The Australian

The Agency to defy debt claim with sales jump

- LACH­LAN MOFFET GRAY

Pres­tige real es­tate group, The Agency, has un­veiled record rev­enues for the first half of the fi­nan­cial year just days after a cred­i­tor at­tempted to have the busi­ness placed in ad­min­is­tra­tion over a dis­puted fee of $385,000.

The earn­ings up­date is part of ef­forts by the real es­tate net­work to re­as­sure in­vestors and brush aside ad­min­is­tra­tion threats, which is cur­rently be­ing chal­lenged in the Fed­eral Court.

The group re­ported a to­tal half year rev­enue of $29.1m, up 15 per cent on the prior cor­re­spond­ing pe­riod, as well as a 51 per cent in­crease in the amount of prop­er­ties sold.

Of the 2407 prop­er­ties sold, gross com­mis­sion in­come was $38.1m.

Unau­dited earn­ings be­fore in­ter­est, tax de­pre­ci­a­tion and amor­ti­sa­tion was $1.6m, ex­clud­ing gov­ern­ment ben­e­fits such as JobKeeper and $2.8m in­clu­sive of them.

The com­pany said its pos­i­tive op­er­at­ing cash­flow for the half year was $1.54m and it had $5.5m in cash and cash equiv­a­lents.

Last week, cred­i­tor Mitchell Atkins of Mag­no­lia Cap­i­tal called in BDO as vol­un­tar­ily ad­min­is­tra­tors over parts of The Agency, say­ing re­peated de­mands for the pay­ment of the debt led to a loss of con­fi­dence in the com­pany’s board and fi­nan­cial po­si­tion.

The Agency said the dis­puted debt “re­lates to al­leged fees on a man­date en­tered into for the pur­pose of se­cur­ing debt fund­ing where MCL 105 Pty Ltd (Mag­no­lia) was un­able to de­liver any fund­ing at all.”

Last Wed­nes­day, the Fed­eral Court or­dered the ad­min­is­tra­tion to stay in place un­til Fe­bru­ary 1 but al­lowed The Agency’s board to re­tain con­trol of the com­pany, pro­vided they pay $400,000 into a bank ac­count to prove its sol­vency.

A hear­ing has been sched­uled for Fe­bru­ary 1 to al­low un­se­cured and se­cured cred­i­tors to come for­ward. The Agency told staff at the time that day-to-day op­er­a­tions would not be af­fected.

The busi­ness em­ploys about 280 agents, mostly in Syd­ney and Perth.

In the re­sults up­date, The Agency Group’s man­ag­ing di­rec­tor Paul Niardone said a strong prop­erty sales pipe­line and new $11m long-term debt fund­ing pack­age meant the com­pany was in a strong fi­nan­cial po­si­tion.

“In ad­di­tion to the strong re­sults, we are cash-flow pos­i­tive and well fi­nanced hav­ing re­cently re­ceived over­whelm­ing share­holder sup­port for a new longterm fund­ing pack­age with pri­vate in­vest­ment com­pany Peters In­vest­ments while Mac­quarie Bank con­tin­ues to be our pri­mary debt fun­der for a fur­ther two years,” he said.

“Look­ing for­ward, the pri­or­ity of the board and the com­pany is to main­tain a healthy bal­ance sheet as well as pro­vide and de­liver es­sen­tial ser­vices and sup­port to our agents and cus­tomers which will en­able a stronger, sus­tain­able and fi­nan­cial po­si­tion in the years ahead for our share­hold­ers.”

The group said its im­proved cash flow had al­lowed it to “ex­tin­guish” its pay­roll tax pay­ment plan and “bring up to date the de­ferred pay­ment terms al­lowed dur­ing the ad­vent of COVID-19”.

The cre­ation of The Agency in late 2016 started one of the most watched splits in Aus­tralian real es­tate his­tory, with the de­fec­tion of key mem­bers of ri­val agency McGrath, in­clud­ing Matt La­hood, Ben Col­lier and Steven Chen.

The Agency was a mar­riage be­tween Perth-based Aus­net Fi­nan­cial Ser­vices and the in­de­pen­dent group led by Mr La­hood.

It at­tracted agents be­cause of McGrath’s then drop­ping share price and the higher com­mis­sions The Agency of­fered.

But there have since been con­stant prob­lems with rais­ing cap­i­tal to sup­port the unique busi­ness model.

Shares in The Agency re­main un­der a trad­ing sus­pen­sion and last traded in De­cem­ber at 5.1c.

‘In ad­di­tion to the strong re­sults, we are cash-flow pos­i­tive and well fi­nanced’

PAUL NIARDONE THE AGENCY GROUP

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