Investor Presentation - FY22 Results
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(ASX: AU1)
Investor Presentation for the FY2022
Full Year Results
30 June 2022
KEY TAKEAWAYS
UNDERLYING EBITDA1 Revenues from Ordinary Activities GCI2
$3.85M $72.7M $102.5M
(FY21: $3.06M) → +26% (FY21: $58.4M) → +24% (FY21: $80.7M) → +27%
Gross Value of Properties Sold No. of Properties Sold No of Agents
$5.9Bn 5,709 393
(FY21: $4.8Bn) → +23% (FY21: 4,964) → +15% (FY21: 308) → +28%
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. FY22 Investor Presentation 2
INCREASE IN AGENT NUMBERS UNDERPINNING GCI GROWTH
28% 27%
Net increase of Growth
Growth 71%
85 12%
Growth
393
15% 21%
Growth
$102.5m
Agents from 30 June 2021 Growth Growth
58% 67% $80.7m
308 Growth Growth
$5.9bn
5,709
276
15%
4,964 $4.8bn
$47.9m
Increase in No. of Properties Sold 3,147
$2.9bn
27%
Increase in Gross Commission Income
No of Agents No of Properties Sold Gross Sales Volume Gross Commission Income
($M)^
FY20 FY21 FY22
^ Gross Commission Income (“GCI”) is the fees the vendor pays for the sale of a property. FY22 Investor Presentation 3
A growing brand now
30
with presence in 6
186
states and territories
147
Since 30 June 2021, The Agency has invested in
10 new geographical markets of Manly NSW,
Sunshine Coast, Gold Coast and Toowoomba in
20 Queensland and Canberra in the ACT.
Post financial year end in July 2022, The Agency
has entered its sixth state being Tasmania through
its acquisition of Bushby Property Group.
11
FY22 Investor Presentation 4
Bushby Property Group
Acquisition
Bushby Property Group, to be renamed The Agency – Team Bushby consists
of nine sales agents within the 32 staff who have sold over $125m in
residential property over the past 12 months and circa 1,300 properties under
management, operating out of its large ‘hub’ office in Launceston.
Consideration of c. $5M subject to a number of earn out
provisions based on performance and growth
Funded via combination of bank debt and existing cash
reserves
Extension of Macquarie Bank facility until July 2025
Extension of Convertible Note issued by Peters Investments
until Jan 2026 (subject to shareholder approval)
Settlement occurred 22 July 2022
FY22 Investor Presentation 5
Why agents are At The Agency, we’re not a traditional franchise structure. Instead, we’ve removed
the ‘middle layer’ and created a more responsive, efficient and effective model for
our agents. This means our agents are better rewarded and their clients receive a
choosing The Agency superior service. This differentiated business model has a number of benefits,
leading agents to choose The Agency:
NO FRANCHISE MORE SUPPORT SERVICES. MORE FINANCIALLY MORE RESPONSIVE.
CONSTRAINTS OR BENEFICIAL.
COSTLY OUTLAYS.
Unlike most other real estate We’ve taken away the overheads and The Agency reduces expenditure on The Agency has strategic partnerships
businesses, there are no franchise administrative burden so agents can fixed costs - such as set premises and with suppliers and various tech
rules or restrictions at The Agency. focus on the high dollar value activities office locations - which allows us to platforms that make selling real estate
Our agents can operate their business that will propel their business forward. pay the agent higher commission more efficient and streamlined, at a
wherever they choose, under our splits in a sustainable way. It’s a more lower cost; enabling the agent to
national flagship brand, The Agency. financially beneficial model for both quickly and easily get their product to
parties. market.
FY22 Investor Presentation 6
Reimagining the
office
In line with The Agency Group’s innovative approach to
disrupting the status quo, The Agency’s newly opened
satellite office in Western Suburbs of Perth
completements the existing Hub office in the Perth CBD.
In an innovative approach, the office also doubles as an
Art Gallery that facilitates community engagement while
building brand awareness.
Artwork displayed, which will be constantly rotated, is
currently showcasing works by students from Curtin
University.
Initial feedback has seen increased foot traffic and
brand awareness compared to a typical office and the
Gallery is generating positive engagement with the
community.
FY22 Investor Presentation 7
How agent recruitment Across the past 12 month period, there has been an increase of 85
Agents. The profitability of FY22 recruits is yet to fully flow through to The
Agency operating profit (as visualised below).
assists the agency
profitability
Recruitment Month
JAN 22 Agents recruited in existing, established,
FEB 22 geographical areas have a quicker path to
profitability.
MAR 22
APR 22 It takes approx. 3-4 months for a new agent in an
MAY 22 existing area to contribute to profitability.
JUN 22
It takes approx. 6 months for agents in a new area to
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUNE
contribute to profitability, as it takes slightly longer to
establish themselves.
Month of the Year
End of FY22
Before entering a new geographical area, any initial
investment is carefully considered by Management
against sufficient scale benefits, to ensure entry into
a new market is profitable over the medium term.
Not Yet Joined Not yet contributing profit Contributing operating profit
FY22 Investor Presentation 8
Financial Highlights
FY22 Investor Presentation 9
Positive jaws delivering EBITDA growth
24% 430 basis point 26%
Increase in Revenues Decrease in Increase in EBITDA
Cost of Doing
Business
UNDERLYING1 STATUTORY
FY22 FY21 Change FY22 FY21 Change
Revenue $72.66m $58.38m 24% $72.66m $58.38m 24%
Cost of Doing Business2 30.3% 34.6% -430 bps n.a. n.a. n.a.
EBITDA $3.85m $3.06m 26% $5.69m $6.37m -11%
Net Profit/(Loss) After tax ($0.84m) ($1.68m) n.m. $1.59m ($1.85m) n.m.
1. FY22 Underlying adjusted for the impact of AASB16 Leasing Standard and Impairment Reversal. FY21 Underlying adjusted for the impact of AASB16, Gain on Sale and Government
Incentives received in the prior period. Refer to Appendix for detailed calculations
2. Operating Expenses as a percentage of revenue
n.a. – Not Applicable
n.m. – Not Meaningful FY22 Investor Presentation 10
Double digit growth in key metrics as the business
reaches scale delivering profitable growth and
increasing cash at bank
61%
26% 26%
Growth
70%
Growth
Growth
24%
Underlying EBITDA Growth Growth 86%
39% Growth $8.2m
$3.9m $4.6m Growth
$72.7m $3.1m
$5.1m
$4.6m $41.9m
$58.4m $2.7m
$2.7m
FY22 Operational Cash Flow
(Pre AASB16)
-$0.4m
$8.2m -$1.7m
Cash at Bank as at 30 June 2022 Total Revenue Underlying EBITDA* Net Cash Received from operating Cash at Bank
Activites^
FY20 FY21 FY22
* Underlying EBITDA P(re AASB16 Leasing Standards Adjustment and Government Grants in relevant period)
^ Pre AASB16 Leasing Standards Adjustment FY22 Investor Presentation 11
Reducing cost of doing
business as revenue grows
UNDERLYING1
$72.7m
FY20 FY21 FY22
GCI (Fees the vendor pays
$47.9m $80.7m $102.5m
for the sale of a property)
$58.4m
Non Payroll Agent GCI2 ($20.4m) ($35.4m) ($41.8m)
Commissions Revenue $27.5m $45.3m $60.7m
Other Revenue $14.2m $13.1m $12.0m
$41.7m
Revenue2 $41.7m $58.4m $72.7m
Operating Expenses ($20.0m) ($20.2m) ($22.0m)
Cost of Doing Business 48.0% 34.6% 30.3%
$22.0m
$20.0m $20.2m
Notwithstanding we are a growth business, we are targeting further decreases in cost
of doing business ratio as we further achieve economies of scale.
Additional Fixed costs are incurred when we enter a new geographical area which
FY20 FY21 FY222 could include rental expenses, marketing expenses and state management expenses.
We are careful to ensure that any growth from entry into a new geographical market is
Revenue Operating Expenses profitable growth, and ensure that this additional fixed cost is only incurred once we
have sufficient scale in that geographical area.
1. FY22 Underlying adjusted for the impact of AASB16 Leasing Standard. FY21 and FY20 Underlying adjusted for the impact of AASB16, Gain on Sale and Government Incentives
received in the prior period.
2. According to accounting standards, recognition of revenue is dependent on the engagement mechanism of the Agent. A sale by a payroll agent will result as revenue equal to GCI, with
an agent commission expense in Cost of Sales. A sale by a non payroll agent, revenue is equal to The Agency share pf GCI. There is no cost of sale expense for a non payroll agent.
As a general rule, Western Australia agents are predominantly Payroll agents, while East Coast agents are predominantly non payroll agents. FY22 Investor Presentation 12
Strengthened balance sheet
underpinned by net cash
Net (Debt) / Cash2 Position STATUTORY
Net Cash
$5m $3.2m KEY INDICATOR 30 June 2022 30 June 2021 Change
Cash at Bank $8.2m $5.1m +61.2%
$0m
Statutory Net Assets $16.4m $14.1m +16.0%
Value of Assets not
($5m) $12.7m $11.2m +13.4%
on balance sheet
Net Debt
Estimate Net Assets1 $29.1m $25.3m +15.0%
($10m)
($15m)
Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22
Borrowings of $5.0m is below The value attached to internally Management valuation of the Adjusted for this off balance sheet
$8.2m Cash at Bank resulting in a Net generated Property Management and Property Management portfolio is assets, Estimated Net Assets has
Cash2 position of $3.2m, a significant Mortgage book is not recorded in the calculated on a blended valuation increased 15.0% to $29.1m
turnaround from prior year positions balance sheet. multiple of 3.65x on Q4 FY22
and represents the strength of the Annualised Property Management
balance sheet repair. fees and 2.25x Net Trail Income
relating to the Mortgage Book
(combined value of $22.8m). Only
$10.1m of this value is held on the
Balance Sheet as an intangible asset,
1 This is a non A-IFRS measure
leaving $12.7m value off balance
2. Excludes Convertible note held as Financial Liabilities sheet. FY22 Investor Presentation 13
Industry Highlights
FY22 Investor Presentation 14
57% OF AUSTRALIAN HOUSEHOLD WEALTH IS HELD IN
RESIDENTIAL HOUSING WITH $7.8 BILLION ANNUAL
ADDRESSABLE COMMISSION MARKET
Residential
584,917
$9.95T Sales in FY22
Real Estate
$521.2Bn
Australian $3.4T Gross Value of Sales in FY22
Superannuation
Australian $2.6T
Listed Stocks
Total Annual Addressable Market* (GCI)
Commercial Real $1.1T
$7.8 Bn
Estate
Source: CoreLogic, RBA, APRA, ASX
* Assessed at 1.50% Average Commission Rate of Gross Sales Volume of $521.2Bn. FY22 Investor Presentation 15
National 16,000
Monthly house and unit approvals, National
dwelling 14,000
12,000 Decade
approvals 10,000
Average
Houses
8,000
Decade
Following the expiry of 6,000 Average
HomeBuilder, house approvals Units
have adjusted downwards to 4,000
decade average. Record high price 2,000
differences between Units and
Houses in key markets is resulting MAY 92 MAY 97 MAY 02 MAY 07 MAY 12 MAY 17 MAY 22
in a recovery in the Unit market due
to affordability, with new Unit
approvals trending towards their
decade average. Units Houses
Australia Houses Units
197k
approvals in FY22
124k 73k
approvals in FY22 approvals in FY22
Source: CoreLogic FY22 Investor Presentation 16
FY22 Sales Change in sales volumes, twelve months to June 2022
Volumes Sydney -9.4%
Melbourne 10.7%
Brisbane 14.5%
Adelaide 16.9%
Across the country there were Perth 17.6%
variances in sales volume
movements compared to FY21. Hobart 0.2%
Market volumes had growth in
Capital Cities markets, with slightly
Canberra -5.6%
lower volumes in Regional markets
after a very strong FY21.
Importantly, The Agency FY22
Sales Transaction increase of
15.0% outperformed the national
growth of 3.2%. Australia Combined Regionals Combined Capitals
3.2% -1.2% 6.0%
Recent months of sales volumes are modelled estimates, and are subject to revision
Source: CoreLogic FY22 Investor Presentation 17
FY22 Rental FY22 change in rental rates
Market Canberra 9.3%
Hobart 8.6%
Rents grew strongly across FY22 in
all markets, as demand for rental
Perth 6.7%
properties outstripped supply.
The rental growth has assisted in Adelaide 10.6%
increasing yields for investors which
have increased to be 3.33%
Brisbane 12.1%
nationally at 30 June 2022, up from
a recent low of 3.21% in January
2022. Melbourne 7.5%
Sydney 9.7%
Australia Combined Regionals Combined Capitals
9.5% 10.8% 9.1%
Source: CoreLogic FY22 Investor Presentation 18
Investor Portion of new lending for investment
housing (excluding refinance)^
Investors as a % of housing finance
commitments by state (May ‘22)^
participation ACT 32.8%
50%
TAS 32.6%
45%
Investor participation at 34.5% of
lending has recovered to be in line WA 27.1%
with the decade average of new 40%
lending volume. SA 30.8%
35% 34.8%
NSW is the state with the highest 34.5% QLD 34.0%
investor participation with 38.7% of
lending to investors. 30%
VIC 31.5%
25%
NSW 38.7%
20% National 34.5%
MAY MAY MAY MAY MAY MAY MAY MAY MAY
06 08 10 12 14 16 18 20 22
3.25m
# of Investment Properties
across Australia*
Source: ^ CoreLogic,
Source: CoreLogic * ATO FY22 Investor Presentation 19
Strategic Objectives
and Outlook
FY22 Investor Presentation 20
STRATEGIC OBJECTIVES
Further expansion of Enhancement of adjacency Further development and Training initiatives to ensure Leveraging technology and
geographical regions across offerings to our agents and rollout of a Multi Brand our Agents are positioned to cost of doing business
Australia in a disciplined customers to increase the Strategy. capitalise on changing market efficiencies to enhance agent
capital and operating share of wallet. conditions. experience and ensure a solid
expenses approach. scalable platform for growth.
Continued growth in agent
numbers across the company.
FY22 Investor Presentation 21
OUTLOOK
Until there is certainty around We have revised our CY22 Vendors look to experienced Market Consolidation as Consumer sentiment to
interest rates, we expect National price growth to be agents who have a track smaller independents and rebound as the quantum of
transaction volumes to remain -4% to -8%. record in changing market franchisees look to access interest rate movements
volatile at a national level. conditions. operating efficiencies. reduce.
For the first 7 months for the
States with lower median year, the reduction was -1.0%, Upon the tipping point of
price points are expected to meaning we expect more rates reaching their terminal
outperform higher median rapid declines in the 2nd half value for this cycle, we believe
priced states in terms of of the calendar year this will lead to a recovery in
transaction volume movement. transaction volumes in some
movements. states.
FY22 Investor Presentation 22
Appendix
FY22 Investor Presentation 23
PROFIT & LOSS STATEMENT
UNDERLYING1 STATUTORY
FY22 FY21 Change FY22 FY21 Change
Revenue $72.66m $58.04m 24% $72.66m $58.38m 24%
Cost of Sales ($47.43m) ($35.65m) 33% ($47.43m) ($35.65m) 33%
Gross Profit $25.22m $22.39m 13% $25.22m $22.73m 13%
Other Income $0.53m $0.63m -16% $0.61m $1.29m -53%
Operating Expenses ($21.90m) ($19.96m) 10% ($20.15m) ($17.65m) 14%
EBITDA $3.85m $3.06m 26% $5.69m $6.37m -11%
Depreciation and Amortisation ($3.85m) ($3.94m) 2% ($5.44m) ($5.47m) -1%
Share-based payments expense ($0.68m) ($0.22m) n.m ($0.68m) ($0.22m) n.m
Impairment recovery/(expense) $- $- n.a $0.40m ($0.40m) n.m
Fair Value Gain on Financial n.a
$- $- $0.12m $- n.a
Asset
Profit on Sale of Asset $- $- n.a $0.00m $0.20m n.m
EBIT ($0.68m) ($1.10m) n.m $0.10m $0.49m -73%
Net Finance income/(expense) ($0.52m) ($1.30m) 60% ($0.78m) ($1.99m) n.m
Embedded derivative non cash
$- $- n.a $1.14m ($2.24m) n.m
financing gain/(cost)
Net Profit/(Loss) Before Tax ($1.20m) ($2.40m) 50% $0.46m ($3.75m) n.m
Income Tax Benefit $0.36m $0.72m -50% $1.12m $1.89m -19%
Net Profit/(Loss) After tax ($0.84m) ($1.68m) n.m. $1.59m ($1.86m) n.m.
1. FY22 Underlying adjusted for the impact of AASB16 Leasing Standard and Impairment Reversal. FY21 Underlying
adjusted for the impact of AASB16, Gain on Sale and Government Incentives received in the prior period.
n.a – Not Applicable FY22 Investor Presentation 24
n.m – Not Meaningful
Note – may not add through due to rounding differences
BALANCE SHEET
STATUTORY
30 June 2022 30 June 2021 Change
Cash at bank $8.26m $5.10m 61%
Other Current Assets $11.60m $8.68m 34%
Non Current Assets $27.84m $31.49m -12%
Total Assets $47.65m $47.65m 5%
Total current liabilities ($28.25m) ($15.59m) 81%
Total Non current liabilities ($3.00m) ($15.54m) -81%
Total Liabilities ($32.82m) ($31.12m) 0%
Net Assets $16.40m $14.14m 16%
Assets not on balance sheet1 $12.68m $11.19m 13%
Estimated Net Assets2 $29.08m $25.32m 15%
1: Property Management Portfolio Management Valuation calculated on a blended valuation multiple of 3.65x on Q2 FY22 Annualised Property
Management fees and 2.25x Net Trial Income relating to the Mortgage Book (combined value of $22.8m). Only $10.1m of this value is held on the
Balance Sheet as an intangible asset.
2: This is a non A-IFRS measure
Note – may not add through due to rounding differences FY22 Investor Presentation 25
CASHFLOW STATEMENT
FY22 FY22 FY21
(Underlying)* (Statutory) (Statutory)
(Pre AASB16)^ (Post AASB16) (Post AASB16)
EBITDA $3.85m $5.69m $6.37m
Change in net working capital $1.03m $1.34m ($0.23m)
Net interest Paid ($0.24m) ($0.43m) ($0.98m)
Net Cashflow from Operating Activities $4.64m $6.60m $4.64m
Purchase of property, plant and equipment ($0.97m) ($0.97m) ($0.24m)
Purchase of intangibles ($0.32m) ($0.32m) $-
Deposit for bank guarantees ($0.01m) ($0.01m) $-
Net Loans to other entities ($0.71m) ($0.71m) ($0.22m)
Net cash received on disposal of asset group $0.49m $0.49m $2.62m
Net cash (used in) / received from investing activities ($1.52m) ($1.52m) $2.16m
Payment of principal portion of lease liabilities $- ($1.96m) ($1.92m)
Proceeds from borrowings $- $- $5.00m
Repayment of borrowings $- $- ($7.84m)
Proceeds from exercise of options $- $- $0.39m
Share issue costs $- $- ($0.06m)
Net cash used in financing activities $- ($1.96m) ($4.42m)
Net increase in cash and cash equivalents held $3.12m $3.12m $2.37m
Cash and cash equivalents at the beginning of the year $5.10m $5.10m $2.72m
Cash and cash equivalents at the end of the year $8.22m $8.22m $5.10m
* Underlying EBITDA adjusted for the impact of AASB16
^ This is a non A-IFRS measure
Note – may not add through due to rounding differences FY22 Investor Presentation 26
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
FY22 Investor Presentation 27
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
subject to significant technical, business, economic,
competitive,
FY22 Investor Presentation 28