Rea Turns In An Impressive Result

The Age

Tuesday February 26, 2008

Jesse Hogan

ONLINE classifieds provider REA Group has continued its rapid growth in the past half, lifting profit 38.6% to $7.77 million. But it has no plans to pay dividends.

The company, owner of leading property website realestate.com.au, increased revenue 49.6% to $71.4 million in the six months to December 31, while operational earnings (EBITDA) rose 68% to $14.2 million. Its local operations crucially maintained margins above 50% - at 52.4%.

REA said the number of real estate agents paying to list sale and rental properties on realestate.com.au had increased to 8824, which it estimated to be 95% of all agents, who collectively posted 1.15 million properties on the website at the end of the period.

REA chief executive Simon Baker said the company's ambition to continue its expansion was a higher priority than paying dividends.

"We've got a number of ongoing acquisition opportunities and one of the things we want to do is fund those acquisitions out of cash flow, rather than go off and pay out a dividend then go back and try to raise cash from the same people we've just paid a dividend to," he said. Apart from Australia and New Zealand, the company operates classified websites in countries including Britain, Italy, Luxembourg, Hong Kong and United Arab Emirates.

All but Luxembourg are still running at a loss, but Mr Baker said this was intentional, with significant amounts being spent on marketing and development.

"For a lot of them, we are purposely investing in them and running them at a loss because we want to grow the businesses further and faster," he said. REA shares were steady at $5.37.

© 2008 The Age

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