Annual Report 2016
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2016 REA Group Limited Annual Report 2016 REA Group Annual Report REA Group is a market-leading digital media business specialising in property Contents 4 About us 6 Chairman’s message 8 CEO’s message 10 How we’ve performed 14 Australian highlights 16 Asian highlights 18 European highlights 19 North American highlights 20 Our latest innovations 22 Our people 24 Community partnerships & programs 28 Executive Leadership Team 30 Board of Directors 32 Directors’ Report 41 Auditor’s Independence Declaration 42 Remuneration Report 52 Consolidated Financial Statements 108 Directors’ Declaration 109 Independent Auditor’s Report 111 Historical results 113 Shareholder information 114 Corporate information Empowering people by making property simple, efficient & stress-free We're passionate about all things property and digital, that enthusiasm has now spread across the globe At REA Group, we strive to create a culture that supports our people and helps them reach their full potential About us 4 REA Group Annual Report 2016 REA Group Limited is a global digital advertising company specialising in property. Our ambition is to change the way the world experiences property. We do this by consistently evolving the way we connect with our global property network, which now spans four continents. A world-leading property this by developing digital experiences Our property related strategy will help resource for desktop and mobile devices. us continue to grow our audience We provide insights through our and connect with people interested REA Group is not your average rich data to inform those interested in areas of property other than buying, digital media company. Our business in the property market. selling or renting. Our investment in is innovative and disruptive, and property related services will help our everything we do is driven by Looking forward users around the world connect with our purpose to make property Today we are extending beyond the right services, at the right time. simple, efficient and stress-free property advertising. Our growth > Global – from product innovation to our strategy rests on three pillars: global investments. We know that everybody is connected > Property advertising We have a team of nearly 1,500 or touched by property. Already on passionate and talented people The foundation of our business four continents, we will continue to across the globe who work in a highly remains the online advertising of expand into new markets, and people collaborative and agile culture across property listings, supported by data on will be able to search for property sales, technology, marketing, design residential and commercial property. all over the world with us. We will and customer experience. Agents continue to play an essential leverage global scale, knowledge role in our business, and increasing and capability to increase our speed Our Australian residential property their loyalty and engagement is to market and competitiveness. site, realestate.com.au, is an innovator paramount for our growth. We will ensure that when people and market-leader. realestate.com.au start to think about property we Our aim with property advertising is attracts 43.8 million average monthly will be at their fingertips, no matter 1 to improve both our existing products visits . We also operate Australia’s where they are in the world. leading commercial property site, and become more personalised realcommercial.com.au, which achieved to consumers. By continuing to 1.2 million average monthly visits1 and innovate and develop new products in May 2016, we acquired Australia’s and services, we’re helping property leading share accommodation site, developers and real estate agents Flatmates.com.au with 2.0 million who list properties on our sites to win average monthly visits2. listings and recognition in the industry, as well as making it easier for our Globally, our network extends to consumers to find properties. property sites in Asia, Europe and North America. In 2016, we increased > Property related services our investment in Southeast Asia with We want to ensure that we’re engaged the acquisition of iProperty Group, with people throughout their entire which has market-leading sites in property journey, no matter what stage Malaysia, the Hong Kong Region, they're at. Be it finding a flatmate, and prominent portals in Thailand, Global employees nearly renting, buying, selling, financing, Singapore and Indonesia. renovating, dreaming about your next Our property portals provide home, managing utilities or knowing exceptional experiences for our exactly who’s looking at your property, customers and consumers. We do people will do it with REA. 1.5k 1 Source: Nielsen Online Market Intelligence Home and Fashion Suite average monthly visits for the audited sites of realestate.com.au and realcommercial.com.au, respectively, for the year ended 30 June 2016, excludes apps. 2 Source: Google Analytics average monthly visits for the year ended 30 June 2016. REA Group Annual Report 2016 5 Chairman’s message I’m delighted to see A year of record results Competitiveness of the market our expansion into It has been another strong year of record results for REA Group as we In Australia, we’ve continued to new international continue to execute our strategy, see widespread growth, which with revenue from core operations is a great accomplishment given markets this year, in 2016 increasing by 20% to the current market environment. placing REA Group $629.8 million. This is an exceptional Despite the overall volume of achievement, driven by a clear property listings being relatively flat on the map as an focus on implementing our strategy in 2016, our Australian businesses and a continued growth in listing have seen a 17% growth in revenue Australian-based products. As a further testament to to $555.2 million. multinational. our performance, EBITDA from our core operations increased by 22% Our flagship site, realestate.com.au, to $347.3 million and we achieved has maintained its strong leadership a 16% increase in Net Profit from position in the Australian market. core operations, finishing the year Compared with our nearest competitor, at $214.5 million. it attracted 2.1 times the number of visits3, while the average monthly time I’m pleased to report that, as a result spent on the site was 6.1 times longer3. of these achievements, the Board has declared a final dividend of 45.5 cents, This result stems from our continued bringing the total 2016 dividend to focus on creating innovative and 81.5 cents a share, which is a 16% engaging products. These products increase on last year. support the growth of our customers’ businesses and help our consumers navigate the complexities of the Australian property market. 3 Source: Nielsen Online Market Intelligence Home and Fashion Suite for the audited site of realestate.com.au compared to domain.com.au, for the year ended 30 June 2016, excludes apps. 6 REA Group Annual Report 2016 Executing a successful venture for REA Group, allowing I would also like to thank my fellow global strategy us to shape and share insights from Board members for their hard work North America, the largest property this year. Having a stable, committed I’m delighted to see our expansion market in the world. and knowledgeable Board has ensured into new international markets this our strategy is consistent, and is being year, placing REA Group on the map Our people – the key executed in a timely and efficient as an Australian-based multinational. to our success way. Their expertise and guidance has ensured the company has delivered This year, we’ve continued to This year, we welcomed two strong results this year, and will complement our European businesses new members to our Board – continue to grow in 2017. by supporting their development Susan Panuccio and Michael Miller, of new products to drive growth, both appointed as Non-Executive Finally, I would like to thank all revenue and engagement. It’s great Directors by News Corp. Having of our customers, consumers to see that revenue in these markets known both Susan and Michael for and shareholders for your has continued to grow and the several years now, I can attest that continued support. collaboration between our teams both are extremely talented individuals has increased brand awareness. who will help us better leverage News Corp’s assets. By far our most exciting move this year was the purchase of the remaining I’d like to thank Tracey Fellows share of iProperty Group, which gives and the rest of our REA Group us increased access to the Asian management team for their work and Hamish McLennan property market. The acquisition has achievements this year. Since starting Chairman been an important strategic decision with REA Group in 2014, Tracey has for us and, with more than 1.6 billion reinvigorated the company and done people living in Asia, REA Group now a great job of maintaining our focus has enormous potential for growth on one of our primary constituents – over the medium to long term. real estate agents. Tracey has provided excellent leadership throughout the Our investment in Move, Inc. year, ensuring our staff across the and partnership with News Corp globe are engaged and delivering continues to be a successful outstanding results. REA Group Annual Report 2016 7 CEO’s message Our financial performance reflects our focus on providing unrivaled value for our customers and consumers. We’ve done this by developing new products and technologies that allow us to create the most immersive, personalised and engaging property experiences in the world. Delivering on our purpose We've just launched the Global We continue to extend our number- Property Network, giving consumers one market position with the It’s been a great year for REA Group. access to more than four million largest and most engaged audience Our strong financial performance, listings from 56 countries, the largest of property seekers in Australia.