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at amortised cost. Interest income from these financial
assets is included in finance income using the effective interest rate method. Any gain or loss arising on
derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign
exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or
loss.
◼ FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the
assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the
carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income
and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is
derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss
and recognised in other gains/(losses). Interest income from these financial assets is included in finance income
using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses)
and impairment expenses are presented as separate line item in the statement of profit or loss.
◼ FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a
debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within
other gains/(losses) in the period in which it arises.
ii. Equity instruments
The Group subsequently measures all equity investments at fair value. Where the group’s management has elected
to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair
value gains and losses to profit or loss following the derecognition of the investment. Dividends from such
investments continue to be recognised in profit or loss as other income when the group’s right to receive payments
is established.
P a g e | 38
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 5 Financial assets and financial liabilities (cont.)
5.7 Other Significant Accounting Policies related to Financial Assets and Liabilities
Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit
or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI
are not reported separately from other changes in fair value.
d. Impairment
The Group assesses on a forward-looking basis, the expected credit losses associated with its debt instruments carried
at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant
increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime
losses to be recognised from initial recognition of the receivables.
Note 6 Non-financial assets and financial liabilities
6.1 Property, plant, and equipment 2020 2019
$ $
Plant and equipment – at cost 1,187,451 1,150,163
Accumulated depreciation (614,867) (467,186)
572,584 682,977
Leasehold improvements – at cost 3,407,145 3,317,312
Accumulated amortisation (1,939,915) (1,422,739)
1,467,230 1,894,573
Total plant and equipment 2,039,814 2,577,550
Plant and Leasehold
Equipment improvements Total
6.1.1 Movements in Carrying Amounts 5 $ $ $
Carrying amount at 1 July 2018 178,312 342,295 520,607
Assets acquired on acquisition 583,063 1,572,653 2,155,716
Additions 48,434 248,755 297,189
Depreciation expense (126,832) (269,130) (395,962)
Carrying amount at 30 June 2019 682,977 1,894,573 2,577,550
- - -
Carrying amount at 1 July 2019 682,977 1,894,573 2,577,550
Transfers between classes -
Assets acquired on acquisition -
Additions 54,028 228,499 282,527
Disposals / write-offs - (116,231) (116,231)
Depreciation expense (164,421) (539,611) (704,032)
Carrying amount at 30 June 2020 572,584 1,467,230 2,039,814
- - -
P a g e | 39
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 6 Non-financial assets and financial liabilities (cont.)
6.1 Property, plant, and equipment (cont.)
6.1.2 Accounting policy
a. Recognition and measurement
Items of plant and equipment are measured on the cost basis and carried at cost less accumulated depreciation (see
below) and impairment losses (see accounting policy 6.5.1 Impairment of non-financial assets).
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets
includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working
condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they
are located, and an appropriate proportion of production overheads. Cost includes the cost of replacing parts that are
eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is
performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible
for capitalisation.
Where considered material, the carrying amount of property, plant, and equipment is reviewed annually by Directors
to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the
basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The
expected net cash flows have not been discounted to their present values in determining recoverable amounts.
Where parts of an item of property, plant, and equipment have different useful lives, they are accounted for as separate
items of plant and equipment.
b. Subsequent costs
The cost of replacing part of an item of plant and equipment is recognised in the carrying amount of the item if it is
probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured
reliably. Any costs of the day-to-day servicing of plant and equipment are recognised in the income statement as an
expense as incurred.
c. Depreciation
The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land, is
depreciated on either a straight-line basis or diminishing balance basis, whichever is considered most appropriate, over
their useful lives to the Group commencing from the time the asset is held ready for use. Leasehold improvements are
amortised over the remaining term of the lease.
Depreciation rates and methods are reviewed annually for appropriateness. The depreciation rates used for the current
and comparative period are:
2020 2019
% %
◼ Leasehold Improvements Over term of lease Over term of lease
◼ Plant and equipment:
Office furniture and fittings 10 10
Office equipment 25 25
Motor vehicle 25 25
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected
net cash flows which will be received from the assets’ employment and subsequent disposal. The expected net cash
flows have not been discounted to their present values in determining recoverable amounts.
d. Derecognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits
are expected from its use or disposal. The gain or loss on disposal of an item of property, plant and equipment is
determined by comparing the proceeds from disposal with the carrying amount of the property, plant and equipment
and is recognised net within other income/other expenses in profit or loss. When revalued assets are sold, any related
amount included in the revaluation reserve is transferred to retained earnings.
P a g e | 40
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 6 Non-financial assets and financial liabilities (cont.)
6.2 Leases Note 2020 2019#
$ $
6.2.1 Right of use assets
Properties 24.1 3,500,419 -
Printing equipment 24.1 1,144,901 -
4,645,320 -
6.2.2 Lease liabilities
Current 24.1 1,979,900 -
Non-current 24.1 3,895,077 -
5,874,977 -
# In the previous year, the Group only recognised lease assets and lease liabilities in relation to leases that were classified as ‘finance
leases’ under AASB 117 Leases. The assets were presented in property, plant and equipment and the liabilities as part of the Group’s
borrowings. For adjustments recognised on adoption of AASB 16 on 1 July 2019, please refer to note 24.1.
6.2.3 Additions to the right-of-use assets during the 2020 financial year were $ 6,335,866.
2020 2019
6.2.4 Amounts recognised in the statement of profit or loss $ $
Depreciation charge of right-of-use assets:
◼ Properties 1,396,230 -
◼ Printing equipment 293,084 -
1,689,314 -
Interest expense (included in finance cost) 325,014 -
6.2.5 The total cash outflow for leases for the 2020 financial year was $2,064,552.
6.2.6 Accounting policy
a. Recognition and measurement
Until the 2019 financial year, leases of property, plant and equipment were classified as either finance leases or
operating leases, see note 24.1 for details. From 1 July 2019, leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is available for use by the Group.
i. Right of Use Asset
The Group recognises a right of use asset at the commencement date of the lease. The right of use asset is initially
measured at cost. The cost of right of use assets includes the amount of lease liabilities recognised, adjusted for any
lease payments made at or before the commencement date, plus initial direct costs incurred and an estimate of costs
to dismantle, remove or restore the leased asset, less any lease incentives received.
Right-of-use assets are measured at cost comprising the following:
◼ the amount of the initial measurement of lease liability
◼ any lease payments made at or before the commencement date less any lease incentives received
◼ any initial direct costs, and
◼ restoration costs.
P a g e | 41
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 6 Non-financial assets and financial liabilities (cont.)
6.2 Leases (cont.)
Subsequent to initial measurement, the right of use asset is depreciated on a straight-line basis over the shorter of the
lease term and the estimated useful life as follows:
◼ Properties 17 – 64 months
◼ Printing equipment 60 months
Right of use assets are subject to impairment and are adjusted for any remeasurement of lease liabilities.
ii. Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities at the present value of lease payment to
be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less
any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be
paid under residual value guarantees. The lease payments also include the exercise price of a purchase option
reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the assessment of
lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an
index or a rate are recognised as expense in the period on which the event or condition that triggers the payments
occurs. The present value of lease payments is discounted using the interest rate implicit in the lease or, if the rate
cannot be readily determined, the Group's incremental borrowing rate.
The lease liability is measured at amortised cost using the effective interest method. After the commencement date, the
amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made.
The amount of lease liability is remeasured when there is a change in future lease payments arising from a change in an
index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value
guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination
option. When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right
of use asset, or is recognised in profit or loss if the carrying amount of the right of use asset has been reduced to zero.
The Group has elected not to recognise right of use assets and lease liabilities for short term leases that have a lease
term of 12 months or less and do not contain a purchase option, and leases of low value assets. The Group recognises
the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
b. Extension and termination options
Extension options are included in the property leases of the Group.
6.2.7 Critical judgements in determining the lease term
In determining the lease term, management considers all facts and circumstances that create an economic incentive to
exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options)
are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
For leases of properties and printing equipment, the following factors are normally the most relevant:
◼ If there are significant penalties to terminate (or not extend), the Group is typically reasonably certain to extend (or
not terminate).
◼ If any leasehold improvements are expected to have a significant remaining value, the Group is typically reasonably
certain to extend (or not terminate).
◼ Otherwise, the Group considers other factors including historical lease durations and the costs and business
disruption required to replace the leased asset.
The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged to exercise
(or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in
circumstances occurs, which affects this assessment, and that is within the control of the lessee.
P a g e | 42
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 6 Non-financial assets and financial liabilities (cont.)
6.3 Intangible assets Note 2020 2019
$ $
Goodwill 17,077,617 17,849,242
Impairment charge 6.3.2 (5,304,380) (771,625)
11,773,237 17,077,617
Rent Roll and trail book 6.3.4a 24,348,146 24,026,310
Accumulated amortisation (5,930,600) (2,067,715)
18,417,546 21,958,595
Trademarks 268,420 268,420
Accumulated amortisation and impairment (268,420) (268,420)
- -
Others 381,968 194,664
Accumulated amortisation and impairment (196,396) (194,664)
185,572 -
Total intangibles 30,376,355 39,036,212
Note
6.3.1 Movements in Carrying Goodwill Rent Roll Trademarks Other Total
Amounts $ $ $ $ $
Carrying amount at 1 July 2018 1,852,730 2,332,278 268,420 194,664 4,648,092
Acquisition of subsidiary 11.1,11.2 15,962,136 21,227,969 - 37,190,105
Additions - 80,000 - 158,252 238,252
Amortisation expense - (1,681,652) (26,842) (162,092) (1,870,586)
Impairment 6.3.4a (737,249) - (241,578) (190,824) (1,169,651)
Carrying amount at 30 June 2019 17,077,617 21,958,595 - - 39,036,212
- - - - -
Carrying amount at 1 July 2019 17,077,617 21,958,595 - - 39,036,212
Acquisition of subsidiary - - - - -
Additions - 102,482 - 187,304 289,786
Impairment 6.3.4a (5,304,380) - - - (5,304,380)
Amortisation expense - (3,643,531) - (1,732) (3,645,263)
Carrying amount at 30 June 2020 11,773,237 18,417,546 - 185,572 30,376,355
- - - - -
P a g e | 43
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 6 Non-financial assets and financial liabilities (cont.)
6.3 Intangible assets (cont.)
6.3.2 Allocation of goodwill to cash-generating units (CGU)
Goodwill has been allocated for impairment testing purposes to the CGU unit. Before recognition of impairment losses, the
carrying amount of goodwill (other than goodwill relating to discontinued operations) was allocated to CGU as follows.
2020 2019
$ $
◼ Top Level Real Estate - Residential sales 10,657,756 15,962,136
◼ Property Management - WA 1,069,001 1,069,001
◼ Settlements 46,480 46,480
Carry amount as at 30 June 11,773,237 17,077,617
- -
The recoverable amount of the Group’s Top Level Real Estate CGU has been determined based on a value in use calculation
which uses cash flow projections based on financial budgets approved by Directors utilising the following key assumptions:
◼ Revenue have been extrapolated at a growth rate of 5.00% from the 2-year budget, with nil% growth rate applied
from year 3;
◼ Discount rate is based upon a weighted average cost of capital of 15.5%.
As a result of the analysis, management recognised an impairment loss of $5,304,380. The Directors believe that any
reasonably possible further change in the key assumptions on which recoverable amount is based would not cause Top
Level Real Estate CGU carrying amount to exceed its recoverable amount.
6.3.3 Accounting policy
a. Intangible assets acquired separately
Intangible assets acquired separately are recorded at cost less accumulated amortisation and impairment. Amortisation is
charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method is
reviewed at the end of each annual reporting period, with any changes in these accounting estimates being accounted for
on a prospective basis.
b. Intangible assets acquired in a business combination
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at
the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising
from derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying
amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in
the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or
period.
c. Trail Book intangible assets
Trail book contracts and licences have a finite useful life and are carried at cost less accumulated amortisation and
impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of trail book and licences
over their estimated useful lives.
d. Property Management intangible assets
The property management rights are expected to have a finite life and are therefore amortised over their useful lives. The
investment is carried at cost less accumulated amortisation and impairment losses.
Amortisation is calculated using the straight-line method to allocate the cost of the rent roll over its estimated useful lives
which is based on comparable market evidence.
e. Business and domain names
Business and domain names are recognised at cost of acquisition. They have a finite useful life and are amortised on a
systematic basis based on the future economic benefits to be obtained over its useful life. Amortisation is calculated using
the straight-line method.
P a g e | 44
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 6 Non-financial assets and financial liabilities (cont.)
6.3 Intangible assets (cont.)
f. Subsequent measurement
The following useful lives are used in the calculation of amortisation:
2020 2019
% %
◼ Trail Book and Rent Roll intangible assets 15.0 12.5 – 20.0
◼ Property Management intangible assets 15.0 15.0
◼ Business and domain names 10.0 10.0
g. Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of the acquisition of the business
(see note 12.1.1) less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (CGU) (or groups
of CGUs) that is expected to benefit from the synergies of the combination.
A CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an
indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other
assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is
recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the profit or loss
on disposal.
6.3.4 Key estimates and Critical Judgements– Impairment of intangibles
a. Impairment of goodwill and rent roll
Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which
goodwill has been allocated. The value in use calculation requires management to estimates the future cash flows expected
to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual
future cash flows are less than expected, an impairment loss may arise.
Included within the Property Management CGU and Top Level CGU are rent roll assets of $1,964,417 (2019: $2,335,284) and
$16,267,497 (2019: $19,394,841) respectively. These same CGU's also included goodwill of $1,069,001 (2019: $1,069,001)
and $10,657,756 (2019: $15,962,136).
For the rent roll assets, the recoverable amounts of these CGU's are derived from market transactional evidence in relation
to their fair value. The Directors have determined that a multiple of 4 for the Top Level CGU (based on an independent
expert opinion) and 2.25 for the Property Management CGU (using subsequent sales transactions), multiplied by the annual
rent roll income is an appropriate measure of the fair value of the rent roll assets. Fair value less cost to sell of these CGU's
was classified on a level 2 basis. No impairment resulted.
Management performed a goodwill impairment test of the Top Level Real Estate Sales CGU (acquired in 2019) taking a
conservative approach in preparing its value in use calculation in light of market uncertainty resulting from COVID.
Management applied a discount rate of 15.5% resulting in an impairment loss of $5,304,380. The goodwill within the
property management CGU was tested for impairment using the fair value less costs to sell method which did not result in
an impairment loss.
The Mortgage CGU was tested for impairment and the result far exceeded the carrying value. All value-in-use calculations
were performed using board approved budgets.
In 2019 the goodwill and other intangible assets related to this CGU were determined to be impaired by an amount of
$1,169,651, which was written off.
P a g e | 45
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 6 Non-financial assets and financial liabilities (cont.)
6.4 Provisions 2020 2019
$ $
6.4.1 Current
Employee entitlements 1,228,979 752,815
Future fund referrals 1,057,856 360,018
2,286,835 1,112,833
6.4.2 Non-current
Employee entitlements 61,377 329,638
Make good provisions 165,000 150,000
Future fund referrals 110,677 120,764
337,054 600,402
6.4.3 Movements in Carrying Amounts Employee Make good Future fund
entitlements provisions referrals Total
$ $ $ $
Carrying amount at 1 July 2019 - 1,082,453 150,000 480,782 1,713,235
Acquired through business combination - - - -
Additions 207,903 15,000 1,058,762 1,281,665
Amounts used during the year - - (371,011) (371,011)
Carrying amount at 30 June 2020 1,290,356 165,000 1,168,533 2,623,889
- - - -
6.4.4 Description of provisions
a. Provision for employee benefits represents amounts accrued for annual leave (AL) and long service leave (LSL). The
current portion for this provision includes the total amount accrued for AL entitlements and the amounts accrued for LSL
entitlements that have vested due to employees having completed the required period of service. The Group does not
expect the full amount of AL or LSL balances classified as current liabilities to be settled within the next 12 months.
However, these amounts must be classified as current liabilities since the Group does not have an unconditional right to
defer the settlement of these amounts in the event employees wish to use their leave entitlement.
b. Make good provision. The Company is required to restore the leased premises to their original condition at the end of
the respective lease terms. A make good provision has been recognised for the present value of the estimated
expenditure required to remove any leasehold improvements. The Directors valued the make good provision based upon
a third-party cost estimate provided to the Company.
c. Provision for Future fund referrals is an incentive scheme provided to property partners for successfully referring
property management and mortgage broking transactions. The referral fees are transferred into an asset growth model
which creates an interest for the future benefit of the Property Partner, maturing after two years, which also assists to
retain staff. The company estimates the value of the future fund referral provision using a probability weighting model
which is based on historic information.
6.4.5 Accounting policy
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating
to any provision is presented in the statement of comprehensive income net of any reimbursement.
P a g e | 46
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 6 Non-financial assets and financial liabilities (cont.)
6.4 Provisions (cont.)
Provisions are measured at the present value or management's best estimate of the expenditure required to settle the
present obligation at the end of the reporting period.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the
risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised
as an interest expense.
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion
of the entity, on or before the end of the reporting period but not distributed at the end of the reporting date
6.5 Other Significant Accounting Policies related to Non-Financial Assets and Liabilities
6.5.1 Impairment of non-financial assets
The carrying amounts of the Group's non-financial assets, other than deferred tax assets (see accounting policy at note 4.9)
are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists,
then the asset's recoverable amount is estimated. Goodwill and intangible assets that have an indefinite useful life are not
subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances
indicate that they might be impaired. Other assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable
amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are
independent from other assets and groups. Impairment losses are recognised in the income statement, unless the asset has
previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous
revaluation with any excess recognised through the income statement. Impairment losses recognised in respect of cash-
generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce
the carrying amount of the other assets in the unit on a pro rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that
does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to
which the asset belongs.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of depreciation and amortisation, if no impairment loss had
been recognised.
P a g e | 47
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 7 Equity
7.1 Issued capital Note 2020 2019 2020 2019
No. No. $ $
Fully paid ordinary shares at no par value 298,954,431 103,810,047 39,395,942 27,765,049
2020 2019 2019 2019
7.1.1 Ordinary shares No. No. $ $
At the beginning of the year 103,810,047 683,793,034 27,765,049 11,480,382
Shares issued during the year:
◼ Bonus issue of shares - 410,275,820 - -
Sub-total 1,094,068,854 -
◼ Effect of share consolidation 30:1 - (1,057,598,807) -
◼ Shares after consolidation - 36,470,047 -
◼ Acquisition: Top Level Pty Ltd - 35,000,000 - 7,566,667
◼ Acquisition: Vicus Residential Pty Ltd - 2,666,667 - 453,333
◼ Lead manager shares - 840,000 - 252,000
◼ Issued for cash 85,913,817 28,000,000 5,584,398 8,400,000
◼ Equity-settled payments 7.1.3 107,008,316 833,333 6,955,540 116,667
7.1.4
◼ Conversion of performance shares 2,222,251 - - -
Transaction costs relating to share
- (909,045) (504,000)
issues
At reporting date 298,954,431 103,810,047 39,395,942 27,765,049
7.1.2 Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares
present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
7.1.3 Equity-settled Payments
As approved by shareholders at general meetings during the year:
◼ 11,138,462 shares with a fair value of $0.065 per share totalling $724,000 were issued to third-party consultants in lieu of
cash for services performed.
◼ 5,782,551 shares with 2,891,275 attaching options were issued to Daring Investments Pty Ltd a company controlled by
Mr John Kolenda to settle outstanding loans of $377,720.
◼ 19,244,088 shares with 9,622,044 attaching options were issued to Teldar Real Estate Pty Ltd a company controlled by
Mr Matt Lahood to settle outstanding loans of $1,252,719.
◼ 18,963,307 shares with 9,481,653 attaching options were issued to MAK Property Group Pty Ltd a company controlled by
Mr Shad Hassen to settle outstanding loans of $1,232,615.
◼ 18,963,307 shares with 9,481,653 attaching options were issued to Ben Collier Investments Pty Ltd a company controlled by
Mr Ben Collier to settle outstanding loans of $1,232,615.
◼ 19,244,088 shares with 9,622,044 attaching options were issued to SEMC 2 Pty Ltd a company controlled by Mr Steven Chen
to settle outstanding loans of $1,252,719.
◼ 7,692,308 shares with 3,846,154 attaching options were issued to Kalonda Pty Ltd to settle outstanding loans of $450,000.
◼ 714,286 options were issue to Kalonda Pty Ltd as a debt facilitation fee with a fair value of $14,297.
◼ 12,899,074 options with a fair value of $258,192 were issued to the Joint Lead Manager in consideration for capital raising
services.
In the prior year Mr Niardone was issued 833,333 shares as described in note 20.2.2a.
P a g e | 48
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 7 Equity (cont.)
7.1.4 The following shares were issued to Directors to settle accrued Amount Shares
outstanding Directors’ fees from the prior year: S No.
Paul Niardone 116,719 1,795,682
Andrew Jensen 118,500 1,823,077
John Kolenda 87,494 1,346,061
Adam Davey 66,000 1,015,385
Total 388,713 5,980,205
7.1.5 Accounting policy
Ordinary issued capital is recorded at the consideration received. Incremental costs directly attributable to the issue of
ordinary shares and share options are recognised as a deduction from equity, net of any related income tax benefit. Ordinary
issued capital bears no special terms or conditions affecting income or capital entitlements of the shareholders.
7.2 Performance shares 2020 2019
No. No.
Performance shares 1,555,558 3,777,778
7.2.1 During the 2020 financial year, 2,222,251 performance shares converted into 2,222,251 ordinary shares upon achieving
a 10% growth in the mortgage and finance business loan book within 18 months of settlement. The remaining 1,555,558
performance shares failed to vest (by achieving a 20-day volume VWAP on the ASX which equals or exceeds 3 times the
re-quotation price of $0.02, at any time within 24 months of settlement) and expired. These performance shares will
convert to five only ordinary shares, subsequent to balance date.
7.3 Options Note 2020 2019 2020 2019
No. No. $ $
Options 104,181,760 5,588,912 928,715 583,426
At the beginning of the year 5,588,912 186,742,739 583,426 566,430
Options issued/(lapsed) during the year:
◼ Effect of share consolidation 30:1 - (180,517,958) - -
◼ Options after consolidation - 6,224,781 - -
◼ Expiry of options - (969,202) - -
◼ Issued to a director 20.2.2b 333,333 16,996
◼ Attaching pursuant to a
Placement 8,461,539 - - -
◼ Attaching to an Entitlement 34,495,371 - - -
Issue
◼ Equity-settled payments 7.1.3 44,944,823 -
◼ Lead Managers options 7.1.3 12,899,074 - 258,192 -
◼ Repayment of Kalonda debt 7.1.3 714,286 - 14,297
◼ Financing costs in respect to the
convertible note options 7.3.1 2,000,000 72,800
◼ Expiry of options (4,922,245) - - -
At reporting date 104,181,760 5,588,912 928,715 583,426
7.3.1 During the year, 2,000,000 options were granted as part of the convertible note.
P a g e | 49
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 7 Equity (cont.)
7.4 Reserves Note 2020 2019
$ $
Share-based payment reserve 7.4.1 928,715 583,426
928,715 583,426
7.4.1 Share-based payment reserve
The share-based payment reserve records the value of options and performance shares issued by the Company to its
employees or consultants.
P a g e | 50
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
SECTION B. RISK
This section of the notes discusses the Group’s exposure to various risks and shows how these could affect the Group’s
financial position and performance.
Note 8 Financial risk management
8.1 Financial Risk Management Policies
This note presents information about the Group’s exposure to each of the above risks, its objectives, policies and
procedures for measuring and managing risk, and the management of capital.
The Group’s financial instruments consist mainly of deposits with banks, short-term investments, and accounts payable
and receivable.
The Group does not speculate in the trading of derivative instruments.
A summary of the Group’s financial assets and liabilities is shown below:
Floating Fixed Non- Floating Fixed Non-
Interest Interest interest 2020 Interest Interest interest 2019
Rate Rate Bearing Total Rate Rate Bearing Total
$ $ $ $ $ $ $ $
Financial Assets
Cash and cash equivalents 2,724,142 - - 2,724,142 2,597,299 - - 2,597,299
Trade and other receivables - - 4,870,877 4,870,877 - - 4,362,645 4,362,645
Bank guarantees and restricted
cash 1,600,000 170,388 - 1,770,388 - 1,085,476 - 1,085,476
Investments - - - - - - 56,911 56,911
Total Financial Assets 4,324,142 170,388 4,870,877 9,365,407 2,597,299 1,085,476 4,419,556 8,102,331
Financial Liabilities
Financial liabilities at amortised
cost
Trade and other payables - - 9,773,151 9,773,151 - - 13,590,883 13,590,883
Borrowings - - 13,843,235 13,843,235 - - - -
Leases - 5,874,977 - 5,874,977 - - - -
Total Financial Liabilities - 5,874,977 23,616,386 29,491,363 - - 13,590,883 13,590,883
Net Financial Assets / (Liabilities) 4,324,142 (5,704,589) (18,745,509) (20,125,956) 2,597,299 1,085,476 (9,171,327) (5,488,552)
8.2 Specific Financial Risk Exposures and Management
The main risk the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk
consisting of interest rate, foreign currency risk and equity price risk. The Group’s overall risk management program
focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial
performance of the Group.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.
The Board adopts practices designed to identify significant areas of business risk and to effectively manage those risks in
accordance with the Group’s risk profile. This includes assessing, monitoring and managing risks for the Group and setting
appropriate risk limits and controls. The Group is not of a size nor is its affairs of such complexity to justify the
establishment of a formal system for risk management and associated controls. Risk management is carried out by the
full Board of Directors as the Group believes that it is crucial for all board members to be involved in this process. The
Chairman, with the assistance of senior management as required, has responsibility for identifying, assessing, treating
and monitoring risks and reporting to the Board on risk management.
P a g e | 51
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 8 Financial risk management (cont.)
8.2.1 Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract
obligations that could lead to a financial loss to the Group.
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient
collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts
with entities that are rated the equivalent of investment grade and above. This information is supplied by independent
rating agencies where available and, if not available, the Group uses publicly available financial information and its own
trading record to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are
continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.
Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee
annually.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and
other receivables.
◼ Credit risk exposures
The maximum exposure to credit risk, arising from cash and cash equivalents and trade receivables, is limited to the
carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial
position and notes to the financial statements.
Credit risk related to balances with banks and other financial institutions is managed by the Group in accordance with
approved Board policy. Such policy requires that surplus funds are only invested with financial institutions residing in
Australia, where ever possible. There are no significant concentrations of credit risk, whether through exposure to
individual customers, specific industry sectors and/or regions.
◼ Impairment losses
The ageing of the Group’s current trade and other receivables at reporting date was as follows:
Past due but not
Gross Impaired Net impaired
2020 2020 2020 2020
$ $ $ $
Trade receivables
Not past due 3,049,563 - 3,049,563 -
Past due up to 30 days 386,989 - 386,989 386,989
Past due 31 days to 90 days 200,173 - 200,173 200,173
Past due over 90 days 310,911 (189,702) 121,209 121,209
3,947,636 (189,702) 3,757,934 708,371
Other receivables
Not past due 1,262,943 (150,000) 1,112,943 -
Total 5,210,579 (339,702) 4,870,877 708,371
8.2.2 Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Group’s reputation.
Ultimate responsibility for liquidity risk management rests with the Board, who have built an appropriate liquidity risk
management framework for the management of the Group’s short, medium and long-term funding and liquidity
management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and
reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles
of financial assets and liabilities. The Group’s ability to raise debt and / or equity funding in the market is paramount in
this regard.
P a g e | 52
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 8 Financial risk management (cont.)
The Group has no access to credit standby facilities or arrangements for further funding or borrowings in place. The
financial liabilities the Group had at the end of the reporting period were trade and other payables incurred in the normal
course of the business. These were non-interest bearing and were due within the normal 30-60 days terms of creditor
payments.
◼ Contractual Maturities
The table below analyses the Group’s financial liabilities and assets into relevant maturity groupings based on the
remaining period at the end of the reporting period to the contractual maturity date. The amounts disclosed in the
table are the contractual undiscounted cash flows:
Within 1 Year Greater Than 1 Year Total
2020 2019 2020 2019 2020 2019
$ $ $ $ $ $
Financial liabilities due for payment
Trade and other payables 9,773,151 13,555,575 - 35,308 9,773,151 13,590,883
Borrowings 13,843,235 21,126,603 13,843,235 21,126,603 27,686,470 42,253,206
Leases 1,979,900 - 3,895,077 - 5,874,977 -
Total contractual outflows 25,596,286 34,682,178 17,738,312 21,161,911 43,334,598 55,844,089
Financial assets
Cash and cash equivalents 2,724,142 2,597,299 - - 2,724,142 2,597,299
Trade and other receivables 4,601,222 4,079,873 269,655 282,772 4,870,877 4,362,645
Bank guarantees and restricted cash 1,600,000 - 170,388 1,085,476 1,770,388 1,085,476
Total anticipated inflows 8,925,364 6,677,172 440,043 1,368,248 9,365,407 8,045,420
Net (outflow) / inflow on financial
instruments (16,670,922) (28,005,006) (17,298,269) (19,793,663) (33,969,191) (47,798,669)
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at
significantly different amounts.
8.2.3 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will
affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management
is to manage and control market risk exposures within acceptable parameters, while optimising the return.
The Group’s activities minimally expose it to the financial risks of changes in foreign currency exchange rates, commodity
prices and exchange rates. The Group does not enter into derivative financial instruments including foreign exchange
forward contracts to hedge against financial risk. There has been no change to the Group’s exposure to market risks or
the manner in which it manages and measures the risk from the previous period.
a. Interest rate risk
The Group are exposed to interest rate risk as the Group borrows funds at both fixed and floating interest rates. The
risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings.
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 8 Financial risk management (cont.)
The Group’s policy is to monitor the interest rate yield curve out to six months to ensure a balance is maintained
between the liquidity of cash assets and the interest rate return. Cash at bank and in hand earns interest at floating
rates based on daily bank deposit rates. The Group does not have any receivables or payables that may be affected
by interest rate risk.
b. Foreign exchange risk
The Group is not exposed to any material foreign exchange risk.
c. Price risk
Price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market prices. The Group does not presently hold material amounts subject to price risk. As such the
Board considers price risk as a low risk to the Group.
8.2.4 Sensitivity Analyses
The following table illustrates sensitivities to the Group’s exposures to changes in interest rates. The table indicates the
impact on how profit and equity values reported at balance sheet date would have been affected by changes in the
relevant risk variable that management considers to be reasonably possible. These sensitivities assume that the
movement in a particular variable is independent of other variables.
Profit Equity
a. Interest rates $ $
Year ended 30 June 2020
±50 basis points change in interest rate ± 21,621 ± 21,621
Year ended 30 June 2019
±100 basis points change in interest rates ± 25,973 ± 25,973
8.2.5 Net Fair Values
a. Fair value estimation
The fair values of financial assets and financial liabilities are presented in the table in note 8.1 and can be compared
to their carrying values as presented in the statement of financial position. Fair values are those amounts at which
an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length
transaction.
Financial instruments whose carrying value is equivalent to fair value due to their nature include:
◼ Cash and cash equivalents;
◼ Trade and other receivables; and
◼ Trade and other payables.
The methods and assumptions used in determining the fair values of financial instruments are disclosed in the
accounting policy notes specific to the asset or liability.
P a g e | 54
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 9 Capital Management
9.1.1 Capital
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance.
Capital is defined as the combination of contributed equity, reserves and net debt (borrowings less cash). The Board is
responsible for monitoring and approving the capital management framework within which management operates. The
Group’s objective when managing capital is to safeguard its ability to continue as a going concern, so that it can continue
to provide returns for shareholders and benefits for other stakeholders such as employees. The Group focuses on
interrelated financial parameters, including its gearing ratio, earnings growth, average cost of debt, gearing, weighted
average debt maturity and borrowing capacity. These are taken into account when the Group makes decisions on how
to invest its capital and evaluate its existing investments.
The capital structure of the Group can be changed by paying distributions to shareholders, returning capital to
shareholders, issuing new shares or selling assets
9.1.2 Working Capital
The working capital position of the Group was as follows: Note 2020 2019
$ $
Cash and cash equivalents 5.1 2,724,142 2,597,299
Trade and other receivables 5.2.1 4,601,222 4,079,873
Financial assets 5.3.1 1,600,000 -
Other current assets (excl. prepayments) 5.4.1 542,840 16,207
Trade and other payables 5.5.1 (9,773,151) (13,555,575)
Borrowings 5.6.1 (13,843,235) (21,126,603)
Leases 6.2.2 (1,979,900) -
Current provisions 6.4 (2,286,835) (1,112,833)
Working capital position (18,414,917) (29,101,632)
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
SECTION C. GROUP STRUCTURE
This section provides information which will help users understand how the Group structure affects the financial
position and performance of the Group as a whole. In particular, there is information about:
(a) changes to the structure that occurred during the year as a result of business combinations and the disposal of a
discontinued operation
(b) transactions with non-controlling interests, and
(c) interests in joint operations.
A list of significant subsidiaries is provided in note 10 below. This note also discloses details about the Group’s equity
accounted investments.
Note 10 Interest in subsidiaries
10.1 Information about principal subsidiaries
The subsidiaries listed below have share capital consisting solely of ordinary shares which are held directly by the Group
and the proportion of ownership interest held equals the voting rights held by the Group. Investments in subsidiaries are
accounted for at cost. Each subsidiaries’ country of incorporation is also its principal place of business, being Australia:
Entity name Class of Percentage Owned Entity name Class of Percentage Owned
Shares 2020 2019 Shares 2020 2019
◼ Ausnet Real Estate Services Pty Ord. 100 100 ◼ The Agency Sales VIC Pty Ltd Ord. 100 100
Ltd ◼ The Agency Sales NSW Pty Ltd Ord. 100 100
◼ Top Level Real Estate Pty Ltd Ord. 100 100 ◼ The Agency Project Sales QLD Ord. 100 100
◼ Vicus Residential Pty Ltd Ord. 100 100 Pty Ltd
◼ Jelina Holdings Pty Ltd Ord. 100 100 ◼ The Agency Project Sales NSW Ord. 100 100
◼ Westvalley Corporation Pty Ltd Ord. 100 100 Pty Ltd
◼ Ausnet Asset Management Pty Ord. 100 100 ◼ The Agency Property Ord. 100 100
Ltd Management NSW Pty Ltd
◼ Ausnet Real Estate Network Pty Ord. 100 100 ◼ The Agency Auctions NSW Pty Ord. 100 100
Ltd Ltd
◼ Ausnet Financial Planning Ord. 100 100 ◼ The Agency Property Ord. 100 100
Services Pty Ltd Management VIC Pty Ltd
◼ Ausnet Financial Pty Ltd Ord. 100 100 ◼ Top Level Real Estate Sales Pty. Ord. 100 100
◼ Vision Capital Management Ltd Ord. 100 100 Ltd.
◼ The Agency Property Ord. 100 100
◼ Ausnet Property Investment Ord. 100 100
Fund Pty Ltd Management QLD Pty Ltd
◼ The Agency Auctions QLD Pty Ord. 100 100
◼ Ausnet Opportunity Fund Ord. 55 55
Ltd
◼ Move Property Solutions Pty Ltd Ord. 100 100
◼ The Agency Auctions VIC Pty Ltd Ord. 100 100
◼ The Agency Property Ord. 100 100
Management WA Pty Ltd ◼ The Agency Project Sales VIC Pty Ord. 100 100
Ltd
◼ Empur Pty Ltd i Ord. 50 50
◼ Top Level Real Estate Sales Pty Ord. 100 100
◼ Namibian Resources Pty Ltd Ord. 100 100
Ltd
◼ Gazania Investments Thirty Two Ord. 80 80
◼ Top Level Real Estate Holdings Ord. 100 100
Pty Ltdii
Pty Ltd
◼ The Agency Sales QLD Pty Ltd Ord. 100 100
◼ The Agency Marketing QLD Pty Ord. 100 100
◼ The Agency Marketing Pty Ltd Ord. 100 100 Ltd
◼ S.J. Laing & Son Pty Ltd Ord. 100 100 ◼ The Agency Marketing VIC Pty Ord. 100 100
◼ Courtesy Real Estate (NSW) Pty Ord. 100 100 Ltd
Ltd
i. The Company has a 50% interest in a joint venture entity trading under the name Ausnet Property Investment Strategies.
ii. Invested through Namibian Resources Pty Ltd
P a g e | 56
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Note 11 Business combinations
11.1 Acquisition of Top Level and Real Estate Assets
On 17 January 2019, the Group announced that its 100% owned subsidiary Ausnet had completed its 100% acquisition
of Top Level Real Estate Pty Ltd (Top Level), in accordance with the Amended and Restated Option Agreement, terms
announced on the ASX on 19 September 2018. For the purposes of these financial statements, the results of Top Level
have been included beginning on 11 January 2019 when control effectively passed, with the considerations shares issued
in respect to 18,333,333 ordinary fully paid shares, valued at the closing price on 11 January 2019 of 14 cents, giving a
market value of $2,566,667.
Top Level is a private Australian company established in 2016 as a residential sales, project marketing, commercial sales
and leasing and property management business.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
◼ Goodwill is calculated as the difference between the fair value of consideration transferred less the fair value of the
identified net assets of Top level.
◼ The assets and liabilities recognised as a result of the acquisition are as follows:
Fair Value
$
Cash and cash equivalents 594,258
Trade and other receivables 2,831,759
Prepayments 170,942
Property, plant, and equipment 2,155,716
Other – bank guarantees 121,637
Trade and other payables (6,767,664)
Borrowings (25,553,559)
Provisions (1,234,080)
Other – lease incentive liabilities (716,263)
Fair value of assets and liabilities acquired (28,397,254)
Add: Goodwill – accounted for 15,962,136
Identifiable intangible assets – Rent Rolls acquired 20,692,117
Less: Deferred tax liability (5,690,332)
Satisfied by:
Ordinary shares issued 2,566,667
2,566,667
Net cash inflow arising on acquisition:
Cash paid Nil
Less: Balances acquired
Cash 594,258
594,258
Net inflow of cash – investing activities 594,258
11.1.1 Revenue and profit contribution
The acquired business contributed revenues of $10,155,115 and net loss of $2,818,080 to the Group for the period from
11 January 2019 to 30 June 2019.
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 11 Business combinations (cont.)
11.2 Acquisition of Vicus Residential
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 $67,500 cash payment as
payment for all of Vicus Residential’s issued shares after receiving shareholder approval on 15 November 2018. The total
acquisition cost is $535,833.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Fair Value
$
Consideration
Provisional cash payment 67,500
Consideration shares 468,333
535,833
Fair value of assets and liabilities held at acquisition date:
Identifiable intangible assets – Rent Rolls acquired 535,833
Fair value of identifiable assets and liabilities assumed 535,833
Note 12 Other Significant Accounting Policies related to Group Structure
12.1 Basis of consolidation
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial
statements as well as their results for the year then ended. Where controlled entities have entered (left) the Consolidated
Group during the year, their operating results have been included (excluded) from the date control was obtained (ceased).
12.1.1 Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the sum of the acquisition‑date fair values of assets transferred
by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interest issued by the
Group in exchange for control of the acquiree. Acquisition‑related costs are recognised in profit or loss as incurred. At the
acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the
acquisition date, except that:
◼ deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and
measured in accordance with AASB 112 Income Taxes and AASB 119 Employee Benefits respectively;
◼ liabilities or equity instruments related to share‑based payment arrangements of the acquiree or share‑based payment
arrangements of the Group entered into to replace share‑based payment arrangements of the acquiree are measured
in accordance with AASB 2 Share‑Based Payments at the acquisition date; and
◼ assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Non‑current Assets Held for Sale
and Discontinued Operations are measured in accordance with that Standard.
a. Goodwill
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non‑controlling interests
in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the
acquisition‑date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of
the acquisition‑date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration
transferred, the amount of any non‑controlling interests in the acquiree and the fair value of the acquirer’s previously held
interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
P a g e | 58
THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 12 Other Significant Accounting Policies related to Group Structure
When the consideration transferred by the Group in a business combination includes contingent consideration
arrangement, the contingent consideration is measured at its acquisition‑date fair value and included as part of the
consideration transferred in a business combination. Changes in fair value of the contingent consideration that qualify as
measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill.
Measurement period adjustments are adjustments that arise from additional information obtained during the
‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed
at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement
period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as
equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Other
contingent consideration is remeasured to fair value at subsequent reporting dates with changes in fair value recognised in
profit or loss.
When a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are
remeasured to its acquisition‑date fair value and the resulting gain or loss, if any, is recognised in profit or loss. Amounts
arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other
comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were
disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination
occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period, or additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have
affected the amounts recognised as of that date.
b. Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately from goodwill are recognised initially at their
fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
c. Contingent liabilities acquired in a business combination
Contingent liabilities acquired in a business combination are initially measured at fair value at the acquisition date. At the
end of subsequent reporting periods, such contingent liabilities are measured at the higher of the amount that would be
recognised in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the amount recognised
initially less cumulative amount of income recognised in accordance with the principles of AASB 15 Revenue from Contracts
with Customers.
12.1.2 Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases.
The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the
Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as non-controlling interests.
The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled
to a proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the non-controlling interests’
proportionate share of the subsidiary’s net assets. Subsequent to initial recognition, non-controlling interests are attributed
their share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown
separately within the equity section of the statement of financial position and statement of comprehensive income.
The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group
is treated as a capital contribution to that subsidiary undertaking. The fair value of employee services received, measured
by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary
undertakings, with a corresponding credit to equity.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing
so causes the non-controlling interests to have a deficit balance.
A list of controlled entities is contained in note 10 Interest In Subsidiaries of the financial statements.
P a g e | 59
ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 12 Other Significant Accounting Policies related to Group Structure
12.1.3 Loss of control
Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests
and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised
in profit or loss. If the Group retains any interest in the previous subsidiary, then such interests are measured at fair value at
the date control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial
asset depending on the level of influence retained.
12.1.4 Transactions eliminated on consolidation
All intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements.
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
SECTION D. UNRECOGNISED ITEMS
This section of the notes includes other information that must be disclosed to comply with the accounting standards
and other pronouncements, but that is not immediately related to individual line items in the financial statements.
Note 13 Commitments
13.1 Lease commitments
Note: From 1 July 2019, the Group has recognised right-of-use assets for these leases, except for short-term and low-value
leases, see note 6.2 and note 24.1 for further information.
13.2 Capital commitments
None.
Note 14 Events subsequent to reporting date
14.1 On 9 September 2020, the Company announced the forming of a strategic partnership with Managex Funds Management
Pty Ltd (Managex), a private company chaired by Future Fund Board member and Crown Perth Chairman John Poynton.
Under the terms of a binding sales agreement, Managex has agreed to purchase The Agency’s West Coast rent roll
business (1,173 managements) for $3.6 million. The sales agreement does not include The Agency Group’s East Coast
property management business which consisted of 3,665 properties under management (PuM) at end of June 2020.
Under a licence agreement, Managex will use The Agency Group brand in WA with a focus on retaining property
management staff. The Agency has agreed to accommodate Managex at its Perth office.
As part of the transaction, a reciprocal referral agreement will be entered into by both parties whereby all sales leads
that come from Managex be referred in first instance to The Agency while all WA property management leads from The
Agency will be referred to Managex.
The Group expects to receive within days of signing this report proceeds of $2.7 million from the sale which will be used
to pay down debt with the remaining retention amount (up to $0.485 million) to be received six months after the
completion date.
14.2 The Group’s loan with Macquarie Bank is due for repayment on 30 September 2020.
The Board is currently actively negotiating the extension of its financing arrangements with its lenders and expects to
have its facilities refinanced imminently. As part of this financing process the Company expects to raise $5 million from
the issue of convertible notes which will be used to pay down its debt with Macquarie Bank. The existing loan from
Kalonda Pty Ltd has been rolled over, under the same terms and conditions, for another 3 months to 31 December 2020.
The Board is confident in successfully renegotiating the extension of all its financing arrangements, as has been
demonstrated during the year. Macquarie Bank has provided confirmation that it is credit approved to extend the Deed
of Forbearance, subject to documentation and conditions precedent to 14 November 2020, and are currently in
negotiations with the Group on a refinancing proposal beyond this period.
There has not been any other matter or circumstance that has arisen after balance date that has significantly affected, or may
significantly affect, the operations of the Group, the results of those operations, or the state of affairs of the Group in future
financial periods.
Note 15 Contingent liabilities
There are no other contingent liabilities as at 2020 (2019: Nil).
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
SECTION E. OTHER INFORMATION
This section of the notes includes other information that must be disclosed to comply with the accounting standards
and other pronouncements, but that is not immediately related to individual line items in the financial statements.
Note 16 Key Management Personnel compensation (KMP)
The names and positions of KMP are as follows:
◼ Andrew Jensen Executive Chairman and Chief Operations Officer
◼ Paul Niardone Managing Director
◼ Adam Davey Non-Executive Director
◼ Matt Lahood Executive Director
◼ Mitchell Atkins Non-Executive Director (appointed 1 October 2019, resigned 8 May 2020)
◼ John Kolenda Non-Executive Director (resigned 20 December 2019)
◼ Arjan van Ameyde Chief Financial Officer (appointed 1 February 2020)
Information regarding individual Directors and executives’ compensation and some equity instruments disclosures as required
by the Corporations Regulations 2M.3.03 is provided in the Remuneration report table on page 16.
2020 2019
$ $
Short-term employee benefits 1,209,888 798,785
Post-employment benefits 64,002 38,411
Equity-settled share-based payments - 133,663
Total 1,273,890 970,859
Note 17 Related party transactions
Some Directors or former Directors of the Group hold or have held positions in other companies, where it is considered they
control or significantly influence the financial or operating policies of those entities. During the year, the following entities
provided services to the Group.
Total Transactions Payable Balance
Entity Nature of transactions KMP 2020 2019 2020 2019
$ $ $ $
Regency Partners Professional services Philip Re - 30,000 - -
Daring Investments Pty Ltd Licence fees John Kolenda - 17,886 - 17,886
Chapter One Advisers Public Relations Paul Niardone 59,000 120,000 11,000 42,000
Aura Capital Pty Ltd Placement fees / John Kolenda 415,089 791,968 71,509 416,558
transaction fees
Matt Lahood Advance commissions / Matt Lahood 44,050 - 52,783 (147,750)
Future fund
Magnolia Capital Professional services Mitchell Atkins 30,170 - - -
During the year MA SOF 56 Pty Ltd, (a Company of which Mr Mitchel Atkins was a director) provided a loan to the Group of
$150,000 of which the principal plus interest and fees was repaid in full. Interest and fees associated with the loan was $91,820.
During the year KMP loans settled by way equity as detailed in note 7.1.4.
Note 18 Auditor's remuneration 2020 2019
$ $
Remuneration of the auditor for:
◼ Auditing or reviewing the financial reports:
Bentleys Audit & Corporate (WA) Pty Ltd 141,661 130,548
◼ Non-audit services provided by a related practice of the Auditor - -
141,661 130,548
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 19 Earnings per share (EPS) Note 2020 2019
$ $
19.1 Reconciliation of earnings to profit or loss
Loss for the year (9,065,337) (7,830,605)
Less: loss attributable to non-controlling equity interest - -
Loss used in the calculation of basic and diluted EPS (9,065,337) (7,830,605)
2020 2019
No. No.
19.2 Weighted average number of ordinary shares outstanding
during the year used in calculation of basic EPS 251,793,328 61,610,752
Weighted average number of dilutive equity instruments outstanding 19.5 N/A N/A
19.3 Weighted average number of ordinary shares outstanding
during the year used in calculation of basic EPS 251,793,328 61,610,752
2020 2019
19.4 Earnings per share ₵ ₵
Basic EPS (cents per share) 19.5 (3.60) (12.71)
Diluted EPS (cents per share) 19.5 N/A N/A
19.5 As at 30 June 2020 the Group has 104,181,760 unissued shares under options (2019: 5,588,912) and 1,555,558 performance
shares on issue (2019: 3,777,778). The Group does not report diluted earnings per share on losses generated by the Group.
During the year, the Group's unissued shares under option and partly-paid shares were anti-dilutive.
Note 20 Share-based payments 2020 2019
$ $
20.1 Share-based payments:
◼ Recognised in profit and loss – share-based payment expense 20.2.2a,b - 133,663
◼ Recognised in profit and loss – Consultancy fees 20.2.1a 724,000
◼ Recognised in profit and loss – Interest and finance costs 20.2.1b 87,097
◼ Recognised in net assets as a reduction in borrowings and payables 20.2.1c,d 6,187,101 -
◼ Recognised in equity – Transaction costs 20.2.1e 258,192 -
Gross share-based payments 7,256,390 133,663
20.2 Share-based payment arrangements in effect during the period
20.2.1 Share-based payments recognised during the year
a. Equity-settled consultant fees
As detailed in note 7.1.3, 11,138,462 shares were issued to consultants for services with a fair value of $724,000.
b. Equity-settled financing fees
As detailed in note 7.1.3, 714,286 options were issued as a debt facilitation fee with a fair value of $14,297, and as
disclosed in note 7.3.1, 2,000,000 options were issued as part of a convertible note fee with a fair value of $72,800.
Number under Option Date of Expiry Consideration Exercise Price Vesting Terms
714,286 31 December 2020 nil $0.065 Immediately upon issue
2,000,000 25 May 2022 nil $0.040 Immediately upon issue
c. Equity-settled loans
As detailed in note 7.1.3, 89,889,649 shares and 44,944,825 options were issued to settle $5,798,388 in loans.
Number under Option Date of Expiry Consideration Exercise Price Vesting Terms
44,944,823 31 December 2020 nil $0.065 Immediately upon issue
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 20 Share-based payments (cont.)
d. Equity-settled accrued Directors’ fees payable
As detailed in note 7.1.4, 5,980,205 shares were issued to Directors to settle accrued outstanding Directors’ fees from
the prior year amounting to $388,713.
e. Equity-settled transaction costs
As detailed in note 7.1.3, 12,899,074 options with a fair value of $258,192 were issued in consideration for capital
raising services.
Number under Option Date of Expiry Consideration Exercise Price Vesting Terms
12,899,074 31 December 2020 nil $0.065 Immediately upon issue
20.2.2 Issued in prior period, remaining in effect
a. Director Remuneration Shares – Paul Niardone
At a general meeting, held 28 November 2018, shareholders approved the issue of 833,333 shares for nil
consideration, at a deemed value of $0.14 per share as part of the remuneration package for Mr Niardone. The total
value of the remuneration shares amounted to $116,667.
b. Director Remuneration – Adam Davey
At a general meeting, held 28 November 2018, shareholders approved the issue of 333,333, at a deemed value of
$0.14 per share as part of the remuneration package for Mr Davey. The total value of the remuneration options
amounted to $16,996.
Number under Option Date of Expiry Exercise Price Vesting Terms
333,333 11 January 2022 $0.30 Immediately upon issue
c. Performance Shares
During the 2020 financial year, 2,222,251 performance shares converted into 2,222,251 ordinary shares upon
achieving a 10% growth in the mortgage and finance business loan book within 18 months of settlement. The
remaining 1,555,558 performance shares failed to vest (by achieving a 20-day volume VWAP on the ASX which equals
or exceeds 3 times the re-quotation price of $0.02, at any time within 24 months of settlement) and expired. These
performance shares will convert to five only, ordinary shares, subsequent to balance date. Refer also 7.2.1.
20.3 Movement in share-based payment arrangements during the period
A summary of the movements of all Company options issued as share-based payments is as follows:
2020 2019
Number of Weighted Average Number of Options Weighted Average
(post-consolidation
Options Exercise Price basis)
Exercise Price
Outstanding at the beginning of the year 5,588,912 $3.873 6,224,758 $4.162
Granted 103,515,093 $0.065 333,333 $0.300
Exercised - - - -
Expired (4,922,245) $4.321 (969,202) $4.500
Outstanding at year-end 104,181,760 $0.068 5,588,889 $3.873
Exercisable at year-end 104,181,760 $0.068 5,588,889 $3.873
a. No options were exercised during the year (2019: nil).
b. The weighted average remaining contractual life of options outstanding at year end was 0.53 years (2019: 0.67 years).
c. The fair value of the options granted to employees is deemed to represent the value of the employee services received
over the vesting period.
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 20 Share-based payments (cont.)
20.4 Fair value of options granted during the year
The fair value of the options granted to employees is deemed to represent the value of the employee services received
over the vesting period.
No options were granted during the year.
The weighted average fair value of options granted during the year was $0.0204 (2019: $0.0510). These values were
calculated using the Black-Scholes option pricing model, applying the following inputs to options issued this year:
Note Reference 20.2.1b 20.2.1b 20.2.1e
Grant date: 30.09.2019 25.05.2020 30.09.2019
Grant date share price: $0.065 $0.039 $0.065
Option exercise price: $0.065 $0.040 $0.065
Number of options issued: 714,286 2,000,000 12,899,074
Remaining life (years): 1.25 2.00 1.25
Expected share price volatility: 68.66 93.93 68.66
Risk-free interest rate: 0.76% 0.26% 0.76%
Value per option $0.020 $0.036 $0.020
Historical volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative
of future movements.
The life of the options is based on the historical exercise patterns, which may not eventuate in the future.
20.4.1 Accounting policy
The Group has provided payment to service providers and related parties in the form of share-based compensation whereby
services are rendered in exchange for shares or rights over shares, equity-settled transactions. The cost of these equity-
settled transactions is measured by reference to the fair value at the date at which they are granted. The fair value is
determined using an appropriate valuation model for services provided by employees or where the fair value of the goods
or services received cannot be reliably estimated.
For goods and services received where the fair value can be determined reliably the goods and services and the
corresponding increase in equity are measured at that fair value. The fair value of the options granted is adjusted to reflect
market vesting conditions, but excludes the impact of any non-market vesting conditions. Non-market vesting conditions
are included in assumptions about the number of options that are expected to become exercisable.
At each balance date, the entity revises its estimates of the number of options with non-market vesting conditions that are
expected to become exercisable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in
which the performance conditions are fulfilled, ending on the date on which the relevant parties become fully entitled to
the award, vesting date.
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the
extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the Directors of the
Group, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment
is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the
determination of fair value at grant date.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not
been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the
modification, as measured at the date of modification.
20.4.2 Key estimate
a. Share-based payments
The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instrument at the
date at which they are granted. The fair value of options granted is measured using the Black-Scholes option pricing model.
The model uses assumptions and estimates as inputs. The assumptions and models used for estimating fair value for share-
based payment transactions are disclosed in note 20.4.
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 21 Operating segments
21.1 Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are provided to the Board of Directors
(the Board) on a monthly basis and in determining the allocation of resources.
The Group is managed primarily on the basis of service offerings as the diversification of the Group’s operations
inherently have notably different risk profiles and performance assessment criteria. Operating segments are therefore
determined on the same basis.
21.2 Types of services by segment
21.2.1 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.
21.2.2 Mortgage Origination Services
This represents revenue received for provision of mortgage broking services.
21.2.3 Other (includes financial planning, head office etc)
This represents non-reportable segments including head office, financial planning, property investments, and other
services.
21.3 Basis of accounting for purposes of reporting by operating segments
21.3.1 Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board, being the chief decision maker with respect to operating
segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual
financial statements of the Group.
21.3.2 Inter-segment transactions
All such transactions are eliminated on consolidation of the Group's financial statements.
Inter-segment loans payable and receivable are initially recognised at the consideration received/to be received net of
transaction costs. If inter-segment 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.
21.3.3 Segment assets
Where an asset is used across multiple segments, the asset is allocated to that segment that receives majority economic
value from that asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and
physical location.
21.3.4 Segment liabilities
Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the
operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Group as a whole and
are not allocated. Segment liabilities include trade and other payables and certain direct borrowings.
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 21 Operating segments (cont.)
21.3.5 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.
21.3.6 Segment information
a. The Group’s operations are from Australian sources and therefore no geographical segments are disclosed.
b. Assets and liabilities have not been reported on a segmented basis as the Board of Directors is provided with
consolidated information.
21.4 Segment Financial Performance
Real Estate Mortgage Total
Property Origination Reportable Other
Services Services Segments Segments Total
30 June 2020 $ $ $ $ $
Revenue
◼ External revenues 39,023,834 2,817,248 41,841,082 20,439 41,861,521
◼ Inter-segment revenues - - - - -
Total segment revenue 39,023,834 2,817,248 41,841,082 20,439 41,861,521
Reconciliation of segment revenue to Group revenue:
◼ Eliminations -
Total group revenue and other income _ 41,861,521
Segment earnings before interest, tax, depreciation,
and amortisation (EBITDA) 6,095,130 1,131,649 7,226,779 (1,518,252) 5,708,527
◼ Unallocated corporate costs (3,045,440)
EBITDA 2,663,087
Reconciliation of segment loss to Group loss:
(i) Unallocated items:
◼ Impairment (5,230,330) - (5,230,330) - (5,230,330)
◼ Depreciation and amortisation (5,771,409) (23,410) (5,794,819) (243,790) (6,038,609)
◼ Net finance costs (1,446,487) - (1,446,487) (304,718) (1,751,205)
Profit before income tax _ (10,357,057)
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 21 Operating segments (cont.)
Real Estate Mortgage Total
Property Origination Reportable Other
Services Services Segments Segments Total
30 June 2019 $ $ $ $ $
Revenue
◼ External revenues 25,179,466 2,879,042 28,058,508 457,189 28,515,697
◼ Inter-segment revenues - - - 876,000 876,000
Total segment revenue 25,179,466 2,879,042 28,058,508 1,333,189 29,391,697
Reconciliation of segment revenue to Group revenue:
◼ Eliminations (876,000)
Total group revenue and other income _ 28,515,697
Segment earnings before interest, tax, depreciation
and amortisation (EBITDA) (2,113,166) 796,562 (1,316,604) (769,280) (2,085,884)
◼ Unallocated corporate costs (2,490,690)
EBITDA (4,576,574)
Reconciliation of segment loss to Group loss:
(ii) Unallocated items:
◼ Impairment (1,169,651) - (1,169,651) - (1,169,651)
◼ Depreciation and amortisation (1,685,721) (2,838) (1,688,559) (577,989) (2,266,548)
◼ Net finance costs (791,794) - (791,794) (450,881) (1,242,675)
Profit before income tax _ (9,255,448)
21.5 Major customers
The Group has a diversified range of customers across various geographic locations and businesses, and is not dependant
on any one customer above 5%.
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 22 Parent entity disclosures
The Agency Group Australia Ltd is the ultimate Australian parent entity and ultimate parent of the Group.
The Agency Group Australia Ltd did not enter into any trading transactions with any related party during the year.
22.1 Financial Position of The Agency Group Australia Ltd 2020 2019
$ $
Current assets 1,058,028 318,923
Non-current assets 2,964,975 961,574
Total assets 4,023,003 1,280,497
Current liabilities 3,947,812 2,244,319
Non-current liabilities - -
Total liabilities 3,947,812 2,244,319
Net assets 75,191 (963,822)
Equity
Issued capital 39,395,942 24,770,150
Share-based payment reserve 928,715 583,426
Accumulated losses (40,249,466) (26,317,398)
Total equity 75,191 (963,822)
22.2 Financial performance of The Agency Group Australia Ltd 2020 2019
$ $
Loss for the year (2,152,572) (3,004,359)
Other comprehensive income - -
Total comprehensive income (2,152,572) (3,004,359)
22.3 Guarantees
There are no guarantees entered into by The Agency Group Australia Ltd for the debts of its subsidiaries as at 2020 (2019:
none).
22.4 Contractual commitments
The parent company has no capital commitments at 2020 (2019: $nil). The parent company other commitments are
disclosed in note 13 Commitments.
22.5 Contingent liabilities
There are no guarantees entered into by The Agency Group Australia Ltd for the debts of its subsidiaries as at 2020 (2019:
none).
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 23 Statement of significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements
to the extent they have not already been disclosed in the other notes above. These policies have been consistently applied to all the
years presented, unless otherwise stated.
23.1 Basis of preparation
23.1.1 Reporting Entity
The Agency Group Australia Ltd (The Agency or the Company) is a listed public company limited by shares, domiciled and
incorporated in Australia. These are the consolidated financial statements and notes of The Agency and controlled entities
(collectively the Group). The financial statements comprise the consolidated financial statements of the Group. For the
purposes of preparing the consolidated financial statements, the Company is a for-profit entity. The Group is a for-profit
entity and is primarily involved in the integrated real estate services.
The separate financial statements of The Agency, as the parent entity, have not been presented with this financial report as
permitted by the Corporations Act 2001 (Cth).
23.1.2 Basis of accounting
These financial statements are general purpose financial statements which have been prepared in accordance with
Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board (AAS Board) and
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and the
Corporations Act 2001 (Cth).
Australian Accounting Standards (AASBs) set out accounting policies that the AAS Board has concluded would result in a
financial report containing relevant and reliable information about transactions, events and conditions to which they apply.
Compliance with AASBs ensures that the financial statements and notes also comply with IFRS as issued by the IASB.
The financial statements were authorised for issue on 30 September 2020 by the Directors of the Company.
23.1.3 Going Concern
The financial report has 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.
The Group incurred a loss for the year of $9,065,337 (2019: $7,830,605 loss) and a net cash in-flow from operating activities
of $334,704 (2019: $6,431,187 out-flow). Included in the loss during the year was depreciation and amortisation of
$6,038,609 and impairment of $5,230,330.
As at 30 June 2020, the Company a working capital deficit of $18,414,917 (2019: $29,101,632 working capital deficit)
As disclosed in note 5.1.2b, during the year the Group reduced its borrowings (excluding leases) from $21,126,603 in 2019
to $13,843,235, assisted by the conversion of $5,798,388 of debt to equity. Included in the working capital deficit as at
30 June 2020 is a loan with Macquarie Bank with a balance of $12,093,235 which is due for repayment on 30 September
2020, and a loan of $750,000 which was also due for repayment on 30 September 2020. However, an option to renew for a
further 3 months to 31 December 2020 was effectuated. The Board is currently actively negotiating the extension of its
financing arrangements with Macquarie Bank and expects to have its facilities refinanced imminently. Macquarie Bank has
provided confirmation that it is credit approved to extend the Deed of Forbearance , subject to documentation and
conditions precedent to 14 November 2020, and are currently in negotiations with the Group on a refinancing proposal
beyond this period As part of this financing process the Company expects to raise $5 million from the issue of convertible
notes which will be used to pay down its debt with Macquarie Bank. The Board is confident in successfully renegotiating the
extension of its financing arrangements, as has been demonstrated during the year and in light of an independent valuation
obtained on the Group’s remaining rent roll of which the value significantly exceeds the debt.
As disclosed in note 14, on 9 September 2020, the Company announced it entered into a binding sales agreement for the
sale of the West Coast rent roll business for approximately $3.6 million (before adjustments). The Group expects to receive
within days of signing this report proceeds of $2.7 million from the sale which will be used to pay down debt with the
remaining retention amount (up to $0.485 million) to be received six months after the completion date.
The ability of the Group to continue as a going concern is principally dependent on the following:
◼ The execution of an amendment deed with Macquarie Bank which is currently in draft;
◼ Raising $5,000,000 from the issue of convertible notes which will be subject to shareholder approval;
◼ The Group meeting payment plans in place;
◼ The continued support of creditors. As at the date of this report management does not have any outstanding statutory
demands on the Group; and
◼ The Group generating cashflows from profitable operations.
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 23 Statement of significant accounting policies
In the event the above are not achieved the Group will need to immediately raise funds from issued capital and/or
alternative financing arrangements, proposals for which have been received by the Company.
These conditions indicate the existence of a material uncertainty that may cast a significant doubt about the Group’s ability
to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the
normal course of business.
The Directors have prepared a cash flow forecast, which indicates that the Group will have sufficient cash flows to meet
commitments and working capital requirements for the 12-month period from the date of signing this financial report.
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 Group’s history of raising capital to date, the directors are confident of
the Group’s ability to raise additional funds as and when they are required.
Should the Group 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 Group be unable to continue as a going
concern and meet its debts as and when they fall due.
23.1.4 Comparative figures
Where required by AASBs comparative figures have been adjusted to conform to changes in presentation for the current
financial year.
Where the Group retrospectively applies an accounting policy, makes a retrospective restatement or reclassifies items in its
financial statements, an additional (third) statement of financial position as at the beginning of the preceding period in
addition to the minimum comparative financial statements is presented.
23.1.5 New and Amended Standards Adopted by the Group
The Group has applied the following standards and amendments for the first time for their annual reporting period
commencing 1 July 2019:
◼ AASB 16 Leases
◼ AASB 2017-6 Amendments to Australian Accounting Standards – Prepayment Features with Negative Compensation
◼ AASB 2017-7 Amendments to Australian Accounting Standards – Long-term Interests in Associates and Joint Ventures
◼ AASB 2018-1 Amendments to Australian Accounting Standards – Annual Improvements 2015- 2017 Cycle
◼ AASB 2018-2 Amendments to Australian Accounting Standards – Plan Amendment, Curtailment or Settlement
◼ Interpretation 23 Uncertainty over Income Tax Treatments.
The Group also elected to adopt the following amendments early:
◼ AASB 2018-1 AASB 2018-7 I
The Group had to change its accounting policies as a result of adopting AASB 16. The Group elected to adopt the new rules
retrospectively but recognised the cumulative effect of initially applying the new standard on 1 July 2019. This is disclosed
in note 24.1. The other amendments listed above did not have any impact on the amounts recognised in prior periods and
are not expected to significantly affect the current or future periods.
23.2 Value-added taxes
Value-added tax (VAT) is the generic term for the broad-based consumption taxes that the Group is exposed to such as:
Australia (Goods and Services Tax or GST), hereafter collectively referred to as GST.
Revenues, expenses, and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the taxation authority. In these circumstances the GST is recognised as part of the cost of acquisition of
the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown
inclusive of GST.
The net amount of GST recoverable from, or payable to, the Australian Taxation Office (or jurisdictional equivalent) is
included as a current asset or liability in the balance sheet.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 23 Statement of significant accounting policies
23.3 Foreign currency transactions and balances
23.3.1 Functional and presentation currency
The functional currency of each of the Group's entities is measured using the currency of the primary economic environment
in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the legal
parent entity's functional and presentation currency. The functional currency of the Group is the Australian Dollar.
23.4 Use of estimates and judgments
The preparation of consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.
These estimates and associated assumptions are based on historical experience and various factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of
assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised and in any future periods affected.
Judgements made by management in the application of AASBs that have significant effect on the consolidated financial
statements and estimates with a significant risk of material adjustment in the next year are discussed in Note 23.4.1.
23.4.1 Critical Accounting Estimates and Judgments
Management discusses with the Board the development, selection and disclosure of the Group's critical accounting policies
and estimates and the application of these policies and estimates. The estimates and judgements that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed
below.
a. Key estimate – Taxation
Refer note 4.8 of the Income tax note.
b. Key judgement and keys estimate – Impairment of goodwill and rent roll
Refer note 6.3 Intangible assets.
c. Key judgement – determining the lease term
Refer note 6.2 Leases.
23.5 Fair Value
23.5.1 Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on
the requirements of the applicable AASB.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly
unforced transaction between independent, knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine
fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the
market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most
advantageous market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts
from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction
costs and transport costs).
For non-financial assets, the fair value measurement also considers a market participant's ability to use the asset in its
highest and best use or to sell it to another market participant that would use the asset in its highest and best use.
The fair value of liabilities and the entity's own equity instruments (excluding those related to share-based payment
arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial
instruments, by reference to observable market information where such instruments are held as assets. Where this
information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective
note to the financial statements.
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 23 Statement of significant accounting policies
23.5.2 Fair value hierarchy
AASB 13 Fair Value Measurement requires the disclosure of fair value information by level of the fair value hierarchy, which
categorises fair value measurements into one of three possible levels based on the lowest level that an input that is
significant to the measurement can be categorised into as follows:
Level 1 Level 2 Level 3
Measurements based on quoted prices Measurements based on inputs other than Measurements based on unobservable
(unadjusted) in active markets for quoted prices included in Level 1 that are inputs for the asset or liability.
identical assets or liabilities that the observable for the asset or liability, either
entity can access at the measurement directly or indirectly.
date.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant
inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant
inputs are not based on observable market data, the asset or liability is included in Level 3.
The Group would change the categorisation within the fair value hierarchy only in the following circumstances:
◼ if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa; or
◼ if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa.
When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value hierarchy (i.e.
transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances occurred.
23.5.3 Valuation techniques
The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to
measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the
asset or liability being measured. The valuation techniques selected by the Group are consistent with one or more of the
following valuation approaches:
◼ Market approach: valuation techniques that use prices and other relevant information generated by market transactions
for identical or similar assets or liabilities.
◼ Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a single
discounted present value.
◼ Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service capacity.
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the
asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priority to those
techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are
developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that
buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for
which market data is not available and therefore are developed using the best information available about such assumptions
are considered unobservable.
23.6 New Accounting Standards and Interpretations not yet mandatory or early adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2020
reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new
standards and interpretations is set out below. These standards are not expected to have a material impact on the entity in
the current or future reporting periods and on foreseeable future transactions.
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 24 Effects of Changes in Accounting Policy
This note explains the impact of the adoption of AASB 16 Leases (AASB 16) on the Group’s financial statements and discloses the
new accounting policies that have been applied from 1 July 2019 in note 24.2 following. The Group has adopted AASB 16
retrospectively from 1 July 2019, but has not restated comparatives for the 2019 reporting period, as permitted under the specific
transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore
recognised in the opening balance sheet on 1 July 2019.
24.1 Adjustments recognised on adoption of AASB 16
On adoption of AASB 16, the Group recognised lease liabilities in relation to leases which had previously been classified as
operating leases under AASB 117 Leases. These liabilities were measured at the present value of the remaining lease
payments, discounted using the lessee’s incremental borrowing rate as of 1 July 2019. The weighted average lessee’s
incremental borrowing rate applied to the lease liabilities on 1 July 2019 was 5.45%.
30 June
2019
$
Operating lease commitments as at 30 June 2019 8,509,202
Discounted using the lessee’s incremental borrowing rate of at the date of initial application 7,517,964
Add/(less): adjustments as a result of a different treatment of:
Short term leases (46,059)
Lease incentives receivable (740,778)
Extension options 734,821
Lease liability recognised as at 1 July 2019 7,465,948
Of which are:
◼ Current lease liabilities 1,723,350
◼ Non-current lease liabilities 5,742,598
7,465,948
The associated right-of-use assets for property leases and printing equipment were measured on a retrospective basis as if the
new rules had always been applied, other than those for which this could not be determined, which are measured at the
amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease
recognised in the balance sheet as at 30 June 2019. There were no onerous lease contracts that would have required an
adjustment to the right-of-use assets at the date of initial application.
The recognised right-of-use assets relate to the following types of assets:
30 June 1 July
2020 2019
$ $
Properties 3,500,419 4,897,881
Printing equipment 1,144,901 1,437,985
Total right-of-use assets 4,645,320 6,335,866
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Notes to the consolidated financial statements
for the year ended 30 June 2020
Note 24 Effects of Changes in Accounting Policy (cont.)
The change in accounting policy affected the following items in the balance sheet on 1 July 2019:
◼ Right-of-use assets – increase by $6,335,866
◼ Lease liabilities – increase by $7,465,948
◼ Lease incentive liability – decrease by $719,158
◼ Prepaid expenses – decrease by $94,226
◼ Accrued expenses – decrease by $49,279
◼ Deferred tax liabilities – decrease by $125,365 (through offset of deferred tax assets)
The net impact on retained earnings on 1 July 2019 was a decrease of $330,506.
24.1.1 Practical expedients applied
In applying AASB 16 for the first time, the Group has used the following practical expedients permitted by the standard:
◼ the use of a single discount rate to a portfolio of leases with reasonably similar characteristics;
◼ reliance on previous assessments on whether leases are onerous;
◼ the accounting for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 as short-
term leases;
◼ the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application; and
◼ the use of hindsight in determining the lease term where the contract contains options to extend or terminate the
lease.
The group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead,
for contracts entered into before the transition date the Group relied on its assessment made applying AASB 117 and
Interpretation 4 Determining whether an Arrangement contains a Lease.
24.2 The Group’s leasing activities and how these are accounted for
Until the 2019 financial year, leases of property were classified as either finance or operating leases. Payments made under
operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over
the period of the lease.
From 1 July 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased
asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance
cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the
lease term on a straight-line basis
24.2.1 Key estimates – Extension and termination options
An extension options is included in property leases of Group. These terms are used to maximise operational flexibility in
terms of managing contracts. The extension option held is exercisable only by the Group and not by the respective lessor.
In determining the lease term, management considers all facts and circumstances that create an economic incentive to
exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options)
are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is
reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within
the control of the lessee.
Note 25 Company details
The registered office and head office of the Company is:
Street: 68 Milligan St Postal: PO Box 7768
Perth WA 6000 CLOISTERS SQUARE WA 6850
Australia Australia
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Directors' declaration
The Directors of the Company declare that:
1. The financial statements and notes, as set out on pages 21 to 75, are in accordance with the Corporations Act 2001 (Cth) and:
(a) comply with Accounting Standards;
(b) are in accordance with International Financial Reporting Standards issued by the International Accounting Standards
Board, as stated in note 23.1 to the financial statements; and
(c) give a true and fair view of the financial position as at 30 June 2020 and of the performance for the year ended on that
date of the Group.
(d) the Directors have been given the declarations required by s.295A of the Corporations Act 2001 (Cth);
2. in the Directors' opinion there are reasonable grounds to believe that the Company 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 and is signed for and on behalf of the Directors
by:
PAUL NIARDONE
Managing Director
Dated this Wednesday, 30 September 2020
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AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Independent auditor's report
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Corporate governance statement
The Board is responsible for establishing the Company’s corporate governance framework. In establishing its corporate
governance framework, the Board has referred to the 4th edition of the ASX Corporate Governance Councils’ Corporate
Governance Principles and Recommendations.
The Corporate Governance Statement discloses the extent to which the Company follows the recommendations. The Company
will follow each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its
corporate governance practices. Where the Company’s corporate governance practices will follow a recommendation, the Board
has made appropriate statements reporting on the adoption of the recommendation. In compliance with the “if not, why not”
reporting regime, where, after due consideration, the Company’s corporate governance practices will not follow a
recommendation, the Board has explained its reasons for not following the recommendation and disclosed what, if any,
alternative practices the Company will adopt instead of those in the recommendation.
The Company’s governance-related documents can be found on its website at www.investors.theagency.com.au/corporate-
governance.
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Additional Information for Listed Public Companies
The following additional information is required by the Australian Securities Exchange in respect of listed public companies.
1 Capital as at 16 September 2020.
a. Ordinary share capital
298,954,431 ordinary fully paid shares held by 917 shareholders.
b. Options over Unissued Shares
Number of Exercise Price Expiry ASX
Options $ Date Status
101,515,093 0.065 31 Dec 2020 Listed
266,667 0.750 20 Dec 2020 Unlisted
66,667 1.200 20 Dec 2020 Unlisted
333,333 0.300 11 Jan 2022 Unlisted
2,000,000 0.040 25 May 2022 Unlisted
104,181,760
c. Performance Shares over Unissued Shares
Class of Performance Condition Performance Milestone Date Expiry Date
Performance rights
Right No.
Incentive Achieving a 20-day volume VWAP on the ASX 1,555,558 24 months of Expired
Performance which equals or exceeds 3 times the re- settlement These performance
Shares quotation price of $0.02, at any time within 24 shares will convert
months of settlement to five only ordinary
shares, subsequent
to balance date
1,555,558
d. Voting Rights
The voting rights attached to each class of equity security are as follows:
◼ Ordinary shares: Each ordinary share is entitled to one vote when a poll is called, otherwise each member present
at a meeting or by proxy has one vote on a show of hands.
◼ Options: Options do not entitle the holders to vote in respect of that equity instrument, nor participate in
dividends, when declared, until such time as the options are exercised or performance shares convert and
subsequently registered as ordinary shares.
◼ Performance Shares: A Performance Right does not entitle a Holder to vote on any resolutions proposed at a
general meeting of shareholders of the Company. A Performance Right does not entitle a Holder to any dividends.
A Performance Right does not entitle the Holder to participate in the surplus profits or assets of the Company upon
winding up of the Company. A Performance Right is not transferable.
e. Substantial Shareholders as at 16 September 2020.
Name Number of Ordinary % Held of Issued Ordinary
Fully Paid Shares Held Capital
Magnolia Equities III Pty Ltd 49,763,017 16.65
Ben Collier Investments Pty Ltd <Ben Collier Investments Pty Ltd> 27,060,515 9.05
MAK Property Group Pty Ltd <MAK A/C> 25,690,547 8.59
SEMC 2 Pty Limited <The Chen Asset A/C> 25,603,532 8.56
John Kolenda (Daring Investments) 24,749,544 8.28
Teldar Real Estate Pty Ltd <MJ Lahood Family A/C> 24,679,595 8.26
Hanzheng KSW Pty Ltd <Hanzheng KSW Unit A/C> 16,666,667 5.57
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Additional Information for Listed Public Companies
f. Distribution of Shareholders as at 16 September 2020.
Category (size of holding) Total Holders Number % Held of Issued
Ordinary Ordinary Capital
1 – 1,000 221 36,127 0.01
1,001 – 5,000 124 347,216 0.12
5,001 – 10,000 105 772,444 0.26
10,001 – 100,000 331 12,225,930 4.09
100,001 – and over 136 285,572,714 95.52
917 298,954,431 100.00
g. Unmarketable Parcels as at 16 September 2020
At the date of this report there were 515 shareholders who held less than a marketable parcel of shares, holding 14,705
shares.
h. On-Market Buy-Back
There is no current on-market buy-back.
i. Restricted Securities
The Company has no restricted securities
j. 20 Largest Shareholders — Ordinary Shares as at 16 September 2020
Rank Name Number of Ordinary % Held of Issued
Fully Paid Shares Ordinary Capital
Held
1. Magnolia Equities III Pty Ltd 49,763,017 16.65
2. Ben Collier Investments Pty Ltd <Ben Collier Investments P/L> 27,060,515 9.05
3. MAK Property Group Pty Ltd <MAK A/C> 25,690,547 8.59
4. SEMC 2 Pty Limited <The Chen Asset A/C> 25,603,532 8.56
5. Teldar Real Estate Pty Ltd <MJ Lahood Family A/C> 24,679,595 8.26
6. Hanzheng KSW Pty Ltd <Hanzheng KSW Unit A/C> 16,666,667 5.57
7. Daring Investments Pty Ltd 13,770,150 4.61
8. Daring Investments Pty Ltd <Kolenda Family A/C> 10,979,394 3.67
9. Honan Insurance Group Pty Ltd 7,692,308 2.57
10. Nutsville Pty Ltd <Indust Electric Co S/F A/C> 6,763,230 2.26
11. Kalonda Pty Ltd <Leibowitz Super Fund A/C> 6,355,192 2.13
12. Crossbay Pty Ltd 4,218,934 1.41
13. On Time Taxis Pty Ltd 4,003,526 1.34
14. Trindis Pty Ltd 3,186,951 1.07
15. Mr Andrew Ernest Goodall 3,000,000 1.00
16. Big Leap Super Pty Ltd <Big Leap Super A/C> 2,830,910 0.95
17. Mr Subodh Raja Kode 2,212,924 0.74
18. Finsure Holding Pty Ltd 2,175,000 0.73
19. Appwam Pty Ltd 2,000,000 0.67
20. Furore Pty Ltd <The O'Brien A/C> 1,958,977 0.66
TOTAL 240,611,369 80.49
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THE AGENCY GROUP AUSTRALIA LTD ANNUAL REPORT
AND CONTROLLED ENTITIES 30 June 2020
ABN 52 118 913 232
Additional Information for Listed Public Companies
k. 20 Largest Optionholders (AU1OA)— Listed Option as at 16 September 2020
Rank Name Number of Listed % Held of Listed
Options Held Options
1. Magnolia Equities III Pty Ltd 29,811,994 29.37
2. Teldar Real Estate Pty Ltd <MJ Lahood Family A/C> 9,622,044 9.48
3. SEMC 2 Pty Limited <The Chen Asset A/C> 9,622,044 9.48
4. Ben Collier Investments Pty Ltd <Ben Collier Investments P/L> 9,481,654 9.34
5. MAK Property Group Pty Ltd <MAK A/C> 9,481,653 9.34
6. Aura Principal Investments Pty Ltd 4,162,103 4.10
7. Kalonda Pty Ltd <Leibowitz Super Fund A/C> 4,000,000 3.94
8. Nutsville Pty Ltd <Indust Electric Co S/F A/C> 3,949,461 3.89
9. Honan Insurance Group Pty Ltd 3,846,154 3.79
10. Daring Investments Pty Ltd 2,891,275 2.85
11. On Time Taxis Pty Ltd 2,031,569 2.00
12. Mr Subodh Raja Kode 1,106,462 1.09
13. Crossbay Pty Ltd 1,083,519 1.07
14. Melshare Nominees Pty Ltd 1,050,000 1.03
15. Mr Michael William Atkins 1,050,000 1.03
16. Mr Andrew Ernest Goodall 866,816 0.85
17. Mr Alexander William Pryor 815,385 0.80
18. Coast Equity Pty Ltd <The Coast Investment A/C> 650,111 0.64
19. Mr Raymond Grogan + Mrs Lolita Grogan <Grogan Family S/F A/C> 567,129 0.56
20. Servtech Global Holdings Limited 559,136 0.55
TOTAL 96,648,509 95.20
TOTAL LISTED OPTIONS (AU1OA) 101,515,093
l. Unquoted Securities Holders Holding More than 20% of the Class as at 16 September 2020
◼ Unlisted Options (Exercise price $1.20, Expiry Date: 20.12.20)
Rank Name Number of % Held of Unquoted
Unquoted Securities Security Class
PAC Partners Pty Ltd 66,667 100.00
TOTAL 66,667 100.00
TOTAL UNLISTED OPTIONS (EXERCISE PRICE $1.20, EXPIRY DATE: 20.12.20) 66,667
◼ Unlisted Options (Exercise price $0.30, Expiry Date: 11.01.22)
Rank Name Number of % Held of Unquoted
Unquoted Securities Security Class
Mr Adam Stuart Davey <Shenton Park Investment A/C> 333,333 100.00
TOTAL 333,333 100.00
TOTAL UNLISTED OPTIONS (EXERCISE PRICE $0.30, EXPIRY DATE: 11.01.22) 333,333
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ANNUAL REPORT THE AGENCY GROUP AUSTRALIA LTD
30 June 2020 AND CONTROLLED ENTITIES
ABN 52 118 913 232
Additional Information for Listed Public Companies
◼ Unlisted Options (Exercise price $0.75, Expiry Date: 20.12.20)
Rank Name Number of % Held of Unquoted
Unquoted Securities Security Class
PAC Partners Pty Ltd 266,667 100.00
TOTAL 266,667 100.00
TOTAL UNLISTED OPTIONS (EXERCISE PRICE $0.75, EXPIRY DATE: 20.12.20) 266,667
◼ Unlisted Options (Exercise price $0.04, Expiry Date: 25.05.22)
Rank Name Number of % Held of Unquoted
Unquoted Securities Security Class
Peters Investments Pty Ltd 2,000,000 100.00
TOTAL 2,000,000 100.00
TOTAL UNLISTED OPTIONS (EXERCISE PRICE $0.04, EXPIRY DATE: 25.05.22) 2,000,000
◼ Performance Share Holders Ordinary Shares
Name Number of % Held of Unquoted
Unquoted Securities Security Class
Paul Niardone 411,112 26.43
Philip Re 344,445 22.14
TOTAL 755,557 48.57
TOTAL PERFORMANCE SHARES 1,555,558
2 The Company Secretary is Stuart Usher.
3 Principal registered office
As disclosed in note 25 Company details on page 75 of this Annual Report.
4 Registers of securities
As disclosed in the Corporate directory on page i of this Annual Report.
5 Stock exchange listing
Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the Australian
Securities Exchange Limited, as disclosed in the Corporate directory on page i of this Annual Report.
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