REA Group Limited (ASX:REA) has announced that it expects to recognize a non-cash impairment charge of approximately $180.0 million.

REA Group Limited (ASX:REA) has announced that it expects to recognize a non-cash impairment charge of approximately $180.0 million (pre-and post-tax) in its results for the year ended 30 June 2017. The impairment relates to the carrying value of goodwill for the Group’s Asian reporting segment and reflects a downturn in market conditions in Asia. The impairment has no effect on current trading and will not impact REA Group’s compliance with its banking covenants. It is intended that REA Group’s final dividend for FY2017 will be determined based on the Group’s Net Profit after Tax (NPAT) excluding the above impairment charge and the $161.6 million profit from the sale of the European operations. In determining the carrying value of its assets, REA Group considers a range of macro assumptions including market conditions, volume of property transactions and new development projects. There has been a decline in several Asian property markets, as a result of changes to government and banking regulations. In Malaysia, there has been a 33% reduction in the number of properties sold. In Hong Kong, the Government has introduced several cooling measures to soften a highly competitive market over the past few years, including the increase of stamp duty for residential property transactions to 15% introduced in November 2016.

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