Investor Presentation
FY2024 Investor Presentation
28 August 2024
FY24 Key Takeaways FY24 Investor Presentation 2
Underlying EBITDA1 Revenues from Ordinary Activities (FY23: -$1,297K) (FY23 : $76.9M)
Property Management Portfolio Value2 Estimated Net Assets (FY23: $27.91M) (FY23 : $29.08M)
Gross Value of Properties Sold No. of Properties Sold (FY23 : $5.3B) (FY23 : 5,734)
GCI3 No of Agents (FY23 : $95.4M) (30 June 2023: 399)
1. Underlying adjusted for the impact of AASB16 Leasing Standard, Gain on Sale and other one off items. 2. Independent Valuation conducted by Pendium Advisory as at 23 August 2024 3. Gross Commission Income (“GCI”) is the fees the vendor pays for the sale of a property.
FY24 Investor Presentation 3
Record transaction volume $6.5bn $102.5m $112.5m
underpinned growth $5.9bn
$5.3bn $95.4m
in other metrics 573,365584,641 5,709 5,734 6,239 $4.8bn $80.7m
508,610 4,964 468,218 415,549 $2.9bn $47.9m 3,147
Record result of 6,239 transactions under pinned record Gross Sale Volume and Gross Commission Income level.
Improved transaction contributions from East Coast states assisted the growth in Gross Sales Volume. Total Properties sold in Australia* No of Properties Sold by The Gross Sales Volume Gross Commission Income ($M)^ Agency Group
FY20 FY21 FY22 FY23 FY24
* Source: CoreLogic Economist Park (Jun 2024). ^ Gross Commission Income (“GCI”) is the fees the vendor pays for the sale of a property.
FY23 Investor Presentation 4
A growing brand with 433 agents with presence across six states and territories.
The Agency group of brands achieved #2 market share in Western Australia in FY241 with 9% market share in the Perth and greater metropolitan region where we operate.
Our focus to continue to grow our East Coast presence has resulted in our New South Wales business increasing to representing 26.2% of The Agency FY24 exchanges (FY23: 21.9%).
The Agency has continued to expand its presence during FY24 with additional markets in Inner West Melbourne around the Port Melbourne and Altona market, while In late FY2024, The Agency leveraged our Launceston, Tasmania operations with an organic entry into the Hobart market
1. Based on # of Transactions
FY24 Investor Presentation 5
Over 10,000 investment properties managed by The Agency
As at 31 December 2024, The Group managed 10,168 (30 June 2023: 5,978) properties on behalf of landlords. The property management business is comprised of 5,256 (30 June 2023: 5,018) that are owned by the Agency and 4,912 (30 June 2023: 960) externally owned management rights. An external valuation of our 5,256 management rights was undertaken which valued the portfolio at $36.32m as at 30 June 2024. Since its announcement, MDC Trilogy Group have deployed nearly $25m in purchasing rent roll assets across NSW and Queensland. These purchased rent roll assets comprise of over 4,000 properties under management which are now managed by The Agency under a services arrangement. Combined, the 10,000 plus managed properties collected $286m of rent in FY24 on behalf our landlords and represent an estimated $9 billion of Australian’s property investors wealth. Our national footprint enables Landlords with a geographically dispersed portfolio the opportunity to have all their properties managed by a single company. The increased portfolio scale enables greater cost synergies across The Agency owned portfolio.
FY24 Investor Presentation 6
FY24 Investor Presentation 87
Business Performance Update Record GCI result Consistent cost of doing business ratio in FY24 to FY23 which allowed significant investment in recruitment, technology, new premises due to the MDC Trilogy Alliance and establishment of second FY24 GCI of $112.5m was a record GCI for the company, growing from $95.4m FY23. brand Rightmove in FY24. Fractalisation of Cost of Doing Business Ratio is expected in FY25 as we get the full year benefit from these FY24 investments.
UNDERLYING1 Agent Mix ($M) FY24 FY23 Change During FY24, a higher percentage of sales by GCI 112.53 95.39 18.0% independent contractors resulted in Revenue growth below GCI growth2. Revenue2 87.97 76.93 14.4%
Gross Profit 29.00 24.25 19.6%
Other Income 0.57 0.48 n.m.
Operating Expenses (30.02) (26.25) 14.4% Investment in Recruitment initiatives
Cost of Doing Business3 34.1% 34.1% 0 basis points A significant increase in recruitment initiatives with formation of a national recruitment department driven by the appointment of two state recruitment managers who EBITDA (0.45) (1.30) -65.4% will be focused on quality agent growth in FY25.
1. Underlying adjusted for the impact of AASB16 Leasing Standard, Gain on Sale and other one off items. 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 independent contractor agent, revenue is equal to The Agency share 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. 3. Operating Expenses Pre AASB16 Leasing Standard as a percentage of revenue n.m – not material
FY24 Investor Presentation 88
Significant shareholder value + The value attached to internally generated Property Management and remaining Mortgage book is not recorded in the balance sheet. Despite the value of the property held off Balance Sheet management portfolio increasing in the period, under the accounting standard rules, the Profit & Loss statement for the twelve month period includes an amortisation charge of the externally purchased property management assets held as an intangible asset. This amortisation charge has resulted in a reduction of Statutory Net assets and results in an increase in assets not recognised in the balance sheet. + An independent valuation was undertaken which has valued the Property Management portfolio at $36.32m. STATUTORY + Only $7.40m of the property management value is held on ($M) 30 June 2024 30 June 2023 Change the Balance Sheet as an intangible asset as at 30 June 2024 ($11.30m as at 30 June 2023), leaving $22.93m of +5.8% shareholder value off balance sheet at 30 June 2024 Cash at Bank 4.90 4.63 ($16.56m at 30 June 2023).
Net Assets 7.89 12.54 -37.1% + Adjusting for these off balance sheet assets, Estimated Shareholder Net Assets has increased 26.4% to $36.80m Assets not on balance sheet 28.91 16.56 +74.6% ($29.11m at 30 June 2023).
Estimated Shareholder Net Assets 36.80 29.08 +26.5%
FY24 Investor Presentation 9
FY24 Investor Presentation 10
Market Residential Real Estate $10.8 Tn
Update. Australian Superannuation $3.9 Tn
56.2% of Australian Household Wealth is held in Residential Housing with a Australian Listed Stocks $3.1 Tn $6.9 Billion annual addressable sales commission market.
Commercial Real Estate $1.2 Tn
Sales in FY24 Gross Value of Sales in FY24 FY24 Total Annual Addressable Market* (GCI)
Source: CoreLogic, RBA, APRA, ASX * Assessed at 1.50% Average Commission Rate of Gross Sales Volume of $459.2Bn. Number of investment Estimated Value of investment properties in Australia properties in Australia
FY24 Investor Presentation 11
Change in sales volumes, twelve months to June 2024
FY24 Market Sales NSW 12.0%
Volume VIC 10.0%
QLD 5.1% In the twelve months to 30 June 2024, Australian market volumes have increased 8.6% from FY23 levels, with SA 7.2% stronger growth in key NSW and WA states. WA 9.6%
TAS 1.0%
ACT -1.7%
Source: CoreLogic Australia Combined Regionals Combined Capitals
FY24 Investor Presentation 12
State Breakdown of Transactions Volume State Breakdown (12 months to June 2024) of Sales. WA; 68,032; 13%
NSW; 151,581; 30% In the twelve months to 30 June2024, NSW SA; 33,632; 6% represented 30% of the national sales volume, followed closely by Queensland at 24% and Victoria at 22%. NT; 3,349; 1% Combined these 3 states represent three TAS; 9,402; 2% quarters of the nationals sales volume. Increased organic agent recruitment and ACT; 8,873; 2% MDC Trilogy Group capital deployment will improve The Agency’s market share in these key growth markets.
QLD; 122,500; 24%
Source: CoreLogic VIC; 111,241; 22%
FY24 Investor Presentation 13
Investor Portion of new lending for investment housing Investors as a % of housing finance Participation (excluding refinance) commitments by state (Dec’23)
ACT 38.0%
Investor Participation at 37.1% is above the TAS 28.6% decade average of 33.9%.
NSW is the state with the highest investor WA 36.6% participation with 41.8% of lending to investors, while WA has grown to 36.6% in December 2023. The Agency has growing SA 37.9% property management rights in both of these key investor markets. QLD 39.1%
VIC 32.1%
NSW 41.8%
AUST 37.1%
Source: CoreLogic, ABS
FY24 Investor Presentation 14
FY24 Investor Presentation 15
FY2025 Outlook
Stable volumes Greater price stability. Shift towards larger Market consolidation to Mixed consumer expected agent teams. continue. sentiment. Australian FY24 volumes Strong price growth in Perth is Continued shift to Super Agent Market Consolidation FY25 consumer sentiment to were 4.0% higher than expected to continue, NSW Teams as inexperienced continues as smaller remain broadly at currently decade average transaction flat, while most other states will agents consolidate to work independents and franchisees levels until economic data volumes while NSW was see limited pricing movements with a leading agent. look to access operating supports interest rate 2.9% below its decade in FY25. efficiencies. The MDC Trilogy reductions (expected in mid average. FY25 is expected to National Recruitment function Group alliance and other CY2025). see similar volumes across team focused on growth of external owned property the country of around quality agents in FY25. management offerings means 500,000 sales completed. we are well placed to capitalise on this trend in a capital light way which is earnings accretive.
FY24 Investor Presentation 16
FY24 Investor Presentation 17
Profit and loss statement. UNDERLYING1 STATUTORY
($M) FY24 FY23 Change FY24 FY23 Change Revenue 87.97 76.93 14.4% 87.97 76.93 14.4% Cost of Sales (58.97) (52.46) 12.4% (58.97) (52.46) 12.4% Gross Profit 29.00 24.25 19.6% 29.00 24.47 18.5% Other Income 0.57 0.48 n.m 0.67 0.58 15.6% Operating Expenses (30.02) (26.25) 14.4% (29.53) (24.05) 22.8% EBITDA (0.45) (1.30) -65.4% 1.60 0.93 72.0% Share of profit/(loss) from equity accounted investments 0.01 – n/a 0.01 – n.a Depreciation and Amortisation (4.66) (4.69) -0.6% (6.43) (6.47) -0.6% Share-based payments expense (0.24) (0.46) -47.8% (0.24) (0.46) -47.8% Fair Value Gain/(Loss) on Financial Asset – – n.a. 0.17 (0.07) n.a One off legal fees2 – – n.a. (0.33) (0.62) n.a Acquisition of business costs – – n.a. – (0.08) n.a Profit/(Loss) on Sale of Asset – – n.a. 1.19 1.51 n.m EBIT (5.34) (6.45) 17.2% (4.03) (1.88) n.m Net Finance Income (Expense) (1.39) (0.95) 46.3% (1.39) (1.51) -7.9% Embedded derivative non-cash finance gain/(cost) – – n.a. 0.12 1.35 n.M Net Profit/(Loss) Before Tax (2.67) (7.40) n.m (5.28) (5.41) n.m Income Tax Expense/(Benefit) 0.40 2.22 n.m 0.40 1.09 n.m Net Profit After Tax (2.28) (5.18) n.m (4.89) (4.32) n.m 1. Underlying adjusted for the impact of AASB16 Leasing Standard, Gain on Sale and other one off items. 2. Legal costs associated with The Agency Group’s intellectual property action against the company H.A.S. Real Estate, the registered owner of The North Agency. n.a – Not Applicable / n.m – Not Meaningful
FY24 Investor Presentation 18
Balance Sheet. UNDERLYING1
($M) 30 June 2024 30 June 2023 Change
4.90 4.63 +5.8% Cash at Bank
15.00 13.24 +13.3% Other Current Assets
27.05 31.85 -15.0% Non Current Assets
46.96 49.72 -5.5% Total Assets
(27.76) (21.66) +28.2% Total current liabilities
(11.30) (15.52) -27.2% Total Non current liabilities
(39.07) (37.18) +5.1% Total Liabilities
7.89 12.54 -37.1% Net Assets
28.91 16.56 +74.6% Assets not on balance sheet1
36.80 29.08 +26.5% Estimated Shaerholder Net Assets
1: Management valuation of the Property Management portfolio of $30.33m is calculated on a blended valuation multiple of 3.35x on Q4 FY24 Annualised Property Management fees. Only $7.40m of this value is held on the Balance Sheet as an intangible asset, leaving $22.93m value off balance sheet. 30 June 2023 balance included a value attributed to Mortgage Book which was valued at 2.25x Net Trail Income. This book was sold as part of MFSA disposal resulting in the value now held on balance sheet..
FY24 Investor Presentation Cashflow Statement. FY24 Investor Presentation 19 19
1HFY24 FY24 (Statutory) FY23 (Statutory) ($M) (Underlying)* (Post AASB16) (Post AASB16) (Pre AASB16)^ EBITDA (0.45) 1.60 0.90 Change in net working capital 0.80 1.20 (0.63) Net interest Paid (0.71) (0.71) (0.71) Net Cashflow from Operating Activities (0.36) 2.09 (0.44) Purchase of property, plant and equipment (0.28) (0.28) (0.45) Purchase of intangibles (0.20) (0.20) (0.59) Refund/(Deposit) for bank guarantees 0.01 0.01 (0.15) Net Loans to other entities (0.06) (0.06) (0.16) Net cash received on disposal of asset – – 1.64
Net cash received on disposal of subsidiary 1.09 1.09 –
Payment for acquisition of subsidiary, net of cash – – (4.37) acquired
Proceeds from disposal of financial asset 0.08 0.08 –
Net cash (used in) / received from investing activities 0.63 0.63 (4.07)
Payment of principal portion of lease liabilities – (2.45) (2.47)
Proceeds of borrowings – – 3.40
Net cash used in financing activities – (2.45) 0.93
Net (decrease)/increase in cash and cash equivalents 0.27 0.27 (3.59) held
Cash and cash equivalents at the beginning of the year 4.63 4.63 8.22
Cash and cash equivalents at the end of the year 4.90 4.90 4.63 * Underlying adjusted for the impact of AASB16 Leasing Standard, Gain on Sale and other one off items. ^ This is a non A-IFRS measure Note – may not add through due to rounding differences
FY24 Investor Presentation 20
Andrew Jensen Executive Chairman andrewjensen@theagency.com.au
David Tasker Chapter One Advisors dtasker@chapteroneadvisors.com.au
21 FY24 Investor Presentation 21
Not an offer This presentation is for information purposes only. This presentation political and social uncertainties and contingencies; does not comprise a prospectus, product disclosure statement or involve known and unknown risks and uncertainties that other offering document under Australian law (and will not be lodged could cause actual events or results to differ materially with the Australian Securities and Investments Commission) or any from estimated or anticipated events or results reflected other law. in such forward looking statements; and may include, among other things, statements regarding estimates and assumptions in respect of prices, costs, results and Summary information capital expenditure, and are or may be based on This presentation does not purport to be all inclusive or to contain all assumptions and estimates related to future technical, information about the Company or any of the assets, current or economic, market, political, social and other conditions. future, of the Company. This presentation contains summary The Company disclaims any intent or obligation to information about the Company and its activities which is current as publicly update any forward looking statements, at the date of this presentation. The information in this presentation is whether as a result of new information, future events or of a general nature and does not purport to contain all the information results or otherwise. which a prospective investor may require in evaluating a possible investment in the Company. The words “believe”, “expect”, “anticipate”, “indicate”, “contemplate”, “target”, “plan”, “intends”, “continue”, The Company does not undertake to provide any additional or “budget”, “estimate”, “may”, “will”, “schedule” and similar updated information whether as a result of new information, future expressions identify forward looking statements. events or results or otherwise. All forward looking statements contained in this Presentation are qualified by the foregoing cautionary Forward looking statements statements. Recipients are cautioned that forward looking statements are not guarantees of future Certain statements contained in this presentation, including performance and accordingly recipients are cautioned information as to the future financial or operating performance of the not to put undue reliance on forward looking statements Company and its projects, are forward looking statements. Such due to the inherent uncertainty therein. 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,