REA Group Limited has announced its results for the Australian financial year ending 30 June 2009, showing that it delivered 26% revenue growth and 34% EBITDA growth, and announcing a dividend payment of 10 cents per share. But the news was not all good.
The REA Group says it has “actively reviewed its portfolio” over the financial year, leading to the sale or exit of some businesses. The non-cash impairment costs were approximately A$54 million, reducing this year’s net profit after tax and after minority interests to A$946,000.
A press release from the company says the results exclude the United Kingdom.
After the closure of the UK print business earlier this year, the company’s UK online operations were sold to zoopla.co.uk in August 2009. The company’s UAE operations were sold to Michael Lahyani in July 2009 (subject to approval by local UAE regulatory authorities), after the closure of allrealestate.co.nz, its residential site in New Zealand, the sale of Clarke Computers in December 2008 and the closure of all Belgium operations.
The company explained that while it continued to deliver strong growth across major key metrics, net profits were adversely impacted by the sale and impairment of the discontinued UK operations. Loss from discontinuing operations was over $63 million.
In announcing the results, Greg Ellis, CEO and Managing Director, said:
“Our record results, in what has been a difficult economic time, is a credit to our teams in Australia and overseas and a reflection of the value we provide Real Estate Agents. We have made strategic decisions during the year to focus on the attractive markets where we can command a strong position. Our core Australian business has delivered strong profitable growth and our Italian business has continued to develop in line with our expectations”.
The last financial year broke records in revenue with $167.8 million, and also in web traffic, with 6.9 million unique browsers. 77 percent of revenue came from agents, with 13 percent from developers, 9 percent from third parties, and 1 percent from consumers.
Australia remains the Group’s focus and its largest market, and the company continues to operate the most popular residential and commercial real estate sites, saying that:
• The number of paying subscribing agents across all portals increased to 9,332 as at 30 June 2009, up from 9,190 as at 30 June 2008 resulting in an estimated market share of approximately 95 percent of all agents subscribing. The agent numbers reflect subscriptions of agents to one or more of the three portals (realestate.com.au, realcommercial.com.au and realholidays.com.au).
• Over FY09, all three portals experienced strong growth. The commercial segment in particular saw revenues increase by 58% to A$15,056k (2008: increase by 52% to A$ 9,519k).
• Traffic (Unique Browsers) to realestate.com.au increased to 4.5 million (Nielsen) – the gap between realestate.com.au and domain (#2 residential site in Australia) reached 2.4 million which has realestate.com.au at more than 2 times the traffic of domain.com.au.
REA Group’s Italian business, casa.it, has shown the largest growth in agent numbers over a year in the history of REA Group, to the point where casa.it is now used by more Italian agents than realestate.com.au is used by Australian agents and has more active listings on its site. The website is dominant in the North of Italy, with room for growth in other regions. casa.it also signed a strategic partnership with the Italian Real Estate Institute (FIAIP) in June 2009. While Italian operations are still running at a loss, REA made it clear that casa.it is in the centre of the Group’s growth strategy and will undergo significant improvements this coming year.
The company says that its Luxembourg websites, athome.lu and atoffice.lu, continue to be a small but profitable market.
Meanwhile little was said about the company’s remaining international operations, except that they were running at a combined loss. They consist of three French and German sites, athomelorraine.fr, athomealsace.fr and athome.de, one Hong Kong website, squarefoot.com.hk, and New Zealand commercial website, realcommercial.co.nz.
The Directors of the REA Group have decided to pay a dividend of 10 cents per share on 16 October 2009 out of the retained profits. The dividend will be combined with a non-underwritten Dividend Reinvestment Plan (DRP) which gives shareholders the option to reinvest the dividend in return for new shares at a discount of 2.5%.
Advertising Partner
-->
{ 1 comment… read it below or add one }
Fairly ordinary back end when you assess the position after the first six months.
Finally a dividend which is a first but the next six months will be watched and scrutinised as its clear that there is only so much the Australian residential business can churned out and they are pinning their growth hopes by rolling the dice in Italy.
The other international businesses are providing pocket change so expect Hong Kong to be rationalised.
Agents are doing just that with the stale stable of products still sitting on the shelf where is the continued growth going to come from? Nobody has diluted market share like Sensis – cue AJ- and have a look at who is driving the bus and sitting in all the front seats with the exception of the CFO.
The share market will see a lot of businesses making recoveries in the next six months as the economy returns to some type of normality. The next six months will be the most significant half year for REA since they broke even in 2002. They would have cleared their UK and UAE distractions and need to prove to the shareholders that they can grow the Australian business like Mr Ellis has been espousing for the last six months. Tick tick.
I’ll be the first to admit that I thought the Greg Ellis bus might be ok but I’m getting the feeling he is the Emperor without any clothes surrounded by ‘yes men and women’ from his past who won’t challenge him and have no idea about their customer base and what they want. Couple this with a largely disgruntled sales force and the mountain to climb is high for the next few months. Tick tick.
{ 1 trackback }