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The global real estate group has reduced the carrying value of its financial services business amid expectations of a decline in home loan settlements.
REA Group Ltd has published its results for the 2020 financial year (FY20), posting a net profit of $267 million, down 9 per cent.
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The group’s underlying revenue fell 6 per cent to $820.3 million, hit by a 7 per cent fall in revenue across its Australian division to $772.4 million.
This came despite an increase in the operating revenue of its financial services business – which includes mortgage broking franchise Smartline Home Loans – in response to settlements growth in the first half of FY20.
Settlement growth was offset by an annual non-cash valuation adjustment to “reflect the expected future trail commission net income”, which reduced off the back of “faster loan run off rates in the low interest rate environment”.
The earnings result also reflects a $7.3 million non-cash reduction in the carrying value of its financial services business in anticipation of a near-term decline in settlement growth off the back of the COVID-19 crisis.
Reflecting on the overall result, REA Group CEO Owen Wilson said he is pleased with the performance given the unprecedented impact of the COVID-19 pandemic.
“Pleasingly, our flagship site realestate.com.au extended its leadership position in FY20. Each month, 60 per cent of Australia’s adult population is visiting our site, with a new record of almost 12 million people in May,” said Mr Wilson.
“I am proud of the way REA has responded to the COVID-19 crisis, quickly adapting our products and experiences to enable Australians to continue to find, buy and sell property,” he said.
“In these challenging conditions, our products and services are playing an increasingly vital role in supporting our customers and vendors.
“Ensuring Australia has a well-functioning property sector remains core to our purpose and vital for our country’s long-term economic growth.”
[Related: Brokers drive Semper uplift in commercial transactions]
