The Agency records third loss in a row

Despite completing a $10.5 million acquisition of real estate group Top Level at the beginning of 2019,The Agency (ASX: AU1) has recorded yet another half yearly loss.

While the 1H20 loss was a slight improvement on its 2018 result of $1.95 million and its 2017 figure of $2 million, the real estate company is still $1.67 million in the red.

One year on from the Top Level deal, the biggest impact of the acquisition has arguably been on The Agency's revenue.

Group revenue was up by 140 per cent in the first half of FY20 to $25.2 million as Top Level made its mark, contributing in part to the $15 million cash boost.

At first glance, it appears as if shareholders have responded positively to The Agency's 1H20 results, with shares in AU1 up 20 per cent to $0.06 per share at 10.02am AEDT.

However, today's rise is relatively insignificant considering The Agency's share price has been on a downward trajectory since May 2019, and flat at around $0.06 per share ever since.

Because of these continued losses The Agency has addressed whether it will be able to continue as a going concern.

"The ability of the Group to continue as a going concern is dependent on refinancing its Macquarie Bank Finance Facility, generating profits and positive cash flows from operating activities and in the event these are not achieved raising capital from equity markets," says The Agency.

"Based on the cash flow forecasts and other factors referred to above, the directors are satisfied that the going concern basis of preparation is appropriate. In particular, given the Company's history of capital raising to date, the directors are confident of the Company's ability to raise funds as and when they are required."

Gross commission income improved during the period to $24.9 million thanks to 1,591 transactions and more than $1.5 billion worth of property sold across the group during the six-month period.

The Agency says it remains confident revenue and commission growth will be maintained as the real estate market improves during the remainder of FY20.

Canberra will be a key market for The Agency going forward after the group opened a new office in the Australian capital earlier this year, appointing property developer and agent Peter Micalos to the role of senior partner in charge of the group's operations there.

Micalos is expected to manage a project pipeline of 2,000 units over 24 months in Canberra and generate a total value of $1 billion.

The Agency managing director Paul Niardone (pictured) says the group's 1H20 results demonstrate the company's potential.

"I am thrilled to deliver yet another set of strong results for the HY2020 which included a maiden positive EBITDA of $533,000," says Niardone.

"The results reflect the strength of our brand and why reputable real estate businesses and agents continue to join our business as they realise we offer higher commissions, reduced risk and higher-level of support compared to franchise and stand-alone businesses.

"In addition, we are witnessing an improving housing market in which house values have risen across every capital city, auction clearance rates have rapidly increased and fewer days on market for properties in Sydney and Melbourne. In Perth, green shoots are emerging with a boost to property values in recent months."

The Agency's still has a way to go until it can catch up to major listed competitor McGrath (ASX: MEA).

During 1H20 McGrath posted revenue of $48.9 million, up 15 per cent, as the real estate market improved.

McGrath's 1H20 turnaround was the result of the company acquiring three new storefronts, optimising its portfolio, and investing in marketing technology.

Like The Agency, McGrath reported a first half loss, but not nearly as painful as AU1's.

McGrath's loss of $0.98 million was significantly lower than its 1H19 loss of $9.6 million, which the company attributed to its turnaround strategy.

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