Investor Presentation of the HY Financial Results
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(ASX: AU1)
Investor Presentation for the Half Year End Results
31 December 2021
KEY TAKEAWAYS
UNDERLYING EBITDA1 Revenues from Ordinary Activities GCI2
$2.14M $35.6M $52.9M
(1HFY21: $1.60M) → +33% (1HFY21: $29.4M) → +21% (1HFY21: $38.1M) → +39%
Gross Value of Exchanges No. of Exchanges Properties Under Management
$3.1Bn 2,910 3,551
(1HFY21: $2.2Bn) → +41% (1HFY21: 2,407) → +21%
1. Underlying EBITDA adjusted for the impact of AASB16 and Government Incentives received in the prior period
2. Gross Commission Income (“GCI”) is the fees the vendor pays for the sale of a property. 1H FY22 Investor Presentation 2
STRONG GROWTH ACROSS KEY
BUSINESS INDICATORS 39% Growth
$52.9m
39%
16% Growth
Increase in Gross
Commission Income $38.1m
41% Growth
21% Growth 345
$3.1Bn
2,910 298
Increase of 278
$24.9m 2,407
47 $2.2Bn
1,591
Agents from 31 December 2020 $1.5Bn
Gross Commission Income Value of Properties Sold No of Properties Sold No of Agents
($M)
1H FY20 1H FY21 1H FY22
1H FY22 Investor Presentation 3
A growing brand now
Sunshine Coast
with presence in 5 states
Toowoomba Brisbane
Gold Coast
and territories
Coffs Harbour
Central Hunter Valley
Coast Newcastle
Central
Perth West NSW Sydney
Illawarra
ACT Since 30 June The Agency has invested in new
geographical markets of Manly NSW, Sunshine
Melbourne Coast and Toowoomba in Queensland and
Port Phillip Canberra in the ACT.
Boroondara
1H FY22 Investor Presentation 4
WHY AGENTS ARE CHOOSING THE AGENCY
The Agency’s business model is to directly engage with Selling Agents. This is a
change to the industry norm where the most common arrangement is a
franchisor/franchisee arrangement, with the franchisee employing the Agents. This
differentiated business model has a number of benefits which are leading Agents to
choose The Agency:
Franchisees are often Agents who Agents can come to The Agency Post COVID, Agents are aware The Agency has strategic
are known as Selling Principals. to focus on what they do best, they may no longer need to have partnerships with the industry
The Selling Principal often which is selling real estate with an office on every suburban leading suppliers that make selling
competes against other Agents their own team underneath them. corner to be successful and sitting real estate as easy as possible.
they have employed in their The Agent’s time is not distracted in a local coffee shop between Agents who join The Agency have
business, which creates tension by needing to manage a Property appointments can generate just as access to a fully digital cloud base
and distrust that can undermine an Management portfolio or manage much engagement with a local process that saves them time on
Agent doing their best work. The the operations of their franchisee community as an office provides. paperwork and means they can
Agency direct engagement model business, office infrastructure, The Agency operates Hubs where operate from anywhere. Agents
does not have these potential Trust accounts or staff matters. Agents can collaborate and have access to artificial
conflicts. Freed of these distractions, we operate with their team members. intelligence that automates tasks,
have Agents who have doubled The Hub model reduces allowing them to work more
their sales as they are just focused expenditure on premises which efficiently. Partnerships with
on listing and selling real estate. allows The Agency to pay the Cooley Auctions lead by Damien
agent higher commission splits in Cooley, External Agent coaches,
a sustainable way. Competitors Vendor advertising funding
who have an existing office providers, insurance providers,
footprint, and match The Agency’s Mortgage brokers and other
commissions, will end up with a operators servicing the residential
higher cost profile than The real estate market ensure the
Agency. Agent’s can maximise their
productivity.
1H FY22 Investor Presentation 5
HOW AGENT RECRUITMENT ASSISTS
THE AGENCY PROFITABILITY
Across the past 12 month period, there has been an increase of 47 Agents. The
profitability of H1 FY22 recruits is yet to fully flow through to The Agency operating
profit (as visualised below).
Agents who are recruited in existing established geographical
areas have a quicker path to profitability as they plug into the
existing overhead infrastructure and brand presence. A newly
recruited agent needs to launch a property for sale, conduct a
sales campaign and on average contribute operational profit 3 to
Recruitment Month
JULY 4 months after their commencement date.
AUG
SEPT
When establishing a presence in a new geographical area, it
OCT generally takes around 6 months before these Agents contribute
to operational profit while the recruited agent builds momentum
NOV
and establishes themselves in the local market. Any initial
DEC investment is carefully considered by Management before
entering a new geographical area and operating costs in a new
JULY AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JULY AUG SEP OCT NOV DEC area will only be incurred if there is sufficient scale benefits.
Month of the Year
End of Period
Not Yet Joined Not yet contributing profit Contributing operating profit
1H FY22 Investor Presentation 6
Financial
Highlights
1H FY22 Investor Presentation 7
PROFITABLE GROWTH REDUCING COST OF DOING BUSINESS
21% 86 basis point $0.4M
Increase in Revenues decrease in Cost of Doing Increase in Statutory Net Profit
Business after tax
UNDERLYING1 STATUTORY
1H FY22 1H FY21 Change 1H FY22 1H FY21 Change
Revenue $35.56m $29.45m 21% $35.56m $29.45m 21%
Cost of Doing Business2 30.7% 31.6% -86 bps n.a. n.a. n.a.
EBITDA $2.14m $1.60m 33% $3.05m $3.68m -17%
Net Profit After tax $0.72m $0.09m 743% $1.25m $0.83m 50%
1. 1H FY22 Underlying adjusted for the impact of AASB16 Leasing Standard and Impairment Reversal. 1H FY21 Underlying adjusted for the impact of AASB16, Gain on
Sale and Government Incentives received in the prior period.
2. Operating Expenses as a percentage of revenue
n.m. – Not Meaningful 1H FY22 Investor Presentation 8
STRENGTHENED BALANCE SHEET
UNDERPINNED BY NET CASH
Net (Debt) / Cash2 Position
STATUTORY
Net Cash
$5m
KEY INDICATOR 31 Dec 2021 30 June 2021 Change
$1.3m
Cash at Bank $6.3m $5.1m -22.9% $-
Statutory Net Assets $15.8m $14.1m +11.5%
($5m)
Value of Assets not on
$11.0m $11.2m -7.1%
balance sheet
($10m)
Net Debt
Estimate Net Assets1 $26.8m $25.3m +5.8%
($15m)
Estimate Net Assets (cents
6.3 cps 5.9 cps +5.8%
per share)1
($20m)
Jun-2019 Dec-2019 Jun-2020 Dec-2020 Jun-2021 Dec-2021
Borrowings of $5.0m is below The value attached to internally Management valuation of the Estimated Net Assets has
Cash at Bank resulting in a Net generated Property Management Property Management portfolio is increased 5.8% to 6.3 cents
Cash2 position of $1.3m, a and Mortgage book is not calculated on a blended valuation per share.
significant turnaround from prior recorded in the balance sheet. multiple of 3.65x on Q2 FY22
year positions and represents Annualised Property Management
the strength of the balance fees ($18.0m) and 2.5x Trial
sheet repair. Income relating to the Mortgage
Book ($4.7m). Only $11.7m of this
value is held on the Balance Sheet
as an intangible asset.
1 This is a non A-IFRS measure
2. Excludes Convertible note held as Financial Liabilities 1H FY22 Investor Presentation 9
STRONG OPERATING CASH GENERATION
OF $2.3M IN THE PERIOD
Strong Operating Cash Flow has funded $1.2m
of Investment activities including costs for an
office refurbishment and short term working
capital advances.
$2.3m Operating Cash Generation
1: This is a non A-IFRS measure 1H FY22 Investor Presentation 10
Industry
Highlights
1H FY22 Investor Presentation 11
56% of Australian Household Wealth is held in Residential
Housing with $7.4 Billion annual addressable market
Residential $9.6T
Real Estate
$3.4T
Australian
Superannuation
$2.9T
Australian
Listed Stocks
$1.0T
Commercial Real
Estate
653,009 $494.6Bn $7.4 Bn
Sales in 2021 Gross Value of Sales in 2021 Total Annual Addressable Market*
(GCI)
Source: CoreLogic, RBA, APRA, ASX
* Assessed at 1.50% Average Commission Rate of Gross Sales Volume of $494.6Bn. 1H FY22 Investor Presentation 12
NATIONAL HOUSE
APPROVALS
Following the expiry of HomeBuilder,
house approvals have adjusted
downwards but still remain above the
decade average. Record high price
differences between Units and Houses
in key markets is resulting in a recovery 12,000
in the Unit market due to affordability,
with new Unit approvals returning 10,000
towards their decade average.
Decade
8,000 Average
Houses
6,000
Decade
Average
4,000 Units
2,000
DEC DEC DEC DEC DEC DEC
11 13 15 17 19 21
Units Houses
Source: CoreLogic 1H FY22 Investor Presentation 13
ROLLING SEVEN
DAY COUNT
OF CMA ACTIVITY
EXCEEDS PRIOR
YEAR
CMA’s are a real estate industry
acronym for Comparative Market
Analysis – an RP Data tool that shows
comparative recent sales to a property.
CMA’s are an indicator of likely future
listing volumes. The start of 2022 has
seen strong uplift on prior year
volumes, with the week of the 13th
February generating 23% more activity
than this time last year.
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
2019 2020 2021 2022
Source: CoreLogic 1H FY22 Investor Presentation 14
INVESTOR
PARTICIPATION Portion of new lending for investment housing (excluding refinance)
Investor participation remains well
below the 5 year average at 31.5% of
new lending volume.
While investor lending is still growing
45%
at 2.4% in December, strong owner
occupier lending of 5.3% in December
means investors made up a smaller
40%
proportion of lending through
December. 5 Year
Average
35% 34.9%
30% 31.5%
25%
20%
DEC 05 DEC 07 DEC 09 DEC 11 DEC 13 DEC 15 DEC 17 DEC 19 DEC 21
Source: CoreLogic 1H FY22 Investor Presentation 15
LOANS GREATER
THAN A 90% LOAN
TO VALUE RATIO
(LVR)
14.1%
13.1% 12.7%
Over recent quarters, the % of
12.0% 12.0% 12.0% 12.4%
loans originated with an LVR
greater than or equal to 90% has
11.7% 11.6%
10.8%
reduced for both investors and
owner occupiers. This shows some
restraint by financial institutions 9.7%
which is key, given that regulators
and policy makers are closely
monitoring lending standards.
5.1% 5.2%
4.5% 4.5% 4.6% 4.5%
3.9%
2.8% 2.8% 3.4% 2.9%
Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21
INVESTORS OWNER OCCUPIERS
Source: CoreLogic 1H FY22 Investor Presentation 16
SUMMARY OF
CAPITAL CITY 2022
FORECASTS
2022 is expected to be a more
moderate year for price growth across
key capital markets.
There is consensus across the Big 4
10% 10%
banks that Brisbane will be the
strongest market for price growth.
5% 5%
0% 0%
CBA ANZ WESTPAC NAB
MELBOURNE SYDNEY BRISBANE PERTH
Source: CoreLogic 1H FY22 Investor Presentation 17
Outlook
1H FY22 Investor Presentation 18
OUTLOOK
Transaction volumes Focus on further Continued growth in Optimisation of
expected to remain geographical regions Agent numbers across operational systems to
strong, despite expected and penetration of the country. ensure a solid platform
subdued price growth in suburbs to grow to service future growth
2022. We forecast National market and take advantage of
National price growth to share and earnings. economies of scale.
be 4-6%.
1H FY22 Investor Presentation 19
Appendix
1H FY22 Investor Presentation 20
PROFIT & LOSS STATEMENT
UNDERLYING1 STATUTORY
1H FY22 1H FY21 Change 1H FY22 1H FY21 Change
Revenue $35.56m $29.45m 21% $35.56m $29.45m 21%
Other Income $0.21m $0.27m -22% $0.21m $0.59m -64%
Cost of Sales ($22.70m) ($18.81m) 21% ($22.70m) ($18.81m) 21%
Gross Profit $13.06m $10.91m 20% $13.06m $11.23m 16%
Operating Expenses ($10.93m) ($9.30m) 17% ($10.02m) ($7.55m) 33%
EBITDA $2.14m $1.60m 33% $3.05m $3.68m -17%
Depreciation and Amortisation ($1.92m) ($2.01m) -4% ($2.69m) ($2.79m) -4%
Share-based payments expense ($0.38m) $- n.a ($0.38m) $- n.a
Impairment recovery $- $- n.a $0.40m $- n.a
Profit on Sale of Asset $- $- n.a $- $0.33m n.m
EBIT ($0.17m) ($0.41m) -59% $0.37m $1.22m -70%
Net Finance income/(expense) $0.15m ($0.12m) -228% $0.02m ($1.44m) n.m
Net Profit/(Loss) Before Tax ($0.01m) ($0.53m) n.m. $0.40m ($0.22m) n.m
Income Tax Benefit $0.73m $0.61m 19% $0.85m $1.05m -19%
Net Profit After tax $0.72m $0.09m 743% $1.25m $0.83m 50%
1. 1H FY22 Underlying adjusted for the impact of AASB16 Leasing Standard and Impairment Reversal. 1H FY21
Underlying adjusted for the impact of AASB16, Gain on Sale and Government Incentives received in the prior period.
n.a – Not Applicable
n.m – Not Meaningful 1H FY22 Investor Presentation 21
BALANCE SHEET
STATUTORY
31 Dec 2021 30 June 2021 Change
Cash at bank $6.26m $5.10m 23%
Other Current Assets $12.49m $8.68m 44%
Non Current Assets $29.83m $31.49m -5%
Total Assets $48.59m $45.26m 7%
Total current liabillities ($18.85m) ($15.59m) 21%
Total Non current liabilities ($13.97m) ($15.54m) -10%
Total Liabilities ($32.82m) ($31.12m) 5%
Net Assets $15.77m $14.14m 12%
Assets not on balance sheet1 $11.03m $11.19m -1%
Estimated Net Assets2 $26.79m $25.32m 6%
1: Property Management Portfolio Management Valuation calculated on a blended valuation multiple of 3.65x on Q2 FY22 Annualised Property
Management fees ($18.0m) and 2.5x Trial Income relating to the Mortgage Book ($4.7m). Only $11.7m of this value is held on the Balance Sheet as an
intangible asset.
2: This is a non A-IFRS measure 1H FY22 Investor Presentation 22
CASHFLOW STATEMENT
1H FY22 1H FY22 1H FY21
(Underlying)* (Statutory) (Statutory)
(Pre AASB16)^ (Post AASB16) (Post AASB16)
EBITDA $2.14m $3.05m $3.68m
Change in net working capital $0.58m $0.66m ($0.23m)
Net interest Paid ($0.31m) ($0.31m) ($0.88m)
Net Cashflow from Operating Activities $2.41m $3.40m $2.57m
Purchase of property, plant and equipment ($0.40m) ($0.40m) ($0.07m)
Purchase of intangibles ($0.06m) ($0.06m) $-
Deposit for bank guarantees ($0.11m) ($0.11m) $-
Net Loans to other entities ($0.67m) ($0.67m) $-
Net cash received on disposal of asset group $- $- $2.62m
Net cash (used in) / received from investing activities ($1.24m) ($1.24m) $2.55m
Payment of principal portion of lease liabilities $- ($0.99m) ($0.99m)
Repayment of borrowings $- $- ($3.56m)
Net cash used in financing activities $- ($0.99m) ($4.55m)
Net increase in cash and cash equivalents held $1.17m $1.17m $0.57m
Cash and cash equivalents at the beginning of the half-year $5.10m $5.10m $2.72m
Cash and cash equivalents at the end of the half-year $6.26m $6.26m $3.29m
* Underlying EBITDA adjusted for the impact of AASB16 and Government Incentives received in the prior period
^ This is a non A-IFRS measure 1H FY22 Investor Presentation 23
Geoff Lucas
Managing Director & CEO
geofflucas@theagency.com.au
LinkedIn: www.linkedin.com/in/geoff-lucas
David Tasker
Chapter One Advisors
dtasker@chapteroneadvisors.com.au
1H FY22 Investor Presentation 24
DISCLAIMER
NOT AN OFFER
This presentation is for information purposes only. This political and social uncertainties and contingencies;
presentation does not comprise a prospectus, product involve known and unknown risks and uncertainties
disclosure statement or other offering document under that could cause actual events or results to differ
Australian law (and will not be lodged with the materially from estimated or anticipated events or
Australian Securities and Investments Commission) or results reflected in such forward looking statements;
any other law. and may include, among other things, statements
SUMMARY INFORMATION regarding estimates and assumptions in respect of
prices, costs, results and capital expenditure, and are
This presentation does not purport to be all inclusive or or may be based on assumptions and estimates
to contain all information about the Company or any of related to future technical, economic, market, political,
the assets, current or future, of the Company. This social and other conditions.
presentation contains summary information about the
Company and its activities which is current as at the The Company disclaims any intent or obligation to
date of this presentation. The information in this publicly update any forward looking statements,
presentation is of a general nature and does not whether as a result of new information, future events
purport to contain all the information which a or results or otherwise.
prospective investor may require in evaluating a The words “believe”, “expect”, “anticipate”, “indicate”,
possible investment in the Company. “contemplate”, “target”, “plan”, “intends”, “continue”,
The Company does not undertake to provide any “budget”, “estimate”, “may”, “will”, “schedule” and
additional or updated information whether as a result similar expressions identify forward looking
of new information, future events or results or statements.
otherwise. All forward looking statements contained in this
FORWARD LOOKING STATEMENTS Presentation are qualified by the foregoing cautionary
statements. Recipients are cautioned that forward
Certain statements contained in this presentation, looking statements are not guarantees of future
including information as to the future financial or performance and accordingly recipients are cautioned
operating performance of the Company and its not to put undue reliance on forward looking
projects, are forward looking statements. Such forward statements due to the inherent uncertainty therein.
looking statements: are necessarily based upon a
number of estimates and assumptions that, while
considered reasonable by the Company, are inherently
1H FY22 Investor Presentation 25
subject to significant technical, business, economic,
competitive,