The iProperty Group has just released its 2014 financial results. The company delivered AUD 21.8m in revenues - a modest 15% year on year growth. Revenues in Malaysia were up 25%, in Hong Kong they were up 38%, and in Indonesia they were up 20%. However these were offset by a strong decrease (22%) in revenues from the Singaporean business.
Its EBITDA position improved from a loss of AUD 2.9m to a loss of just 370k over the course of the year. Interestingly, they reported a small (61k) positive EBITDA from the advertising business while the new transaction business recorded a loss.
iProperty also reported an overall loss of AUD 10.7m. This is a dramatic turnaround from 2013 when it reported a profit of AUD 1.7m. The key driver of this loss was an impairment (ie write down of the carrying value) of goodwill and intangibles for both the Singaporean business and the Indonesian business. The total of this impairment was AUD 8.x m split AUD 4.6m against the Singaporean business and AUD 4.2m against the Indonesian business. In layman terms, this means that the management team does not believe that the future cash flows (through mid 2019) justified the value of these businesses on the books of iProperty.
Finally, the business issued projections for 2015 in which it expects revenues to be between AUD 30m and AUD 36m and its EBITDA to be between AUD 2m and AUD 5m.
The market did not respond favourably to the news and the shares closed 13.2% down.
Here is the market release ...
iProperty Group records an initial EBITDA profit for its Advertising business on the basis of strong revenue growth across its key markets
iProperty Group Ltd (ASX: IPP), the owner of Asia's No. 1 network of property portal sites and related real estate services, today released its full year accounts.
iProperty Group ('the Group') showed strong growth in the key markets of Hong Kong (38% revenue growth), Malaysia (25% revenue growth) and Indonesia (20% revenue growth in local currency).
The Group also finished Q4 of 2014 with its highest ever quarterly billings of A$ 7.9m (Q4 of 2013: A$6.1m) which provides outstanding momentum into 2015.
Operating expenditure only grew by 1% despite increased investment in marketing and personnel.
Consequently the Group shows for the first time an EBITDA profit for its Advertising business of A$61k (2013: Loss of A$2,943k). This result was achieved in spite of the protests in Hong Kong and the extension of the amortisation of agent depth products in Malaysia which had a combined adverse impact of A$292k.
The Transaction business saw a marginal loss of A$431k.
The overall EBITDA loss of 370k (see Note 4 of the accounts) is better than originally expected as per the December 2014 guidance.
Net profit for the year was impacted by impairment losses (as reported during the first half year) of A$8.8m and the amortisation of the employee options at A$0.9m.
In August, the Group began a transformation project spearheaded by the iProperty Singapore business, whereby the iProperty brand would be engaged by international developers to advertise and sell their property listings to iProperty Group's Asian user base.
The combined pilots of iBonus and Buyers Club have already resulted in the sale of more than 100 properties, providing licensed real estate agents in Malaysia and Singapore with access to a growing number of listings. The Group will continue to work to develop its eCommerce and international offerings in tandem through 2015.
Guidance for 2015
iProperty Group expects Revenues for 2015 to be within a range of $30m-$36m for 2015. iProperty Group also currently expects to deliver an EBITDA profit for 2015 of $2m-$5m.
These estimates are based on the current performance of the business for January 2015, the current billings for the subsequent months and is subject to the successful delivery of all key projects planned, current FX rates and a successful completion of the Thailand acquisition by April 2015. A further update will be given in August 2015 with the half yearly numbers.