The Agency Group Australia has moved a step closer to acquiring fast growing eastern coast real estate agency Top Level Real Estate after signing a deal with prominent Perth based stock broking firm CPS Capital Group to underwrite a minimum $10 million capital raising to fund the acquisition.
The successful completion of capital raising is a condition precedent to the proposed acquisition of Top Level, which would facilitate addition of a highly experienced east coast real estate sales and project marketing team, significant property management portfolio and extensive sales pipeline.
Last month, The Agency Group signed an agreement to acquire all Top Level shares held by the majority shareholders in Top Level and offer to acquire all other Top Level shares from those shareholders other than the majority shareholders for total consideration of 550 million shares.
We are firmly committed to the proposed acquisition of Top Level and are pleased to have executed an Underwriting Agreement with CPS Capital Group, who share our commitment to this transformational transaction,” The Agency Managing Director Paul Niardone said.
“CPS Capital Group have a strong track record of fundraising success and to have them support our capital raising is a significant milestone in the advancement of this transaction.
“We recently undertook a roadshow to meet with, and present to, a range of Australian small cap funds, institutions, and received overwhelmingly positive feedback.
“With the support and commitment of CPS Capital Group to our capital raising we look forward to completing the transaction within our expected timeframe.”
During the half year to end of December 2017, The Agency continued to achieve strong exponential revenue growth, delivering net revenue from continuing operations of $6.9 million for the six-month period. This represents 71 per cent of the previous full financial year’s revenue of $9.6 million.
Commissions for the Consolidated Entity for the six-month period totalled $4.8 million, representing 75% of the previous financial year’s total commissions of $6.4 million.
According to The Agency, revenue and commission growth will be maintained during the upcoming period and could be significantly enhanced as a result of its recent and proposed acquisitions of Top Level and subsidiaries in ServTech Holdings.
The company also reported a loss before tax of $2.1 million, however more than $650,000 of this were one-off costs associated with several office moves/ fit-out, legal expenses associated with acquisitions and corporate advisory, strengthening trademarks and brand protection.
Taking this this into account, the normalised loss before tax shows a marked improvement operationally on previous years and the Company expects the WA operations (real estate, mortgage, and settlement businesses), including the planned acquisitions, to be cash flow positive from the start of the 2018 Financial Year.
Shares in The Agency were at 1.9c in Thursday morning trading.