REA GROUP TAKES $180M IMPAIRMENT CHARGE AS ASIA BUSINESS WEAKENS
Written on the 29 June 2017 by David Simmons
ONLINE real estate advertiser REA Group (ASX: REA) says it expects to take a non-cash impairment hit of $180 million because of weak market conditions in Asia.
The realestate.com.au owner says the pre- and post-tax impairment of goodwill for the year to June 30, 2017, was due to a decline in several Asian property markets.
The group's shares were down 1.78 per cent this morning following the impairment announcement.
The News Corp-controlled group says there has been a 33 per cent reduction in the number of properties sold in Malaysia.
In Hong Kong, the government has introduced a number of measures to soften its highly competitive market, such as increasing stamp duty.
REA Chief Executive Tracey Fellows says while market conditions have been challenging in Asia, the group remains confident in the long-term growth opportunities in the region.
"We continue to invest in senior leadership to drive strategy and our focus on innovation and marketing positions us well for the market recovery," says Fellows.
REA says the impairment has no effect on current trading and will not impact REA's compliance with its banking covenants.
REA announced recently its intentions to acquire 80.3 per cent of mortgage broker Smartline.
The group also recently secured a broking partnership with National Australia Bank as part of a move into home financing.
The impairment outcomes are subject to the finalisation of the full year results which the company says will be released on 11 August 2017.
Author: David Simmons