The Agency Faces Profitability Challenge Amid Net Loss and Working Capital Deficit
The Agency Group Australia Ltd reported a 12% revenue increase and a return to positive EBITDA in FY2025, driven by record property sales and operational efficiencies, despite a net loss after tax of $5.44 million.
- 12% revenue growth to $98.5 million
- Record $7.44 billion in property sales volume
- Positive underlying EBITDA of $1.12 million
- Net loss after tax of $5.44 million
- Extended banking facilities with improved terms
Strong Sales and Revenue Growth
The Agency Group Australia Ltd has reported a robust financial performance for the year ended 30 June 2025, highlighted by a 12% increase in revenue to $98.5 million and an 11% rise in gross commission income (GCI) to $125.3 million. This growth was underpinned by a record $7.44 billion in property sales, representing a 14.8% increase in gross volume compared to the previous year, and a 6.8% increase in the number of properties sold to 6,663.
Return to Positive EBITDA Amid Net Loss
Despite reporting a net loss after tax of $5.44 million, The Agency returned to a positive EBITDA of $1.12 million (pre-AASB16 lease adjustments), reversing the prior year’s loss. The net loss was influenced by significant depreciation and amortisation expenses, interest and finance costs, and high salaries and employment costs. However, operational efficiencies and a disciplined cost structure contributed to reducing the cost of doing business to 32% of revenue, down from 34.1% in FY2024.
Balance Sheet Strength and Off-Balance Sheet Assets
The Group’s net assets decreased to $2.45 million, reflecting the accounting treatment of intangible assets. Notably, The Agency holds significant off-balance sheet intangible assets, with an independent valuation placing the market value of its property management rent rolls at approximately $37.4 million. This valuation underscores substantial shareholder value not fully captured on the balance sheet.
Strategic Focus on Agent Quality and Market Expansion
The Agency has focused on enhancing the quality of its agent network by recruiting high-performing agents and investing in training, resulting in a rise in agents achieving 'Altitude' status, those generating over $1 million in GCI or completing more than 75 transactions. The company is also expanding its footprint in emerging markets such as Victoria and Queensland, aiming to increase market share beyond the current 0.33% in these states.
Improved Financing Terms and Future Outlook
Post year-end, The Agency secured an extension and improvement of its secured debt facility with Macquarie Bank Limited, including a reduced interest margin, extended maturity to June 2028, and increased facility size to $10 million to support growth initiatives. Additionally, the maturity of convertible notes held by Peters Investments Pty Ltd was extended to December 2028, with shareholder approval. These financing arrangements provide the company with greater liquidity and flexibility to pursue its growth strategy.
Risks and Governance
The Agency acknowledges risks including market competition, regulatory compliance, interest rate fluctuations, and IT security. The company maintains a strong governance framework and continues to invest in technology and culture to mitigate these risks and support sustainable growth.
Bottom Line?
The Agency’s FY2025 results set a foundation for growth, but investors will watch closely how the company navigates profitability and market expansion in a competitive environment.
Questions in the middle?
- How will The Agency convert its off-balance sheet intangible assets into tangible shareholder value?
- What impact will rising interest rates have on property sales volumes and commission income?
- Can the company sustain positive EBITDA and move towards net profitability in FY2026?
