Appendix 4D & Half Year Financial Report
ABN 52 118 913 232
and its controlled entities
APPENDIX 4D Interim Financial Report 31 December 2021
THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
Corporate directory
Current Directors Andrew Jensen Executive Chairman and Chief Operating Officer Geoff Lucas Managing Director and CEO Paul Niardone 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 Hall Chadwick WA Audit Pty Ltd Australian Securities Exchange 283 Rokeby Road Level 40, Central Park, 152-158 St Georges Terrace SUBIACO WA 6008 Perth WA 6000 Telephone: +61 (0)8 9426 0666 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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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Contents
◼ Results for announcement to the market ………………………………………………………………………………………………………………….. 1 ◼ Directors’ report …………………………………………………………………………………………………………………………………………………….. 3 ◼ Auditor’s independence declaration …………………………………………………………………………………………………………………………. 7 ◼ Condensed consolidated statement of profit or loss and other comprehensive income ………………………………………………….. 8 ◼ Condensed consolidated statement of financial position ……………………………………………………………………………………………. 9 ◼ Condensed consolidated statement of changes in equity ………………………………………………………………………………………….. 10 ◼ Condensed consolidated statement of cash flows …………………………………………………………………………………………………….. 11 ◼ Notes to the condensed consolidated financial statements ……………………………………………………………………………………….. 12 ◼ Directors’ declaration ……………………………………………………………………………………………………………………………………………. 29 ◼ Independent auditor’s review report ………………………………………………………………………………………………………………………. 30
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
Results for announcement to the market for the half-year ended 31 December 2021
1 REPORTING PERIOD (item 1)
◼ Report for the period ended: 31 December 2021 ◼ Previous corresponding period is half-year ended: 31 December 2020
Movement Percentage Amount 2 RESULTS FOR ANNOUNCEMENT TO THE MARKET % $ ◼ Revenues from ordinary activities (item 2.1) Increase 20.74 to 35,555,648 ◼ Profit from ordinary activities after tax attributable to Increase 49.75 to 1,247,405 members (item 2.2) ◼ Profit after tax attributable to members (item 2.3) Increase 49.75 to 1,247,405
a. Dividends (items 2.4 and 5) Amount per Franked amount Security per security ₵ % ◼ Interim dividend nil n/a ◼ Final dividend nil n/a ◼ Record date for determining entitlements to the dividend n/a (item 2.5)
b. Brief explanation of any of the figures reported above necessary to enable the figures to be understood (item 2.6): 1. Revenue represents service revenue.
2. EBITDA of $3,048,684, refer to section 2.3 of the Directors’ Report for details.
3 DIVIDENDS (item 6) AND RETURNS TO SHAREHOLDERS INCLUDING DISTRIBUTIONS AND BUY BACKS
Nil a. Details of dividend or distribution reinvestment plans in operation are described below (item 6): Not applicable
Previous 4 RATIOS Current corresponding period period a. Financial Information relating to 4b: $ $ Earnings for the period attributable to owners of the parent 1,247,405 832,979
Net assets 15,766,417 14,137,261 Less: Intangible assets and deferred tax balances (22,230,465) (22,883,701) Net tangible (liabilities)/assets (6,464,048) (8,746,440)
No. No.
Fully paid ordinary shares 428,575,916 428,575,916
₵ ₵
b. Net tangible (liability)/assets backing per share (cents) (item 3): (1.508) (2.041)
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Results for announcement to the market for the half-year ended 31 December 2021
5 DETAILS OF ENTITIES OVER WHICH CONTROL HAS BEEN GAINED OR LOST DURING THE PERIOD: (item 4)
a. Control gained over entities ◼ Name of entities (item 4.1) Nil ◼ Date(s) of gain of control (item 4.2)
b. Loss of control of entities
◼ Name of entities (item 4.1) Nil ◼ Date(s) of loss of control (item 4.2)
c. Contribution to consolidated profit from ordinary activities after tax by the controlled entities to the date(s) in the current period when control was gained / lost (item 4.3).
d. Profit from ordinary activities after tax of the controlled entities for the whole of the previous corresponding period (item 4.3)
6 DETAILS OF ASSOCIATES AND JOINT VENTURES: (item 7)
◼ Name of entities (item 7) Nil ◼ Percentage holding in each of these entities (item 7) N/A Current period Previous corresponding period ◼ Aggregate share of profits (losses) of these entities (item 7) N/A N/A
7 The financial information provided in the Appendix 4D is based on the interim final report (attached), which has been prepared in accordance with Australian Accounting Standards.
8 The report is based on accounts which have been reviewed by the Company’s independent auditor (item 9).
GEOFF LUCAS Managing Director and CEO Dated this Wednesday, 23 February 2022
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
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 half-year ended 31 December 2021 (HY2022). 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 half-year are: ◼ Andrew Jensen Executive Chairman and Chief Operations Officer ◼ Geoff Lucas Managing Director and CEO Appointed 28 January 2022 ◼ Paul Niardone Executive Director ◼ Adam Davey Non-Executive Director ◼ Matthew LaHood Executive Director and Real Estate CEO Resigned 28 January 2022 (collectively the Directors or the Board) Directors have been in office since the start of the half-year to the date of this report unless otherwise stated.
2. Operating and financial review 2.1. Nature of Operations Principal Activities The principal activity of the Group for the half- year was real estate services and related activities. There were no significant changes in the nature of the Group’s principal activities during the half-year.
2.2. Operations Review a. Key Metrics
COMBINED GROUP REVENUE ($M) GCI ($M) 40 Up 21% H-on-H 60 Up 39% H-on-H
35 50 30 35.6 52.9 29.4 40 25 20 25.2 30 38.1 15 20 24.9 10 10 17.8 5 10.2 0 0 HY FY19 HY FY20 HY FY21 HY FY22 HY FY19 HY FY20 HY FY21 HY FY22
SALES ($M) Up 21% Up 39% NUMBER OF NEW LISTINGS (#) 3,500 H-on-H H-on-H 3,500 Up 25% H-on-H
3,000 3,000 3,086 2,500 2,910 3,050 2,500 2,000 2,407 2,217 2,000 2,449 1,500 1,500 1,955 1,595 1,519 1,590 1,000 1,235 1,000 1,129 500 500 0 0 HY FY19 HY FY20 HY FY21 HY FY22 HY FY19 HY FY20 HY FY21 HY FY22
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Directors’ report
NUMBER OF AGENTS (#) 400 Up 16% H-on-H 350 300 345 250 291 298 278 200 150 100 50 0 HY FY19 HY FY20 HY FY21 HY FY22
During HY2022, The Agency delivered significant HY2022 financial and operational results across its business as it further grows its presence now in five states and territories.
Group revenue for HY2022 $35.6 million, up 21% on HY2021’s Group revenue of $29.4 million, which further highlights the effectiveness of the Company’s model.
The increase in revenue was primarily due to a 39% year-on-year increase in Gross Commission Income (GCI) to $52.9 million (HY2021 $38.1 million).
This figure was bolstered by 2,910 exchanges across the Group for HY2022 (compared to 2,407 exchanges in HY2021) and $3.1 billion worth of property sold across the combined Group for HY2022 (compared to $2.2 billion in HY2021).
The pipeline for future sales remains strong with the combined Group reporting 3,050 listings for the half-year period. The Agency’s east coast operations reported a total management portfolio of 3,551 PuM at the end of December 2021.
As at 31 December 2021, the Company consisted of 345 agents, a 16% increase on the 298 agents as at 31 December 2020. Importantly, post half-year end, in January 2022 alone, The Agency has further accelerated its recruitment drive adding four new agents in the ACT, seven new agents in NSW, seven new agents in QLD and four new agents in WA.
2.3. 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 has continued its growth during HY2022. With positive cashflow during these 6 months means the Group has now delivered three continuous quarters of positive EBITDA and cashflow, a first for the company. For HY2022, the Group recorded positive EBITDA of $3.05 million. EBITDA was calculated as provided below.
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
Directors’ report
EBITDA calculation HY2022 HY2021 Change Change $ $ $ %
Profit after tax 1,247,405 832,979 +414,426 +50%
Income tax benefit (850,437) (1,049,926) Profit / (loss) before tax 396,968 (216,947) +613,915 +283%
Interest income (2,700) (16,437) Depreciation and amortisation 2,694,819 2,793,006 Embedded derivative non-cash financing (gains) / costs1 (289,428) – Impairment recovery (400,000) – Interest and finance costs 267,274 1,455,310 Profit on Sale of Assets2 – (331,407) Share-based payments expense 381,751 –
EBITDA 3,048,684 3,683,525 -634,841 -17%
AASB 16 Leases impact3 (909,783) (918,567)
EBITDA (pre-AASB16 Leases impact) 2,138,901 2,764,958 -626,057 -23%
Government incentives – (1,161,089)
Normalised EBITDA 2,138,901 1,603,869 +535,032 +33%
Other key metrics:
◼ Revenue 35,555,648 29,449,321 +6,106,327 +21% ◼ GCI 52,876,078 38,124,162 +14,751,916 +39%
EBITDA for the current period was $3.05 million (HY2021: $3.68 million). After adjusting for the AAB16 Leases impact and government incentives received, normalised EBITDA for HY2022 was $2.14 million. This represents a $0.54 million increase in normalised EBITDA, which equates to a 33% increase from the comparative period.
The Group generated a net profit after tax for the year of $1.25 million (HY2021: $0.83 million profit). This was primarily impacted by the embedded derivative non-cash financing gains ($0.29 million), impairment recovery ($0.40 million), interest and finance costs ($0.27 million), and depreciation and amortisation ($2.69 million).
The net assets of the Group have increased from 30 June 2021 by $1.63 million to $15.77 million at 31 December 2021 (30 June 2021: $14.14 million).
As at 31 December 2021, the Group’s cash and cash equivalents increased from 30 June 2021 by $1.17 million to $6.26 million at 31 December 2021 (30 June 2021: $5.10 million).
HY2022 $’000
Cash at bank (reference financial statements note 4.1) 6,262 Cash classified as ◼ Bank Guarantees 639
Reporting in the 31 December 2021 Appendix 4C 6,901
1 Refer to note 2.1 of the financial statements
2 Sale of West Coast rent roll assets to Managex. Includes profit on sale of net assets disposed of $273K + Gain on exit of lease of $58K
3 AASB 16 Leases was adopted from 1 July 2019. The above demonstrates finance costs and amortisation, which prior to the adoption AASB 16
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Directors’ report
2.4. Impact of COVID 19 Coronavirus The COVID-19 coronavirus global pandemic has continued to cause significant disruption and restrictions to the movement of people and goods throughout the world. During the pandemic, The Agency implemented prudent business continuity measures to see it through which allowed it to continue to operate nationally and is now reaping the benefits of a rebounding real estate market in WA and NSW. The half-year numbers reflect limited activity from Victoria which is expected to rebound with the easing of restrictions. 2.5. 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 8 Events subsequent to reporting date on page 22.
2.6. Future Developments, Prospects and Business Strategies The Group continues to focus on growth opportunities and attracting real estate agents to its contemporary direct engagement business model. By contracting directly with agents, the Group removes an additional layer of management and also better aligns the company and selling agents by removing internal conflicts. We believe this creates an environment where agents do what they do best which is selling real estate. The Group also differentiates by reducing the number of traditional real estate offices, operating in larger purpose built ‘hubs’ from which agents collaborate and serve broader geographic regions. The Group believes this model is more attractive to agents than traditional offices which have historically dominated the highly fragmented Australian real estate industry as it enables a higher agent commission split in a sustainable way.
Future growth will come from growth in agent numbers, and increased efficiencies driven by economies of scale and utilisation of best practice technological advances to ensure agents can maximise their productivity. The highly fragmented structure of the industry presents an opportunity for consolidation and the Group believes additional growth will come from acquisition opportunities – a number of which are being assessed and can be funded by existing resources.
The Group continues to assess a variety of strategic partnerships and adjacent revenue opportunities closely related to the activities of real estate sales transactions in addition to the existing property management, mortgage broking and conveyancing businesses already undertaken.
2.7. Environmental Regulations The Group’s operations are not subject to any significant environmental regulations in the jurisdictions it operates in.
3. Auditor’s independence declaration The lead auditor’s independence declaration under section 307C of the Corporations Act 2001 (Cth) for the half-year ended 31 December 2021 has been received and can be found on page 7 of the interim financial report.
This Report of the Directors, is signed in accordance with a resolution of directors made pursuant to section 306(3) of the Corporations Act 2001 (Cth).
GEOFF LUCAS Managing Director and CEO Dated this Wednesday, 23 February 2022
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
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
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Condensed consolidated statement of profit or loss and other comprehensive income for the half-year ended 31 December 2021 Note 6 months to 6 months to 31 December 31 December 2021 2020 $ $ Continuing operations Revenue 1.1 35,555,648 29,449,321 Other income 1.2 214,285 941,995
35,769,933 30,391,316
Advertising and promotion expenses (1,243,675) (1,014,102) Computers and information technology expenses (931,205) (679,515) Consultancy fees (707,482) (949,776) Depreciation and amortisation (2,694,819) (2,793,006) Embedded derivative non-cash financing gains / (costs) 2.1 289,428 – Impairment recovered 2.2 400,000 – Interest and finance costs (267,274) (1,455,310) Legal and professional fees (352,936) (1,168,662) Occupancy costs (314,350) (373,636) Salaries and employment costs 2.3 (28,408,725) (21,158,144) Other expenses (1,141,927) (1,016,112)
Profit / (loss) before tax 396,968 (216,947) Income tax benefit 3.1 850,437 1,049,926
Net profit for the year 1,247,405 832,979
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 1,247,405 832,979
Earnings per share: ₵ ₵ Basic earnings per share (cents per share) 10.4 0.29 0.28 Diluted earnings per share (cents per share) 10.4 0.29 0.27 3,048,684 3,683,525
The Condensed consolidated statement of profit or loss and other comprehensive income is to be read in conjunction with the accompanying notes.
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
Condensed consolidated statement of financial position as at 31 December 2021 Note 31 December 30 June 2021 2021 $ $ Current assets Cash and cash equivalents 4.1 6,262,235 5,096,435 Trade and other receivables 4.2.1 11,381,645 8,353,403 Other current assets 4.4.1 1,111,272 323,438
Total current assets 18,755,152 13,773,276
Non-current assets Trade and other receivables 4.2.2 132,710 163,010 Financial assets 4.3.1 639,030 612,860 Property, plant, and equipment 5.1 1,660,873 1,577,659 Right of use asset 5.2.1 4,665,290 4,894,370 Intangible assets 5.3 22,736,778 24,240,451
Total non-current assets 29,834,681 31,488,350
Total assets 48,589,833 45,261,626
Current liabilities Trade and other payables 4.5.1 14,519,173 11,194,122 Provisions 5.4 2,438,511 2,565,406 Leases 5.2.2 1,892,474 1,828,270
Total current liabilities 18,850,158 15,587,798
Non-current liabilities Borrowings 4.6.1 5,000,000 5,000,000 Financial liabilities 4.7.1 4,593,244 4,882,672 Provisions 5.4 258,819 280,245 Leases 5.2.2 3,614,882 4,016,900 Deferred tax liabilities 3.6 506,313 1,356,750
Total non-current liabilities 13,973,258 15,536,567
Total liabilities 32,823,416 31,124,365
Net assets 15,766,417 14,137,261
Equity – – Issued capital 6.1.1 43,635,166 43,635,166 Reserves 6.4 1,453,612 1,071,861 Accumulated losses (29,322,361) (30,569,766)
Total equity 15,766,417 14,137,261 (1,206,278) (2,120,270) (11,129,338) (13,640,810) The consolidated statement of financial position is to be read in conjunction with the accompanying notes.
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Condensed consolidated statement of changes in equity for the half-year ended 31 December 2021 Note Share-based Contributed Accumulated payment Total equity Losses Reserve equity $ $ $ $
Balance at 1 July 2020 39,395,942 (28,713,311) 928,715 11,611,346 Profit for the half-year attributable owners of the parent – 832,979 – 832,979 Other comprehensive income for the half-year attributable owners of the parent – – – – Total comprehensive income for the half-year attributable owners of the parent – 832,979 – 832,979
Transaction with owners, directly in equity Shares issued during the half-year (net of costs) – – – – Options granted during the half-year – – – –
Balance at 31 December 2020 39,395,942 (27,880,332) 928,715 12,444,325
Balance at 1 July 2021 43,635,166 (30,569,766) 1,071,861 14,137,261 Profit for the half-year attributable owners of the parent – 1,247,405 – 1,247,405 Other comprehensive income for the half-year attributable owners of the parent – – – –
Total comprehensive income for the half-year attributable owners of the parent – 1,247,405 – 1,247,405
Transaction with owners, directly in equity Shares issued during the half-year (net of costs) – – – – Options granted during the half-year 11.2.2 – – 381,751 381,751 Options exercised during the half-year – – – –
Balance at 31 December 2021 43,635,166 (29,322,361) 1,453,612 15,766,417
The consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
Condensed consolidated statement of cash flows for the half-year ended 31 December 2021
Note 6 months to 6 months to 31 December 31 December 2021 2020 $ $ Cash flows from operating activities Receipts from customers 37,762,381 31,536,210 Payments to suppliers and employees (34,092,451) (28,086,117) Interest received 2,700 16,437 Finance costs (311,280) (898,045)
Net cash received operating activities 3,361,350 2,568,485
Cash flows from investing activities Purchase of property, plant, and equipment (399,736) (70,235) Deposit for bank guarantees (26,170) – Purchase of intangibles (112,294) – Loans to other entities (670,000) – Net cash received on disposal of asset group 1.2.1 – 2,623,330
Net cash (used in) / received from investing activities (1,208,200) 2,553,095
Cash flows from financing activities Repayments of borrowings – (3,564,464) Payment of principal portion of lease liabilities (987,350) (987,977)
Net cash used in financing activities (987,350) (4,552,441)
Net increase in cash and cash equivalents held 1,165,800 569,139
Cash and cash equivalents at the beginning of the half-year 5,096,435 2,724,142
Cash and cash equivalents at the end of the half-year – 4.1 6,262,235 3,293,281
The consolidated statement of cash flows is to be read in conjunction with the accompanying notes.
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
In preparing the December 2021 Interim Financial Report, The Agency Group Australia Ltd has grouped into sections under the same key categories as used in the June 2021 Annual Report: ◼ Section A: How the numbers are calculated ……………………………………………………………………………………………………………..13
◼ Section B: Unrecognised items ………………………………………………………………………………………………………………………………..22
◼ Section C: Other Information ………………………………………………………………………………………………………………………………….23 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 financial report is presented in Australian dollars, except where otherwise stated.
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
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.
Note 1 Revenue and other income Note 6 months to 6 months to 31 December 31 December 2021 2020 $ $ 1.1 Revenue Commissions 29,240,577 21,973,365 Fees 3,013,947 3,376,980 Management fees 3,301,124 4,098,976
35,555,648 29,449,321 1.2 Other Income Interest income 2,700 16,437 Gain on disposal of assets 1.2.1 – 273,225 Gain on exit of lease – 58,182 Other income 211,585 269,739 Government grants received – Cash Flow Boost – 324,412
214,285 941,995 1.2.1 In September 2020, the Company formed a strategic partnership with Managex Funds Management Pty Ltd (Managex). Under the terms of a binding sales agreement, Managex purchased The Agency Property Management WA Pty Ltd that held the Group’s West Coast rent roll net assets, resulting in the following gain: 6 months to 31 December 2020 $ Consideration Cash payment 2,777,164 Retention receivable 484,794
Total consideration 3,261,958 Less: Costs associated with sale (51,292) Net assets disposed (2,937,441)
Profit on sale of net assets disposed 273,225
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
Note 2 Profit before income tax Note 6 months to 6 months to 31 December 31 December 2021 2020 $ $ The following significant revenue and expense items are relevant in explaining the financial performance: 2.1 Embedded derivative non-cash financing (gains)/costs: ◼ Embedded Derivative – Finance cost 455,912 – ◼ Embedded Derivative – Fair value adjustment 4.7.1a (745,340) –
(289,428) – 2.2 Impairment: ◼ Doubtful debts (recovered) / expense 4.4.1,4.4.3 (400,000) –
(400,000) – 2.3 Salaries and employment costs: ◼ Commissions 18,810,810 14,233,025 ◼ Director fees 72,000 72,000 ◼ Salary and wages 5,499,294 4,909,529 ◼ Share-based payments expense 11 381,751 – ◼ Superannuation 1,322,093 1,088,996 ◼ Other employment related costs 2,322,777 1,691,271 ◼ Government grants received in connection with employment costs – (836,677)
28,408,725 21,158,144
Note 3 Income tax Note 6 months to 6 months to 31 December 31 December 2021 2020 $ $ 3.1 Income tax benefit Current tax – – Deferred tax (850,437) (1,049,926)
(850,437) (1,049,926) 3.2 Reconciliation of income tax expense to prima facie tax payable The prima facie tax benefit on profit / (loss) from ordinary activities before income tax is reconciled to the income tax expense as follows: Accounting profit / (loss) before tax 396,968 (216,947) Prima facie tax on operating profit / (loss) at 30% (December 2020: 27.5%) 119,090 (59,660) Add / (Less) tax effect of: ◼ Other Deductible expenses (17,965) (48,659) ◼ Profit on sale of assets – (75,033) ◼ Capital gain on sale of assets – 192,612 ◼ Profit on lease exit – (16,000) ◼ Non-deductible expenses 14,831 16,462 ◼ Unrecognised income tax effect of temporary differences – (1,059,648) ◼ Recognition of deferred tax assets on revenue losses, not previously (966,393) – recognised
Income tax benefit attributable to operating profit / (loss) (850,437) (1,049,926)
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2020
Note 3 Income tax (cont.) Note 31 December 30 June 2021 2021 $ $ 3.5 Deferred tax assets Employee benefits 628,386 558,583 Accrued expenses 2,243,801 1,747,300 Provisions 27,160 177,161 AASB 16 Leases – Lease Liability 190,620 182,453 Other 259,531 309,093 3,349,498 2,974,590 Set-off deferred tax liabilities 3.6 (3,349,498) (2,974,590)
Net deferred tax assets – –
3.6 Deferred tax liabilities Intangible Asset – Rent Roll 3,855,811 4,331,340
3,855,811 4,331,340
Set-off deferred tax assets 3.5 (3,349,498) (2,974,590)
Net deferred tax liabilities 506,313 1,356,750
3.7 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 3,130,755 5,063,541
3,130,755 5,063,541 The parent company has accumulated tax losses of $10,435,850 (30 June 2021: $16,878,470) 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 by the Australian Taxation Office.
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
Note 4 Financial assets and financial liabilities
4.1 Cash and cash equivalents 31 December 30 June 2021 2021 $ $ Cash at bank 6,262,235 5,096,435
6,262,235 5,096,435
4.2 Trade and other receivables 31 December 30 June 2021 2021 $ $ 4.2.1 Current Trade debtors 9,155,180 6,672,604 Recoverable commissions / wages 1,201,262 1,125,019 Other receivables 1,075,203 855,780 Provision for non-recovery of trade debtor and commissions / wages (50,000) (300,000)
11,381,645 8,353,403 4.2.2 Non-current Trade debtors 132,710 163,010
132,710 163,010
4.3 Financial assets 31 December 30 June 2021 2021 $ $ 4.3.1 Non-current Bank guarantees and restricted cash 639,030 612,860
639,030 612,860
4.4 Other assets Note 31 December 30 June 2021 2021 $ $ 4.4.1 Current Prepayments 1,111,272 305,748 Other deposits 4.4.2 – 417,690 Less: provision for impairment 4.4.3 – (400,000)
1,111,272 323,438
4.4.2 Other deposits at 30 June 2021 relate to an advance payment of $400,000 made to the Federal Court regarding the Magnolia case and other amounts of $17,690. 4.4.3 During the half-year, the provision for impairment of $400,000 was reversed following the favourable decision of the Federal Court (announced 23 November 2021), costs were awarded to the Agency and the $400,000 was returned to the Company.
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
Note 4 Financial assets and financial liabilities (cont.)
4.5 Trade and other payables 31 December 30 June 2021 2021 $ $ 4.5.1 Current Unsecured Trade payables 3,316,135 2,552,376 Employees’ remuneration – commissions payable 4,557,215 3,706,455 Payroll tax 509,793 353,739 Superannuation – employees 367,003 392,778 Sundry creditors and accrued expenses 3,438,134 2,512,237 GST and PAYG payable 2,330,893 1,676,537
14,519,173 11,194,122
4.6 Borrowings Note 31 December 30 June 2021 2021 $ $ 4.6.1 Non-current Bank loans 4.6.1a 5,000,000 5,000,000
5,000,000 5,000,000 a. On 4 August 2021 the Company executed an amendment deed to its loan agreement with Macquarie Bank Limited (Macquarie). Pursuant to the terms of the amendment deed, the revised terms of the loan include: ◼ Loan amount $5,000,000 ◼ Interest rate Base Rate (BBSW) + margin of 3.75%. The Base Rate (determined monthly) has ranged between 0.01% to 0.0917% during the period ◼ Repayment date On or before 4 January 2023 ◼ Covenants The Company has covenanted to Macquarie that it will: maintain an EBITDA interest cover ratio of at least 3 times. The definition of interest expense does not include financial indebtedness owed by the Company to Peters Investments Pty Ltd, in accordance with the convertible notes issued on 15 May 2020 and 4 January 2021 respectively. ◼ Termination/Default It is an event of default under the loan agreement if the total number of sales agents employed by the Company’s wholly owned subsidiary, Top Level Real Estate Pty Ltd, is less than, or falls to less than 59. The Loan Agreement otherwise contains default and termination provisions considered standard for a bank facility of this nature.
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
Note 4 Financial assets and financial liabilities (cont.)
4.7 Financial liabilities Note 31 December 30 June 2021 2021 $ $ 4.7.1 Non-current Convertible note: 4.7.1a,b ◼ Debt component 1,351,013 895,101 ◼ Derivative financial liability conversion option 3,242,231 3,987,571
4,593,244 4,882,672 a. Reconciliation of convertible notes Opening balance: ◼ from Borrowings – 1,000,000 ◼ Debt component 895,101 – ◼ Derivative financial liability conversion option 3,987,571 – Proceeds on issue of convertible notes – 5,000,000
4,882,672 6,000,000
◼ Fair value of derivative liabilities – 4,988,334 ◼ Host debt liability – 896,561 ◼ Convertible loan notes converted to equity – (3,612,768) ◼ Interest charged 455,912 623,557 ◼ Fair value movement (745,340) 1,986,988
Carrying value of liabilities at reporting date 4,593,244 4,882,672 b. On 5 January 2021, following shareholder approval at the Company’s AGM held 4 January 2021, the Company issued 5,000,000 convertible notes to Peters Investments Pty Ltd in order to raise $5,000,000. In addition, the terms of the 1,000,000 convertible notes issued to Peters Investments in May 2020 were amended to be consistent with the terms of the 5,000,000 convertible notes issued 4 January 2021: ◼ Interest rate higher of 8% per annum and the interest rate on the Macquarie Bank loan ◼ Facilitation fee 3% fee equalling $150,000 which is capitalised and added to the face value of the note. ◼ Security Second security ranking behind Macquarie Bank. ◼ Options 12,000,000 Options exercisable at the $0.027 on or before 31 March 2023. These options were exercised on 28 January 2021. ◼ Term/Maturity Date Unless converted to shares the notes will be repaid in cash on the earlier of 31 March 2023 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 $0.027 per share and the issue price of shares offered under any subsequent capital raising completed by the Company to raise over $1,000,000 on or before 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. On 28 January 2021, Peter Investments converted $3,612,768 of debt and interest into 115,621,485 shares.
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
Note 5 Non-financial assets and financial liabilities
5.1 Property, plant, and equipment 31 December 30 June 2021 2021 $ $ Plant and equipment – at cost 1,359,511 1,253,362 Accumulated depreciation (795,733) (725,387)
563,778 527,975
Leasehold improvements – at cost 3,739,133 3,447,970 Accumulated amortisation (2,642,038) (2,398,286)
1,097,095 1,049,684
Total plant and equipment 1,660,873 1,577,659
5.2 Leases 31 December 30 June 2021 2021 $ $ 5.2.1 Right of use assets Properties 3,609,893 3,704,241 Printing equipment 1,055,397 1,190,129
4,665,290 4,894,370 5.2.2 Lease liabilities Current 1,892,474 1,828,270 Non-current 3,614,882 4,016,900
5,507,356 5,845,170
5.3 Intangible assets 31 December 30 June 2021 2021 $ $ Goodwill 10,704,236 10,704,236
10,704,236 10,704,236
Rent Roll and trail book 21,134,545 21,134,545 Accumulated amortisation (9,436,696) (7,851,603)
11,697,849 13,282,942
Trademarks 268,420 268,420 Accumulated amortisation and impairment (268,420) (268,420)
– –
Others 403,529 291,875 Accumulated amortisation and impairment (68,836) (38,602)
334,693 253,273
Total intangibles 22,736,778 24,240,451
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
Note 5 Non-financial assets and financial liabilities (cont.)
5.4 Provisions 31 December 30 June 2021 2021 $ $ 5.4.1 Current Employee entitlements 1,670,366 1,406,422 Future fund referrals 768,145 1,158,984
2,438,511 2,565,406 5.4.2 Non-current Employee entitlements 57,252 62,742 Make good provisions 148,498 149,548 Future fund referrals 53,069 67,955
258,819 280,245
Note 6 Equity
6.1 Issued capital Note 31 December 30 June 31 December 30 June 2021 2021 2021 2021 No. No. $ $
Fully paid ordinary shares at no par value 428,575,916 428,575,916 43,635,166 43,635,166 6 months to 6 months to 31 December 12 months to 31 December 12 months to 2021 30 June 2021 2021 30 June 2021 6.1.1 Ordinary shares No. No. $ $ At the beginning of the period 428,575,916 298,954,431 43,635,166 39,395,942 Shares issued during the period: ◼ Convertible note conversion 4.7.1b – 115,621,485 – 3,612,768 ◼ Exercise of $0.027 options – 12,000,000 – 546,000 ◼ Exercise of $0.0338 options – 2,000,000 – 140,456 Transaction costs relating to share issues – – – (60,000)
At reporting date 428,575,916 428,575,916 43,635,166 43,635,166
6.2 Performance shares 31 December 30 June 2021 2021 No. No.
Performance shares 1,555,558 1,555,558
6.2.1 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.
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
Note 6 Equity (cont.)
6.3 Options Note 31 December 30 June 31 December 30 June 2021 2021 2021 2021 No. No. $ $ Options 30,333,333 333,333 1,453,612 1,071,861 6 months to 6 months to 31 December 12 months to 31 December 12 months to 2021 30 June 2021 2021 30 June 2021 No. No. $ $ At the beginning of the period 333,333 104,181,760 1,071,861 928,715 Options movement during the period ◼ Issued in connection with 4.7.1b 12,000,000 222,000 Convertible notes ◼ Exercise of $0.027 options (12,000,000) (222,000) ◼ Exercise of $0.0338 options (2,000,000) (72,800) ◼ Granted and issued to CEO in 11.2.2a 30,000,000 – 381,751 215,946 accordance with employment agreements ◼ Expiry of options – (101,848,427) – –
At reporting date 30,333,333 333,333 1,453,612 1,071,861
6.4 Reserves 2021 2020 $ $ Share-based payment reserve 1,453,612 1,071,861
1,453,612 1,071,861
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
SECTION B. 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 7 Commitments There are no material commitments to the Group as at 31 December 2021 (30 June 2021: Nil).
Note 8 Events subsequent to reporting date 8.1 Following the appointment of Geoff Lucas as Managing Director on 28 January 2022, Paul Niardone has moved to Executive Director. As part of the updated appointments to the board, Real Estate CEO Matt Lahood has stepped down as a director of the listed Company to allow him additional time to focus on his increasing executive workload following recent agent recruitment. All changes were effective 28 January 2022. 8.2 At the Annual General Meeting on 28 January 2022, the shareholders approved the issue of 11,000,000 performance rights to Paul Niardone.
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 9 Contingent liabilities There are no contingent liabilities as at 31 December 2021.
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
SECTION C. 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 10 Earnings per share (EPS) Note 6 months to 6 months to 31 December 31 December 2021 2020 $ $ 10.1 Reconciliation of earnings to profit or loss Profit for the half-year 1,247,405 832,979 Less: profit attributable to non-controlling equity interest – –
Profit used in the calculation of basic and diluted EPS 1,247,405 832,979
6 months to 6 months to 31 December 31 December 2021 2020 No. No. 10.2 Weighted average number of ordinary shares outstanding during the half-year used in calculation of basic EPS 428,575,916 298,954,431 Weighted average number of dilutive equity instruments outstanding 10.5 2,018,116 11,162,892 10.3 Weighted average number of ordinary shares outstanding during the half-year used in calculation of basic EPS 430,594,032 310,117,323
6 months to 6 months to 31 December 31 December 2021 2020 10.4 Earnings per share ₵ ₵ Basic EPS (cents per share) 10.5 0.29 0.28 Diluted EPS (cents per share) 10.5 0.29 0.27
10.5 As at 31 December 2021, the Group has 30,333,333 unissued shares under options (December 2020: 11,162,892) and 1,555,558 performance shares on issue (December 2020: 1,555,558). As at 31 December 2021, of the 30,333,333 options granted and issued, 10,333,333 options have vested and are exercisable. Unvested options are not considered to be dilutive.
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
Note 11 Share-based payments Note 6 months to 6 months to 31 December 31 December 2021 2020 $ $ 11.1 Share-based payments: ◼ Recognised in profit or loss – share-based payment expense 11.2.2a 381,751 –
Gross share-based payments 381,751 – 11.2 Share-based payment arrangements in effect during the period 11.2.1 Issued during the current year No share-based payments were granted during the period. Refer 11.2.2a for share-based payments issued in prior year, remaining in effect.
11.2.2 Issued in prior year, remaining in effect a. Chief Executive Officer – Remuneration Options On the commencement of employment, the Company granted Mr Geoff Lucas 30,000,000 options in accordance with his employment agreement, on the following terms (subject to the completion of his probationary period, ending 29 September 2021): Number under Option Date of Expiry Consideration Exercise Price Vesting Terms 10,000,000 29 September 2022 nil $0.050 60 days after 6-month probationary period 28 November 2021 10,000,000 29 September 2023 nil $0.075 12 months after 6-month probationary period 29 September 2022 10,000,000 29 September 2024 nil $0.100 24 months after 6-month probationary period 29 September 2023
11.3 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: 6 months to 12 months to 31 December 2021 30 June 2021 $ $ Number of Weighted Average Number of Weighted Average Options Exercise Price Options Exercise Price Outstanding at the beginning of the period 30,333,333 $0.077 104,181,760 $0.068 Granted (refer 11.3a below) – – 42,000,000 $0.061 Exercised – – (14,000,000) $0.028 Expired – – (101,848,427) $0.068
Outstanding at the end of the period (refer 30,333,333 $0.077 30,333,333 $0.077 11.3a below)
Exercisable at the end of the period 10,333,333 $0.058 333,333 $0.300
a. Included in Granted and Outstanding at year-end are 30,000,000 options granted to Mr Geoff Lucas that subject to vesting conditions and remained unissued as at 30 June 2021, as noted in 11.2.2a. These options were issued to Mr Lucas on 30 November 2021. As at 31 December 2021, of the 30,000,000 options granted and issued, 10,000,000 options have vested and are exercisable. b. The weighted average remaining contractual life of options outstanding at period end was 1.73 years (June 2021: 0.53 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 APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
Note 11 Share-based payments (cont.)
11.4 Fair value of options granted in prior period, remaining in effect The weighted average fair value of options was calculated using the Black-Scholes option pricing model, applying the following inputs to options issued the period: Note Reference 11.2.2a 11.2.2a 11.2.2a Grant date: 29 March 2021 29 March 2021 29 March 2021 Grant date share price: $0.060 $0.060 $0.060 Option exercise price: $0.050 $0.075 $0.100 Number of options issued: 10,000,000 10,000,000 10,000,000 Remaining life (years): 0.75 1.75 2.75 Expected share price volatility: 106.60 106.60 106.60 Risk-free interest rate: 0.08% 0.08% 0.66% Value per option $0.0320 $0.0333 $0.0360
Fair values:
Total fair value $320,000 $333,000 $360,000 Recognised in the period $197,147 $112,061 $72,543
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.
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
Note 12 Operating segments
12.1 Segment Financial Performance Real Estate Mortgage Total Property Origination Reportable Other Services Services Segments Segments Total 31 December 2021 $ $ $ $ $ Revenue ◼ External revenues 33,848,380 1,706,099 35,554,479 1,169 35,555,648 ◼ Inter-segment revenues – – – – –
Total segment revenue 33,848,380 1,706,099 35,554,479 1,169 35,555,648 Reconciliation of segment revenue to Group revenue: ◼ Eliminations –
Total group revenue and other income _ 35,555,648
Segment earnings before interest, tax, depreciation, and amortisation (EBITDA) 5,403,692 441,562 5,845,254 119,935 5,965,189 ◼ Unallocated corporate costs (2,916,504)
EBITDA 3,048,685 Reconciliation to Group profit: (i) Allocated items: ◼ Depreciation and amortisation (2,536,519) (21,420) (2,557,939) (136,880) (2,694,819) ◼ Net finance costs (248,759) 4,572 (244,187) (476,300) (720,487) (ii) Unallocated items: ◼ Impairment reversal – – 400,000 400,000 ◼ Fair value adjustments – – – 745,340 745,340 ◼ Share-based payments – – – (381,751) (381,751)
Profit before income tax _ 396,968
Real Estate Mortgage Total Property Origination Reportable Other Services Services Segments Segments Total 31 December 2020 $ $ $ $ $ Revenue ◼ External revenues 28,010,324 1,431,003 29,441,327 7,994 29,449,321 ◼ Inter-segment revenues – – – – –
Total segment revenue 28,010,324 1,431,003 29,441,327 7,994 29,449,321 Reconciliation of segment revenue to Group revenue: ◼ Eliminations –
Total group revenue and other income _ 29,449,321
Segment EBITDA 5,605,925 630,345 6,236,270 (615,471) 5,620,799 ◼ Unallocated corporate costs (1,937,272)
EBITDA 3,683,527 Reconciliation to Group loss: (i) Allocated items: ◼ Other gains 58,182 – 58,182 273,225 331,407 ◼ Depreciation and amortisation (2,680,767) (21,420) (2,702,187) (90,820) (2,793,007) ◼ Net finance costs (774,913) (2,247) (777,160) (661,714) (1,438,874)
Loss before income tax _ (216,947)
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
Note 13 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 periods presented, unless otherwise stated.
13.1 Basis of preparation 13.1.1 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. This interim financial report is intended to provide users with an update on the latest annual financial statements of The Agency Group Australia Ltd and controlled entities. As such, it does not contain information that represents relatively insignificant changes occurring during the half-year within the Group. It is therefore recommended that this financial report be read in combination with the annual financial statements of the Group for the half-year ended 31 December 2021, together with any public announcements made during the half-year. 13.1.2 Basis of accounting The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting. The half-year report does not include notes of the type normally included in an annual financial report and shall be read in conjunction with the most recent annual financial report. The financial statements were authorised for issue on 26 February 2021 by the Directors of the Company. 13.1.3 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 profit for the half-year of $1,247,405 (31 December 2020: $832,979 profit) and a net cash in-flow from operating activities of $3,361,350 (31 December 2020: $2,568,485 in-flow). Included in the profit during the year was depreciation and amortisation of $2,694,819, embedded derivative non-cash financing gains $289,428, and impairment recovery of $400,000. As at 31 December 2021, the Company had a working capital deficit of $1,206,278 (30 June 2021: $2,120,270 working capital deficit) 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. The ability of the Group to continue as a going concern is principally dependent on the following: ◼ The Group continuing to generate cash flows from profitable operations; and ◼ The Group being in compliance with all terms of its debt facilities and the Group repaying or refinancing its borrowings which are due for repayment in January 2023. In the event that the above are not achieved the Group will need to raise funds from issued capital and/or alternative financing arrangements. 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. 13.1.4 Comparative figures Where required, comparative figures have been adjusted to conform to changes in presentation for the current half-year. 13.1.5 New and Amended Standards Adopted by the Group The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current half-year. New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant to the Group are: ◼ AASB 2020-4 Amendments to Australian Accounting Standards – Covid-19-Related Rent Concessions [AASB 16] ◼ AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform – Phase 2 [AASB 4, AASB 7, AASB 9, AASB 16 & AASB 139].
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Notes to the condensed consolidated financial statements for the half-year ended 31 December 2021
Note 13 Statement of significant accounting policies
13.2 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. 13.2.1 Coronavirus (COVID-19) pandemic Judgement has been exercised in considering the impacts that the COVID-19 pandemic has had, or may have, on the consolidated entity based on known information. This consideration extends to the nature of the supply chain, staffing and geographic regions in which the consolidated entity operates. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the consolidated entity unfavourably as at the reporting date or subsequently as a result of the COVID-19 pandemic.
Note 14 Company details
The registered office and head office of the Company is: Street: 68 Milligan Street Postal: PO Box 7768 Perth WA 6000 CLOISTERS SQUARE WA 6850 Australia Australia
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
Directors’ declaration
The Directors of the Company declare that:
1. The financial statements and notes, as set out on pages 8 to 28, are in accordance with the Corporations Act 2001 (Cth) and: (a) comply with Accounting Standard AASB 134: Interim Financial Reporting; and
(b) give a true and fair view of the financial position as at 31 December 2021 and of the performance for the half-year ended on that date of the Company.
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 pursuant to s303(5) of the Corporations Act 2001 (Cth) and is signed for and on behalf of the directors by:
GEOFF LUCAS Managing Director and CEO Dated this Wednesday, 23 February 2022
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
Independent auditor’s review report
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THE AGENCY GROUP AUSTRALIA LTD APPENDIX 4D AND CONTROLLED ENTITIES Interim Financial Report ABN 52 118 913 232 31 December 2021
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APPENDIX 4D THE AGENCY GROUP AUSTRALIA LTD Interim Financial Report AND CONTROLLED ENTITIES 31 December 2021 ABN 52 118 913 232
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