Webinar/Investor presentation

I N V E S T O R P R E S E N TAT I O N 19 October 2021
ASX:AU1
Direct exposure to national property market with a re-set Balance Sheet and a Team to deliver growth
DISCLAIMER
NOT AN OFFER • involve known and unknown risks and uncertainties that could This presentation is for information purposes only. This cause actual events or results to differ materially from presentation does not comprise a prospectus, product disclosure estimated or anticipated events or results reflected in such statement or other offering document under Australian law (and forward looking statements; and will not be lodged with the Australian Securities and Investments • may include, among other things, statements regarding Commission) or any other law. estimates and assumptions in respect of prices, costs, results SUMMARY INFORMATION and capital expenditure, and are or may be based on assumptions and estimates related to future technical, This presentation does not purport to be all inclusive or to contain economic, market, political, social and other conditions. all information about the Company or any of the assets, current or future, of the Company. This presentation contains summary The Company disclaims any intent or obligation to publicly update information about the Company and its activities which is current any forward looking statements, whether as a result of new as at the date of this presentation. The information in this information, future events or results or otherwise. presentation is of a general nature and does not purport to contain The words “believe”, “expect”, “anticipate”, “indicate”, all the information which a prospective investor may require in “contemplate”, “target”, “plan”, “intends”, “continue”, “budget”, evaluating a possible investment in the Company. “estimate”, “may”, “will”, “schedule” and similar expressions The Company does not undertake to provide any additional or identify forward looking statements. updated information whether as a result of new information, All forward looking statements contained in this Presentation are future events or results or otherwise. qualified by the foregoing cautionary statements. Recipients are FORWARD LOOKING STATEMENTS cautioned that forward looking statements are not guarantees of future performance and accordingly recipients are cautioned not Certain statements contained in this presentation, including to put undue reliance on forward looking statements due to the information as to the future financial or operating performance of inherent uncertainty therein. the Company and its projects, are forward looking statements. Such forward 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, political and social uncertainties and contingencies;
2
NATIONAL PRESENCE
Real Estate underpins Australia’s wealth
$9.1 Trillion $9.1T Residential Residential Real Real Estate Estate $975 600,682 Billion Total sales p.a. Commercial real estate Australian $3.3T Superannuation Australian Real Estate Australan Listed $2.8T Stocks 10.7 $436.8 Million Billion Number of dwellings Gross value of sales p.a. Commercial Real $0.997T
$2 Trillion Estate Outstanding mortgage debt
Total addressable market1: $5.68 Billion GCI
Data as at October 2021.
Source: CoreLogic, APRA, RBA, ABS, ASX 3 Assuming 1.3% commission on total sales
EXECUTIVE SUMMARY
A SCALABLE, VERTICALLY-INTEGRATED REAL ESTATE SERVICES COMPANY Providing investors direct exposure to the growing $8.9T residential Australian property market1
Unique business Stabilised balance Real estate services Achieved scale model sheet ✓ One of Australia’s largest ✓ Our agents are our clients ✓ Substantial growth since 2017 ✓ Long-term ~$8M funding vertically-integrated real and are at the core of our & achieved a profitable scale: package strengthens estate services companies business model • FY21 EBITDA (pre financial position & balance ✓ Continued agent recruitment ✓ Attracts high performing AASB16) of $4.57M vs sheet growth in existing / new real estate agents by FY20 of $0.71M, a ✓ Assets (rent roll, mortgage market sectors across two offering higher commissions $3.86M improvement. book etc) valued at more brands: The Agency + SLP and support than traditional than $25M franchises & independent models
Macroeconomic External validation Vertical integration Scalable footprint tailwinds ✓ Group CEO Geoff Lucas joins ✓ Multiple cross-selling ✓ Continued strong outlook ✓ We are now focused on mgmt. team – one of the most opportunities with a suite of with low interest rates & low using our scalable platform highly regarded executive teams in real estate services including unemployment to recruit high performing the Australian property industry property sales, property agents with limited capital ✓ Primary lender Macquarie Bank management, mortgage outlays or increases in has reduced interest rate from financing and conveyancing corporate overheads. 4.75% to 3.75% in recognition of (settlement) ✓ Dual brands significant improvements to balance sheet. ✓ Supportive shareholder Peters Investments converts $3M in Convertible Notes to emerge a 30.2% shareholder
1. CoreLogic Market Report 4
GROWTH STORY
Built for scale with ability to materially grow agent numbers with limited capex or increase in corporate overheads
New business model Achieve a profitable scale Bottom-line growth
We are disrupting the real-estate The Agency has now achieved a We are now focused on using our sector by reducing structural layers profitable scale of operation, scalable platform to recruit high and rewarding staff through a more established a stable balance sheet and performing agents with limited compelling value proposition. attracted supportive investors. capital outlays or increases in corporate overheads. Dual brand strategy launching in 2022.
2016 2017 2018 2019 2020 2021+
Launched the Agency Major expansion with Listed on the ASX on the east coast of Acquired Sell Lease Achieved maiden Achieved growth in the acquisition of Top Australia Property EBITDA of $0.7m EBITDA of at least $4m Level Real Estate
5
DIVISIONS: PROPERTY SALES
Our agents are our clients and are at the core of our business model
Able to attract leading agents, without compromising on margin. Attractive business model with agent first culture providing high levels of support services
Franchisor Head office Principal c. 10% c. 35%-15%1 c. 40% Franchisee c. 40%
Traditional Independent Independent franchise Operations operations
Agent Agent Agent c. 50% c. 65%-85%1 c. 60%
Note 1: Commission structure is tailored dependent on brand (The Agency or SLP) and agent performance. 6
FY2021
Q1 FY22 RESULTS: KEY TAKEAWAYS
GCI $24.5M Q1 FY21 GCI of $16.6M, 47.5%
Revenue $16M Q1 FY21 Revenue of $13.6M, 18%
Sales for 12 months to Sep 21 sales of 5174 (sales Strong Growth 44.6% of 3578 pcp) 44.6%
Strong Borrowings reducing as EBITDA grows, Operating Balance Costs reducing as Revenue grows, rent roll and Financial loan book valued at ~$25m1 and cash/ cash Sheet Position equivalents $6.8M2
1. The Agency’s East Coast rent roll was valued at in excess of $23 million by JemmesonFisher in Sep’20 7 2. As at 30 September 2021
PERFORMANCE
Q1 FY22: ALL-TIME HIGH RESULTS ACROSS KEY METRICS
- Delivered strong operating results for Q1 FY22 with key metrics increasing quarter-on-quarter.
- The results further reinforce the sustained growth the business has been able to achieve.
- This is despite the ongoing impact of COVID-19 and resultant restrictions on the real estate sector nationally.
Gross commission income ($ million) Number of Sales
21.5 22.7 24.5 20.0 16.6 1344 1325 1273 1232 1134
Q1 Q2 Q1 FY21 Q3 Q2 FY21 Q4 Q3 FY21 Q1 FY21 Q4 FY21 FY21 FY22 FY21 Q1 FY21 FY22 Listings Gross value of sales ($ million) 1,470 1,441 1,424 1,389 1,259 1,153 1,240 1,299 959 1,209
Q1 Q2 FY21 Q3 FY21 Q4 Q1 FY21 FY21 Q1 Q2 FY21 FY21 Q3 FY21 FY22 Q4 FY21 Q1 FY22
8
PERFORMANCE
OUTPERFORMING THE NATIONAL REAL ESTATE MARKET
Total number of transactions for 12 months to September 2021 of 5,174, a 44.6% increase on prior year. This is greater than the 41.9% increase experienced across the national real estate market for 12 months to September 20211
Number of Sales, 12 months to September Change in sales volume, 12 months to September 21 vs 12 months to September 20 20211 +44.6% y-o-y
5,174 Australia 41.90% 3,578
Combined regionals 43.30%
Combined capitals 41.10%
Sep-20 0% 20% 40% 60% 80% 100% Sep-21
1. CoreLogic Monthly Chart Pack September 2021 9
PERFORMANCE
A NATIONAL FOOTPRINT IN KEY MARKETS READY TO SCALE
No. of Agents (as at 30th September 21) Now that our business model has achieved a profitable scale, focus shift to quality agent recruitment for driving 272 283 308 334
growth. 191
- Our model of allowing our high-quality 50
agents to focus on sales and providing FY 17 FY 18 support is being demonstrated by the FY 19 FY 20* FY 21* YTD22 year-on-year increase in GCI.
- We are looking to boost agent 9 QLD agents numbers in the coming quarters. Based on the company’s existing platform and cost structure, which is largely fixed, any future recruitment and 145 NSW agents productivity gains will contribute to EBITDA performance. 158 WA agents 22 VIC agents
* COVID + JobKeeper slowed movement of agents, as overall industry agent numbers also reduced 10
PERFORMANCE
STRENGTHENED FINANCIAL POSITION
Total financing facilities at end of June 2021 AU1 borrowings & EBITDA ($ million)
of $8.35 million3 EBITDA Borrowings A renewed $5 million Macquarie Bank primary secured debt facility 21.1
$3.35 million Convertible Note to private investment company Peters 12.2
Investments Pty Ltd4 8.35 AU1 borrowings continue to reduce as 0.7 4.57 EBITDA grows $0 Macquarie Bank reduces interest rate FY 1 9 FY 20 F Y2 1 from 4.75% to 3.75% in recognition of -4.2 the significant improvements to balance sheet and continued strong operational performance ($ million) FY19 FY20 FY21 Operating costs at 32% of Revenue in FY21 Borrowings1 21.1 12.2 8.35 A reduction from 42% of revenue in Revenue 31.3 41.9 60.1 FY20 and 65% of revenue in FY19 EBITDA2 (4.2) 0.71 4.57
Asset value (rent roll and loan book) ~$25m Note 1: Borrowings have been adjusted to off set financial assets held against the borrowings. Note 2: EBITDA adjusted to exclude the impact of AASB16 and government incentives. Note 3: Refer to June Quarter 2021 Appendix 4C in ASX announcement dated 29 July 2021 Note 4 : Includes monthly interest which is capitalised. 11
FUTURE
BUSINESS CONTINUES TO GROW
- STRONG PIPELINE OF LISTINGS Into FY22 on back of rebounding property market
- QUALITY AGENT RECRUITMENT GROWTH In existing and new market sectors
- BUILDING MARKET SHARE IN AUSTRALIA’S PREMIER REAL ESTATE MARKETS
- Total 334 agents currently, an 8% increase from 308 agents as at 30 June 21
- Sydney & Melbourne still performing strongly despite COVID-19 lockdown
- STRONG FINANCIAL POSITION Continuing to identify and implement efficiencies into the business
12
THE TEAM
Experienced board & management team with a mix of real estate and commercial expertise
Paul Niardone | Managing Director Arjan Van Ameyde| Chief Financial Officer Previously Executive Director and founder of Professional Public Relations Arjan has over 25 years’ experience in senior finance roles in listed (WA), the largest PR and communications firm in the State until he sold the companies and SME. He has previously founded short-term lending and business to WPP. Experience in marketing and strategic planning for clients in insurance businesses and established the treasury for a listed both Government and the private sector and over 15 years experience with multinational group. Most recently he was Chief Operating public companies. Officer/Chief Financial Officer(Australia and UK) of ASX listed Ensurance Limited (ASX: ENA).
Geoff Lucas| Group Chief Executive Officer Maria Carlino| Director of Property Management Geoff Lucas is one of the most highly regarded executives in the Australian Over 27 years of real estate experience in key markets incl. Sydney, property industry, with more than 25 years commercial experience and a Brisbane and the Gold Coast. Previous senior roles at RUN Property, Ray distinguished track record of leadership in a number of corporate positions White and McGrath Real Estate where she was responsible for the for an ASX-listed real estate group, as well as other major public companies. management and growth strategies of the rental portfolio and team From 2008-2016 Geoff served as the Chief Operating Officer of McGrath Real across all company owned offices. Estate (ASX: MEA), later serving as Chief Executive Officer of the company.
Matt Lahood| Chief Executive Officer – Real Estate Mark Williams | Chief Executive Officer – Commercial More than 30 years in real estate sales; 2,000+ property sales worth over Mark Williams brings more than 30 years of real estate experience to $2bn. Previously Director of Sales for McGrath Real Estate, responsible for his commercial role with The Agency. As the CEO and founder of Ray market entry strategies and management of 22 company owned offices and White’s commercial division, he built a network of over 50 more than 250 people. commercial businesses across Australia, Asia and New Zealand. Further to these achievements, he headed up the Ray White Group’s Asia operations as Director of Greater China and Asia.
Andrew Jensen| Chief Operating Officer Andrew, formerly CFO of Ray White, has extensive knowledge in the Board of directors management of all aspects of finance with strong commercial, strategic, M&A, and change management experience. He has financially led companies Paul Niardone Managing director engaged in various fields including real estate and ancillary services sectors globally. Fellow of IPA and member of the AICD. Matt Lahood Chief executive officer – Real estate
Adam Davey| Non-Executive Director Andrew Jensen Chief operating officer Adam is Director, Private Clients and Institutional at Patersons Securities. His expertise spans over 25 years and includes capital raising (both private and Adam Davey Non-executive director public), mergers and acquisitions, ASX listings, asset sales and purchases, transaction due diligence and director duties.
13
CORPORATE SNAPSHOT
Corporate snapshot
Top shareholders Snapshot
6% – Daring Investments
8%- Directors ASX Code Shares O/S 428.6m & Mgmt. AU1:ASX Shares F/D2 570.7m 30% – Peters Investments
16% – Agents
Market capitalisation Cash3 $23m (@ 5.4cps) $6.8m
40% – Other Enterprise value Total Financing Facilities4 $24.6m (@ 5.4cps) $8.42m
Note 1: Trading history for the 12-month period ending 21 May 2021 (source: Thomson Reuters). Note 2: Fully diluted shares outstanding inclusive of 333,333 unlisted options and conversion of the remaining balance of the Peters Investments Convertible Note ($3.26m as at 28 February 2021) at maturity. 14 Note 3: Cash as at 30 Sep 2021. Note 4: Refer to Sep Quarter 2021 Appendix 4C in ASX announcement dated 19 October 2021
FY2021
Q1 FY22 RESULTS: KEY TAKEAWAYS
GCI $24.5M Q1 FY21 GCI of $16.6M, 47.5%
Revenue $16M Q1 FY21 Revenue of $13.6M, 18%
Sales for 12 months to Sep 21 sales of 5174 (sales Strong Growth 44.6% of 3578 pcp) 44.6%
Strong Borrowings reducing as EBITDA grows, Operating Balance Costs reducing as Revenue grows, rent roll and Financial loan book valued at ~$25m1 and cash/ cash Sheet Position equivalents $6.8M2
1. The Agency’s East Coast rent roll was valued at in excess of $23 million by JemmesonFisher in Sep’20 15 2. As at 30 September 2021
Thank you
For further information please contact:
Geoff Lucas Group Chief Executive Officer E: geofflucas@theagency.com.au Ph: +61 02 8376 9100