This article is from the Australian Property Journal archive
LISTED real estate agents The Agency’s loss result has worsened but the company said its quick response to COVID-19 has placed it in an enviable position, allowing it to rebound strongly in key markets.
The Agency reported a full year loss of $9.06 million for the 12 months to June 30 compared to a loss of $7.83 million in the previous corresponding period. But annual group revenue jumped 48% to $41.86 million and cashflow from operations was $334,704 compared to FY19 negative cashflow of $6.4 million. Cash at end of financial year was $2.72 million, up from $2.6 million in the pcp. Government incentives and related grants have been received during the last quarter of the year and were used to also support employee sales agents in Perth. These have been included in operational cashflows.
Managing director Paul Niardone said the strong gain in revenue and other key metrics is a major achievement, especially when considering the impact of COVID-19.
He said COVID-19 has highlighted the effectiveness of established remote ready cloud-based platform and model to the industry, which will drive recruiting efforts over following quarters.
“Our quick response to COVID-19 has placed us in an enviable position, allowing us to rebound strongly in key markets. We have generated a strong sales pipeline which has flown through into the first quarter FY21 with a record 446 listings for July 2020,”
Niardone said strong operating results were delivered, despite the impact of the COVID-19 pandemic and resultant impact from restrictions on the real estate sector nationally during the latter part of the March and for the majority of June quarter 2020.
The increase in revenue was primarily due to a 26% increase year-on-year in combined gross commission income to $47.9 million (FY19: $38 million), supported by 3,153 sales (up from 2,419 sales for FY19) and $2.9 billion worth of property sold across the combined group for the FY2020 (FY19: $2.5 billion).
Rent roll business continues to grow with 4,838 properties under management as at 30 June 2020, up 12% on the pcp, generating $9 million revenue annually.
The company also witnessed growth in its Mortgage Solutions Australia (MSA) business with home loan approvals for FY2020 up 11% year-on-year from $124.2 million to $137.4 million.
As at 30th June, The Agency was comprised of a combined 283 sales agents (East Coast: 142, West Coast: 141), with average Gross Commission Income (GCI) increasing by over 20% over the past 12 months.
Niardone said The Agency will be looking to boost agent numbers in the coming quarters. Based on the company’s existing platform and cost structure, which is largely fixed, any future recruitment will directly contribute to EBITDA performance.
“The Agency implemented a range of initiatives in the third quarter 2020 to deal with the fallout from COVID-19 including a seamless transition of its workforce to remote working using the company’s “remote ready” cloud-based platform.
“With the restrictions on open houses and in-person auctions, the company quickly employed innovative solutions including digital viewings and auctions. The company reduced working hours of all staff (including management and board) temporarily in line with reduced workloads as well as a small number of redundancies. As a result, the company retained the vast majority of its staff and successfully moved all staff back to full working hours and full salaries in June 2020,”
“Pleasingly, The Agency rebounded in June across key metrics as COVID-19 restrictions on open houses and in-person auctions eased in major markets. Results delivered in June are now flowing through with a strong sales pipeline into Q3 CY2020.
“The Agency is also active in pursuing a range of strategic partnerships and JV opportunities it believes will drive agent recruitment and sales revenue in the coming reporting periods,” he concluded.
