Financial Analysis of Seek Limited

This assignment conducts a financial analysis of Seek Limited, an Australian company in the employment service industry. It evaluates the company's profitability, management structure, and industry comparison. The analysis reveals the company's strong distribution network, strong brand portfolio, and reliable suppliers as strengths. However, it also identifies high marketing and sales costs and low profitability as weaknesses. The industry comparison shows competition from major global recruiting companies, such as REA Group Ltd and Carsales.com Ltd. The assignment concludes with investment recommendations based on the financial analysis.

Running head: FINANCIAL ANALYSIS
Seek Limited
Name of the Student:
Name of the University:
Author’s Note:

1SEEK LIMITED
Executive Summary
The aim of the assignment is to conduct a financial analysis of Seek Limited Company an
Australian based company operating in the employment service industry. The company helps the
job seeker and companies find a righty platform and right candidate for creation of employment
opportunities. The company is a publically listed company listed in the Australia Stock Exchange
with its ticker symbol SEK. The investment recommendation for the company was based on the
financial analysis done on the company and the included various business and macroeconomic
factors associated with the same. The industry outlook for the company is primarily dependent
on the overall growth of the various companies in the terms of their operations and the services
companies expand. The employment generation services is highly related to the performance of
the Australian economy and the relative performance thereon. The key domestic global
challenges and other issues were also addressed in the assignment where the operations of the
company is also affected by the global macroeconomic outlook. The company uses various types
of strategy for the operations of the company in the terms of the operations of the company i.e.,
placement strategy. The company has its operation spread on a global basis, which allows the
company to earn revenue from the varied source basis. The company operates in a competitive
environment where the global competitive level is high for the company and competition for the
company is generally seen from the various domestic and global players in the market. The trend
for the company in the field of changing labour market trends and rapid development observed in
the technology field is some of the key area where the company needs to focus on. The
investment risk associated with the company is comparatively high and a sell recommendation
will be given for the company as it is highly correlated with the global and macroeconomic
factors of the Australian economy where the performance of the company is dependent.

2SEEK LIMITED
Table of Contents
Introduction......................................................................................................................................4
Discussion........................................................................................................................................5
Overview Analysis.......................................................................................................................5
Financial Analysis...................................................................................................................5
Corporate Strategy.......................................................................................................................6
Management Structure.............................................................................................................6
Shareholder’s Value Generation Strategies.............................................................................6
Porter’s Five Forces.....................................................................................................................7
SWOT Analysis...........................................................................................................................9
Industry Comparison and Projections..........................................................................................9
Major Competitors and Market Share...................................................................................10
Financial Performance...........................................................................................................11
Ratio Analysis........................................................................................................................12
Du Pont Analysis...................................................................................................................16
Industry Trends/ Economic Environment..................................................................................19
Micro Economic Environment..............................................................................................19
Macro-Economic Environment.............................................................................................20
Equity Valuation........................................................................................................................22
Dividend Discount Model......................................................................................................22

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Free Cash Flow Model...........................................................................................................23
Relative Valuation Method....................................................................................................23
Investment Analysis...................................................................................................................24
Conclusion.....................................................................................................................................25
Reference.......................................................................................................................................26
Appendix........................................................................................................................................30

4SEEK LIMITED
Introduction
Seek Limited a diversified group company operating globally by helping people fulfil
their requirement in various perspective from education, job requirement fulfilment and various
other perspective. The company has a strong and a diversified product portfolio basket thereby
spanned across on a global basis in Australia, New Zealand, Africa, Bangladesh, South East
Asia, Brazil and Mexico. The diversified product portfolio base along with the global presence
for the company helps the company in the leading 18 countries and enjoying a substantial
amount of market share thereby for the company. Seek Ltd was the first company, which started
online-based job sites in the Australia giving boost for the employment services (IBISWorld,
2018). The company focusses and aims for providing excellent better technology support and
solutions to the various company in the form of employment services. Seek Ltd provides
education services in relation to the career related education programmes and the same is
operated with the name of Online Education Services (OES). The Company also provides
volunteering services where the company operates the same as a not for profit organisation
(About SEEK, 2019).

5SEEK LIMITED
(Source: About SEEK 2019).
Discussion
Overview Analysis
Financial Analysis
The financial analysis of the company was evaluated on the ground of the profitability of
the company and the performance of the company in the trend period analysed for the company.
The trend period analysed for the company was for the year 2013-18. The profitability of the
company was evaluated for the company by assessing the operating profit, gross profit and the
net profit of the company. The gross profit of the company has shown consistent improvement in
the trend period analysed for the company. The revenue base of the company has increased
consistently for the company and the same has shown a growth in trend period analysed for the
company. The operating income of company has been negative in the initial trend period
analysed for the company but the same has shown improvement in 2016-18 reflecting reducing
expenses of the company in terms of the growth of revenue for the company (Sirucek & Čajka,
2016).

6SEEK LIMITED
(Source: Appendix 1)
Corporate Strategy
Management Structure
The management structure of a company shows the hierarchy position of the company
and the division of the various jobs and duties of the companies in respect to the responsibility
each of the key members of the company plays. Seek Ltd has its management structure in a well-
structured way, which help them divide the various roles and duty of the key management
executive of the company s that the operations of the company is done effectively. The Chief
Executive Officer (C.E.O) of Seek Ltd is Mr Andrew Bassat who is also the key founder of the
company. The Chief Financial Officer (C.F.O) of the company is Geoff Roberts and the Chief
Operating Officer (C.O.O) of the company is Mr Isar Mazer.
Shareholder’s Value Generation Strategies
The management of the company has applied various strategy for the operations of the
business and various management actions in each of the business services and products the
company caters to the customers (Wang, 2018). The company also follows aggressive strategy
by providing aggressive reinvestment strategy programmes for expanding the business services
of the company and creating a substantial market share in the economy. The key strategies
2014-06 2015-06 2016-06 2017-06 2018-06
0
200000
400000
600000
800000
1000000
1200000
1400000
Gross profit
2014-06 2015-06 2016-06 2017-06 2018-06
0
50000
100000
150000
200000
250000
300000
350000
400000
Net income

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followed by the management of the company are done for creating long-term growth and value
for the company. The company aims in maintaining and growing market leadership in the form
of the higher number of placement done, which is a key metric for the company in terms of the
performance of the company (Liu, Liang & Yang, 2016). The company applies the usage and
application of technology and other software services, which will help them, get relevant data
about the business and there operation would also be sustainable for the company. The data
shared by the candidates seeking job opportunities helps the company in examining and finding a
better solution for the consumer in the form of better career insights and strengthening Seeks
network with other companies (Grant, 2016). The company has various kinds of employment
services for the customers of the company in the form of various services and products provided
on a premium basis allowing the company for better solution and creating networking with other
companies (Bridge & Dodds, 2018).
Porter’s Five Forces
The port five forces is a key strategic management tool which help us analyse and
introspect the various industry perspective of the company (Burns & Dewhurst, 2016). The
Porter Five forces will help the company in holistic strategy framework for taking key strategic
decision about the company (Mathooko & Ogutu, 2015).
Porter's
Five
Force
Threat of New
Entry: Low
Bargaining
Power of
Suplier: Low
Bargaining
Power of
Threat of
Subsitute:
Rivalry Among
Existing
Player:
Medium

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9SEEK LIMITED
Threat of New Entry: The threat of new
entry in the industry will put pressure on the
operations of the company and force the
company in availing the lower price strategy
for the company. Companies would not easily
enter in these sector as the operations and the
types of products and services offered by
Seek Ltd is on a diversified basis which helps
the company remove the threat of new entry.
Bargaining Power of Suppliers: The
bargaining power of supplier or the
companies who are looking for candidates for
the purpose of jobs, education and various
other service required for the company. The
bargaining power of the supplier was assessed
to be at a very low level as the suppliers I the
industry could not significantly influence the
operations of the company (Adi, 2015).
Bargaining Power of Buyers: High
bargaining power of buyers in a company or a
industry can significantly influence the
pricing strategy followed by the company for
the operations and performance of the
company. The bargaining power of buyer for
the Seek Ltd was considered to be at a very
low level as the company is having a sound
and a diversified base of customers where the
company has a primarily advantage.
Rivalry among the Existing Competitors:
Rivalry among existing player in the market
sets up the overall profitability conditions of
the companies in the industry. The
competition among the existing player in the
market was considered to be that off at a
moderate level. Seek Ltd should increase the
product portfolio base for the consumers and
provide differentiated products and services to
the consumers (Zhao et al., 2016)
Threat of Substitute of Products or Services: Seek Ltd faces high degree of competition
from other competitors who offers similar kinds of products its customers. The high threat of
substitute products from other similar companies offering similar products and services may
significantly influence the profitability of the company.

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SWOT Analysis
Industry Comparison and Projections
The industry in which the company operates is the employment generation and
recruitment industry where the company primarily aims in providing services to various
jobseekers. The products and the services of the company are diversified in the range of
education and employment services on a global basis. The growth of the industry is highly
correlated with the performance of the economy and the growth of companies and economies.
The industry performance and the growth prosperity of the industry thereby expanding the
services of the company, which will help raise more employment opportunities (Bonney et al.
2017).
Strength:
Strong Distribution Network
Strong Brand Portfolio
Reliable Suppliers
Skilled Wokforce Base
Weakness:
High Marketing and Sales Costs
Low Profitability
Oppurtunities:
Overall Growth in Economy
Improving Business Conditions
Friendly Taxation Policy
Threats:
Changing Technology
Rising Competition
Threat of Substitution

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Major Competitors and Market Share
Seek Ltd Company operates in a high competitive environment in Australia where the
company faces competition from major global recruiting companies. The primary income of the
company is generated from advertising of various services and products offered in the market.
The major competitors for the company has been identified as companies operating in the same
industry and providing similar services and products to the consumers of the economy (Dorn et
al. 2017). The major competitors of the company are the REA Group Ltd and Carsales.com Ltd
Company. The REA group enjoys the highest amount of market share and enjoys around 28.8%
and SEEK Ltd enjoys around 15.90% (Wang et al. 2015).
(Source: IBIS World, 2018).
The company also faces employment competition from Major Australian rival “Career
One” who offers similar job opportunities services to the jobseekers. The company over the past
5 years has tried to maintain a substantial position in the market. The company has its global
presence in all over of around 18 countries where the company enjoys highest market share in
almost 14 countries. The company has consistently increased the market share of the company
by incorporating various aspects of product development along with technological advancement
which helped the company create a variety of product portfolio and capture market share in the
economies it operates (Cooper, Hartley & Harvey, 2018).

12SEEK LIMITED
(Source: IBIS World, 2018).
Financial Performance
The financial performance of the company is the crucial factor for the long term value
creation for the company. The financial performance of the company has been evaluated using
the financial statement of the company and asses the performance of the company in various
aspects. The growth in revenue for the company has been constantly increasing for the company
and the average revenue growth for the company in the past five year trend analysis was around
15% for the company (Saeidi et al. 2015). The operating income for the company has also
increased consistently for the company showing better efficiency and utilisation of the resources
deployed. Seek Ltd business risk is associated to be at a moderate level where the level of debt
for the company has consistently increased for the company in the past 5 year analysed for the
company. This simultaneously led to rising interest expenses for the company and create
pressure on the profitability of the company (Post & Byron, 2015). The financial risk of the
company may also decrease the net profitability of the company with the increasing exposure of
debt. The overall financial position for the company has not been stable with profitability of the

13SEEK LIMITED
business been volatile in the trend period analysed for the company (Flammer, 2015). The net
profit of the company showed a consistent decrease in the year 2018 when the profitability of the
company went down due to impairment of assets done by the company and the rising operating
and selling expenses of the company which led to the lowest reported profitability of the
company. The key assets impaired by the company was the intangible assets of the company
which was reported at 2.4 million in the year 2017 and the same was impaired and reassessed to
around 1.513 million for the company (O’Neill, Sohal & Teng, 2016). The key expenses
identified for the company has been the selling and general administrative expenses spent by the
company which is a key constituent part of the total expenses of the company. The company
reported the highest amount of profitability in the year 2016 when the company showed good
returns in terms of net profitability. The net income of the company is categorically divided into
two sections and the company has its earnings primarily from the business operations of the
company and from other income sources in the form of investments done in other subsidiary
companies. It is important for the company to earn and maintain a stable operating profit of the
company so that the operations of the company remains stable and functions well in the long ter.
The dependency of income from sources like other income which the company is earnings from
other subsidiary investment may not be primary source and a consistent source of earning for the
company. Thus, it is crucial for the company to identify various factors and conditions where the
company can improve the operations of the business and the profitability of the company can
thereby be increased for long-term growth and sustainability.
Ratio Analysis
The financial analysis and evaluation for the Seek Ltd was evaluated with the help of
ratio analysis in order to identify the performance of the company and the financial trend of the

14SEEK LIMITED
company. The trend period taken into consideration for the analysis of the company was the
period from 2014-18. The key ratio evaluated for the company was done in various stage in order
to identify the various aspects of liquidity, profitability, solvency and efficiency ratio for the
company (Uechi et al. 2015).
Liquidity Ratio: The liquidity ratio for the company was assessed in order to identify the
liquidity position of the company and the ability of the company in meeting up the current
obligations of the company (Gyulai & Szűcs, 2017).
Current Ratio: (Current Assets/Current Liabilities)
Seek Ltd Ratio Analysis
Particulars 2013-14 2014-15 2015-16 2016-17 2017-18
Liquidity Ratio
Current Assets 446100 642200 737000 841900 624500
Current Liabilities 284800 599400 575000 550000 763600
Workings =B26/B27 =C26/C27 =D26/D27 =E26/E27 =F26/F27
Current Ratio 1.57 1.07 1.28 1.53 0.82
The current ratio for the company was assessed to be around stable for the company and
was greater than 1 reflecting that the company has a sound coverage of current assets with
respect to the current liabilities of the company (Rodrigues & Rodrigues, 2018). The current ratio
for the industry was around 0.80 and the company has maintained the ratio well above the
industry level (Appendix 4).
Quick Ratio: ((Cash+ Accounts Receivables)/Current Liabilities)
The quick ratio for the company was also assessed to be at a significant level for the
company reflecting that the company has a majority of its current assets of the company in the

15SEEK LIMITED
form of cash and short term investments, which may help the company in paying off the current
liabilities of the company (Haskins & Haskins, 2017).
Seek Ltd Ratio Analysis
Particulars 2013-14 2014-15 2015-16 2016-17 2017-18
Cash 347500 498600 637400 727500 444300
Accounts Receivable 49200 62200 57700 72100 85300
Current Liabilities 284800 599400 575000 550000 763600
Workings =(B31+B32)/B33 =(C31+C32)/C33 =(D31+D32)/D33 =(E31+E32)/E33 =(F31+F32)/F33
Quick Ratio 1.39 0.94 1.21 1.45 0.69
Profitability Ratio: The profitability ratio for the company was assessed in order to evaluate the
return generated by the company on the resources deployed by the shareholders of the company
(Penman, 2015).
Return on Capital Employed: (Net Profit/Shareholders Equity)*100
Seek Ltd Ratio Analysis
Particulars 2013-14 2014-15 2015-16 2016-17 2017-18
Profitability Ratio
Net Profit 195600 281200 357100 340200 53200
Capital Employed 902400 1134300 1355200 1480700 1340300
Workings =B15/B16 =C15/C16 =D15/D16 =E15/E16 =F15/F16
Return on capital employed 22% 25% 26% 23% 4%
The return on capital employed for the company has remained at a same rate of around
23-25% for the trend period analysed for the company. However, the company has shown poor
ROCE in the year 2018 giving around 4% of return. The return on capital employed by the
industry in the year 2018 has been far more consistent than the company return (Appendix 4).

16SEEK LIMITED
Net Profit Margin: (Net Profit/Sales)*100
The net profit of the company has also remained sustained at a consistent level of around
30-35% and showing poor performance in the year 2018. The company should try to increase the
net profitability position of the company in the long term so that the company grows sustainably
well (Arsad, Shaari & Isa, 2017).
Seek Ltd Ratio Analysis
Particulars 2013-14 2014-15 2015-16 2016-17 2017-18
Profitability Ratio
Net Profit 195600 281200 357100 340200 53200
Sales 713300 858400 950400 1036400 1294500
Workings =B20/B21 =C20/C21 =D20/D21 =E20/E21 =F20/F21
Net profit margin ratio 27.42% 32.76% 37.57% 32.83% 4.11%
Solvency Ratio: The solvency ratio for the company shows the exposure and the weightage of
the debt in the capital structure of the company and with respect to the assets of the company.
The solvency ratio of the company and the industry level was assessed to be at the same level
and not much material difference was found while analysing the same (Appendix 4).
Debt to Equity Ratio: (Debt/Equity)*100
The debt to equity ratio for the company has increased consistently with the company
consistently increasing the exposure and addition of debt in the capital structure of the company.
The increase of debt with contrast to the equity level of the company may increase the financial
risk of the company and influence the profitability of the company by the amount of interest paid
by the company on the long term interest bearing liabilities of the company (Afonso, Baxa &
Slavík, 2018).

17SEEK LIMITED
Seek Ltd Ratio Analysis
Particulars 2013-14 2014-15 2015-16 2016-17 2017-18
Solvency Ratio
Debt 379800 769300 751600 930200 1218700
Equity 902400 1134300 1355200 1480700 1340300
Workings =(B4/B5) =(C4/C5) =(D4/D5) =(E4/E5) =(F4/F5)
Debt to Equity Ratio 42% 68% 55% 63% 91%
Debt to Total Assets: (Debt/ Total Assets)*100
The exposure of debt in respect to the total assets of the company is significantly low for
the company and the company does not have much risk when looked by the total assets of the
company. However, it is crucial to note that the ratio has been increasing for the company by the
increasing amount of debt for the company in the trend period analysed for the company.
Seek Ltd Ratio Analysis
Particulars 2013-14 2014-15 2015-16 2016-17 2017-18
Solvency Ratio
Debt 379800 769300 751600 930200 1218700
Assets 2232200 3301100 3278400 3683000 3785800
Workings =B9/B10 =C9/C10 =D9/D10 =E9/E10 =F9/F10
Debt to Asset Ratio 0.17 0.23 0.23 0.25 0.32
Du Pont Analysis
The Du Pont Analysis is an extended way for evaluating and assessing the return
generated by the company on the equity level (Mitrovic, Knezevic & Velickovic 2015). The
analysis shows the breakdown of ROE and helps the analysts get detailed information about the
various factors that influence the return on equity for a company. The return on equity is
calculated by the formula (PAT/Net Worth). The 3 step Du Pont Analysis helps the company in
examining the Return on Equity via the formula:

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Return on Equity (R.O.E) = (Profit after Tax/Sales)*(Sales/Total Assets)*(Assets/Net Worth)

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3 Step Du Pont Analysis
ROE = PAT Sales Assets
Sales Total Assets Net Worth
ROE = 53200 1294500 3785800
1294500 3785800 1340300
ROE = 4.11% 34.19% 282.46%
ROE = 3.97%
The five step Du Pont Analysis was evaluated with the help of the formula:
Return on Equity (R.O.E) = (Profit after Tax/Profit before Tax)*(Profit before tax/Earnings
before interest and tax)*(Earnings before interest and tax/Sales)*(Sales/Total Assets)*(Total
Assets/Net Worth).
5 Step Du Pont Analysis
ROE =
PAT EBT EBIT Sales Assets
PBT EBIT Sales
Total
Assets
Net
Worth
ROE = 53200 174900 318300 1294500 3785800
174900 318300 1294500 3785800 1340300
ROE = 30.42% 54.95% 24.59% 34.19% 282.46%
ROE = 3.97%

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Industry Trends/ Economic Environment
Micro Economic Environment
The microeconomic factors involves various factors and resources that affects the
operations of the company. The key microeconomic factors are those factors that are directly
related with the operations of the company. The five key micro-economic factors that are directly
related with the operations of the company are the customers of the company, employees of the
company, key competitors of the company, the shareholders of the company and the suppliers of
the company. The overall microeconomic factors of Seek Ltd is assessed to be at a minimal stage
where the factors of the company does not play significant role in the operations of the company.
The company is having a wide and dispersed range of customer, the competitive environment for
the company was assessed to be at a moderate level and the company is having a skilled
employee’s base for the company.
Customers: The customer base of the company is primarily been diversified and the company
has a wide range of customer base. The customers of the company are the jobseekers and
candidates looking for educational training and various other services offered by the company in
the field of volunteering of various activities and events.
Employees: Seek Ltd has a wide range of skilled workforce which helps the company in doing
the various activities of the company and different level of tasks and activities of the company.
The wide dispersed level of skilled workforce helps the company in better utilisation and
efficiently operating the resources of the company.

21SEEK LIMITED
Competition: The competition faced by the company with the existing player in the market was
considered to be that off at a moderate level. Seek Ltd should increase the product portfolio base
for the consumers and provide differentiated products and services to the consumers.
Investors: The shareholders of the company provide the company with the key financial
resource of a company i.e., financial capital which helps the company in utilising the same in
investing and utilisation of various operations of the company. The return provided by the
company on the capital deployed by the shareholders of the company help the investor asses the
performance of the company.
The above factors discussed above plays a significant role ad influences the operations of
the company as the operations of the company is directly related to the and any changes in these
factors will directly affect the operations of the company.
Macro-Economic Environment
The microeconomic environment of a company depicts the environment under which the
company operates and the related various factors which can influence the operations of the
company. The macroeconomic factors are the external factors of the company which creates a
significant influence on the operations of the company. These factors are not controlled by the
company but they significantly play crucial role in the operations and the growth of the company
in the long term. The key macroeconomic factors which affects and influences the level of
activities for the company are the level of inflation rate, unemployment rate, interest rates and
the economic growth of the economy in which the company operates. The inflation rate for the
company has been remained sustainable for the company and the same is forecasted to be at a
same level of rate in future. The level of interest rate in the Australian economy and on a global
basis is expected to be at a moderate level which will help the company in significantly

22SEEK LIMITED
conducting the operations of the business. The growth rate of GDP will give a positive boost for
the performance of the company on a domestic level and on a global level where he companies
would be willing to expand the business and require more employees for the company. The
growth rate in the GDP is expected to be at a moderate level as the level of investment done by
the company will be directly dependent on the business and macroeconomic factors like level of
interest rate, inflation rate and the demand for goods and services in an economy. The rise in
unemployment rate may affect and influence the company on a positive and on a negative scale
as the rise in the unemployment will help the company get more customers who are looking for
jobs and various other services provided by the company.
(Source: Australia GDP Growth Rate | 2019 | Data | Chart | Calendar | Forecast | News. 2019).

23SEEK LIMITED
The growth driver of the company is based on the profitability of the company and the
various factors like the overall performance of the company and various other domestic and
global factors. The growth rate of the company is assessed to be at around 3.5% and the same has
been assessed by taking the past performance of the company in the last 5 years financial
performance of the company. The long term growth rate of the company will be significantly
dependent on various business and macroeconomic factors for the company and the same has
been assessed to be at a level of around 1.25% in the long-term growth rate.
Equity Valuation
The valuation of the equity of the company was done by applying various assessment
tools like Dividend Discount Model, Free Cash Flow Model and through Relative Valuation
Model methods.
Dividend Discount Model
The model was applied for evaluating the intrinsic value of the stock using the forecasted
dividend and growth rate of the company. The growth rate of the company in the initial year was
determined using the formula (Retention Rate*Return on Equity). The growth rate applicable
from second year onwards was calculated by incorporating the various macroeconomic and
microeconomic factors of the company. The growth rate was taken on an assumption basis and
was determined to be at a level of around 3.50%. The long-term sustainable growth rate was
taken at 1.25%. The required rate of return was evaluated for the stock using the Capital Asset
Formula (Required Return on Equity (Re) = Risk Free Rate of Return (Rf) + Beta*(Return on
Market- Risk Free Rate of Return)). The intrinsic value was calculated for the stock using the
Dividend Discount model formula (D1/ (1+Re)) + (D2/(1+Re))+((D3+Po)/(Re-g).
Where Po: Terminal Value of the Stock.

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Re: Required Return on Equity.
The Intrinsic Value calculated was around $ 32.19 and the current market price for the stock is
around 16.72 reflecting the stock is undervalued.
Free Cash Flow Model
The model was applied for evaluating the intrinsic value of the stock using the free cash
flow for equity and growth rate of the cash flows in the period analysed. The formula applied for
evaluating the same was (FCFE: Net Income+ Depreciation Expenses-Changes in Working
Capital- Capital Expenditures+ New Debt Issued- Principal Debt Repaid). The growth rate
applicable from the first year onwards was evaluated to be around 5%. The growth rate
applicable from second year onwards was calculated by incorporating the various
macroeconomic and microeconomic factors of the company. The growth rate was taken on an
assumption basis and was determined to be at a level of around 3.50%. The long-term
sustainable growth rate was taken at 1.25%. The required rate of return was evaluated for the
stock using the Capital Asset Formula (Required Return on Equity (Re) = Risk Free Rate of
Return (Rf) + Beta*(Return on Market- Risk Free Rate of Return)).
The intrinsic value of the stock was calculated to be around $12.16 and the current
market price of the stock was around $16.72 showing that the stock is overvalued.
Relative Valuation Method
The three relative valuation model evaluated for the company on the base of assessing the
current valuation of the company was the (Price/Earnings, Price/Book, and Price/Sales). The
above valuation methods evaluated for the company indicates that the company is currently
overvalued and the pricing of the company with respect to the earnings of the company, sales of

25SEEK LIMITED
the company and in accordance with the book value is very high. The high pricing reflects the
overvaluation of the company stock.
Calendar 2014 2015 2016 2017 2018 Current 5-Yr Index
Price/Sales 8.34 6.31 5.5 6.46 4.93 4.87 6.56 2
Price/Earnings 34.86 19.25 14.63 19.68 120 118.58 27.17 14.79
Price/Cash Flow 25.07 19.24 15.6 23.88 16.26 16.06 21.17 10.05
Price/Book 6.55 4.67 3.81 4.49 4.43 4.38 4.84 1.84
Relative Valuation
Investment Analysis
The investment analysis for the company was done by including various factors and
points for the company and assessment tools like Dividend Discount Model, Free Cash Flow
Model and through Relative Valuation Model methods. The key investment drivers for the
company will be the profitability of the company and various other factors like the revenue of the
company. The financial performance of the company was also assessed and overall financial
position for the company has not been stable with profitability of the business been volatile in the
trend period analysed for the company. The company has a strong and a diversified product
portfolio basket where the operations of the company is spanned across on a global basis in
Australia, New Zealand, Africa, Bangladesh, South East Asia, Brazil and Mexico. The
performance of the company is dependent on various global factor which makes difficult for
assessing the changes and factors which can influence the level of operations of the company.
Seek Ltd has though tried to maintain a adequate capital allocation policy by investments into
subsidiary company but the sustainability of theses return in the long-term is questionable.
Changing business factors like rapid advancement in technologies and changing micro-economic
factors of the company makes the operations of the company unstable and inefficient. The
performance of the company will be dependent on the performance of the economy due to the

26SEEK LIMITED
products and services offered by the company. The wide variety of product portfolio basket for
the company might help the company in having an overall better revenue base but operational
efficiency ad optimum utilisation of resources deployed are the key factors that should be taken
into consideration.
The equity valuation methods analysed for the company indicates that the valuation of
the company as compared to the current valuation of the company is currently overpriced and the
risk of the stock was assessed to be at a significantly high level. The valuation model based on
which our decision is based is the Free Cash flow model and Relative Valuation model where the
same has been evaluated for the company with respect to valuation of the company’s stock. The
investment risk associated with the company is comparatively high and a sell recommendation
would be given for the company.
Conclusion
The company operates in a competitive environment where the global competitive level
is high for the company and competition for the company is generally seen from the various
domestic and global players in the market. The investment risk associated with the company is
comparatively high and a sell recommendation would be given for the company. The revenue
base for the company though has increased for the company but the profitability of the company
at the same time has been very volatile and may not be suitable for investors who are generally
of risk averse nature. Investors looking for moderate to high amount of risky investment can
invest in the company.

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Appendix
1) Income Statement
Particulars 2014-06 2015-06 2016-06 2017-06 2018-06
Revenue 713300 858400 950400 1036400 1294500
Cost of Revenue 29200 29200 39300 64300 130400
Gross profit 684100 829200 911100 972100 1164100
Operating expenses
Research and development 55300 71900 84200
Sales, General and administrative 618000 771000 896300 627300 738700
Other operating expenses 39800 57200 68700 89500 107100
Total operating expenses 713100 900100 1049200 716800 845800
Operating income -29000 -70900 -138100 255300 318300
Interest Expense 27700 29900 41500 29300 43400
Other income (expense) 308500 484700 736400 211300 -100000
Income before taxes 251800 383900 556800 437300 174900
Provision for income taxes 53400 68700 157400 75300 83900
Net income from continuing operations 198400 315200 399400 362000 91000
Net income from discontinuing ops 25000
Other -27800 -34000 -42300 -21800 -37800
Net income 195600 281200 357100 340200 53200
Earnings per share
Basic 0.57 0.82 1.03 0.97 0.15
Diluted 0.56 0.8 1.01 0.96 0.14
Weighted average shares outstanding
Basic 339349 342571 344487 347631 350366
Diluted 344366 351940 351131 352174 377305
EBITDA 316300 457000 651700 520000 285900
SEEK LTD (SEK) INCOME STATEMENT

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2) Balance Sheet
Particulars 2014-06 2015-06 2016-06 2017-06 2018-06
Assets
Current assets
Cash
Cash and cash equivalents 323000 449600 504900 652000 361700
Short-term investments 24500 49000 132500 75500 82600
Total cash 347500 498600 637400 727500 444300
Receivables 49200 62200 57700 72100 85300
Deferred income taxes 9300
Prepaid expenses 17700 21500 27300 28900 42100
Other current assets 31700 50600 14600 13400 52800
Total current assets 446100 642200 737000 841900 624500
Non-current assets
Property, plant and equipment
Gross property, plant and equipment 68800 28100 28100 29100 39500
Accumulated Depreciation -48100
Net property, plant and equipment 20700 28100 28100 29100 39500
Equity and other investments 215800 196000 99300 89800 413500
Goodwill 1196200 1947100 1931200 2171900 2013500
Intangible assets 317700 462500 457100 500300 539100
Deferred income taxes 35700 24200 24800 32400 29400
Other long-term assets 1000 900 17600 126300
Total non-current assets 1786100 2658900 2541400 2841100 3161300
Total assets 2232200 3301100 3278400 3683000 3785800
Liabilities and stockholders' equity
Liabilities
Current liabilities
Short-term debt 22200 214900 71100 37800 80500
Accounts payable 79500 116900 118300 192100 11500
Deferred income taxes 18200 17100 113800 17900 38400
Deferred revenues 128200 204300 226500 266300 356800
Other current liabilities 36700 46200 45300 35900 276400
Total current liabilities 284800 599400 575000 550000 763600
Non-current liabilities
Long-term debt 379800 769300 751600 930200 1218700
Deferred taxes liabilities 75600 105200 100500 115300 124200
Pensions and other benefits 4100 5800 8900 8200 10700
Minority interest 566200 666600 469400 559200 297000
Other long-term liabilities 19300 20500 17800 39400 31300
Total non-current liabilities 1045000 1567400 1348200 1652300 1681900
Total liabilities 1329800 2166800 1923200 2202300 2445500
Stockholders' equity
Common stock 203700 222900 222900 251600 269200
Other Equity 28200 -100300 -35000 -32400 -91700
Retained earnings 624900 796500 1024900 1225000 1123900
Accumulated other comprehensive income 45600 215200 142400 36500 38900
Total stockholders' equity 902400 1134300 1355200 1480700 1340300
Total liabilities and stockholders' equity 2232200 3301100 3278400 3683000 3785800
SEEK LTD (SEK) CashFlowFlag BALANCE SHEET

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3) Revenue Analysis
Corporate Costs Total
SEEK Brasil
ANZ Asia O nline O CC O the r(2) Total Zhaopin O ES ESV(2) Total
Ye ar e nde d 30 June 2018 Notes $m $m $m $m $m $m $m $m $m $m $m
Sales revenue 2 411.8 151.3 74.9 29.0 19.2 686.2 461.5 119.4 27.4 608.3 - 1,294.5
Segment EBIT DA(1) 251.8 76.3 22.7 4.9 -17.8 337.9 84.0 37.5 -9.7 111.8 -16.9 432.8
Depreciation -1.5 -2.3 -1.4 -1.2 -0.1 -6.5 -5.7 -0.5 -0.1 -6.3 -1.6 -14.4
Amortisation 12 -26.5 -3.0 -3.3 -1.9 -4.1 -38.8 -5.5 -8.4 -0.5 -14.4 - -53.2
Impairment loss 13(d) - - -119.0 -60.0 - -179.0 -2.7 - - -2.7 - -181.7
Net interest (expense) / income 0.7 -3.5 3.8 0.5 -0.4 1.1 -0.6 1.0 -0.2 0.2 -27.2 -25.9
Share-based payments and other LT I 30(b) -4.6 -2.3 -0.3 -0.3 -1.1 -8.6 -10.2 - -1.4 -11.6 -6.6 -26.8
Share of results of equity accounted
investments 24(a) - - - - -0.8 -0.8 - - -5.4 -5.4 - -6.2
Gain on disposal of equity accounted
investment 3 - - - - - - - - 1.9 1.9 - 1.9
Fair value gain on financial asset 3 - - - - - - 58.8 - - 58.8 - 58.8
T ransaction costs from investing
activities - - - - - - -6.9 - -0.1 -7.0 -1.7 -8.7
Other financing activities / borrowing
costs written off - -1.3 - 0.8 - -0.5 - - - - -1.2 -1.7
Profit before income tax expense 219.9 63.9 -97.5 -57.2 -24.3 104.8 111.2 29.6 -15.5 125.3 -55.2 174.9
Income tax expense 6(a) -62.8 -17.6 - -0.7 7.5 -73.6 -19.0 -8.8 1.2 -26.6 16.3 -83.9
Profit for the year 157.1 46.3 -97.5 -57.9 -16.8 31.2 92.2 20.8 -14.3 98.7 -38.9 91.0
Non-controlling interest 23(c) - -4.6 - 1.1 0.4 -3.1 -32.0 -4.1 1.4 -34.7 - -37.8
Profit attributable to owners of SEEK
Limited 157.1 41.7 -97.5 -56.8 -16.4 28.1 60.2 16.7 -12.9 64.0 -38.9 53.2
Segment information provided to the CODM
Asia Pacific & Americas SEEK Inve stments

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4) Industry Ratio Analysis
(Source: IBIS World, 2018).

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5) Pay-out Ratio and Financial History

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6) Du Pont Analysis
7) Dividend Discount Model
Growth Rate =
Return on Equity = 19.95% (Average ROE of 5 year Analysis)
Retention Ratio 0.27
(1-Payout Ratio)
Where; Payout Ratio 0.73
Growth Rate (g) 5.39%
Growth Rate = 3.50%
Growth Rate = 1.25%
Current Dividend 0.71 (Average Dividend based on 5 YR)
(Based on Assumption)
Dividend Discount Model
Retention Rate*Return on Equity
First Stage Growth Factor
Growth Rate based on Macro and Micro Economic Factors
(Based on Assumption)
Growth Rate based on Long Term Assumptions

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8) Free Cash Flow Model