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The slide in property prices on the east coast was among the key drivers behind an underlying loss for national real estate company The Agency Group Australia (ASX: AU1) for the first half of FY23.
The underlying EBITDA loss of $947,000 compares with a $2.14 million profit in the previous corresponding period, despite a 5.6 per cent increase in half-year revenue to $37.49 million.
The statutory loss of $1.67 million compares with a $1.25 million profit a year earlier.
The Agency says it generated more of its commission income out of its home market of Western Australia in the six months to the end of December. When compounded with a fall in property prices on the east coast, the company says this led to a 17 per cent fall in the gross value of properties sold and a 14 per cent slide in gross commission income to $45.7 million.
The latest result reflects a contribution from The Agency’s $5 million acquisition of Launceston-based Bushby Property Group during the period. The company says it continues to invest in the business’ ‘long term, strategic objectives’.
The Bushby acquisition has lifted The Agency’s properties under management to 4,908 from which $64.8 million in rent was collected for landlords.The expanded rent roll and a strong performance by payroll agents in WA helped The Agency lift group revenue.
Despite the loss, the real estate group has managed to increase market share during the period. The Agency sold 2,847 properties in the first half, and while this was 2 per cent lower than the previous year, it compares with a 21.6 per cent fall in national transaction volumes over the same period.
The Agency’s CEO Geoff Lucas notes the group increased its team by 67 agents over the year to finish the period with 412 agents.
“As the founders established the business with a mid-term target of 600 agents, we are pleased with the progress toward that level,” Lucas says.
“This agent growth underpinned our national market share uplift to 1.15 per cent from 0.92 per cent in the corresponding half.”
Lucas expressed his disappointment at the latest half-year loss.
“However, we believe the investment activities undertaken are critical to set the business up for the next stage of growth and ensure a solid platform for execution of our strategic objectives,” he says.
“Our business is designed and built for scaling efficiencies from a critical mass. The recent market conditions have seen the company drop slightly below that scaled revenue level in this half, the continued growth in agent numbers and market share will see a resumption to scaled earnings in the near term.”
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