Despite what has been described as some of the worst real estate conditions in recent times The Agency Group Australia (ASX:AU1) has turned in another powerful financial and operational performance.
The Agency has reported an 86% increase year-on-year Annual Group Revenue at $31.3 million, (FY2018: $16.8 million). Highlighting the effectiveness of the company’s disruptive business model, this year’s success follows 75% growth and 70% growth during the prior two years.
The Agency Managing Director Paul Niardone said the increase in revenue was primarily due to a 31% increase year-on-year in Combined Gross Commission Income to $38 million (FY18: $29 million). This figure was bolstered by 2,419 sales (up from 667 sales for FY18) and $2.5 billion worth of property sold across the combined group for the FY2019 (FY18: $400 million).
“This has been a company-making year for The Agency in which we completed the Top Level Real Estate acquisition, expanded into key real estate markets and recruited strongly, despite challenging wider market conditions,” Mr Niardone said.
“Since launching this business model less than three years ago we have achieved outstanding financial and operating results and have attracted some of the best agents.
“The integration of Top Level into the Combined Group has been highly successful, and we are confident further revenue growth will be achieved and cost synergies realised over the coming financial year.
“We realise the need to implement measures to control our costs in the current environment and have identified and are already implementing these cost savings.
“Coupled with the $5.6 million capital raising and $5.8 million debt to equity conversion which will significantly strengthen our balance sheet, and signs of green shoots in the key markets, I anticipate the company will continue to achieve strong operational and financial growth moving forward.”
At the completion of FY2019, the company had 3,430 listings, up 43% on the 2,401 listings at the end of FY18. Property management continues to grow with The Agency reporting a record total of 4,337 Properties Under Management as at 30 June 2019, up 29% on the Prior Corresponding Period.
The Agency Group also reported strong increase year-on-year in the number of agents recruited with a 47% increase year-on-year to 272 agents as at 30 June 2019 (FY18: 185).
The Group also reported cash receipts of $33 million for the FY2019, a 120% year-on-year increase (FY18: $15 million). Importantly, The Agency Group reported $44,000 net cash from operating activities for the June Quarter as a result of an increase in cash receipts for the period.
Importantly, the financial results only include six months of operations from Top Level Real Estate Pty Ltd (“Top Level”) following completion of the acquisition in mid-January 2019.
Financial performance
The company recorded an EBITDA loss of approx. $4.2 million for FY19 (2018: $3.1 million loss), however this included $1.3 million of one-off, non-recurring costs expensed this year, primarily associated with the Top Level transaction (i.e. legal, accounting, professional services, corporate advisory, financing and office fit-outs, etc ).
Excluding these would have seen the company record a normalised EBITDA loss of approx. $2.9 million, or a 10% reduction on previous year.
