SEEK LIMITED — Annual Report 2012

Oct 29, 2012

Annual Report 2012 SEEK Limited ABN 46 080 075 314

SEEK & you shall find

Contents

2 Chairman’s Letter

4 CEO’s Review

12 Directors’ Report

36 Auditor’s Independence Declaration

37 Corporate Governance Statement

46 Financial Report

47 Consolidated Income Statement

48 Consolidated Statement of Comprehensive Income

49 Consolidated Balance Sheet

• 50 Consolidated Statement of Changes in Equity

• 51 Consolidated Statement of Cash Flows

• 52 Notes to the Financial Statements

119 Directors’ Declaration

120 Independent Auditor’s Report

122 Shareholder Information

124 Five Year Financial Summary IBC Corporate Directory

SEEK Limited is the world’s largest online employment classifieds businesses by market capitalisation, and a provider of education via online and classroom education and training.

Chairman’s Letter

Dear Shareholder,

SEEK has achieved another successful year with very strong performance across its entire portfolio of domestic and international businesses. Delivery of yet another year of record financial results reflects the resilience of SEEK’s market-leading businesses, strength of the business model and solid execution of the Group’s strategy. These record results were achieved despite far from buoyant conditions.

On a “look-through” basis[1] the Group delivered revenue of $657.4 million (up $99.7 million on FY11, or 18%) and EBITDA of $235.0 million (up $47.5 million on FY11, or 25%). SEEK’s “look-through”[1] growth in the past 12 months has been achieved through organic growth across the Australia and New Zealand employment business and the Education businesses, as well as a mixture of organic and acquisition related growth in SEEK’s International investments.

Our Australia and New Zealand employment business continues to hold market-leading positions, with the Australian employment website capturing 70% plus market share of ads, visits and total time on site.[2] The online job ad market is tighter in New Zealand, however SEEK is still the number one brand in online job ads based on share of ads and total time on site.[2]

The last 12 months has been a strong period for our product development with improvements to our Jobseeker Profile product, as well as the mobile and tablet offerings. During this period we launched the SEEK iPhone app which has had a significant volume of downloads and has led to increased site and application activity.

Our International businesses have continued to deliver revenue growth whilst investing heavily in their brands, people, products and IT. On a “look-through” basis[1] the International businesses generated revenue of $173.8 million (up $45.5 million on FY11, or 35%) and EBITDA of $49.8 million (up $14.1 million on FY11, or 39%).

FY12 also saw us drive our strategic objectives by increasing our ownership interests to controlling stakes in Brasil Online Holdings Coöperatief U.A. (Brasil Online) and Online Career Center Mexico SA de CV (OCC), as well as continuing to partner with management in each of our investments to help them improve their product offerings.

The results of our Education businesses have been pleasing during 2012, with improved performance across each of SEEK Learning, THINK Education Group (THINK) and IDP Education Pty Ltd (IDP). Whilst our 50% joint venture with Swinburne University (Swinburne Online) made an EBITDA loss of $3.2 million (FY11: loss of $0.2 million) over the past 12 months, it is satisfying to note that it is tracking ahead of the business plan expectations in its start-up phase.

We also recently announced the completion of an important transaction in which SEEK sold down a 20% minority interest in THINK to Laureate Education, Inc. (Laureate), a global education company. Laureate has strong experience in education management and online learning, and will provide additional Board expertise and capabilities to further complement THINK’s existing strengths and capabilities.

Financial overview

SEEK achieved record financial results with sales revenue of $442.3 million (2011: $343.1 million), Reported EBITDA of $193.6 million (2011: $135.6 million) and net profit after tax (NPAT) (post non-controlling interests) of $131.7 million (2011: $97.7 million). This represents revenue growth of 29%, EBITDA growth of 43%, and growth in NPAT (post non-controlling interest) of 35% for 2012 compared to the prior corresponding period.

The key factors which underpinned 2012’s financial performance were solid growth in the Employment business, a strong result by Zhaopin and improving performance in the Education businesses.

A fully franked final dividend of 9.0 cents (2011: 7.5 cents) was declared, equivalent to 50% of cash NPAT and results in total dividends of 17.3 cents for the financial year (2011: 14.3 cents).

I am pleased to announce that subsequent to the year end we have successfully completed the refinancing of our syndicated bank facility, increasing the facility limit from $340 million to $450 million. The increased facility will offer SEEK greater flexibility should other acquisition opportunities arise.

Remuneration

As noted in the Remuneration Report, this year the Board conducted a review of the SEEK executive remuneration strategy. As a result of this review, the Board has made changes to the FY13 executive remuneration strategy in order to emphasise the focus for executives to build long-term and sustainable shareholder value.

The Notice of Meeting for the SEEK 2012 Annual General Meeting (AGM) provides a detailed explanation of the new FY13 executive remuneration strategy as it relates to CEO remuneration. At this year’s AGM shareholders will be asked to approve the issue of securities to the CEO in FY13. The Board will provide further details of the new SEEK executive remuneration plan as it relates to all SEEK executives in the FY13 Remuneration Report.

Outlook

We remain positive about SEEK’s growth prospects in 2013 and more importantly across the medium to long term. Although challenging macro-economic factors may cause some variability in short-term results, the focus of the Board and Management team is to invest and position our market-leading businesses to create sustainable growth over the medium- to long-term horizon and to continue to create sustainable shareholder value.

SEEK is now the largest business of its kind globally and is extremely well positioned in some of the most exciting growth economies in the world.

In the Domestic employment business, we remain confident that our resilient business model will provide some protection from possible deteriorating market conditions, benefited by the continuing structural migration of employment advertising from print to online and the creation of a more effective and efficient sourcing marketplace.

At the International level, we will continue to focus on investment in these high growth markets, utilising our domestic experience to partner with local management teams to maintain or grow market share in key markets. Whilst global economic conditions may have some bearing on the results, we are well placed to benefit from favourable structural trends in these markets.

SEEK Education is expected to continue its trend of solid results into 2013. We will focus on growing synergies between SEEK Learning and SEEK Employment, improved operating efficiencies and partnering with Laureate at THINK, as well as benefiting from IDP’s world-leading student network.

SEEK is now the largest business of its kind globally and is extremely well positioned in some of the most exciting growth economies in the world. Our future looks very bright.

On behalf of our Board, I thank SEEK’s Management team and all our staff for their contribution to another year of record results. The management team has done an exceptional job in managing the business in light of significant short-term economic volatility, whilst also continuing to position the business for growth over the medium to long term. I thank SEEK’s CEO and Co-Founder, Andrew Bassat, for another year of strong business performance. I also wish to thank my fellow directors for their significant contributions to the strategic development and governance of the company.

Most importantly, I thank you, our shareholders, for your continued support of SEEK.

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Bob Watson Chairman

1. The ‘look-through’ basis captures SEEK’s proportionate share of revenue and earnings before interest, depreciation and tax (EBITDA) from associates plus 100% owned core businesses.

2. Source: July 2012 Nielsen NetRatings, SEEK Count of websites.

CEO’s Review

I am very pleased to announce that 2012 was a record financial year for SEEK. The Australia and New Zealand business delivered solid results in a tough market, our International businesses continued their strong growth and our Education businesses delivered significantly improved results. SEEK’s ability to achieve strong results despite less than buoyant conditions is attributable to its market leadership across a number of markets, the strength of the business model and continued execution against our long-term strategy.

In FY12 we achieved numerous key objectives, with the most notable being:

– Vision: Establishment of our vision to become the clear global leader in online employment by creating a ‘sourcing marketplace’ that will help us match more people with job opportunities than any other organisation. More specifically:

• SEEK Employment:

• to be the world leader on all key metrics;

• to assist recruiters, corporates and government with every placement;

• providing leading edge solutions that deliver better matching/search experiences;

International Employment:

• to be the number one player on all key metrics in all current markets;

• consider further expansion as opportunities arise;

• SEEK Education: Working alongside our strategic partners to grow our Education businesses;

• New products: Continued evolution and expansion of our products, including mobile and tablet offerings;

• International collaboration: Continuing to work closely with local management in each of our investments to provide strategic support that leverages our deep understanding and experience of employment marketplaces and product offerings, and helping them recruit key roles at the executive level;

• Acquisitions: The acquisition of increased ownership interests in Brasil Online in May 2012 and OCC in June 2012, taking us to controlling interests in both of these businesses;

• Integration: Further integration of JobsDB Inc (JobsDB) into the Group;

• Strategic partnering: The sale of a 20% stake in THINK to Laureate Education Inc (Laureate), a global education provider who will complement our existing team and help us take the business to the next stage;

• Refinancing: Successfully renegotiating the Group’s syndicated banking facility, extending the tenor and increasing the facility limit from $340 million to $450 million.

SEEK Employment

Reflecting its clear market leadership, SEEK’s employment business across Australia and New Zealand achieved a strong revenue result of $247.8 million (2011: $224.0 million), EBITDA of $152.1 million (2011: $133.5 million) and EBITDA margins of 61% for the 12 months to 30 June 2012 (2011: 60%). This represents revenue growth of 11% and EBITDA growth of 14%, continuing to demonstrate SEEK Employment’s resilience in a period where the economic conditions remain subdued.

Our Australian business continues to be the number one brand in online job ads in Australia and is well positioned versus its competitors, with 70% plus market share of ads, visits and total time on site.[1] As at July 2012 we had around 139,000[1] jobs on our Australian website, which was over four times more than that of our nearest competitor.

The New Zealand competitive environment is much tighter between SEEK and Trade Me but we remain the number one brand in online job ads based on share of ads and total time on site.[1]

Over the past year there has been further migration of job ad volume from print to online in Australia, with 84%[2] now residing online. Despite the volume shift, we believe that 42% of the advertising expenditure still resides in print and given our market-leading position we are likely to be the primary beneficiary as this print revenue moves online.

We have had a strong year for our product innovation with the refinement of our Jobseeker Profile offering, and enhancements in our mobile and tablet offerings which included the launch of the SEEK iPhone app. The iPhone app saw approximately 560,000 downloads in the three months to July 2012, which sat as the number one iPhone app in the lifestyle category from launch.

During the past year we have invested a large amount of resources developing a strategy which will take our Employment business forward over the next three years. Our goal is to extend SEEK Employment’s core capabilities to create a more effective and efficient ‘sourcing marketplace’ with better matching/search experiences. This will ultimately result in more recruiters and corporates finding their last candidate via SEEK and more jobseekers finding their last job through SEEK.

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Group Financial Results
– Eight Year Trend
A$ million
05 06 07 08 09 10 11 12 05 06 07 08 09 10 11 12 05 06 07 08 09 10 11 12
Operating Revenue Reported EBITDA Reported NPAT
(Post non-controlling interests)
442.3
343.1
280.9
210.2 208.8
193.6
157.0
135.6 131.7
69.6 106.2 80.3 109.8 97.8 117.4 76.3 89.5 97.7
49.0 55.5 55.3
29.5 19.3 34.1
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SEEK Employment’s solid result demonstrates the resilience of the business despite a period where the economy remains subdued.

SEEK Employment – Eight Year Trend Revenue, EBITDA & Average Australian Unemployment Rate

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05 06 07 08 09 10 11 12
Revenue (A$m) EBITDA (A$m) Australia’s average unemployment rate
for the year ended 30 June (%)
247.8
224.0
190.0
170.9 172.7
140.2 152.1
133.5
95.2
63.5 106.7 90.9 93.4
76.9
44.2
28.4
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Looking ahead we believe that SEEK is well positioned for growth over the medium to long term due to the following:

• Successful implementation of our ‘sourcing marketplace’ strategy: We estimate that the employment placement market is approximately three times larger than the existing Australian and New Zealand print and online classified market. We believe that the delivery of our ‘sourcing marketplace’ strategy will capture a larger share of the employment placement market and in doing so deliver greater returns for recruiters, corporates, jobseekers and SEEK;

• Structural migration: The continued structural migration of print to online in Australia which typically lags trends in the US by approximately two years. By comparison, in the US currently approximately 80% of job ad expenditure resides in online versus 42% in Australia. As such there is still a large market opportunity for SEEK to capture more of the job advertising spend. Reflecting this structural shift, the Australian Commonwealth Government mandated the use of online recruitment advertising at the expense of daily newspapers from 1 July 2012;[3]

• Cyclical changes in the economy: At present we are approximately 27% below the cyclical highs of the December 2007 peak in new job ads posted on the SEEK website, providing us upside opportunities when the market turns around;

• Structural shifts in the Australian labour market: Analysts are forecasting that demand for labour will increase over the next five years, this coupled with an ageing population is likely to lead to labour shortages, providing SEEK with an opportunity to benefit by playing a meaningful role in matching jobseekers and advertisers.

Whilst variability in macro economic conditions may persist in the short term, given SEEK’s market position, and strength and resilience of the business model, the business remains well positioned for further growth over the medium to long term.

1. Source: July 2012 Nielsen NetRatings, SEEK Count of websites.

2. Source: ANZ Advertisement Series for July 2012.

3. Source: http://www.finance.gov.au/advertising/docs/non-campaign_ recruitment_advertising_policy.pdf.

International Employment SEEK is now a global business, with ownership interests in market-leading job boards across Asia and Latin America.

CEO’s Review continued

International Employment

SEEK is now a global business, with ownership interests in market leading job boards across Asia and Latin America and is well positioned to benefit from exposure to approximately 2.2 billion people and over 20% of Global GDP.

During 2012 we continued to pursue our strategy of international expansion in growth regions by acquiring controlling interests in Brasil Online and OCC. We now hold ownership interests of 51% and 57% respectively in these businesses and have exposure to the two largest economies in the highly attractive Latin American online employment sector.

SEEK’s International Employment portfolio comprises five significant international investments:

• Zhaopin: A leading employment website in China (number two market position overall);

• JobsDB: A leading provider of online employment websites throughout Asia (number one or two market position in key markets);

• JobStreet: A leading provider of online employment websites throughout Asia (leading market positions in Malaysia and Philippines);

• Brasil Online Holdings: Market leading employment website in Brazil; and

• OCC: Market leading employment website in Mexico.

On a ‘look-through’ basis[4] SEEK International achieved a strong result in 2012 with a 35% increase in revenue to $173.8 million (2011: $128.3 million) and an EBITDA increase of 40% to $49.8 million (2011: $35.7 million).

Zhaopin continued to achieve strong results in 2012, with underlying revenue growth of 28% and EBITDA growth of 70% from 2011. Zhaopin achieved particularly strong online revenue which increased 31% and improved margins resulting from operating efficiencies. We believe that Zhaopin is very well placed on competitive metrics to continue to close the gap with the number one player in China.

We have been pleased with the solid earnings growth of 23% achieved by JobsDB during 2012 despite the slowing economic conditions in key regions.

Over the course of the past year we have been actively involved in the integration of JobsDB into the SEEK Group.

We are very pleased with the relationships we have developed with JobsDB management, the knowledge we have shared, and are working collaboratively to help build JobsDB’s market share and reach throughout Asia.

JobStreet continues to perform solidly in the fast growing Asian markets and achieved strong growth in Malaysia and Philippines during 2012. The business recorded underlying revenue growth of 18% and continues to generate strong cash flows.

Brasil Online achieved a solid result during a period of continuing investment and softening macro conditions. In the short to medium term Brasil Online is well positioned to continue recording strong revenue and earnings growth from new employer paid products and current jobseeker paid products.

Our increased ownership in OCC positions us well to benefit from favourable structural trends in the developing Mexican marketplace. OCC performed reasonably during 2012 with underlying revenue growth of 15% and EBITDA growth of 4% on the prior corresponding period. The continued investment in a new ad usage business model impacted margins during 2012, however initial indicators are showing pleasing results from the transition. We expect strong earnings growth in the medium to long term, reflecting OCC’s strong market position.

1. The ‘look-through’ basis captures SEEK’s proportionate share of Revenue and EBITDA from associates plus 100% owned core businesses.

International Financial Results

– Six Year Trend

Prepared on a ‘look-through’ basis

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A$ million
07 08 09 10 11 12 07 08 09 10 11 12
Revenue EBITDA
173.8
128.3
73.8
59.6
49.8
35.7
6.0 14.2 (3.2) (6.7) (8.5) 9.2
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CEO’s Review continued

SEEK Education

We have a strong collection of assets in the Education business with a complementary portfolio comprising 100% owned subsidiaries (SEEK Learning and THINK),[5] 50% owned IDP Education and 50% joint venture with Swinburne University (Swinburne Online). These businesses provide us with broad exposure to the education marketplace in Australia and internationally.

On a ‘look-through’ basis[6] SEEK Education performed well in 2012 with a 15% increase in revenue to $235.8 million (2011: $205.3 million) and an EBITDA increase of 80% to $33.0 million (2011: $18.4 million).

SEEK Learning delivered a strong financial result in 2012, benefiting from the launch of three new partners and 49 new courses as well as improvements in marketing.

IDP has achieved a solid result in the context of tough market conditions. The multi-destination strategy is beginning to deliver students, most notably in the US and UK which is pleasing given the infancy of operations. During 2012, IDP expanded its global network, signing 100 new institutions across the US, UK, Canada and New Zealand.

The Swinburne Online joint venture is performing ahead of business plan expectations. Whilst still in start-up phase (set up in 2011), the first student intake in 2012 has yielded higher than anticipated enrolments and revenue. The joint venture complements our existing Education portfolio and we will continue to invest to support the medium- to long-term growth of the business.

1. As at 30 June 2012 (pre Laureate transaction).

The turnaround in the THINK business culminated in a pleasing result in 2012, particularly in the second half. THINK has undergone a period of significant change management and re-investment and it is a testament to our team that these initiatives are now delivering strong financial results. We recently announced the completion of a transaction to sell a 20% interest in THINK to Laureate. We are excited about the transaction as it supports our strategy of utilising our core competencies in business development and sales and marketing, whilst involving a strategic partner who has strong expertise in the Education industry. We believe that Laureate will help us take the THINK business forward.

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Education Financial Results
– Eight Year Trend
Prepared on a ‘look-through’ basis
A$ million
05 06 07 08 09 10 11 12 05 06 07 08 09 10 11 12
Revenue EBITDA
235.8
207.8 205.3
169.0
100.2
59.9
28.8 39.7 33.0
6.1 11.3 1.4 3.1 12.3 18.8 18.4
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1. The ‘look-through’ basis captures SEEK’s proportionate share of Revenue and EBITDA from associates plus 100% owned core businesses.

SEEK Education We have a strong collection of assets in the Education business which provide us with broad exposure to the education marketplace in Australia and internationally.

Our vision To become the clear global leader in online employment, matching more people with job opportunities than any other organisation.

CEO’s Review continued

Culture, values and community

We are focused on continually enhancing SEEK’s strong organisational culture and values by making SEEK an inspiring and energising place to work. We do this through investment in the well-being and professional development of SEEK employees and the communities in which SEEK operates.

As part of this investment we have developed a community contribution program known as ‘SEEK Village’ aimed at providing volunteering opportunities via the SEEK Volunteer website. During 2012 we invested in the redevelopment and improvement of this website which was supported by a major campaign to raise awareness of the site to prospective volunteers with significant pro bono support from media companies across Australia.

We also encourage employees to contribute directly to the wider community through the internal volunteer program, where employees are provided one day a year to work for a charitable organisation of their choice. In addition, we support selected charities through a workplace donation program (‘Bright Futures’).

We are firmly committed to reducing SEEK’s environmental impact via our SEEK Green program which ensures better environmental practices while achieving our business goals. Since November 2007, SEEK has collected energy consumption and travel data and engaged an external consultant to calculate greenhouse gas emissions for our Australian and New Zealand employment business and SEEK Learning. We continue to offset greenhouse gas emissions associated with electricity and natural gas consumption and business air travel through the purchase of offsets from Origin Energy’s Carbon Reduction Scheme.

Investing in people, technology and customers

We are aware that the strength of our brand and business is a result of our people, our products and service offerings, and the relationships we have developed since inception with the jobseekers and advertisers of our Employment businesses and students of our Education businesses. As a result we are focused on investing in each of these areas by:

• Our Technology: Investing in new products and services to enhance the experience and efficiency of our offerings for our advertisers, jobseekers and students;

• Our Employment Customers (Jobseekers & Advertisers): Developing innovative solutions which result in a more effective and efficient ‘sourcing marketplace’, delivering better matching of job opportunities to jobseekers; and

• Our Education Customers (Students): Working closely with our strategic partners to provide high-quality course offerings, connecting students to the most relevant course and supporting them throughout their period of study.

The future

I am excited about the future for SEEK and the vision we have for the Group. We have largely achieved our original goal of shifting the way people look for jobs away from print classifieds to online job ad boards. Our vision now is to become the clear global leader in online employment, matching more people with job opportunities than any other organisation.

This vision represents the ongoing evolution of SEEK and will help us stretch ourselves even further to deliver, so that we can continue to be the market leader in Australia and New Zealand and cement our footprint on key markets internationally.

I would like to take the opportunity to recognise the major contribution by the Board to the improved performance of the Group, and to thank the fantastic team at SEEK for their commitment, enthusiasm and terrific efforts throughout the year. I would also like to thank our customers, jobseekers and fellow shareholders for their ongoing support.

I look forward to the challenges and opportunities which 2013 will no doubt present, but most of all I look forward to delivering another successful year for SEEK.

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Andrew Bassat CEO

• Our People: Focusing on continually enhancing our people via innovative talent development programs and professional development opportunities, as well as promoting the health and well-being of our employees. As a result of our practices SEEK was recognised as a 2012 Best Employer in the annual Aon Hewitt accreditation program, the seventh time the organisation has received this honour out of the eight years in which it has participated.

Directors’ Report

Your directors present their report on the consolidated entity (referred to hereafter as the Group), consisting of SEEK Limited and the entities it controlled at the end of, or during, the year ended 30 June 2012.

Directors

The following persons were directors of the Company during the financial year and up to the date of this report:

R C G Watson Chairman, non-executive director A R Bassat Managing Director and Chief Executive Officer (“CEO”) C B Carter Non-executive director N G Chatfield Non-executive director D I Bradley Non-executive director

Principal activities

During the year the principal continuing activities of the Group consisted of:

–

Advertising employment classifieds and related services on the internet; and

– Provision and distribution of vocational training and higher education courses.

Dividends

Dividends paid to shareholders during the financial year were as follows:

			Franked	Total
	Payment	Amount	amount	dividend
Dividend	date	per share	per share	$’000
Year 2011
2010 fnal dividend	15 October 2010	6.7 cents	6.7 cents	$22,550
2011 interim dividend	19 April 2011	6.8 cents	6.8 cents	$22,889
				$45,439
Year 2012
2011 fnal dividend	12 October 2011	7.5 cents	7.5 cents	$25,277
2012 interim dividend	18 April 2012	8.3 cents	8.3 cents	$27,980
				$53,257
Dividends paid or declared by the Company after year end (to be paid out of retained		profts at 30 June 2012):
2012 fnal dividend	16 October 2012	9.0 cents	9.0 cents	$30,339

The total dividend for the year is 17.3 cents (2011: 14.3 cents).

Review of operations

A summary of consolidated revenues and results is set out below:

Review of operations A summary of consolidated revenues and results is set out below:
		2012	2011
	Notes	$’000	$’000
Operating revenue	5	442,254	343,054
Interest revenue	5	2,976	1,681
Revenue from continuing operations	5	445,230	344,735
Segment EBITDA(1)	4	193,625	135,636
Depreciation	13	(8,805)	(6,203)
Amortisation	14	(11,645)	(6,392)
Amortisation of share-based payments and other long-term incentive schemes	7	(4,130)	(999)
Interest expense	7	(23,650)	(14,588)
Interest income	5	2,976	1,681
Fair value gain/(loss) on step acquisitions	29	28,224	(811)
Other non-operating gains	6	1,130	–
Impairment loss	14(b)	(24,115)	–
Share of net profts of associates and jointly controlled entities
accounted for using the equity method	11(b)	30,871	24,685
Proft from continuing operations before income tax		184,481	133,009
Income tax expense	8(a)	(47,023)	(36,295)
Proft for the year		137,458	96,714
Non-controlling interests	20	(5,778)	974
Proft for the year attributable to owners of SEEK Limited		131,680	97,688

1. Segment EBITDA is earnings before interest, tax, depreciation and amortisation and excluding share of net profits of associates and jointly controlled entities accounted for using the equity method, fair value gains/(losses) on acquisition, impairment loss, amortisation of share-based payments and long-term incentives and other non-operating gains/(losses).

Strong performance across all of SEEK's businesses has led to a record full year result with net profit for the year (SEEK Limited’s share) of $131,680,000 (2011: $97,688,000), up 35% on the prior year. The strong result was achieved in challenging conditions, as a result of continued growth in the domestic Employment business, strong growth in all International markets, as well as from acquisitions and strong underlying earnings in the Education business.

Further information on segment results is provided below.

SEEK Employment

SEEK Employment
2012 $’000 2011 $’000	Growth
	$’000 %
Operating revenue 247,769 224,005	23,764 11%
Employment 247,769 224,037	23,732 11%
Inter-segment revenue – (32)	32 n/a
Segment EBITDA 152,146 133,517	18,629 14%
EBITDA (%) 61% 60%

SEEK’s domestic Employment business achieved a solid result despite subdued labour market conditions, with revenue growth of 11% on the prior period attributable to volume growth of 1% and a 10% increase in yield.

Key highlights:

• The pleasing result reflects SEEK’s market leadership and resilience of the business model.

• SEEK Employment generated strong revenue and earnings growth with an increase in EBITDA margins to 61% despite the challenging macro environment.

• The successful launch of several new products and services further improved the ‘Jobseeker and advertiser marketplace’, including the iPhone app and refinement of Jobseeker Profiles.

Directors’ Report

Review of operations continued

SEEK Education

SEEK’s Education segment includes SEEK Learning, Think and share of profits/(losses) from IDP (50%) and Swinburne Online (50%).

and Swinburne Online (50%).
2012 $’000 2011 $’000	Growth
	$’000 %
Operating revenue 132,386 110,322	22,064 20%
SEEK Learning 49,478 44,466	5,012 11%
Think 86,913 69,078	17,835 26%
Inter-segment revenue (4,005) (3,222)	(783) 24%
Segment EBITDA 20,544 5,549	14,995 270%
SEEK Learning 15,261 13,046	2,215 17%
Think 5,283 (7,497)	12,780 n/a
EBITDA (%) 16% 5%
SEEK Learning 31% 29%
Think 6% (11%)
Share of net profts/(losses) of associates and jointly controlled entities
IDP 8,161 7,742	419 5%
Swinburne Online (2,028) (46)	(1,982) n/a

SEEK Education achieved a solid result for the year with EBITDA of $20,544,000 and each business executing against its key objectives.

Key highlights:

• SEEK Learning achieved a solid result with EBITDA increasing 17% on the prior period and a robust margin of 31%. Continued improvements in marketing efficiencies have been coupled with the launch of three new partners and 49 new courses, as well as investment in brand awareness.

• Think achieved a strong result with revenue increasing by 26% on the prior period, and EBITDA improving by $12,780,000 to turn around a positive EBITDA result of $5,283,000. Key drivers have been an 18% growth in online students and an improvement in campus students across all faculties. The Melbourne Design Campus was successfully launched with approximately 730 students educated in FY12.

• IDP achieved a pleasing result despite subdued market conditions, with EBITDA increasing by 9% on the prior year as a result of growth in IELTS candidates and a focus on cost containment in core operations. SEEK received dividends from IDP of $6,000,000 during the year (2011: $2,500,000).

• Swinburne Online is performing ahead of expectations with higher than anticipated student enrolments and revenue per student.

SEEK International

SEEK International owns interests in leading job boards that are exposed to favourable structural and macro trends. SEEK’s International segment includes JobsDB (consolidated from 5 May 2011), Brasil Online Holdings Coöperatief U.A. (“Brasil Online”) (consolidated from 31 May 2012), Online Career Center Mexico S.A. de C.V. (“OCC”) (consolidated from 19 June 2012), other operating costs incurred by SEEK and share of net profits from International associates.

2012 $’000 2011 $’000	Growth
	$’000 %
Operating revenue 62,099 8,727	53,372 n/a
JobsDB 52,926 8,727	44,199 506%
Brasil Online 8,818 –	8,818 n/a
OCC 355 –	355 n/a
Segment EBITDA 20,935 (3,430)	24,365 n/a
JobsDB 20,752 3,535	17,217 n/a
Brasil Online 2,982 –	2,982 n/a
OCC 112 –	112 n/a
Other operating costs (2,911) (6,965)	4,054 58%
EBITDA (%) 34% (39%)
JobsDB 39% 41%
Brasil Online 34% n/a
OCC 32% n/a

SEEK International achieved a strong result with the first full year of consolidation of JobsDB as well as a reduction in other operating costs (prior year included JobsDB acquisition costs of $6,203,000).

Key highlights:

• JobsDB achieved solid earnings growth and an EBITDA result of $20,752,000 reflecting a full year of SEEK’s increased ownership. JobsDB continues to pay dividends, with SEEK’s share being $4,214,000 this year.

• SEEK moved to majority ownership in Brasil Online and OCC, and both businesses achieved solid results in the investment period with underlying revenue growth in Brasil Online of 14% and OCC of 15%, as well as strong cash flows.

During the year dividends and distributions of $9,525,000 were received from these three investments.

Share of net profits of International associates

Further details of SEEK’s investments in International associates are included in note 11.

2012 $’000 2011 $’000	Growth
	$’000 %
Zhaopin 16,490 8,702	7,788 89%
Brasil Online(1) 4,654 4,144	510 12%
JobStreet 2,773 2,679	94 4%
OCC(2) 821 749	72 10%
JobsDB(3) – 715	(715) n/a
Share of net profts of International associates 24,738 16,989	7,749 46%

1. Results included as an associate to 31 May 2012.

2. Results included as an associate to 19 June2012.

3. Comparative result included as JobsDB was equity accounted from 23 December 2010 to 5 May 2011.

Profits from our share of International associates grew 46% to $24,738,000 (2011: $16,989,000).

Key highlights:

• Zhaopin continues to achieve strong results with underlying revenue and EBITDA growth of 28% and 70% respectively from prior year. SEEK’s share of profits increased 89% from the prior year to $16,490,000.

• JobStreet achieved solid underlying revenue and EBITDA growth of 18% and 6% respectively and SEEK received dividends during the year of $1,544,000.

Directors’ Report

Review of operations continued

Analysis of key items below EBITDA

Analysis of key items below EBITDA
Expense/(income) 2012 $’000 2011 $’000	Movement
	$’000 %
Interest expense 23,650 14,588	9,062 62%
Interest income (2,976) (1,681)	(1,295) 77%
Depreciation 8,805 6,203	2,602 42%
Amortisation 11,645 6,392	5,253 82%
Amortisation of share-based payments and other long-term incentive schemes 4,130 999	3,131 313%
Fair value (gain)/loss on step acquisitions (28,224) 811	(29,035) n/a
Other non-operating gain (1,130) –	(1,130) n/a
Impairment loss 24,115 –	24,115 n/a
40,015 27,312	12,703 47%

Key highlights:

• The key driver of the increase in interest expense has been the higher average borrowings throughout the current year, primarily as a result of the recent acquisitions (JobsDB in the latter half of the 2011 and more recently Brasil Online and OCC).

• The higher depreciation charge is primarily driven by the Education and International businesses, in particular Think office and campus fit-outs and the full year consolidation of JobsDB.

• The higher amortisation is driven mainly by the full year impact of the amortisation of intangible assets recognised as part of the JobsDB acquisition.

• The increase in amortisation of share-based payments and other long-term incentive schemes reflects additional schemes opened in the year (including the deferred share plan) and additional option allocations. In the prior year, a credit of approximately $2,500,000 was recognised in profit and loss where certain vesting conditions were not met (including the resignation of Paul Bassat).

• The fair value gain of $28,224,000 was recognised as part of the acquisition accounting for the additional ownership interests in Brasil Online and OCC (refer to note 29(a) for further details on these transactions).

• The impairment loss relates to the write down of goodwill and brands and licences in the Think business during the current year (refer to note 14(b)).

Significant changes in the state of affairs

Business combinations

Brasil Online Holdings Coöperatief UA (‘Brasil Online’)

On 31 May 2012, the Group acquired an additional 21.0% interest in Brasil Online, the owner of the two leading employment websites in Brazil, for US$78,750,000 (A$80,563,000 at the exchange rate on the date of the transaction). The acquisition was funded through cash and an additional $30,000,000 drawdown on the syndicated bank debt facility and takes the total interest held in Brasil Online to 51.0%.

Online Career Center Mexico SA de CV (‘OCC’)

On 19 June 2012, the Group acquired an additional 15.6% interest in OCC, the leading employment website in Mexico, for US$22,500,000 (A$22,250,000 at the exchange rate on the date of the transaction). The acquisition was funded through cash and takes the total interest held in OCC to 56.7%.

These acquisitions significantly enhance SEEK’s exposure to the two largest economies in the highly attractive Latin American online employment sector. SEEK has a majority of voting rights and positions on the Board of Directors in both businesses and will play an active role in driving the strategic and growth agenda.

The businesses are considered subsidiaries of SEEK and have been consolidated into the Group from the date of acquisition. Refer to note 29(a) in the Financial Report for further information in relation to these transactions.

Change in key management personnel

On 1 October 2011 SEEK appointed David Gibbons as Chief Information Officer (CIO). For further information refer to the Remuneration Report.

Matters subsequent to the end of the financial year

Syndicated debt facility

The Group is in the process of refinancing the existing syndicated debt facility to extend the maturity by at least a further three years. The refinancing process is progressing well and is expected to be completed within the next few weeks.

Minority shareholding in Think

SEEK is in exclusive discussions with a global education company with the company looking to acquire a minority shareholding (approximately 20%) in Think. If completed, the investment will be accompanied by board representation in Think proportionate to its shareholding and typical minority shareholder protection rights. The strategic rationale for SEEK is that it brings onto the Think Board additional expertise and capabilities to assist in the ongoing growth of Think.

Additional investment in Swinburne Online

On 1 July 2012, as detailed in the joint venture agreement, SEEK and Swinburne University each contributed an additional $2,500,000 to Swinburne Online. SEEK will recognise this transaction as an additional investment in Swinburne Online.

No other matters or circumstances have arisen since 30 June 2012 that have significantly affected, or may significantly affect the Group’s operations in future financial years, the results of those operations in future financial years, or the Group’s state of affairs in future financial years.

Likely developments and expected results of operations

At the date of this report there are no likely developments in the operations of the consolidated entity constituted by the SEEK Group which would materially impact the results of the Group. Further information about the Group’s future results has not been disclosed as it could be prejudicial to the best interests of the Group.

Directors’ Report

SEEK’s environmental, social and governance framework

SEEK is focused on continually enhancing its positive organisational culture and values, through its investment in the well-being and professional development of SEEK employees and the ongoing promotion of employee engagement.

SEEK’s values support its culture of ethical corporate conduct. SEEK contributes to the wider community through the SEEK Volunteer website, and by providing volunteering opportunities to employees to directly assist and/or donate to charitable organisations. The Company is also committed to reducing its corporate carbon footprint, which has been achieved through the implementation of a number of environmental sustainability programs.

SEEK social and governance

Employee development and engagement

SEEK measures employee engagement through bi-annual “Insight” surveys. In 2012, SEEK was recognised as a 2012 Best Employer in the annual Aon Hewitt accreditation program, the seventh time the organisation has received this honour out of the eight years in which it has participated in the study.

SEEK also has innovative talent development programs, as well as professional development opportunities provided through both internal and external programs, mentoring and coaching.

SEEK promotes the health and well-being of its employees by offering a variety of group and individual sporting activities for staff, discount gym memberships, fruit and healthy snack options and regular communications promoting well-being in the workplace.

Community

SEEK’s community contribution program is known as SEEK Village. SEEK Village manages the SEEK Volunteer website in partnership with Volunteering Australia and Volunteering WA, which aims to provide volunteers with volunteering opportunities suited to their skills and requirements. This year SEEK has invested in the redevelopment and improvement of the SEEK Volunteer website which launched in August 2012. This was supported by a major campaign to raise awareness of the site to prospective volunteers with significant pro bono support from media companies across Australia.

SEEK also encourages employees to contribute directly to the wider community through the internal volunteer program, where employees are provided one day a year to work for a charitable organisation of their choice. SEEK also supports selected charities through a workplace donation program called Bright Futures.

Corporate Conduct

SEEK’s Code of Conduct sets out the tenets of ethical and respectful conduct against which all employees are required to comply when dealing with each other, our suppliers, customers, shareholders and external stakeholders, and the broader community. These include acting honestly, in good faith and in the best interests of the Company, without conflict of interest or improperly taking advantage of position or confidential information, and all times within the law.

In turn, SEEK’s whistleblower policy protects employees from detrimental action where they disclose in good faith and with reasonable grounds any unethical or improper conduct, financial impropriety or fraud, contravention of legal provisions or auditing non-disclosure within the organisation.

Governance

SEEK is committed to strong and effective governance frameworks. SEEK’s corporate governance policies are described in the Corporate Governance Statement set out in the Directors’ Report and are also available for viewing from the Company website seek.com.au in the Investor section.

SEEK environment

Sustainability programs

SEEK has a number of sustainability programs which include:

(i) SEEK Green

SEEK Green is an internal program which focuses on sustainability and minimising SEEK’s environmental impact. SEEK Green identifies behaviours, work practices and in-house initiatives associated with carbon reduction, and implements improvements in the areas of energy, waste reduction and recycling, consumables, cleaning and water.

Some initiatives include reducing consumption of paper and energy to reduce carbon consumption, and the introduction of a mobile phone recycling program to reduce landfill. SEEK’s Enviro Council also helps the organisation to drive a greener working environment by ensuring the adoption of better environmental practices while achieving its business goals.

(ii) Carbon offsets

SEEK’s business emits low levels of carbon emissions. Since November 2007, SEEK has collected energy consumption and travel data and engaged an external consultant to calculate its greenhouse gas emissions for its domestic online employment business and SEEK Learning. SEEK continues to offset greenhouse gas emissions associated with electricity and natural gas consumption and business air travel through the purchase of offsets from Origin Energy’s Carbon Reduction Scheme.

SEEK is compliant with environmental legislative requirements

As a result of SEEK’s low greenhouse gas emissions, energy consumption and waste management program, it is compliant with current environmental legislative requirements as set out in the National Greenhouse and Energy Reporting (NGER) and Energy Efficiency Opportunities (EEO) Acts, as well as waste legislation. Due to SEEK’s current level of scope 1 greenhouse emissions, SEEK is not liable under the Clean Energy Act 2011 .

Directors’ Report

Information on directors

	Robert (Bob) C G Watson	Andrew R Bassat	Colin B Carter
Position	Chairman, independent	Chief Executive Offcer	Independent non-executive director
	non-executive director	Co-founder
Age	56	46	69
Appointed	February 1999,	September 1997	March 2005
	Chairman since August 2009
Other current	None.	None.	Wesfarmers Limited (non-executive)
directorships			since October 2002.
Former	Cytopia Limited (non-executive) June	None.	None.
directorships in	2003 to February 2010.Cytopia was
last three years	acquired in 2010 by YM Biosciences Inc (incorporated in Canada). Removed
	from the ASX in February 2010.
Special	Chairman of the Board.	Chief Executive Offcer.	Member of the
responsibilities	Chairman of the Remuneration	Managing Director.	Remuneration Committee.
	Committee.		Member of the Audit and Risk
	Member of the Audit and Risk.		Management Committee.
	Management Committee.		Member of the Nomination
	Chairman of the Nomination		Committee.
	Committee.
Interests in	4,238,648 shares, representing	13,500,113 shares, representing	94,458 shares, representing 0.03%
shares and	1.26% of issued capital.	4.00% of issued capital and	of issued capital.
options		3,652,357 options.
Experience and	Bob Watson has 25 years at CEO	Andrew is the CEO and Managing	Colin Carter has an extensive
expertise	and director level in the information	Director of SEEK, and co-founded	consulting background in
	technology, internet, recruitment	SEEK in 1997. He has been involved	organisational and business strategy.
	and labour hire industries. His Chief	in all stages of the development	He is a former Senior Partner of,
	Executive roles have included Mayne	of the business since then.	and a current senior adviser to,
	Nickless Computer Services, Data Sciences International (in the UK) and Lend Lease Employer Systems. Bob founded and developed several private technology businesses including Australia’s largest IT labour contracting business which was sold to Adecco where Bob was subsequently appointed Australasian CEO.	Andrew is an Executive Director of SEEK Limited. He is also a Director of a number of the Group’s fully owned Australian subsidiaries as well as a director on the majority of the Group’s International investments and holding companies. He is a Director of the charitable Shane Warne Foundation. Prior to co-founding SEEK, Andrew was a management consultant with Booz Allen Hamilton and prior to that, he worked as a solicitor at Corrs Chambers Westgarth. Andrew holds a Bachelor of Science (Computer Science) degree from the University	The Boston Consulting Group. Colin is a non-executive Director of ASX-listed companies Wesfarmers Limited and Lend Lease Corporation Ltd, and is a Director of World Vision Australia. He is President of the Geelong Football Club. He is also a director of The Ladder Project (for youth homelessness). In February 2010, Colin was appointed by the Federal government to the new position of Government Ambassador for Business Action to support the economic development of Indigenous communities.
		of Melbourne, a Bachelor of Laws	Colin has a Bachelor of Commerce
		(Honours) degree from Monash	degree from Melbourne University
		University, and a Master of Business	and an MBA from Harvard Business
		Administration degree from	School where he graduated with
		Melbourne Business School.	distinction and as a Baker Scholar.

Neil G Chatfield Denise I Bradley Independent non-executive director Independent non-executive director 58 70 June 2005 February 2010 Virgin Australia Holdings Limited (non-executive) since May 2006 None. and Chairman since June 2007. Transurban Group (non-executive) since February 2009. Grange Resources Limited (non-executive) since January 2009. Whitehaven Coal (non-executive) 2007 to 2012. None. Chairman of the Audit and Risk Management Committee. Member of the Remuneration Committee. Member of the Nomination Committee. Member of the Nomination Committee.

32,656 shares, representing 0.01% of issued capital.

Neil Chatfield is an established executive and non-executive director with extensive experience across all facets of company management, and with specific expertise in financial management, capital markets, mergers and acquisitions, and risk management.

In addition to SEEK, Neil also holds non-executive roles across a range of industries in ASX listed companies and is currently the Chairman of Virgin Australia, a non-executive Director of Transurban Group and Grange Resources, and from 2007 to 2012 was a non-executive Director of Whitehaven Coal.

Neil’s most recent executive role was Executive Director and Chief Financial Officer of ASX listed Toll Holdings, Australia's largest transport and logistics company; a position he held for over 10 years.

Neil has a Masters of Business in Finance and Accounting, and is a Fellow of CPA Australia (FCPA) and Fellow of the Australian Institute of Company Directors (FAICD).

4,000 shares, representing 0.0012% of issued capital. Emeritus Professor Denise Bradley AC has been extensively involved in national education policy groups for more than two decades. She was a member of the Commonwealth Tertiary Education Commission (CTEC) and later of the National Board of Employment, Education and Training (NBEET) and was deputy chair of the Higher Education Council of NBEET.

In 2008 she chaired the Expert Panel which undertook the National Review of Higher Education. She has also had significant roles on other government and educational boards and committees involved in higher education and training. Professor Bradley is also a former President and Chair of IDP Education Pty Ltd in which SEEK has a 50% investment in partnership with Australian Universities.

Professor Bradley is currently a member of the Education Investment Fund Advisory Board; a member of the Australian National Commission for UNESCO; a member of the NSW National Partnerships Evaluation Committee, Chair of VERNet and of the Australian Health Workforce Advisory Council.

On Australia Day 2008 Professor Bradley was made a Companion of the Order of Australia, Australia’s highest honour, in recognition of her service to higher education.

Professor Bradley has a Bachelor of Arts degree from Sydney University, a Diploma of Education from Adelaide University, a Diploma of Librarianship from the University of NSW, and a Masters degree in Social Administration from Flinders University. She also holds Honorary Doctorates from Pukyong University (Korea), University of South Australia, Royal Melbourne Institute of Technology and the University of Western Sydney.

Directors’ Report

Company secretary

The Company Secretary is Moana Weir. Moana was appointed General Counsel and Company Secretary of SEEK in December 2010. Moana has 11 years senior management experience in listed online companies, having previously been the Company Secretary and General Counsel at both REA Group Ltd (realestate.com.au) and Melbourne IT Ltd.

Moana was appointed as a non-executive director of V/Line Corporation in October 2010 and is the Chair of the V/Line Remuneration Committee. She is an independent director with a school not-for-profit organisation. She holds a BA, LLB (Hons) and is a Graduate member of the Australian Institute of Company Directors (GAICD).

Meetings of directors

	Board Audit and Risk Management Committee Remuneration Committee Nomination Committee
	Attended Held Attended Held Attended Held Attended Held
R C G Watson	10 10 5 5 5 5 – –
A R Bassat	10 10 5 – 5 – – –
C B Carter	10 10 3 5 4 5 – –
N G Chatfeld	10 10 5 5 3* – – –
D I Bradley	9 10 2* – 5 5 – –

• Denotes Committee meetings attended by a director as an invitee (not as a member of the Committee).

Retirement, election and continuation in office of directors

Under the SEEK constitution, the following directors will seek re-election at the 2012 Annual General Meeting (AGM):

–

Colin Carter, being eligible, will seek re-election at the next AGM.

Under the SEEK Limited constitution, directors cannot serve beyond three years or the third AGM after their appointment, whichever is longer.

If no director is in a position requiring them to stand for re-election in the normal rotation, then one director must stand for re-election at the AGM, as selected under the rules of the constitution.

Andrew Bassat, who is Managing Director and Chief Executive Officer, is not required to be re-elected while he holds the position of Managing Director.

Insurance of officers

SEEK Limited has entered into Deeds of Indemnity with all SEEK Limited directors in accordance with the SEEK constitution. During the financial year, SEEK Limited paid a premium to insure the directors, officers and managers of the Company and its controlled entities. The insurance contract requires that the amount of the premium paid is confidential.

Proceedings on behalf of the Company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.

Non-audit services

The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the consolidated entity are important. Such services are typically associated with large transactions and are one-off in nature.

Details of the amounts paid to the auditor (PricewaterhouseCoopers) for non-audit services provided during the year are set out on page 23.

The Board of Directors has considered the position and, in accordance with the advice received from the Audit and Risk Management Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 . The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• all non-audit services have been reviewed by the Audit and Risk Management Committee to ensure they do not impact the integrity and objectivity of the auditor;

• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 36.

During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, its related practices and non-related audit firms.

entity, its related practices and non-related audit frms.
	Consolidated
	2012 $ 2011 $
(a) Other assurance services
_PricewaterhouseCoopers_Australian frm:
Due diligence services	674,404 1,345,462
Other services	– –
Total remuneration for other assurance services	674,404 1,345,462
(b) Taxation services
PricewaterhouseCoopers Australian frm:
Tax compliance services and consulting	53,900 553,676
Tax related due diligence services	586,962 55,195
Tax consulting	43,138 71,935
Related Practices of PricewaterhouseCoopers Australian frm:
Tax compliance services, including review of company tax returns	20,106 8,981
Total remuneration for taxation services	704,106 689,787
(c) Other advisory services
PricewaterhouseCoopers Australian frm:
Education awards project	– 30,132
Executive team benchmarking	– 49,900
Other services	– 16,058
Total remuneration for other advisory services	– 96,090
Total remuneration for non-audit services	1,378,510 2,131,339

It is the Group’s policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit duties where PricewaterhouseCoopers’ expertise and experience with the Group are important. These assignments are principally tax advice and due diligence reporting on acquisitions, or where PricewaterhouseCoopers is awarded assignments on a competitive basis. It is the Group’s policy to seek competitive tenders for all major consulting projects.

Rounding of amounts

The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities & Investments Commission, relating to the “rounding off” of amounts in the Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

Auditor

PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

Directors’ Report

Remuneration Report

This Remuneration Report sets out remuneration information for SEEK Limited’s non-executive directors, executive directors and other senior executives (key management personnel) of the Group. The information in this report has been prepared based on the requirements of the Corporations Act 2001 and the applicable accounting standards. The report has been audited.

Directors and executives disclosed in this report

Name	Position
Non-executive directors
R C G Watson	Chairman, non-executive director
C B Carter	Non-executive director
N G Chatfeld	Non-executive director
D I Bradley	Non-executive director
Executive director
A R Bassat	Managing Director and Chief Executive Offcer (“CEO”)
Other key management personnel (“KMP”)
J A Armstrong	Chief Financial Offcer
J S Powell	Managing Director (SEEK Employment (Australia & New Zealand))
J S Lenga	Managing Director (SEEK International)
P D Everingham	Managing Director (SEEK Education)
M F Callaghan	Group Human Resources Director
H J Souness	Marketing Director
M J Ilczynski	Group Strategy Director
D J Gibbons	Chief Information Offcer (appointed 1 October 2011)

Remuneration governance

Remuneration Committee function

The Remuneration Committee reviews and makes recommendations to the Board on remuneration packages and policies applicable to the CEO, non-executive directors, and where considered appropriate, executives. The Remuneration Committee is responsible for ensuring that remuneration levels are set competitively to attract appropriately qualified and experienced non-executive directors, executive directors and executives.

The Remuneration Committee makes decisions in the context of SEEK’s remuneration strategy and ensures shareholder and employee interests are aligned.

The Board (on recommendation from the Remuneration Committee) determines short-term incentive (“STI”) payment quantum and long-term incentive (“LTI”) vesting as follows:

• STI quantum is determined taking into account EBITDA results and CEO recommendations regarding executive performance against individual objectives and SEEK values criteria.

• LTI performance achievement is determined taking into account a combination of (as appropriate per plan):

• Relative Total Shareholder Return (“RTSR”) result for comparator companies (ASX200 excluding real estate, energy and metals and mining) undertaken by independent consultants;

• Earnings Per Share (“EPS”) aggregate target over a three year period and set by the Board. Minimum and stretch aggregate EPS targets are set;

• Return On Investment (“ROI”) result in comparison against minimum and maximum targets.

In this way, those components of incentive payments which are based on corporate performance are independently assessed.

The Board has absolute discretion to vary remuneration outcomes for STI and LTI payments (including in change of control circumstances) and to determine whether a portion of existing incentives may vest on cessation of employment. Upon leaving SEEK, all STI and unvested LTI payments lapse and the Board has not exercised discretion to award pro-rata payments for leavers in either the current or previous financial years.

Use of remuneration advisors

To ensure the Remuneration Committee is fully informed of market practice and trends, regulatory developments and shareholder views, the Remuneration Committee approved the engagement of Mercer Consulting (Australia) Pty Ltd during the year. Mercer provided remuneration recommendations regarding STI and LTI design, executive benchmarking, profit share plan design, non-executive director fees and CEO remuneration for the new structure to be implemented during FY13. Both Mercer and the Remuneration Committee are satisfied the recommendations received are free from undue influence from the key management personnel (KMP) to whom the remuneration recommendations apply. The following arrangements were made to meet this requirement:

• Mercer was engaged by, and reported directly to, the chair of the Remuneration Committee. The agreement for the provision of remuneration consulting services was executed by the chair of the Remuneration Committee under delegated authority on behalf of the Board;

• The report containing the remuneration recommendations was provided by Mercer directly to the chair of the Remuneration Committee; and

• Mercer was permitted to speak to management throughout the engagement to understand Company processes, practices and other business issues and obtain management perspectives. However Mercer was not permitted to provide any member of management with a copy of their draft or final report that contained the remuneration recommendations.

The remuneration recommendations were provided to SEEK as an input into decision making only. The Remuneration Committee considered the recommendations, along with other factors, in making its remuneration decisions.

The fees paid to Mercer for the remuneration recommendations were $156,145. Fees paid for other services provided by Mercer during the year were $8,750.

In addition, during the first half of the financial year, Guerdon Associates were engaged to benchmark executive salaries against the market. The fees paid to Guerdon were $27,379.

Non-executive director fees

Fee policy

The following table outlines the non-executive director fee policy:

Aggregate non-executive	Non-executive directors’ fees are determined within an aggregate directors’ fee pool limit.
director fee pool	The fee pool currently stands at $1,250,000 per annum, covering all non-executive directors.
	The current fee pool was approved by shareholders at the 2011 Annual General Meeting (AGM).
Non-executive	Non-executive directors’ fees and payments are reviewed periodically by the Remuneration
director fee reviews	Committee, and approved by the Board, to ensure fees are appropriately positioned against the
	market to attract and retain high calibre non-executive director talent. The current non-executive
	director fee structure was implemented from 1 July 2010, following a review by independent
	remuneration consultants (described in the 2011 Remuneration Report). There was a 5% increase
	in non-executive director remuneration from 1 July 2011 and a subsequent 5% increase from
	1 July 2012.
	The Chairman’s fees are determined as a separate exercise to those of other non-executive
	directors’ fees. The Chairman is not present at any discussions relating to determination
	of his own remuneration.
Non-executive	Fees and payments to non-executive directors are determined on an individual basis in accordance
director fees	with assigned responsibilities and demands that are made on the directors. The fees for each
	director are as follows:
	R C G Watson Chairman of the Board $252,000
	C B Carter Non-executive director $110,250
	N G Chatfeld Audit and Risk Management Committee Chair $152,250
	D I Bradley Non-executive director $110,250
	In addition to the fees, non-executive directors receive superannuation payments in accordance
	with statutory requirements, calculated as 9% of directors’ fees.
Non-executive director	All non-executive directors are required to acquire over time a SEEK shareholding equivalent to one
minimum shareholding	year of directors’ fees. Non-executive directors have the option of reaching this level by purchasing
requirement	shares themselves or by opting into an arrangement with SEEK. This arrangement is that SEEK
	purchases an amount of shares on behalf of the non-executive director twice a year immediately
	following the fnancial results release as permitted under the terms of the SEEK share trading policy,
	to the value of 20% of their annual fee after tax. Directors may opt into a greater amount than 20%
	if they wish. When the non-executive director reaches the required shareholding they can opt to end
	the arrangement and receive their full annual fee as cash.
Performance-based	Non-executive directors do not receive share options or any performance-based remuneration.
remuneration

Directors’ Report

Remuneration Report continued

Fees for 2011 and 2012

Details of the nature and amount of each element of the remuneration of each non-executive director of the parent entity and the Group for the year ended 30 June 2012 is set out in the following table:

		Short-term benefts Post-employment benefts Total Director fees $ Cash Bonus $ Non-monetary benefts $ Super- annuation $ Retirement benefts $ $
Non-executive directors
R C G Watson	2012 252,000 – – 22,680 – 274,680
	2011 240,000 – – 21,600 – 261,600
C B Carter	2012 110,250 – – 9,923 – 120,173
	2011 105,000 – – 9,450 – 114,450
N G Chatfeld	2012 152,250 – – 13,703 – 165,953
	2011 145,000 – – 13,050 – 158,050
D I Bradley	2012 110,250 – – 9,923 – 120,173
	2011 105,000 – – 9,450 – 114,450
Total	2012 624,750 – – 56,229 – 680,979
	2011 595,000 – – 53,550 – 648,550

Executive remuneration strategy and framework

Overview of executive remuneration strategy, structure and mix

SEEK’s remuneration strategy provides a strong link between performance and reward. Performance measures are sufficiently stretching to provide reward to executives only when shareholder value is delivered, while remaining competitive and appropriate to ensure attraction and retention of executives.

The following outlines the key criteria utilised by the Board when considering remuneration structures:

• Attraction and retention of high calibre executives

• Alignment to shareholder expectations

• Alignment to achievement of Company vision and goals

• Reasonableness and transparency.

SEEK is currently undertaking a review of the SEEK executive remuneration structure and proposes to change the structure for FY13 as a result of the review. One of the key objectives of the Board in undertaking the review is to emphasise the focus for executives to build long-term and sustainable shareholder value. Refer to the Chairman's letter for background to the new executive remuneration structure for FY13. Full disclosure will be made in FY13 Remuneration Report.

The following table outlines the components of the executive remuneration structure for the 2012 financial year:

Base pay	Benefts	Short-term Incentives	Long-term Incentives
Base salary	Superannuation	Annual cash payment	Grant of share
		(subject to performance)	options or cash
Salary sacrifced benefts and	Salary continuance	Financial and non-fnancial	Performance linked to RTSR
related Fringe Benefts Tax	insurance cover	performance	or growth in business value
			(ROI or EPS)
	Car parking	12 month performance period	3 year performance period
		30% of base pay	40–50% of base pay

The above remuneration mix provides a balance of fixed and variable remuneration, cash and equity, and long-term and short-term performance focus.

Given the CEO is a founder of the Company with a large shareholding, SEEK has developed a customised remuneration structure to support long-term decision making and enhance alignment to shareholders. For further details of the CEO remuneration structure, refer to page 28.

Base pay

Base pay is set at a market competitive rate and is reviewed annually by external remuneration consultants. Base pay is also reviewed on promotion, and upon changes in role requirements or scope. Remuneration is targeted between the 50th and 80th percentile of a comparator group comprising internet, media and industrials seen to be peers based on market capitalisation as at 31 March each year. The comparator group selected is appropriate as it represents the market for talent, and the targeted position reflects a general, market competitive rate for executives. Base pay is structured as a total package which may be delivered as a combination of cash and benefits at the executives’ discretion. There is no guaranteed increase in executive contracts. The comparator group is reassessed regularly to ensure that it remains an appropriate basis of comparison.

As a result of the resignation of Paul Bassat (former joint CEO), the responsibilities for all executive roles increased (with the exception of the Chief Information Officer and Marketing Director). As such, base pay levels were reviewed and increases were awarded from 1 January 2011 where relevant to reflect the revised role scope. During the current financial year, a market review was conducted to benchmark executive base pay against the market and increases were awarded for certain executives from 1 July 2011.

Benefits

Executives receive salary continuance insurance cover, which is provided to all permanent employees of the Company.

Retirement benefits are delivered under the Superannuation Guarantee Charge (SGC). Under current legislation, SEEK Limited provides choice of superannuation funds to all employees. The SEEK Limited default fund is the SEEK Limited Superannuation Plan, which is provided by MLC Limited Group. This fund is an accumulation fund. Other retirement benefits for directors and executives may be provided directly by the Company if the benefit is within statutory limits or is approved by shareholders.

Short-term incentives

Executives participate in a cash incentive plan which delivers payments based on performance against the Company’s annual financial goals as well as non-financial measures assessed at the individual level. The level of the target STI opportunity is set as a percentage of the executive’s base pay, currently set at 30% for all key management personnel. STI payments are capped at 125% of target. Incentives are usually assessed and paid after the release of the Company’s annual results. The CEO does not currently participate in the STI.

The STI plan rewards executives for delivery of financial and non-financial performance as illustrated below:

Non-financial performance

Assessed through an internal performance management program based on individual performance against:

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50%
Base 30% of Total
Pay Base Pay STI
50%
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• Individual objectives

• SEEK values and culture

Each executive’s performance is assessed via a 360° feedback tool by their immediate manager, peers and direct staff reporting to them.

Financial performance

Based on segment or Group performance against EBITDA targets:

EBITDA STI Below 90% of target No STI payable 90–99% of target 80% of allocated STI plus additional (inclusive) 2% of allocated STI for every additional 1% that EBITDA exceeds 90% of target 100% of target 100% of allocated STI Above 100% of target 100% of allocated STI plus additional 1% of allocated STI for every additional 1% that EBITDA exceeds 100% of target up to a cap of 125%

Directors’ Report

Remuneration Report continued

Long-term Incentives

Similar to the STI, the LTI is based on a maximum value calculated as a percentage of base pay, ranging from 40% to 50% of base salary.

Since the first plan commenced in 2000, the Group has established a number of different LTI plans in which executives have participated depending on when they joined the organisation. Many of these plans are closed and no further awards will be made under these plans. Refer to the 2011 Remuneration Report for an overview of these plans. Details of awards granted in previous years that are yet to vest are found in Appendix A. In accordance with SEEK’s share trading policy, participants are prohibited from engaging in hedging arrangements over unvested securities.

The Managing Director (SEEK International) participates in an additional LTI. The performance measures for the additional LTI support long-term business growth of the International business, rewarding for sustained return on investment.

The following grants were made in the 2012 financial year:

		Options Plans	Options Plans
Objectives	Align the reward for participants with shareholder		wealth and Group or segment
	performance over a period of time
Participants	All executives		Managing Director (SEEK International)
Grant date	1 September 2011		1 September 2011
Vehicle	Options		Options
Vesting period	3 years with vesting on 1 September 2014		3 years with vesting on 1 September 2014
and Vest date	No retesting thereafter		No retesting thereafter
Expiry date	1 September 2016		1 September 2016
Share price at grant date	$5.62		$5.62
Performance conditions	Dependent on achieving RTSR and individual		Dependent on achieving a cumulative ROI
	performance hurdles.		of SEEK International over a three year period
			and individual performance hurdles.
Vesting schedule	Entitlement to vest options under the RTSR		ROI targets are set taking into account business
	measurement test is:		forecasts and industry expectations, approved by
	– Below median: 0% vest		the Board. The targets are commercially sensitive
	– From median to 75th percentile: 50% vest plus 2% for every additional percent above median		and will therefore be disclosed on a retrospective basis upon vesting.
	– 75th percentile or higher: 100% vest.
Exercise price	$5.36		$5.36
Fair value	$1.23		$0.73

Chief Executive Officer remuneration

The Chief Executive Officer’s remuneration comprises:

• Base pay

• Fixed payment of options (refer below)

• Benefits

• LTI subject to RTSR performance.

To support long-term strategic decision making, the CEO does not participate in an STI plan. There are no potential conflicts for the CEO to maximise short-term gain at the expense of long-term performance.

As the Company informed the market last year, Andrew Bassat’s remuneration was reviewed at the time he signed a new employment agreement in February 2011 to commit to the role of sole CEO. The terms of the remuneration review were initially determined by the Board and then approved by the Company’s shareholders at the 2011 AGM.

In summary it was determined by the Board and approved by the Company’s shareholders that Andrew’s remuneration would be structured to ensure alignment with shareholder interests. In addition to a fixed salary component of $770,000, Andrew would be issued a fixed payment of options over two years (50% each year) of

$2,000,000 (determined by reference to the fair value of the options) at the date of issuance, being 1 January 2011. Details of the options plan are outlined in the table opposite.

Under his regular salary package, the CEO was also granted a number of options during the year under an LTI Plan with assigned RTSR hurdles to further support long-term strategic decision making.

The key terms of the options granted to the CEO during the year (which received shareholder approval at the 2011 AGM) are as follows:

	Fixed Remuneration Option Grant	Fixed Remuneration Option Grant	CEO November 2011 Options Plan
Objectives	Ensure retention of the CEO and support market		Align the reward for CEO with shareholder wealth
	competitive remuneration levels		and Group performance over a period of time
	Tranche 1	Tranche 2
Grant date	21 November 2011	21 November 2011	21 November 2011
Vehicle	Options	Options	Options
Vesting period	1 year from 1 January	2 years from 1 January	3 years to 1 September 2014
and vest date	2011 (frst 50% of	2011 (second 50% of
	options vested on 31	options vest on 31
	December 2011)	December 2012)
Expiry date	31 December 2014	31 December 2014	1 September 2016
Share price at grant date	$6.05	$6.05	$6.05
Performance conditions	Service with Company	Service with Company	Dependent on achieving RTSR and individual
			performance hurdles
Vesting schedule	As per vesting period	As per vesting period	Entitlement to vest options under the RTSR
			measurement test is:
			– Below median: 0% vest
			– From median to 75th percentile: 50% vest plus
			2% for every additional percent above median
			– 75th percentile or higher: 100% vest
Exercise price	$6.80	$6.80	$5.36
Fair value	Tranche 1: $0.63	Tranche 2: $0.74	$1.41

Service agreements

Remuneration and other terms of employment for the CEO and the other key management personnel are formalised in service agreements. Each of these agreements provide for base salary, short-term and long-term incentives and are reviewed annually by the Remuneration Committee.

All executives (excluding CEO) have termination notice periods of three months by employee and three months by employer. In addition, all executives (excluding CEO) have non-competition periods of three months within Australia from termination date.

The CEO has a termination notice period of six months by employee and six months by employer. The Company can terminate employment with a payment in lieu of notice. In addition, the CEO has a non-competition period of three months within Australia from termination date.

Directors’ Report

Remuneration Report continued

Remuneration outcomes

Relationship between remuneration and Company performance

The overall level of executive rewards takes into account the performance of the Group over a number of years, whereby SEEK has elected to move towards a stronger link between Company results and executive remuneration.

Historical earnings and shareholder wealth information

The table below sets out summary information about the Group’s earnings and movements in shareholders’ wealth for the past five years up to and including the current financial year as well as movements between executives’ compensation (excluding non-executive directors) and SEEK’s performance for the same period.

	Balances 2012 2011 2010 2009 2008	Change
		2012 2011 2010 2009 2008
Total Executive Remuneration ($'000)	8,610 6,275 5,567 4,241 4,430	37.2% 12.7% 31.3% (4.3%) (1.6%)
Revenue ($'000)	445,230 344,735 281,792 209,778 211,488	29.2% 22.3% 34.3% (0.8%) 33.1%
Segment EBITDA ($'000)	193,625 135,636 117,365 97,767 109,809	42.8% 15.6% 20.0% (11.0%) 36.7%
NPAT attributable to SEEK ($'000)	131,680 97,688 89,521 55,301 76,280	34.8% 9.1% 61.9% (27.5%) 37.4%
Share price at year end ($)	6.34 6.44 7.01 4.17 5.00	(1.6%) (8.1%) 68.1% (16.6%) (32.2%)
Weighted average share price ($)	6.11 6.86 6.30 3.86 6.60	(10.9%) 8.8% 63.1% (41.5%) 7.0%
Basic EPS (cents)	39.1 29.0 26.6 18.8 26.6	34.8% 9.1% 41.5% (29.3%) 35.7%
Total dividend (cents per share)	17.3 14.3 11.9 9.2 18.6	21.0% 20.2% 29.3% (50.5%) 35.8%

Total remuneration outcomes

The total executive remuneration for the year is $8,610,000, which represents 6.5% of net profit after tax attributable to SEEK; this proportion has remained constant in comparison to the prior year. The change in total executive remuneration over the last five years is in line with the performance of the business with higher remuneration paid in stronger years, as illustrated in the graph below.

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Change (%) Total Executive Remuneration Segment EBITDA NPAT attributable to SEEK EPS
80
60
40
20
0
(20)
(40)
(60)
2008 2009 2010 2011 2012
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LTI performance outcomes

The current LTI plans are option plans which have been designed to align executive rewards with shareholder value through the use of RTSR and EPS hurdles. Several of these plans have not yet vested and all plans have exercise periods over several years.

The 2009 LTI plan vested on 30 June 2012 due to the achievement of both RTSR and EPS hurdles over the three year term. SEEK ranked in the 82.5th percentile against the comparator group (RTSR target is met if over 75th percentile achieved) and achieved the maximum EPS growth rate over the three year period.

STI performance outcomes

As discussed on page 27, the STI plan rewards executives for delivery of financial (segment or Group EBITDA) and non-financial performance. The STI has fluctuated with the level of net profit after tax attributable to SEEK Limited over the past five years, with higher STIs payable in the stronger years.

The STI performance outcomes for the 2012 financial year for each segment are as follows:

• SEEK’s domestic Employment business achieved a solid result despite subdued labour market conditions, with revenue growth of 11% on the prior period attributable to volume growth of 1% and a 10% increase in yield.

• SEEK Education continued its trend of improving performance with a solid result in the current year. Revenue growth of 20% was achieved on the prior period with strong results from SEEK Learning and a positive EBITDA result from THINK.

• SEEK International achieved a strong result with the first full year of consolidation of JobsDB as well as a reduction in other operating costs. The Group also moved to majority ownership in Brasil Online and OCC, and both businesses achieved solid results in the investment period.

The percentage of STI achieved is based on meeting financial (segment or Group EBITDA) and non-financial targets. The non-financial targets are specific to each individual. Where the percentage of STI achieved exceeds 100%, this implies the segment or Group has exceeded 100% of target EBITDA. The portion of STI payments relating to financial performance is capped at 125% of target. The following tables outlines the STI achieved in the year for each executive.

		Percentage of	Percentage of
Executive	EBITDA target	STI achieved	STI forfeited
J Powell	Employment	83%	17%
P Everingham	Education	113%	nil
J Lenga	International	101%	nil
J Armstrong	Group	88%	12%
M Ilczynski	Education	113%	nil
M Callaghan(1)	Group	88%	12%
H Souness(2)	Employment	83%	17%
D Gibbons(3)	Group	88%	12%

1. Percentages based on bonus achieved in comparison to pro-rated maximum as a result of maternity leave.

2. Percentages based on bonus achieved in comparison to pro-rated maximum as a result of pro-rated working hours.

3. Percentages based on bonus achieved in comparison to pro-rated maximum as a result of start date of 1 October 2011.

Directors’ Report

Short-term benefts Post-employment benefts Subtotal Long-term benefts Total Percentage of remuneration that consists of: Cash salary(1) $ Cash bonus $ Non-monetary benefts $ Super- annuation(2) $ Retirement benefts $ $ Long service leave $ Share-based payments(3) $ Fixed remuner- ation options(4) $ Education LTI(5) $ $ Fixed(6) % At risk STI % At risk LTI %	Executive directors	A R Bassat 2012 814,300 – 5,531 25,000 – 844,831 7,551 1,275,198 (41,329) – 2,086,251 39% n/a 61% 2011 748,900 – 5,222 25,000 – 779,122 54,290 769,530 725,144 – 2,328,086 67% n/a 33%	P M Bassat(7) 2012 – – – – – – – – – – – n/a n/a n/a 2011 683,500 – 5,222 25,000 – 713,722 26,725 (691,018) – – 49,429 100% n/a n/a	Other key management personnel	J A Armstrong 2012 571,118 142,877 5,531 25,000 744,526 22,857 149,616 – – 916,999 68% 16% 16% 2011 420,219 56,100 5,222 25,000 – 506,541 18,793 64,115 – – 589,449 80% 10% 10%	C M T Eaton(8) 2012 – – – – – – – – – – – n/a n/a n/a 2011 348,204 45,900 5,317 25,000 – 424,421 24,503 62,182 – – 511,106 79% 9% 12%	J S Powell 2012 706,659 166,363 6,015 25,000 – 904,037 24,071 256,947 – – 1,185,055 64% 14% 22% 2011 578,312 86,250 5,464 25,000 – 695,026 19,671 116,685 – – 831,382 76% 10% 14%	J S Lenga 2012 668,754 189,041 6,015 25,000 – 888,810 18,467 293,553 – – 1,200,830 60% 16% 24% 2011 541,474 85,500 5,464 25,000 – 657,438 40,264 94,310 – – 792,012 77% 11% 12%	P D Everingham(10)(11) 2012 606,143 193,050 5,048 25,000 – 829,241 29,498 79,444 – – 938,183 71% 21% 8% 2011 495,906 58,500 4,738 25,000 – 584,144 14,106 (26,703) – (162,514) 409,033 132% 15% (46%)	M F Callaghan(9) 2012 283,949 65,196 5,383 25,078 – 379,606 31,426 122,095 – – 533,127 65% 12% 23% 2011 216,699 31,684 5,207 22,354 – 275,944 (6,504) 68,879 – – 338,319 70% 10% 20%	H J Souness(9) 2012 270,256 67,179 5,531 25,165 – 368,131 8,287 99,240 – – 475,658 65% 14% 21% 2011 221,981 35,775 5,018 22,185 – 284,959 9,952 62,994 – – 357,905 73% 9% 18%	M J Ilcyznksi(9)(10)(11) 2012 549,970 176,324 5,773 25,000 – 757,067 23,483 72,561 – – 853,111 71% 21% 9% 2011 469,190 61,200 5,283 23,580 – 559,253 21,378 – – (511,912) 68,719 756% 89% (745%)	D J Gibbons(12) 2012 268,642 69,110 3,858 17,483 – 359,093 22,680 38,889 – – 420,662 74% 16% 9% 2011 – – – – – – – – – – – n/a n/a n/a	Total 2012 4,739,791 1,069,140 48,685 217,726 – 6,075,342 188,320 2,387,543 (41,329) – 8,609,876 2011 4,724,385 460,909 52,157 243,119 – 5,480,570 223,178 520,974 725,144 (674,426) 6,275,440	1. Cash salary includes base salary and excess superannuation. 2. Staff can elect to have superannuation capped at $25,000. Any excess super is paid in cash and is included within “Cash salary”. 3. Amounts disclosed refect the value of remuneration consisting of Options and Performance Rights, based on the value of options expensed during the year. Negative amounts indicate expenses reversed during the year due to a failure to satisfy certain vesting conditions. 4. Andrew Bassat was issued 1,156,069 options through a fxed remuneration option arrangement at average ‘fair value’ of $1.73 on offer date of 1 January 2011. Following shareholder approval at the AGM, the options were revalued at an average fair value of $0.69 on grant date of 21 November 2011. The credit in 2012 relates to an adjustment due to the change in fair value. Further details of the options plan is outlined on page 29. 5. Represents estimate of amounts that may be paid in the future. Negative amounts indicate expenses reversed during the year due to lower than expected performance for the Education business across the remaining LTI forecast periods. A nil expense implies no change to the provision in the year. 6. Fixed remuneration includes cash salary, non-monetary benefts, all superannuation benefts, long service leave, fxed remuneration options and termination payments. 7. Paul Bassat resigned effective 1 July 2011. 8. Carey Eaton resigned 1 July 2011. Total remuneration for the day, consisting of cash salary and superannuation, was $1,509. 9. Appointed to Executive management group from 22 July 2010. 10. On 30 June 2011, the 2008-2011 Education LTI plan vested and resulted in an entitlement of $151,961 to Michael Ilczynski. The 2009-2012 Education LTI plan vested on 30 June 2012 and resulted in a nil entitlement to both Michael Ilczynski and Peter Everingham. 11. Restated prior year bonus to refect actual cash payment. 12. David Gibbons was appointed on 1 October 2011 and his total remuneration has been pro-rated from this day.

The following table outlines the details of the LTI grants outstanding for each participant and other movements in options and performance rights in the year. No options will vest if the performance conditions are not satisfed, hence the minimum value of the option yet to vest is nil. Fair value is calculated in accordance with the Group’s accounting policy as discussed in note 1(s)(iv). There were no amounts paid and there are no amounts outstanding or due from KMP in relation to the grant of options during the year. Individual Grant date Number of options and performance rights granted Exercise price $ Value of options at grant date(1) $ Vested(3) % Forfeited/ lapsed(3) % Value of lapse at lapse date(2) $ Financial years in which options may vest Maximum total value of grant yet to vest $	A R Bassat 1/07/2008 914,838 5.29 518,512 29% – – 2012 – 30/11/2009 559,212 4.10 1,688,820 100% – – 2012 – 1/07/2010 502,000 7.39 1,004,000 – – – 2013 334,667 21/11/2011 1,156,069 6.80 2,000,000(4) 50% – – 2012/2013 1,028,901 21/11/2011 964,065 5.36 1,359,332 – – – 2015 1,359,332	J A Armstrong 1/07/2008 23,166 – 70,193 50% 50% 74,479 2012 – 30/06/2009 77,563 4.10 121,386 100% – – 2012 – 1/07/2010 73,530 7.39 147,060 – – – 2013 147,060 1/09/2011 176,000 5.36 216,480 – – – 2015 216,480	D J Gibbons 1/09/2011 113,821 5.36 140,000 – – – 2015 101,388	J S Powell 1/07/2008 43,856 – 132,884 50% 50% 140,997 2012 – 30/06/2009 150,316 4.10 235,245 100% – – 2012 – 1/07/2010 129,438 7.39 258,876 – – – 2013 258,876 1/09/2011 269,970 5.36 332,063 – – – 2015 332,063	J S Lenga 1/07/2008 28,355 – 85,916 50% 50% 91,161 2012 – 30/06/2009 94,937 4.10 148,576 100% – – 2012 – 1/07/2010 113,750 7.39 227,500 – – – 2013 227,500 1/09/2011 254,878 5.36 313,500 – – – 2015 313,500 1/09/2011 400,000 5.36 292,000 – – – 2015 292,000	P D Everingham 1/07/2008 24,386 – 73,890 50% 50% 78,401 2012 – 1/09/2011 232,520 5.36 286,000 – – – 2015 286,000	M J Ilcyznksi 1/09/2011 212,375 5.36 261,221 – – – 2015 189,177	M F Callaghan 1/07/2008 18,949 – 57,415 50% 50% 60,921 2012 – 30/06/2009 63,443 4.10 99,288 100% – – 2012 – 1/07/2010 60,000 7.39 120,000 – – – 2013 120,000 1/09/2011 143,411 5.36 176,396 – – – 2015 176,396	H J Souness 1/07/2008 18,045 – 54,676 50% 50% 58,015 2012 – 30/06/2009 60,418 4.10 94,554 100% – – 2012 – 1/07/2010 53,000 7.39 106,000 – – – 2013 106,000 1/09/2011 94,797 5.36 116,600 – – – 2015 116,600	1. The value at grant date calculated in accordance with AASB 2:Share-based Payments. 2. The value at lapse date of options that were granted as part of remuneration and that lapsed during the year due to a failure to satisfy vesting conditions. The value is determined at the time of lapsing. 3. The percentage of options vested and forfeited is calculated on total options that were due to vest in the current fnancial year for each particular grant. 4. Andrew was issued $2,000,000 in options over two years through a fxed remuneration options arrangement at an average fair value of $1.73 on offer date of 1 January 2011, determined by external remuneration consultants. Following approval at the AGM, and in accordance with AASB 2:Share-based Payments, the options were revalued at an average fair value of $0.69 on grant date of 21 November 2011, giving a total value of the options of $797,688. SEEK Limited Annual Report 2012 33

Directors’ Report

Remuneration Report continued

Shares provided on exercise of remuneration options

Details of ordinary shares in the Company provided as a result of the exercise of remuneration options to each director of SEEK Limited and other key management personnel of the Group are set out below.

		Number of ordinary	Weighted	Value at
	Date of exercise	shares issued upon exercise	average exercise price	exercise date(1)	Options fulflment
Other key management personnel
J A Armstrong	5 October 2011	11,583	Nil	60,382	Shares purchased on market
J S Powell	5 October 2011	21,928	Nil	114,311	Shares purchased on market
J S Lenga	5 October 2011	14,178	Nil	73,910	Shares purchased on market
P D Everingham	5 October 2011	12,193	Nil	63,562	Shares purchased on market
M F Callaghan	5 October 2011	8,422	Nil	43,904	Shares purchased on market
H J Souness	5 October 2011	9,023	Nil	47,037	Shares purchased on market

1. The value at exercise date of the options that were granted as part of remuneration and were exercised during the year has been determined as the intrinsic value of the options at that date.

On 1 July 2011 Paul Bassat (former Executive Director) and Carey Eaton (former KMP) exercised 471,011 and 10,208 options respectively, which were satisfied by the issue of new shares.

Shares under option

Unissued ordinary shares of SEEK Limited under option at the date of this report are as follows:

		Exercise price
Date granted	Expiry date	of options	Number
Executive Director Options
1 July 2008	1 July 2013	$5.29	471,011
30 November 2009	30 November 2014	$4.10	559,212
21 November 2011	31 December 2014	$6.80	1,156,069
21 November 2011	1 September 2016	$5.36	964,065
Options Plans
30 June 2009	1 July 2014	$4.10	702,385
1 July 2010	1 July 2015	$7.39	1,321,755
1 September 2011	1 September 2016	$5.36	1,998,178
Total Options			7,172,675

FY13 options

As noted in the 'Executive remuneration strategy framework' section on page 26, SEEK is currently undertaking a review of the SEEK executive remuneration structure. SEEK proposes to change the SEEK executive remuneration structure for FY13, including the options structure, as a result of the review. One of the key objectives of the Board in undertaking the review is to emphasise the focus for executives to build long-term and sustainable shareholder value. Refer to the Chairman's letter for background to the new executive remuneration structure for FY13. Full disclosure will be made in the FY13 Remuneration Report.

Appendix B: Historical LTI awards

Plan name	Executive Director Options Options Plan Options Plan Education Cash LTI Plan	Executive Director Options Options Plan Options Plan Education Cash LTI Plan
Objectives	Align the reward for executives and senior managers with shareholder wealth and Company performance. Drive growth in the Education business.
Participants	Executive Directors Other executives and senior managers Executive Directors, other executives and senior managers Managing Director (SEEK Education) and Group Strategy Director
Offer date	1 July 2009 30 June 2009 1 July 2010 1 July 2008, 2009 and 2010
Grant date	30 November 2009 30 June 2009 1 July 2010 1 July 2008, 2009 and 2010
Vehicle	Share Options Share Options Share Options Cash payment
Performance period	3 years (vesting on 30 June 2012) with no retesting thereafter. 3 years (vesting on 30 June 2012) with no retesting thereafter. 3 years (vesting on 30 June 2013) with no retesting thereafter. Based on the increase in value of the Education business over three years, measured on 30 June 2011, 2012 and 2013.
Performance conditions	50% of the award is tested with reference to the Company’s RTSR performance. 50% of the award is tested with reference to EPS targets. 50% of the award is tested with reference to the Company’s RTSR performance. 50% of the award is tested with reference to EPS targets. 50% of the award is tested with reference to the Company’s RTSR performance. 50% of the award is tested with reference to EPS targets. Payments are subject to achieving a minimum valuation growth hurdle and are limited to a percentage of the increase in the valuation of the business.
Vesting schedule	Vesting occurs according to the following schedule: TSR EPS Performance Proportion of award to vest Performance Proportion of award to vest Below median 0% Below minimum target 0% Between median and 75th percentile 50% of award plus 2% for every additional % above median Between minimum and maximum target 50% plus a pro rata allocation 75th percentile or higher 100% Above maximum target 100% The growth hurdles are commercially sensitive and are therefore not disclosed. The current estimate of future amounts to be paid under this plan is $nil.
Exercise price	$4.10 $4.10	$7.39 Nil (cash payment)
Expiry date	30 June 2014 1 July 2014	1 July 2015 30 June 2011, 2012 and 2013
Fair value	RTSR: $2.90 EPS: $3.14 RTSR: $1.49 EPS: $1.64	RTSR: $1.89 EPS: $2.11 Cash payment

This report is made in accordance with a resolution of the directors.

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Bob Watson Chairman Melbourne 22 August 2012

Auditor’s Independence Declaration

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Corporate Governance Statement

The Board of SEEK considers that high standards of corporate governance are a cornerstone to creating long-term and sustainable shareholder value. It is also a key element in ensuring that the Company workplace is fair, equitable and respectful of its employees, and protects the interests of other stakeholders.

Features of the SEEK corporate governance regime are summarised below. Further details on the Company corporate governance codes, policies and charters are available from the About SEEK/Corporate Governance section on the SEEK website – www.seek.com.au (the “Company website”).

SEEK has adopted the revised ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (2nd Edition) issued on 30 June 2010. SEEK considers that its governance systems were consistent with these Principles throughout the reporting period.

Board and Senior Management Functions

(Corporate Governance Principles and Recommendations: 1.1, 2.3)

The Board operates in accordance with the SEEK Board Charter, which is available from the Company website and sets out the functions reserved to the Board. The Board reviews and approves the Board Charter on an annual basis.

Responsibilities

The responsibilities of the Board as set out in the Board Charter include:

1. Strategy

2. Providing input and approval of the Group’s strategic direction and business plans as developed by Management.

3. Directing, monitoring and assessing the Group’s performance against strategic and business plans.

4. Approving and monitoring capital management including major capital expenditure, acquisitions and divestments.

5. Risk management

6. Ensuring a process is in place to identify the principal risks of the Group’s business.

7. Reviewing, ratifying and assessing the integrity of the Group’s systems of risk management, legal compliance, and internal compliance and control.

8. Reporting and disclosure

9. Approving and monitoring financial and other reporting, including reporting to shareholders and other stakeholders.

10. Establishing procedures to ensure implementation of and adherence to the Group’s continuous reporting policy by appropriate levels of management.

11. Management

12. Appointment and terms of engagement of the CEO.

13. Ensuring that a process is in place such that the remuneration and conditions of service of senior executives are appropriate.

14. Ensuring that a process is in place for executive succession planning, and monitoring of that process.

15. Performance

16. Evaluating the CEO’s performance.

17. Approving criteria for assessing performance of senior executives and for monitoring and evaluating the performance of senior executives.

18. Undertaking a performance evaluation of the Board.

19. Establishing and reviewing succession plans for Board membership.

6. Corporate governance

• Establishing appropriate standards and encouraging ethical behaviour and compliance with the Group’s own governing documents, including the Group’s Code of Conduct.

• Monitoring the Group’s compliance with corporate governance standards.

The SEEK Board Charter was reviewed in 2012 to ensure it remains consistent with the Board’s objectives and responsibilities. The Charter delegates authority to the CEO for management of the Company. The role has overall responsibility for the operational, financial and business performance of SEEK and the SEEK Group of companies, while also managing the organisation in accordance with the strategy and policies approved by the Board. Executives reporting to the CEO have their roles and responsibilities defined in specific position descriptions.

The roles of Chairman and CEO are not exercised by the same individual.

Corporate Governance Statement

Board Composition and Size

(Corporate Governance Principles and Recommendations: 2.1, 2.2, 2.6)

The SEEK Board comprises the following directors at the date of this Report:

Name	Position	Appointed
Mr Bob Watson	Chairman, independent and non-executive director	Feb 1999
Mr Andrew Bassat	MD and CEO, executive director	Sep 1997
Mr Neil Chatfeld	Independent and non-executive director	Jun 2005
Mr Colin Carter	Independent and non-executive director	Mar 2005
Ms Denise Bradley	Independent and non-executive director	Feb 2010

The directors determine the size of the Board with reference to the SEEK Constitution and SEEK Board Charter, which provides that there will be a minimum of three directors. The SEEK Board currently comprises four non-executive directors and the Managing Director.

The Board considers that the directors bring professional skills, knowledge and experience as well as personal attributes which enable the Board to operate effectively and meet its responsibilities to the Company, its shareholders and other stakeholders.

The professional experience of the Board members covers diverse areas across a broad range of industries such as Employment, Transport and Logistics, and Education. For further information on the directors please refer to the Information on Directors section of the Directors’ Report.

As noted in the 2011 Notice of AGM to shareholders, the SEEK Board conducted a review of its composition in financial year 2011 through its Nomination Committee, and determined that the Board and the Company would benefit from the addition of a new Director or Directors to increase the existing skills, experience and diversity of Directors. The Board is currently conducting a selection process for the appointment of an additional Director or Directors.

Director Independence

(Corporate Governance Principles and Recommendations: 2.1, 2.6)

The Board confirms that all current serving non-executive directors are independent. Mr Andrew Bassat, by virtue of his executive office as MD and CEO, is not considered to be independent.

The Board has determined that none of its independent directors hold relationships which could reasonably be perceived to materially interfere with or compromise their independent judgement.

The Board tables individual director interests at every SEEK Board meeting.

Access to Information

(Corporate Governance Principles and Recommendations: 2.6)

Directors are able to access members of senior management to request relevant information in their role as a non-executive director.

Directors are entitled to seek independent professional advice at the Company’s expense relating to their role as a SEEK director, subject to the prior written approval of the Chairman.

Board Remuneration and Performance Review

(Corporate Governance Principles and Recommendations: 2.5, 2.6, 8.2, 8.3)

The Board reviews its performance, including Board documentation and process, internally, on an annual basis. The Board uses surveys for the purpose of its internal Board performance reviews. The surveys are prepared and collated externally. The aim of the internal Board performance review is to ensure that individual directors and the Board as a whole work effectively in meeting their responsibilities as described in the Board Charter. The Chairman will meet annually with each non-executive director to discuss individual performance. The Chair of the Audit Committee will meet annually with the Chairman to discuss the Chair’s performance.

In addition to internal Board performance reviews, the Board will conduct externally facilitated performance reviews on a periodic basis, with the aim to conduct such reviews in every third year. These reviews will incorporate feedback from Executives and stakeholders beyond the Board.

All directors receive copies of all Committee Board packs, including the minutes for each Committee meeting. In addition, the Committee Chair provides an update at the following Board meeting on the activities of the Committee. The Board reviews and approves the Charters of each Committee on an annual basis.

The maximum aggregate amount of fees that may be paid to all SEEK non-executive directors each year is capped at $1.25 million, which was approved by shareholders at the 2011 AGM. The total fees (including superannuation) paid to non-executive directors during the reporting period was $680,979.

Further details on directors’ remuneration are disclosed in the Remuneration Report.

Executive Remuneration and Performance Review

(Corporate Governance Principles and Recommendations: 1.2, 1.3, 8.3)

The performance of the Executive team including the CEO is assessed annually, in June. Assessment is measured against the Company’s performance rating system (SEEK Synergy), which is applied in relation to all SEEK employees. The performance of the Executive team is measured against quantifiable goals and objectives set at the start of the financial year, and the individual performance of the executive. Performance is also assessed, as for all Company employees, against the employee’s fulfilment of the Company values.

In addition to this, the performance of the CEO is reviewed by the Board. The Chairman meets annually with the CEO to discuss individual performance.

Further details on CEO and Executive remuneration are disclosed in the Remuneration Report.

Diversity

(Corporate Governance Principles and Recommendations: 3.2, 3.3, 3.4)

SEEK recognises the great value contributed to the organisation by the talent and diversity of its employees, bringing varied skills, cultural backgrounds and experience.

The Company’s success is a reflection of the quality and skill of its people. SEEK has an energetic and dynamic workforce with passion and fresh ideas, able to innovate and produce strong business performance results – a key competitive advantage.

SEEK is committed to fostering this diversity by providing a work environment and culture in which all its employees are valued and treated with respect, and provided with equal access to opportunities.

SEEK values gender diversity in its workforce, as is evident from the strong female representation in the Company. In June 2012, within SEEK Ltd and its fully owned Australian subsidiary companies:

• Women comprise 54% of all employees, and 37% of its senior management team (including at the Executive level).

• In the Executive team, women comprise 20%.

• At the Board level, SEEK has one female director, which comprises 25% of non-executive Board representation.

Corporate Governance Statement

Diversity continued

In order to enhance its commitment to gender and broader diversity principles, SEEK continually works to achieve objectives which include:

1. Continuing to maintain or improve its high levels of female participation at senior management level at or above 37%

2. Maintaining principles of gender pay equity

3. Ensuring that there is at least one viable female candidate on the shortlist for all senior management positions

4. Continuing its innovative programs to develop a diverse pool of SEEK employees, including women, to take on senior roles within the business, in senior management, executive and operational roles, and

5. Initiating programs for indigenous engagement and enhancing awareness and appreciation of cultural diversity for SEEK employees.

SEEK’s approach to diversity is stated in the Company Diversity Policy which is available on the employee intranet. The policy is focused on providing flexible work practices to all its employees, male or female, to assist in the balancing of work and family responsibilities, and to assist employees in pursuing their personal as well as professional development goals. These include the following, which are summarised from the Diversity Policy:

• Flexible working time arrangements

• Employee education assistance

• Employee network and support groups

• Mentor programs

• Flexible policies including unlimited access to sick and carer’s leave

• Appointment of a Diversity and EEO Contact Officer to whom employees may make suggestions and complaints

• SEEK Connect – an internal program designed to ensure that employees meet with a wide range of people within the business with whom they might otherwise not interact on a regular basis.

SEEK’s organisational goals and objectives on diversity are endorsed by the Board. Ongoing responsibility for the measuring and reporting of progress against SEEK’s diversity objectives is undertaken by the Remuneration Committee, which will review progress on a regular basis. The Board will report on the Company’s achievement of its measurable objectives in the SEEK Annual Report.

Share Trading Policy

SEEK’s Share Trading Policy governs when its officers, defined as its directors, executives or senior managers, may deal in SEEK securities and the process which must be followed in respect of such dealings.

In August 2012 SEEK amended its Share Trading Policy. Previously, trading by officers in SEEK securities was only permitted during the trading windows set out in the policy. SEEK has amended the Trading Policy to provide that SEEK officers and their associates, as defined in the policy, are not permitted to deal in SEEK securities (or in any financial products and associated products issued or created over SEEK securities by third parties) during defined Blackout Periods:

(a) between 1 January and one trading day following the announcement of the half year results, and (b) between 1 July and one trading day following the announcement of the full year results.

At any time outside the Blackout Periods, officers may trade in SEEK securities where the officer:

(a) is not, at the time of the proposed dealing, in possession of any price sensitive information, and

(b) where the officer is a director, the director obtains the prior written clearance of the Chairman to deal in SEEK securities, or

• (c) where the officer is not a director, where the officer obtains the prior written clearance of the CFO or Company Secretary.

SEEK directors, executives or their associates are prohibited from entering into transactions in associated products which operate to limit the economic risk of security holdings in the Company over unvested entitlements.

SEEK officers are only permitted to enter margin loans with the prior written approval of the Chairman. If approval is granted, the Continuous Disclosure Committee (comprising the CEO, CFO and Company Secretary) will review the terms of the margin loan to determine whether there are any material terms requiring disclosure to the market.

Board Committees

The Board is supported by a Remuneration Committee, Audit and Risk Management Committee and Nomination Committee. The Committees are comprised of independent non-executive directors. The members of these Committees at the date of this Report are:

		Audit and Risk
		Management	Remuneration	Nomination
	Board	Committee	Committee	Committee
R C G Watson				
A R Bassat		–	–	–
C B Carter				
N G Chatfeld			–	
D I Bradley		–		

For information on the skills, experience and expertise of the Committee members, please refer to pages 20 and 21 of the Directors’ Report. In relation to the number of meetings and attendance of members at the Committee meetings please refer to page 22 of the Directors’ Report.

Remuneration Committee

(Corporate Governance Principles and Recommendations: 8.1, 8.2)

The Remuneration Committee comprises three members, all of whom are independent non-executive directors. It is chaired by the Chairman of the SEEK Board. Other directors who are not members of the Committee and executives attend by invitation.

The Remuneration Committee Charter, which is available from the Company website, sets out its role and responsibilities. In summary, the Committee has the delegated responsibility from the SEEK Board to conduct detailed examination of the following matters:

• Remuneration packages and policies applicable to the CEO, non-executive directors, and where considered appropriate, executives;

• Compliance with statutory responsibilities relating to remuneration disclosure;

• Review and approval of the design of equity-based plans including eligibility criteria, performance hurdles and proposed awards;

• Review and approval of budget and guidelines each year for annual performance review and salary review processes;

• Review and approval of decisions regarding where to position the Company relative to market remuneration levels and composition;

• Review policies relating to employee share and option plans;

• Review progress against SEEK’s diversity objectives;

• Review the Company’s superannuation plan and compliance with relevant laws and regulations;

• Review executive and director retirement and termination payments;

• Review and monitor fringe benefits; and

• Monitor effective succession planning for the positions of CEO, non-executive directors and executives.

Corporate Governance Statement

Audit and Risk Management Committee

(Corporate Governance Principles and Recommendations: 4.1, 4.2, 4.3, 4.4)

The Audit and Risk Management Committee consists of three members, all of whom are independent non-executive directors. It is chaired by an independent non-executive director. Other directors that are not members of the Committee, the external auditor and executives attend meetings by invitation.

The Audit and Risk Management Committee Charter (“A&RMC Charter”), which is available from the Company website, sets out its role and responsibilities. In summary, the Committee has the delegated responsibility from the SEEK Board to conduct detailed examination of the following matters:

Financial Reporting

• The primary responsibility of the Committee is to oversee the financial reporting process on behalf of the Board and to recommend to the Board appropriate actions in the interests of the integrity of financial reporting.

Statutory Financial Reports

• Review the statutory financial reports of the SEEK Group and become satisfied that the reports provide a true and fair view of the financial affairs of the SEEK Group.

Assessment of Systems of Financial Risk Management and Internal Control

• Oversight of SEEK Group’s accounting and financial controls, for the purpose of forming a view as to the effectiveness of these controls, policies, procedures and programs.

• Oversight of the SEEK Group’s accounting policies and methods for the purpose of forming a view as to the appropriateness (as opposed to the acceptability) of these policies and methods.

• Review all related party transactions involving the SEEK Group.

• May request reports from SEEK Management on the risk frameworks and controls within entities in which SEEK holds equity but not a controlling interest.

External Audit

• Recommend to the Board the appointment and remuneration (and, where appropriate, replacement) of the external auditor and the terms of their engagement.

• Agree with the external auditor the overall scope of the external audit, including identified risk areas and any additional procedures considered necessary.

• Monitor and periodically evaluate the effectiveness of the external auditor.

Independence of the External Auditor and Provision of Non-audit Services

• Periodically (at least once per annum) assess the independence of the external auditor.

• Approve and review the External Auditor Independence Policy (refer to the separate policy available on the Company website) which regulates the provision of services by the external auditor, and monitor compliance with that policy;

• Recommend to the Board the appropriate disclosure in each year’s Financial Report of the full details of fees paid to the external auditor, including an analysis of non-audit services.

• Require that the lead external audit engagement partner be rotated every five years at a minimum.

Risk Profile Oversight

Financial Reporting

• Review the SEEK Group’s assessment of material risks and form an opinion on the adequacy and effectiveness of the risk assessment based on an evaluation of the rigour and suitability of the process undertaken.

• Consider the processes that management uses to design and assure controls and to measure their effectiveness together with Group risk reports from Management to form an opinion on the reliability of the risk assessment.

• Review the SEEK Group’s risk profiles as developed by Management and monitor emerging risks and changes in the SEEK Group’s risk profile.

Effectiveness of the Risk Management Framework

• Review, recommend to the Board, and oversee the operation of, risk management policies and procedures, so that there is, amongst other things:

• A procedure for identifying risks relevant to the SEEK Group’s businesses and controlling their financial or non-financial impacts on the SEEK Group;

• An adequate system of internal control, risk management and safeguarding of assets;

• A system of reporting and investigating breaches of risk management policies and procedures;

• A review of internal control systems and the operational effectiveness of risk management policies and procedures;

• A culture of risk management and compliance throughout the SEEK Group; and

• Adequate resources to support the risk management function and enable proper remedial action to be taken to address areas of weakness.

• Review, recommend to the Board, and monitor the SEEK Group’s Whistleblower Policy.

• Review and monitor the SEEK Group’s risk management performance, including conducting specific investigations where necessary.

• Review and provide oversight on the Group’s insurance policies.

Nomination Committee

(Corporate Governance Principles and Recommendations: 2.4, 2.6)

The Nomination Committee consists of all of the independent non-executive directors of the SEEK Board, comprising four members. It is chaired by the Chairman of the SEEK Board. The CEO and MD, who is not a member of the Committee, and other executives attend meetings by invitation.

The Nomination Committee Charter, which is available from the Company website, sets out its role and responsibilities. The Committee has the delegated responsibility from the SEEK Board to conduct detailed examination of the following matters:

• Assessing and enhancing the necessary and desirable competencies of the Board and Chairman;

• Reviewing the size and composition of the Board, including succession plans to enable an appropriate balance of skills, experience and expertise to be maintained;

• Making recommendations to the Board on the appointment and removal of Directors;

• Developing and reviewing the process for the evaluation of the performance of the Board, the Chairman and individual Directors;

• Evaluating the performance of the Board, its Committees and Directors;

• Ensuring that there is an appropriate induction process in place for new Directors and reviewing its effectiveness;

• Reviewing the process for the selection and removal of Directors and assessing its effectiveness; and

• Ensuring there is a continuing education program for directors in respect to compliance and governance issues.

When a new director is to be appointed, the Nomination Committee, under delegation from the Board, reviews the range of skills, experience, expertise and diversity on the Board, identifies the requirements of the Board and the Company, and prepares a short-list of candidates with appropriate skills and experience. Where necessary, advice is sought from independent search consultants. The Nomination Committee will recommend to the Board the most suitable candidate, who, if selected by the Board, must stand for election at the next Annual General Meeting of the Company.

The Board’s nomination of existing directors for re-appointment is not automatic and is contingent on their past performance, contribution to the Company and the current and future needs of the Board and the Company.

Corporate Governance Statement

Recognise and Manage Risk

(Corporate Governance Principles and Recommendations: 7.1, 7.2, 7.3, 7.4)

The Board is responsible for approving and reviewing the SEEK risk management strategy and policy, with the Audit and Risk Management Committee having delegated responsibility to conduct detailed review in a number of key risk areas as outlined in the A&RMC Charter (and set out above). The active identification of risks and implementation of appropriate controls and mitigation measures are the responsibilities of Management.

SEEK’s enterprise risk management framework is based on the international standard (AS/NZS ISO 31000:2009) for risk management.

Management has established a Group risk framework, and within this each business unit/department is required to profile its risk environment, control identification and operation. The outcomes of the risk profile across the Group are aggregated for reporting to the Executive and the Audit and Risk Management Committee.

Management monitors and reviews the Company’s internal control systems and procedures, and reports to the Audit and Risk Management Committee. The Audit and Risk Management Committee provides oversight of the risk framework and aggregated risk profiles at the Group level, and monitors Management’s response to internal risk and assurance reviews.

The Group risk function is independent of the external audit, has access to the Audit and Risk Management Committee and also has access to the Company executives and employees.

When considering the Audit and Risk Management Committee’s review of financial reports, the Board receives a written statement signed by the CEO and MD, and the CFO, affirming that SEEK’s financial reports give a true and fair view in all material respects of the Company’s financial position and comply in all materials respects with relevant accounting standards. The statement also confirms that the Company’s financial reports are founded on a sound system of risk management and internal control and that the system is operating effectively in relation to the financial reporting risks.

SEEK’s risk management policy is available on the Company website.

Continuous Disclosure

(Corporate Governance Principles and Recommendations: 5.1, 5.2)

SEEK’s Continuous Disclosure Policy sets out the key responsibilities for the Company employees in relation to continuous disclosure. The Policy is reviewed annually by the Board.

The Policy sets out SEEK’s obligations under the ASX Listing Rules and the Corporations Act 2001 . It refers to the type of information that requires disclosure. The policy also provides procedures for internal notification and external disclosure.

The Board is responsible for ensuring that SEEK complies with its continuous disclosure obligations. The CEO, CFO and Company Secretary (the Continuous Disclosure Committee) are responsible for determining what matters might be considered to be price sensitive and whether or not disclosure is required under the ASX Listing Rules.

A copy of the Company’s Continuous Disclosure Policy is available on the Company website.

Communication with Shareholders

(Corporate Governance Principles and Recommendations: 6.1, 6.2)

SEEK is committed to transparency and openness in its communication with its shareholders. It works to keep shareholders fully informed regarding developments and important information affecting the Company.

The key channels currently utilised by SEEK to distribute information to shareholders include:

1. the SEEK website;

2. the Notice of AGM and explanatory memoranda;

3. the Annual Report;

4. Financial statements and accompanying presentations to the market; and

5. ASX announcements.

Annual General Meeting (AGM)

The Annual General Meeting is a key opportunity for shareholders to hear the CEO and Chairman provide updates on Company performance, ask questions of the Board, and to express a view and vote on the various matters of Company business on the agenda. Shareholders may also ask questions of the Company’s external auditors at the meeting. SEEK encourages its shareholders to attend its AGM. SEEK also commits to deal with shareholder queries in a respectful and timely manner whenever they are received by the Company.

Communication with Analysts

The Company communication framework includes the following to ensure provision of equal access to material information:

1. All discussions with analysts are conducted by or with the sanction of the CEO or the CFO, and are limited to explanation of previously disclosed material.

2. Where information is likely to be price sensitive, in line with its legal obligations and Continuous Disclosure Policy, SEEK immediately discloses the information to the market.

3. All formal SEEK analyst presentations are released to the market.

4. Generally speaking, meetings with analysts to discuss Financial results are not held from 1 January until release of the half year results, or from 1 July until release of the full year results.

Code of Conduct

(Corporate Governance Principles and Recommendations: 3.1, 3.5)

SEEK prides itself on creating and maintaining a vibrant and transparent employee culture which demonstrates the Company values of Honesty, Ownership, Teamwork and Passion. The SEEK values form an integral part of the Company performance review and reward process (SEEK Synergy). All SEEK employees, including executives, are required to meet both their professional key performance indicators (KPIs) and a minimum performance rating evidencing their demonstration of the SEEK values for the relevant review period.

The SEEK code of conduct is available on the employee intranet. The SEEK code of conduct reflects the SEEK values to ensure a work environment and culture that complies with the law, is honest, respectful, equitable and professional.

Ethical and responsible decision making at SEEK is also promoted by an additional code of conduct for directors and executives, based on a code of conduct for directors prepared by the Australian Institute of Company Directors (AICD). The code of conduct for directors and executives is found on the SEEK website.

SEEK has a Whistleblowers Policy available on the employee intranet which is designed to support and protect employees who properly report non-compliant, illegal or unethical conduct by other employees. The aim of the Policy is to protect the confidentiality and position of employees wishing to raise matters which affect the fairness, legality or integrity of the Company.

Contents

Financial Report for 30 June 2012

• 47 Consolidated Income Statement

• 48 Consolidated Statement of Comprehensive Income

• 49 Consolidated Balance Sheet

• 50 Consolidated Statement of Changes in Equity

• 51 Consolidated Statement of Cash Flows

• 52 Notes to the Financial Statements

• 52 1. Summary of significant accounting policies

• 66 2. Financial risk management

• 71 3. Critical accounting estimates and judgements

• 73 4. Segment information

78 5. Revenue

78 6. Other income

• 79 7. Expenses

• 79 8. Income tax

• 82 9. Cash and cash equivalents

• 83 10. Trade and other receivables

• 84 11. Investments accounted for using the equity method

• 87 12. Other financial assets

• 88 13. Plant and equipment

This Financial Report covers SEEK Limited as a consolidated entity consisting of SEEK Limited and its controlled entities. The financial report is presented in the Australian currency. The Financial Report was authorised for issue by the directors on 22 August 2012. The Company has the power to amend and reissue the Financial Report.

SEEK Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Level 6 541 St Kilda Road Melbourne Victoria 3004

A description of the nature of the consolidated entity’s operations and its principal activities is included in the review of operations and activities in the Directors’ Report on pages 12 to 35, which are not part of this Financial Report.

Through the use of the internet, we have ensured that our corporate reporting is timely, complete, and available globally at minimum cost to the Company. All press releases, financial reports and other information are available at our Investor Relations page on our website at www.seek.com.au.

• 89 14. Intangible assets

• 91 15. Trade and other payables

• 92 16. Borrowings

• 92 17. Other financial liabilities

• 93 18. Provisions

• 95 19. Contributed equity

• 96 20. Equity

• 98 21. Dividends

• 99 22. Key management personnel disclosures

• 102 23. Remuneration of auditors

• 103 24. Contingent liabilities

• 103 25. Commitments for expenditure

• 104 26. Share-based payments

• 106 27. Related party transactions

• 107 28. Deed of cross guarantee

• 110 29. Business combinations

• 114 30. Interests in controlled entities

• 115 31. Events occurring after balance date

• 116 32. Reconciliation of profit for the year to net cash inflow from operating activities

• 117 33. Earnings per share

• 117 34. Net tangible asset backing 118 35. Parent entity financial information

119 Directors’ Declaration

120 Independent Auditor’s Report

122 Shareholder Information

124 Five Year Financial Summary IBC Corporate Directory

Consolidated Income Statement

For the year ended 30 June 2012

Notes	Consolidated
	2012 $’000 2011 $’000
Revenue from continuing operations 5	445,230 344,735
Other income 6	29,354 –
Operating expenses
Direct cost of services	(35,394) (30,141)
Sales and marketing	(134,420) (103,874)
Business development	(25,313) (19,963)
Operations and administration	(99,170) (66,020)
Finance costs 7	(26,677) (16,413)
Total operating expenses	(320,974) (236,411)
Share of profts of associates and jointly controlled entities accounted for using the equity method 11(b)	30,871 24,685
Proft before income tax expense	184,481 133,009
Income tax expense 8(a)	(47,023) (36,295)
Proft for the year	137,458 96,714
Proft is attributable to:
Owners of SEEK Limited 20(a)	131,680 97,688
Non-controlling interests 20(a)	5,778 (974)
	137,458 96,714
Earnings per share for proft attributable to the ordinary equity holders of the Company:	Cents Cents
Basic earnings per share 33	39.1 29.0
Diluted earnings per share 33	38.9 28.9

The above Consolidated Income Statement should be read in conjunction with the accompanying notes.

Consolidated Statement of Comprehensive Income For the year ended 30 June 2012

Notes	Consolidated
	2012 $’000 2011 $’000
Proft for the year	137,458 96,714
Other comprehensive income
Exchange differences on translation of foreign controlled operations 20(a)	(14,234) (6,876)
Exchange differences on translation of foreign associates 11(c)	(15,214) (38,879)
Gains/(losses) on hedge contracts of controlled entities 20(a)	536 (2,705)
Gains/(losses) on hedge contracts of associates (net of tax) 11(c)	223 (262)
Recycled foreign currency translation reserve on step acquisition 20(a)	33,137 –
Recycled cash fow hedge reserve on step acquisition 20(a)	(10,561) –
Recycled foreign currency translation reserve on closure of foreign operation 20(a)	165 –
Income tax recognised in other comprehensive income 8(c)	3,001 490
Other comprehensive income for the year	(2,947) (48,232)
Total comprehensive income for the year for SEEK Limited	134,511 48,482
Total comprehensive income for the year attributable to:
Owners of SEEK Limited	135,271 54,678
Non-controlling interests 20(a)	(760) (6,196)
	134,511 48,482

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

Consolidated Balance Sheet As at 30 June 2012

Notes	Consolidated
	2012 $’000 2011 Restated* $’000
Current assets
Cash and cash equivalents 9	92,703 98,291
Trade and other receivables 10	65,566 44,814
Other fnancial assets 12	630 17,379
Current tax assets	2,924 –
Total current assets	161,823 160,484
Non-current assets
Investments accounted for using the equity method 11(b)	196,063 315,930
Plant and equipment 13	24,744 19,201
Intangible assets 14	984,487 463,587
Deferred tax assets 8(d)	24,615 11,397
Total non-current assets	1,229,909 810,115
Total assets	1,391,732 970,599
Current liabilities
Trade and other payables 15	57,028 43,698
Unearned income	61,680 38,366
Other fnancial liabilities 17	82,487 147,887
Current tax liabilities	19,376 5,370
Current provisions 18(a)	2,849 1,923
Total current liabilities	223,420 237,244
Non-current liabilities
Borrowings 16(b)	318,433 275,281
Deferred tax liabilities 8(e)	47,434 18,534
Non-current provisions 18(b)	31,312 4,781
Total non-current liabilities	397,179 298,596
Total liabilities	620,599 535,840
Net assets	771,133 434,759
Equity
Contributed equity 19	186,525 183,950
Reserves 20(a)	(63,884) (71,208)
Retained profts 20(a)	276,867 198,474
Non-controlling interests 20(a)	371,625 123,543
Total equity	771,133 434,759

• Refer to note 29(b) for details of restatement on the completion of acquisition accounting for JobsDB.

The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.

Consolidated Statement of Changes in Equity For the year ended 30 June 2012

						Non-
		Contributed equity	Reserves	Retained profts	Total	controlling interests	Total
Consolidated	Notes	$’000	$’000	$’000	$’000	$’000	$’000
Balance at 1 July 2010		183,950	22,668	146,339	352,957	–	352,957
Proft for the year		–	–	97,688	97,688	(974)	96,714
Other comprehensive income		–	(43,010)	–	(43,010)	(5,222)	(48,232)
Total comprehensive income
for the year	20(a)	–	(43,010)	97,688	54,678	(6,196)	48,482
Transactions with owners
in their capacity as owners
Restated*:
Dividends provided for or paid	20(a)	–	–	(45,439)	(45,439)	–	(45,439)
Employee share options scheme	20(a)	–	1,504	–	1,504	–	1,504
Purchase of shares-on-
market for employee
share option scheme	20(a)	–	(38)	(163)	(201)	–	(201)
Tax associated with employee
share option schemes	8(c)	–	(49)	49	–	–	–
JobsDB related items Restated*:
Non-controlling interest
at fair value arising
on acquisition		–	–	–	–	64,624	64,624
Non-controlling interest
acquired on acquisition		–	–	–	–	1,279	1,279
Put option provided
to vendor of JobsDB	20(a)	–	(50,629)	–	(50,629)	(22,788)	(73,417)
Transactions with non-
controlling interests		–	–	–	–	87,969	87,969
Acquisition of non-controlling
interest in CJOL	20(c)	–	(1,654)	–	(1,654)	(1,345)	(2,999)
Balance at 30 June 2011
Restated*		183,950	(71,208)	198,474	311,216	123,543	434,759
Proft for the year		–	–	131,680	131,680	5,778	137,458
Other comprehensive income		–	3,591	–	3,591	(6,538)	(2,947)
Total comprehensive
income for the year	20(a)	–	3,591	131,680	135,271	(760)	134,511
Transactions with owners
in their capacity as owners:
Contributions of equity, net
of transaction costs and tax	19	2,575	–	–	2,575	–	2,575
Dividends and distributions
provided for or paid	20(a)	–	–	(53,257)	(53,257)	(4,628)	(57,885)
Employee share options scheme	20(a)	–	4,263	–	4,263	–	4,263
Purchase of shares-on-
market for employee
share option scheme	20(a)	–	(197)	(363)	(560)	–	(560)
Tax associated with employee
share option schemes	8(c)	–	(333)	333	–	–	–
Non-controlling interests
acquired on acquisition	29(a)	–	–	–	–	253,470	253,470
Balance at 30 June 2012		186,525	(63,884)	276,867	399,508	371,625	771,133

• Refer to note 29(b) for details of restatement on the completion of acquisition accounting for JobsDB.

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

Consolidated Statement of Cash Flows

For the year ended 30 June 2012

Notes	Consolidated
	2012 $’000 2011 $’000
Cash fows from operating activities
Receipts from customers (inclusive of goods and services tax)	470,316 383,355
Payments to suppliers and employees (inclusive of goods and services tax)	(270,049) (230,270)
	200,267 153,085
Interest received	2,976 1,418
Interest paid	(20,182) (14,167)
Income taxes paid	(41,793) (32,150)
Net cash infow from operating activities 32	141,268 108,186
Cash fows from investing activities
Payments for acquisition of interests in associates and jointly controlled entities	– (49,512)
Payments for investments in subsidiaries, net of cash acquired 29(c)	(147,372) (186,134)
Payments for transaction costs on investments in subsidiaries 29	(188) (6,203)
Dividends and distributions received from associates 11(c)	12,855 9,841
Payments for plant and equipment	(8,714) (8,375)
Proceeds from the sale of plant and equipment	66 –
Payments for intangible assets	(8,213) (3,692)
Net cash (outfow) from investing activities	(151,566) (244,075)
Cash fows from fnancing activities
Proceeds from borrowings	124,783 406,704
Repayment of borrowings	(83,000) (228,000)
Transaction costs on syndicated debt facility	– (5,584)
Purchase of shares for employee share options plans	(597) (201)
Proceeds from issues of shares 19	2,575 –
Dividends paid 21	(53,257) (45,439)
Dividends and distributions paid to non-controlling interests	(3,433) –
Payment for additional interest in subsidiary 20(c)	– (3,857)
Contributions from non-controlling interests – transaction costs 29(b)	– 1,925
Contributions from non-controlling interests – purchase consideration 29	16,980 68,648
Net cash infow from fnancing activities	4,051 194,196
Net (decrease)/increase in cash and cash equivalents	(6,247) 58,307
Cash and cash equivalents at the beginning of the fnancial year	98,291 39,731
Effect of exchange rate changes on cash and cash equivalents	659 253
Cash and cash equivalents at the end of the fnancial year 9	92,703 98,291

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

Notes to the Financial Statements

1. Summary of significant accounting policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of SEEK Limited and its subsidiaries.

(a) Basis of preparation

The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001 . SEEK Limited is a ‘for profit’ entity for the purpose of preparing the financial statements.

At 30 June 2012 the Group’s current liabilities exceed its current assets by $61,597,000. This financial report has been prepared on a going concern basis as this deficiency is principally due to the $81,216,000 put option in place under which the Group’s controlled entity, SEEK Asia Limited, may be required to purchase the remaining 20% of JobsDB. In addition, the Group has sufficient available cash and committed facilities in place to support the capital requirements of the business and has also commenced discussions around refinancing the existing syndicated debt facility (refer to note 31).

(i) Compliance with IFRS

The consolidated financial statements of SEEK Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

(ii) Historical cost convention

These financial statements have been prepared under the historical cost convention as modified by the revaluation of financial assets and liabilities (including derivative instruments) at fair value through profit or loss.

(iii) Critical accounting estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

(b) Principles of consolidation

(i) Subsidiaries

The Consolidated Financial Statements incorporate the assets and liabilities of all subsidiaries of SEEK Limited (‘Company’ or ‘parent entity’) as at 30 June 2012 and the results of all subsidiaries for the year then ended. SEEK Limited and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies of those subsidiaries. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations made by the Group (refer to note 1(g)).

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet and Consolidated Statement of Changes in Equity respectively.

Investments in subsidiaries are accounted for at cost in the individual financial statements of the investing entity.

(ii) Associates

Associates are all entities over which the Group has significant influence but not control or joint control. Investments in associates are accounted for, after initially being recognised at cost, using the equity method of accounting.

The Group’s investment in associates includes goodwill identified on acquisition.

The Group’s share of its associates’ post-acquisition profits or losses is recognised in the Consolidated Income Statement and its share of post-acquisition other comprehensive income is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates are recognised as a reduction in the carrying amount of the investment.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

(iii) Joint venture entities

The interest in a joint venture entity is accounted for using the equity method, after initially being recognised at cost. Under the equity method, the share of the profits or losses of the entity is recognised in the Consolidated Income Statement, and the share of the post-acquisition movement in reserves is recognised in other comprehensive income. Any cash contributions made to the jointly controlled entity are recognised in the Group’s financial statements as an investment in the jointly controlled entity. Details relating to the Group’s joint venture entity are set out in note 11(e).

(iv) Changes in ownership interests

The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to the owners of SEEK Limited.

When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. If the ownership interest in a jointly-controlled entity or an associate is reduced, but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

(c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer.

(d) Foreign currency translation and transactions

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is SEEK Limited’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in profit or loss, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.

Notes to the Financial Statements

1. Summary of significant accounting policies continued

(iii) Group companies

The results and financial position of all Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

• income and expenses for each income statement and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and

• all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, a proportionate share of such exchange difference is reclassified to profit or loss, as part of the gain or loss on sale where applicable.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

(e) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and amounts collected on behalf of third parties. Revenue is recognised for the major business activities as follows:

(i) Job advertisements

Revenues from the provision of job advertisements on the Group’s websites are recognised in the period over which the advertisements are placed.

(ii) Banner advertising

Revenues from banner advertising on the Group’s websites are generated based on a fixed price which is based on the impressions each banner receives. These revenues are recognised in the period that the impressions occur.

(iii) Brasil Online: CV online revenue

CV online is Brasil Online’s primary service for jobseekers and its principle source of revenue, whereby jobseekers are permitted to apply for job opportunities posted on the databases, and to post resumes online for review by employers and recruiting agencies. CV online has billing cycles that range from one month to one year, and jobseekers’ credit cards or bank accounts are charged. Revenue from services provided to jobseekers through CV online is recognised over the service period.

(iv) Education: classroom-based training

Revenues from classroom-based training are recognised from course commencement and brought to account on a pro-rata basis over the duration of the relevant teaching period.

(v) Education: distance learning

Revenues from distance learning are apportioned between an amount recognised on receiving the course materials and an amount over the period to completion. This has been determined with reference to the proportion of costs incurred upfront to the total estimated cost of providing the services.

(vi) Education: commission revenue

Commission revenue is recognised when the customer obtains unconditional access to the course material or when revenue can be reliably estimated. Revenue that relates to agency/principal relationships is recognised on a net basis.

(vii) Interest income

Interest income is recognised on a time proportion basis using the effective interest method, which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate (EIR) of the instrument, and continues unwinding the discount as interest income.

(viii) Dividends

Dividends are recognised as revenue when the right to receive payment is established. This applies even if they are paid out of pre-acquisition profits. However, the investment may need to be tested for impairment as a consequence, refer note 1(k).

(ix) Royalty income

Royalty income relates to intercompany charges for the use of intellectual property. It is recognised on an accruals basis and is reviewed annually.

(f) Income tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income, based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company's subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Consolidated Financial Statements. However, deferred income tax is not provided for if it arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are able to be recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if information about facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill), if it was incurred during the measurement period, or in profit or loss.

Notes to the Financial Statements

1. Summary of significant accounting policies continued

(g) Business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group's share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

In a business combination achieved in stages, the Group remeasures its previously held equity interest in the acquiree at its acquisition-date fair value and recognises the resulting gain or loss, if any, in profit or loss.

Acquired deferred tax assets recognised after the initial acquisition accounting will increase the Group’s net profit after tax.

(h) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows, which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

(i) Cash and cash equivalents

For the purposes of presentation in the Statement of Consolidated Cash Flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

(j) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. This provision includes amounts that are not considered to be recoverable from debtors and amounts that are expected to be credited to debtors. Trade receivables are generally due for settlement no more than 30 days from the date of recognition.

Collectibility of trade receivables is reviewed on an ongoing basis. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. In addition, the trade receivables balances are considered for credit notes that are expected to be raised against individual and collective balances.

The amount of the provision relating to non-collectible items is recognised in the Consolidated Income Statement in ‘operations and administration’ expense. The amount of the provision for amounts that are expected to be credited is recognised in the Consolidated Income Statement in ‘revenue from continuing operations’. Trade receivables which are known to be uncollectible are written off against the provision for impairment. Subsequent recoveries of amounts previously written off to the provision for impairment are credited against ‘operations and administration’ expense in the Consolidated Income Statement.

(k) Investments and other financial assets

Classification

The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date.

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are expected to be settled within 12 months; otherwise they are classified as non-current. Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with net changes in fair value recognised in finance costs in the income statement.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are included in trade and other receivables in the Consolidated Balance Sheet (note 10). After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.

(iii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the end of the reporting period, which are classified as current assets. After initial measurement, held-to-maturity investments are subsequently measured at amortised cost using the effective interest method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.

Notes to the Financial Statements

1. Summary of significant accounting policies continued

(iv) Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the end of the reporting period. Investments are designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term.

Recognition and de-recognition

Regular purchases and sales of investments are recognised on trade date, the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the Consolidated Income Statement. Financial assets are de-recognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences are recognised in profit or loss and other changes in carrying amount are recognised in other comprehensive income. Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive income.

When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the Consolidated Income Statement as gains and losses from investment securities.

Details on how the fair value of financial instruments is determined are disclosed in note 2.

Fair value

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using commonly used valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum use of market inputs and relying as little as possible on entity specific inputs.

Impairment

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the assets are impaired.

(l) Derivatives and hedging activities

Derivatives are initially recognised at fair value on the date that a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either:

• i. hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge);

• ii. hedges of the cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow hedges); or

• iii. hedges of a net investment in a foreign operation (net investment hedges).

The Group documents at the inception of the hedging transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items.

Movements in the Hedging reserve in equity are shown in note 20. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.

(i) Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The gain or loss relating to the effective portion of interest rate swaps hedging fixed rate borrowings is recognised in profit or loss within ‘finance costs’, together with the changes in the fair value of the hedge fixed rate borrowings attributable to interest rate risk. The gain or loss relating to the ineffective portion is recognised in the Consolidated Income Statement within ‘other income’ or ‘operating and administration expenses’.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedge item for which the effective interest method is used is amortised to profit or loss over the period to maturity using a recalculated effective interest rate.

(ii) Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately in the Consolidated Income Statement within ‘other income’ or ‘operating and administration’ expenses.

Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss. The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognised in profit or loss within ‘finance costs'.

When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the Consolidated Income Statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to profit or loss.

(iii) Net investment hedges

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss within ‘other income’ or ‘operating and administration’ expenses. Gains and losses accumulated in equity are reclassified to profit or loss when the foreign operation is partially disposed of or sold.

(iv) Derivatives that do not qualify for hedge accounting

Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in profit or loss and are included in ‘other income’ or ‘operating and administration’ expenses.

Notes to the Financial Statements

1. Summary of significant accounting policies continued

(m) Plant and equipment

Plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Consolidated Income Statement during the financial period in which they are incurred.

Depreciation on assets is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives, as follows:

– Plant and equipment: three to ten years.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1(h)).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Consolidated Income Statement.

(n) Intangible assets

(i) Goodwill

Goodwill is measured as described in note 1(g). Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in investments in associates. Goodwill is not amortised but it is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segments (refer to note 14).

(ii) Brand and licences

Brands and licences are carried at the lower of cost or fair value less any impairment losses and are not amortised. Instead, they are tested for impairment annually, or more frequently if events or changes in circumstances indicate that they might be impaired, and are carried at cost or fair value less accumulated impairment losses.

(iii) Course development and accreditation

Costs incurred on developing and designing courses are recognised as an expense unless it is probable that the course will generate future economic benefits and its cost can be measured reliably. Course development expenditure is recognised as an asset at cost less any impairment losses. Once delivery of the course to which the development costs relate has commenced the associated costs are amortised over the life of the accreditation, which is five years.

(iv) Customer relationships

Acquired customer relationships have a finite useful life and are carried at fair value at acquisition date less accumulated amortisation and impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of the asset over its estimated useful life, which is between one and six years.

(v) Computer software and website development

Costs incurred in acquiring, developing and implementing new websites or software are recognised as intangible assets only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The expenditure capitalised comprises all directly attributable costs, including costs of materials, services, licences and direct labour.

Software has a finite useful life and is carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of software over its estimated useful life, which is between three and six years.

Website developments have a finite useful life and are carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated using the straight-line method to allocate the cost of website development over their estimated useful lives, which is three years.

(vi) Work in progress

Work in progress (WIP) represents intangible assets of other classes not yet put into use. These assets are amortised from the date of completion over their estimated useful life according to the amortisation policies above.

(o) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

(p) Leases

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases. Leases are made up of operating leases of property. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Consolidated Income Statement on a straight-line basis over the period of the lease. Benefits that are provided to the Group as an incentive to enter into a lease arrangement are recognised as a liability and amortised on a straight-line basis over the life of the lease.

(q) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Consolidated Income Statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual drawdown of the facility, are recognised as transaction costs and amortised on a straight-line basis over the term of the facility.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

(r) Provisions

Provisions for legal claims and make-good obligations are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Make-good provisions are amortised through the Consolidated Income Statement over the life of the lease.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

Notes to the Financial Statements

1. Summary of significant accounting policies continued

(s) Employee benefits

(i) Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date, are recognised in other payables in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Long service leave

The liability for long service leave expected to vest within 12 months of the end of the period in which employees render the related service is recognised in the provision for employee benefits and is measured in accordance with (i) above. The liability for long service leave expected to vest in more than 12 months from the reporting date is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

(iii) Retirement benefit obligations

All employees of the Group in Australia and New Zealand are entitled to benefits on retirement, disability or death from the Group’s superannuation plan. All employees in Australia and New Zealand are party to a defined contribution scheme and receive fixed contributions from Group companies and the Group’s legal or constructive obligation is limited to these contributions. Contributions to defined contribution funds are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payment is available.

Employees of subsidiaries of SEEK Limited who are located outside of Australia and New Zealand are entitled to benefits as outlined in local company policies.

(iv) Share-based payments

Share-based compensation benefits are provided to employees via the SEEK Option Plans. Information relating to these schemes is set out in note 26.

The fair value of options granted under the SEEK Option Plans is recognised as an employee benefit expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted, which includes any market performance conditions but excludes the impact of any service and non-market performance vesting conditions and the impact of any non-vesting options. The fair value is measured at grant date and the expense recognised over the period during which the employees become unconditionally entitled to the options.

The fair value at grant date is independently determined using a Black-Scholes or similar option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest which are revised at the end of each reporting period. The impact of the revision to original estimates, if any, is recognised in the Consolidated Income Statement, with a corresponding adjustment to equity. The employee benefit expense recognised each period takes into account the most recent estimate.

(v) Profit sharing and bonus plans

A liability for employee benefits in the form of profit sharing and bonus plans is recognised in other payables where there is a legal or constructive obligation and depending on an assessment against the Group’s profit performance and the individual’s personal performance and at least one of the following conditions are met:

• there are formal terms in the plan for determining the amount of the benefit, or

• the amounts to be paid are determined before balance sheet date.

(t) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration. Where any Group company purchases the Company’s equity instruments, for example as the result of a share buy-back or a share-based payment plan, the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the owners of SEEK Limited as Treasury shares until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the owners of SEEK Limited.

(u) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at the end of the reporting period.

(v) Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(w) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included within trade and other receivables or trade and other payables in the Consolidated Balance Sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the taxation authority are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(x) Rounding of amounts

The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities & Investments Commission, relating to the “rounding off” of amounts in the financial report. Amounts in the financial statements have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, the nearest dollar.

(y) Parent entity financial information

The financial information for the parent entity, SEEK Limited, disclosed in note 35 has been prepared on the same basis as the consolidated financial statements, except as set out below.

(i) Investments in subsidiaries, associates and joint venture entities

Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial statements of SEEK Limited. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments.

Notes to the Financial Statements

1. Summary of significant accounting policies continued

(ii) Tax consolidation legislation

SEEK Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation.

The head entity, SEEK Limited, and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand-alone taxpayer in its own right.

In addition to its own current and deferred tax amounts, SEEK Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled entities in the tax consolidated group.

The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate SEEK Limited for any current tax payable assumed and are compensated by SEEK Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to SEEK Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities' financial statements.

The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts receivable from or payable to other entities in the Group.

Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.

(iii) Financial guarantees

Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries for no compensation, the fair values of these guarantees are accounted for as contributions and recognised as part of the cost of the investment.

(z) New and amended Accounting Standards and Interpretations

(i) New and amended Accounting Standards and Interpretations issued and effective

The Group has adopted the following new and amended Accounting Standards and Interpretations which were applicable as disclosed in the table below. Adoption of these new and amended Accounting Standards and Interpretations has not had a material impact on the Company or the Group.

Interpretations has not had a material impact on the Company or the Group.
	Application	Application
	date of	date for
Summary	standard	Group
AASB 124 (Revised)	1 January	1 July
The revised AASB 124_Related Party Disclosures_(December 2009) simplifes the defnition of	2011	2011
a related party, clarifying its intended meaning and eliminating inconsistencies from the defnition.
AASB 2009-12	1 January	1 July
This standard makes numerous editorial changes to a range of Australian Accounting Standards	2011	2011
and Interpretations.
AASB 2010-4	1 January	1 July
Amendments to Australian Accounting Standards arising from the Annual Improvements Project,	2011	2011
providing guidance relating to disclosures for AASB 7 and AASB 124, analysis of other
comprehensive income and fair value of award credits.
AASB 2010-5	1 January	1 July
This Standard makes numerous editorial amendments to a range of Australian Accounting Standards	2011	2011
and Interpretations, including amendments to refect changes made to the text of IFRS by the IASB.
AASB 2010-6	1 July	1 July
Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets.	2011	2011
The amendments increase the disclosure requirements for transactions involving transfers of
fnancial assets but which are not de-recognised and introduce new disclosures for assets that are
de-recognised but the entity continues to have a continuing exposure to the asset after the sale.

(ii) Accounting standards issued but not yet effective

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2012 reporting periods. The Group’s assessment of the impact of these new standards and interpretations is set out below.

Initial application of the following Standards and Interpretations will not affect any of the amounts recognised in the financial report, but may change the disclosures presently made in relation to the Group:

in the fnancial report, but may change the disclosures presently made in relation to the	Group:
	Application	Application
	date of	date for
Summary	standard	Group
AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Other	1 July	1 July
Comprehensive Income	2012	2012
This Standard requires entities to group items presented in other comprehensive income on the basis
of whether they might be reclassifed subsequently to proft or loss and those that will not.
AASB 9_Financial Instruments_	1 January	1 July
AASB 9 includes requirements for the classifcation and measurement of fnancial assets. It was	2013*	2013
further amended by AASB 2010-7 to refect amendments to the accounting for fnancial liabilities.
These requirements improve and simplify the approach for classifcation and measurement of
fnancial assets compared with the requirements of AASB 139.
AASB 10_Consolidated Financial Statements_	1 January	1 July
AASB 10 establishes a new control model that applies to all entities. It replaces parts of AASB 127	2013	2013
_Consolidated and Separate Financial Statements_dealing with the accounting for consolidated fnancial
statements and UIG-112_Consolidation – Special Purpose Entities_. The new control model broadens the
situations when an entity is considered to be controlled by another entity and includes new guidance
for applying the model to specifc situations.
AASB 11_Joint Arrangements_	1 January	1 July
AASB 11 replaces AASB 131_Interests in Joint Ventures_and UIG-113_Jointly-controlled Entities –_	2013	2013
Non-monetary Contributions by Ventures. AASB 11 uses the principle of control in AASB 10 to
defne joint control, and therefore the determination of whether joint control exists may change.
In addition it removes the option to account for jointly controlled entities (JCEs) using proportionate
consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights
and obligations arising from the arrangement.
AASB 12_Disclosure of Interests in Other Entities_	1 January	1 July
AASB 12 includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements,	2013	2013
associates and structures entities. New disclosures have been introduced about the judgements made
by management to determine whether control exists, and to require summarised information about
joint arrangements, associates and structured entities and subsidiaries with non-controlling interests.
AASB 13_Fair Value Measurement_	1 January	1 July
AASB 13 establishes a single source of guidance for determining the fair value of assets and	2013	2013
liabilities. AASB 13 does not change when an entity is required to use fair value, but rather, provides
guidance on how to determine fair value when fair value is required or permitted. AASB 13 also
expands the disclosure requirements for all assets or liabilities carried at fair value.
Annual Improvements to IFRSs 2009–2011 Cycle	1 January	1 July
This standard sets out amendments to International Financial Reporting Standards (IFRSs) and the	2013	2013
related bases for conclusions and guidance made during the International Accounting Standards
Board’s Annual Improvements process. These amendments have not yet been adopted by the AASB.
AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual	1 July	1 July
Key Management Personnel Disclosure Requirements	2013	2013
This Amendment deletes from AASB 124 individual key management personnel disclosure
requirements for disclosing entities that are not companies.

• AASB ED 215 Mandatory effective date of IFRS 9 proposes to defer the mandatory effective date of AASB 9 to annual periods beginning on or after 1 January 2015, with early application permitted. At the time of preparation, finalisation of ED 215 is still pending by the AASB. However, the IASB has deferred the mandatory effective date of IFRS 9 to annual periods beginning on or after 1 January 2015, with early application permitted.

Notes to the Financial Statements

2. Financial risk management

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments such as foreign exchange contracts to hedge certain risk exposures.

Risk management is the responsibility of the Chief Financial Officer (CFO) and follows policies approved by the Board of Directors. The CFO identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units.

As detailed in note 29, on 31 May 2012 and 19 June 2012 respectively, the Group acquired a controlling interest in Brasil Online and OCC, leading providers of online employment websites in Brazil and Mexico respectively. Given the timing of the acquisitions, SEEK is currently reviewing the financial risk policies in both Brasil Online and OCC, and during the next financial year will align their policies with the rest of the Group.

In the prior year, the Group acquired a controlling interest in JobsDB, a provider of online employment websites in South East Asia. During the current financial year, SEEK has reviewed the financial risk policies in JobsDB and is in the process of aligning these policies with the rest of the Group.

The Group holds the following financial instruments:

The Group holds the following fnancial instruments:
			2011
		2012	Restated*
	Notes	$’000	$’000
Financial assets
Cash and cash equivalents	9	92,703	98,291
Trade and other receivables(1)	10	61,098	42,699
Other fnancial assets	12	630	17,379
Financial liabilities
Trade and other payables	15	57,028	43,698
Other fnancial liabilities	17	82,487	147,887
Borrowings (principal)	16	320,487	278,704

• Refer to note 29(b) for details of restatement on the completion of acquisition accounting for JobsDB. 1. Trade and other receivables in the table excludes prepayments which are not classified as financial instruments.

The carrying value of the assets and liabilities disclosed in the table above closely approximates or equals their fair value.

Borrowings are issued at variable interest rates (for details of the maturity of borrowings, refer to note 16), and cash and cash equivalents (refer to note 9) attract interest at variable interest rates. All other financial assets and liabilities are non-interest bearing.

(a) Market risk

(i) Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, predominately the US dollar (USD), Singapore dollar (SGD), Hong Kong dollar (HKD), New Zealand dollar (NZD), British pound (GBP), Brazil real (BRL) and Mexican peso (MXN). The Group’s exposure to these and other key currencies is detailed on page 67.

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency.

Forward contracts are sometimes used to manage foreign currency exchange risk. The CFO is responsible for managing exposures by using external forward currency contracts, for example for one-off significant transactions. During the financial year, SEEK also entered into a net investment hedge for $50,000,000 (HKD388,725,000). This is designated as a hedge against the Hong Kong assets, thereby protecting this portion of assets against depreciation of the HKD over the three year life of the swap.

The Group’s foreign exchange risk management policy is to hedge up to 100% of anticipated significant cash flows in foreign currencies for up to a six month period. The forward foreign currency exchange contracts taken up by the Group are regularly reassessed.

AUD Denominated HKD Denominated MXN Denominated 2012 NZD 000's GBP 000's MYR 000's USD 000's HKD 000's PHP 000's THB 000's NTD 000's IDR 000's MYR 000's SGD 000's INR 000's RMB 000's USD 000's AUD 000's USD 000's	Cash and cash equivalents – 62 1,746 362 – – – – – – 3,493 – 14 396 103 13	Trade and other receivables 755 179 – – – 1,265 12,681 3,215 – 8,822 – 6,065 – – – 3	Financial assets – – – – – – – – – – – – – – – –	Trade and other payables 355 385 – – – – – – 7,908,680 – 663 – 7,108 – – –	Borrowings (principal) – – – – – – – – – – – – – – – –	AUD Denominated HKD Denominated MXN Denominated 2011 NZD 000's GBP 000's MYR 000's USD 000's HKD 000's PHP 000's THB 000's NTD 000's IDR 000's MYR 000's SGD 000's INR 000's RMB 000's USD 000's AUD 000's USD 000's	Cash and cash equivalents – 536 3,768 1 – – – – – – – – – – – –	Trade and other receivables – 832 – – – – – – 8,921,984 – 6,213 – – – – –	Financial assets – – – – – – – – – – – – – – – –	Trade and other payables 4,083 50 – 1,124 51,112 9,396 22,388 3,113 – 7,790 – 6,134 9,624 – – –	Borrowings (principal) – – – – – – – – – – – – – – – –

Notes to the Financial Statements

2. Financial risk management continued

The analysis below reflects management’s view of possible movements in relevant foreign currencies against the Australian dollar in the short term subsequent to 30 June 2012. The table summarises the range of possible outcomes that would affect the Group’s net profit and equity as a result of foreign currency movements.

The impact of reasonably possible movements in exchange rates is as follows:

	Proft or Loss
	2012 $’000 2011 $’000
	High Low High Low
AUD to NZD (Range +5% to -5%)	(15) 17 84 (93)
AUD to GBP (Range +5% to -5%)	11 (12) (93) 103
AUD to MYR (Range +5% to -5%)	(26) 28 59 (65)
AUD to HKD (Range +5% to -5%)	– – 291 (322)
AUD to USD (Range +5% to -5%)	(17) 19 50 (55)
HKD to PHP (Range +5% to -5%)	(1) 2 10 (11)
HKD to THB (Range +5% to -5%)	(18) 20 32 (36)
HKD to NTD (Range +5% to -5%)	(5) 5 5 (5)
HKD to IDR (Range +5% to -5%)	39 (43) (46) 51
HKD to MYR (Range +5% to -5%)	(127) 141 – –
HKD to SGD (Range +5% to -5%)	(103) 113 (224) 248
HKD to INR (Range +5% to -5%)	(5) 6 6 (7)
HKD to RMB (Range +5% to -5%)	52 (57) 66 (73)
HKD to USD (Range +5% to -5%)	(18) 20 – –
HKD to AUD (Range +5% to -5%)	5 (5) – –
MXN to USD (Range +5% to -5%)	(1) 1 – –
Net movement	(230) 255 240 (265)

(ii) Price risk

The Group is not exposed to significant equities price risk.

(iii) Cash flow interest rate risk

The Group’s main interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk if the borrowings are carried at fair value.

As part of its capital risk management policy the Group protects part of its borrowings from exposure to fluctuations in interest rates. The Group has entered into interest rate swap contracts under which it is obliged to receive interest at variable rates and to pay interest at fixed rates.

Swaps currently in place cover approximately 25% (2011: 11%) of the variable loan principal outstanding and are timed to expire as each loan repayment falls due. Refer to note 12 for further details.

At the end of the reporting period, the Group had the following variable rate borrowings and interest rate swap contracts outstanding:

contracts outstanding:
	2012 $’000 2011 $’000
	Weighted average interest rate % $’000 Weighted average interest rate % $’000
Bank loans – principal (note 16)	7.1% 320,487 7.1% 278,704
Less amounts covered by interest rate swaps	4.9% (80,000) 4.5% (30,000)
	240,487 248,704

The interest rate and term for bank borrowings is determined at the date of each drawdown. The weighted average interest rate for the year ended 30 June 2012 was 7.1% (2011: 7.1%). At 30 June 2012 if the weighted average interest rate of the facility had been 10% higher or 10% lower, interest expense would increase/decrease by $2,110,000.

Cash balances

As at 30 June 2012 the Group has $17,690,000 held in bank deposits, debentures, fixed income funds and short-term marketable securities held by the subsidiaries of SEEK’s controlled entity Brasil Online, which attract a higher rate of interest.

The Group’s bank accounts are predominantly interest bearing accounts. Funds that are excess to short-term liquidity requirements are generally invested in short-term commercial bills, backed by the four major Australian domestic banks. Where excess funds are significantly in excess of short-term requirements, they are then applied to reduce the syndicated loan facility balance, thus reducing interest payable.

At 30 June 2012, if the interest rates on interest bearing cash balances were to move 10% higher or 10% lower than the weighted average rate of 3.08%, annual interest income would increase/decrease by $282,000 respectively.

(b) Credit risk

The Group’s exposure to credit risk arises from the potential default of the Group’s trade and other receivables as well as the institutions in which the Group’s cash and cash equivalents are deposited, with a maximum exposure equal to the carrying amounts of these assets. Further details of the Group’s trade receivables are included in note 10, and cash and cash equivalents are detailed in note 9.

For trade and other receivables, the Group does not hold any credit derivatives or collateral to offset its credit exposure. Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.

Group trade receivables at 30 June 2012 is $55,475,000 (note 10).

The domestic Employment business accounts for 47% of gross trade receivables with a customer base comprising of agencies, national/major accounts and SMEs. Credit risk assessments are conducted on new and renegotiated contracts to evaluate each customer’s credit worthiness.

The Education business accounts for 20% of gross trade receivables and their customer base is predominantly made up of full- and part-time students. The majority (94%) of these students receive FEE-HELP, for which the debt recorded is not yet due and the risk of default is relatively low as the debt is settled by the Department for Education. The remainder are self-funded and while individual debtors are low, they represent a higher credit risk.

The International business represents 33% of gross trade receivables and the exposure to credit risk is relatively low due to the credit terms provided and the large and diverse customer base.

Credit risk is managed in the following ways:

– The provision of credit is covered by a risk assessment process for all customers (e.g. appropriate credit history, credit limits, past experience);

• Concentrations of credit risk are minimised by undertaking transactions with a large number of customers.

The Group’s treasury policy only authorises dealings with financial institutions that have an investment grade rating.

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash flows and ensuring that all term deposits can be converted to funds at call. Due to the dynamic nature of the underlying businesses, the CFO aims to maintain flexibility in funding by keeping accessible the cash reserves of the business. A borrowing facility of $340,000,000 was set up in the prior year to enable the Group to borrow cash when necessary, repayable during December 2013 (refer to note 16). In addition in May 2012, a short-term borrowing facility of $20,000,000 was set up to enable additional cash borrowings when necessary. This facility was not drawn down at 30 June 2012, and expires in August 2012.

At 30 June 2012 the Group has recognised a financial liability of $81,216,000 (2011: $74,630,000), which represents the net present value of the expected cash consideration to be paid to the vendor of JobsDB for the remaining 20% ownership. The vendor has been granted the option to exercise between 23 June 2012 and 23 June 2014; as the option is now current, the value of the liability is no longer discounted at 30 June 2012. The selling price is dependent on future earnings, but capped at HK$640,000,000, which is the amount currently recognised. At the date of this report the option had not been exercised.

All other financial liabilities are current and anticipated to be repaid over the normal credit terms, usually 30 days.

Notes to the Financial Statements

2. Financial risk management continued

(i) Financing arrangements

The Group had access to the following borrowing facilities at end of the reporting period:

	Drawn Undrawn Total
	2012 $’000 2011 $’000 2012 $’000 2011 $’000 2012 $’000 2011 $’000
Floating rate
Expiring within one year	– – 20,000 – 20,000 –
Expiring beyond one year	320,487 278,704 19,513 61,296 340,000 340,000
	320,487 278,704 39,513 61,296 360,000 340,000

Subject to the continuance of meeting certain financial covenants, the bank loan facilities may be drawn down at any time. Refer to note 16 for further details of the Group’s borrowing arrangements.

(d) Fair value measurements

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

SEEK Limited is required to disclose fair value measurements by level of the following fair value measurement hierarchy:

• (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);

• (b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and

• (c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).

At 30 June 2012 the Group held at fair value the following level 2 financial assets and liabilities (refer to note 12):

• Net investment hedge $672,000 gain

• Interest rate swaps $42,000 loss.

At 30 June 2012 the Group held at fair value a put option, classified as a level 3 financial liability. The fair value of the put option is determined based on the net present value of anticipated future cash outflows. These cash outflows are dependent on a multiple of future earnings, capped at HK$640,000,000. The fair value has been determined using the maximum cash outflow and is not discounted as the option is current. The following table shows the movement in the put option during the current and prior years:

		2012	2011
	Notes	$’000	$’000
Carrying amount at start of year		74,630	–
Recognised during the period as a level 3 fnancial liability		–	73,396
Exchange differences		4,583	980
Interest unwound and charged to the Consolidated Income Statement		2,003	254
Carrying amount at end of year	17	81,216	74,630

(e) Capital risk management

The Group’s policy is to maintain a capital structure for the business which ensures sufficient liquidity and support for business operations, maintains shareholder and market confidence, provides strong stakeholder returns, and positions the business for future growth. In assessing capital management the Group considers both equity and debt instruments.

The ongoing maintenance of this policy is characterised by:

• Ongoing cash flow forecast analysis and detailed budgeting processes which, combined with continual development of banking relationships, is directed at providing a sound financial positioning for the Group’s operations and financial management activities;

• A capital structure that provides adequate funding for the Group’s potential acquisition and investment strategies, building future growth in shareholder value. The syndicated loan facility will be partly used to fund significant investments as part of the Group’s growth strategy; and

• Investment criteria that consider earnings accretion and risk adjusted rate of return requirements based on the Group’s weighted average cost of capital, and overall strategic goals.

The Group is not subject to externally imposed capital requirements, other than normal banking covenants and obligations. The Company has complied with all bank lending requirements during the year and at the date of this report.

3. Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

(a) Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future which may not equal the related actual results. The estimates and assumptions that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(i) Business combinations

Following the guidance in AASB 3: Business Combinations , the Group has made assumptions and estimates to determine the purchase price of businesses acquired as well as its allocation to acquired assets and liabilities. To do so, the Group is required to determine the acquisition-date fair value of the identifiable assets acquired, including intangible assets such as brand, customer relationships and liabilities assumed. Goodwill is measured as the excess of the fair value of the consideration transferred including the recognised amount of any non-controlling interest over the net recognised amount of the identifiable assets and liabilities.

The assumptions and estimates made by the Group have an impact on the asset and liability amounts recorded in the financial statements. In addition, the estimated useful lives of the acquired amortisable assets, the identification of intangible assets and the determination of the indefinite or finite useful lives of intangible assets acquired will have an impact on the Group’s future profit or loss.

In step acquisitions where the Group obtains control over an entity by acquiring an additional interest in that entity, the Group’s previously held equity interest is remeasured to fair value at the date the controlling interest is acquired and a gain or loss is recognised in the Consolidated Income Statement. The Group has also adopted the fair value method in measuring non-controlling interests in recent step acquisitions. The determination of these fair values involves management judgement and takes into consideration purchase price of the acquired controlling interest, other comparable transactions and trading comparables.

(ii) Estimated impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 1(h). The recoverable amounts of CGUs have been determined based on value-in-use or fair value calculations. These calculations require the use of assumptions. Please refer to note 14 for details of these assumptions and the potential impact of changes to these assumptions.

(iii) Income taxes

The Group is subject to income taxes in Australia and in a number of overseas jurisdictions. Judgement is required in determining the Group provision for income taxes.

• There are certain transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group estimates its tax liabilities based on its current understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the future period in which such determination is made.

• Research and development tax concessions available to the business are estimated in the accounts because a full assessment of the position cannot be made by the year end. This has been one of the causes of over-provision for tax in prior periods as it is the policy of the business to only bring to account that portion of expenses that are reasonably expected to be claimable at period end.

Please refer to note 8 for further details on the Group’s income tax balances.

Notes to the Financial Statements

3. Critical accounting estimates and judgements continued

(iv) Potential deferred tax liability on undistributed profits of IDP Education Pty Ltd (an associate of SEEK Limited) The Group did not recognise a deferred tax liability in relation to undistributed profits of IDP Education Pty Ltd since a dividend policy agreement has been put in place, which stipulates that dividends will be fully franked, and the directors consider that this gives them the ability to control the timing and reversal of the temporary differences.

(v) Acquired contingent liabilities

In accordance with Australian Accounting Standards for Business Combinations, the Group are required to reassess contingent liabilities acquired in a business combination and record them at their fair value. The fair value of the contingent liabilities reflects the range of possible outcomes across the portfolio of contingent liabilities and is adjusted for risk. Given the accounting for the acquisitions are preliminary, these fair values are still being assessed and are subject to change.

(b) Critical judgements in applying the entity’s accounting policies

(i) Significant influence over associates

The Group follows the guidance in AASB 128: Investments in Associates to determine its level of control and influence over its investments in associates. This determination can require judgement particularly around voting rights and participation in the financial and operating activities of the investee. If the Group’s influence increased such that the Group has the power to govern the financial and operating activities of the associate, then its results would have to be fully consolidated. Conversely, if the Group’s influence reduced and the Group did not have the power to participate in the financial and operating activities of the associate then it would need to account for its interest in the associate as an available-for-sale financial asset.

The key judgemental areas are as follows:

Zhaopin Limited (“Zhaopin”)

The Group owns 56.1% of Zhaopin. Although SEEK’s equity interest is more than 50%, the terms of a shareholders’ agreement mean that SEEK does not exercise control over the financial and operating policies of the entity. A representative of the Group is a director of the entity, enabling the Group to exert significant influence over the entity. For this reason the investment is considered to be an associate of the Group.

IDP Education Pty Ltd (“IDP”)

The Group owns 50% of the voting rights in IDP. The Group does not have control over the investment as its voting rights and board seats are equal to its co-investors. The Group is required to equity account for IDP as an associate company due to the fact that the Group has significant influence over IDP.

JobStreet Corporation Berhad (“JobStreet”)

The Group owns 22.0% of the voting rights in JobStreet and management has determined that this ownership provides it with significant influence over JobStreet. This is however a judgemental area and the Group continues to monitor its position to participate in the JobStreet policy-making processes. If this situation were to change and the Group did not have the power to participate in the financial and operating policy decisions of JobStreet, then it would need to account for its interest in JobStreet as an available-for-sale financial asset at fair value and would no longer equity account for its share of profit.

(ii) Impairment of the investment in associates

The Group has not impaired any of its investments in associates, a decision which requires significant estimates and judgements. As required by current Accounting Standards, the Group has evaluated, among other factors, the financial health of, and business outlook for, its associates and assessed the carrying value of its investments against current estimated fair value. Where an impairment indicator exists due to the current economic climate, an impairment test has been performed. This has resulted in no impairment write downs being required in the current financial period.

4. Segment information

(a) Description of segments

Management have determined the operating segments based on the reports reviewed and relied upon by the CEO (the chief operating decision maker (CODM)).

The Group operates in three core industries: online employment classified advertising (Employment); the provision and execution of training courses (Education); and overseas investments in online employment websites (International).

• The Employment business is considered as one reporting segment which provides online employment classified advertising services through the SEEK website. It sells these services in Australia, New Zealand and the United Kingdom, which have similar business characteristics and are managed as one business.

• The Education division comprises two segments: Learning and Think.

• The Learning business markets, sells and distributes (predominantly through online channels) vocational training and education training courses in Australia. These courses are developed and delivered by outside providers (including Think). It also holds the Group’s investment in IDP.

• Think is a provider of vocational training and higher education courses, including classroom-based and distance learning courses, and operates solely in Australia.

• The International division now comprises three operating businesses, being JobsDB, Brasil Online and OCC, as well as other head office costs (previously disclosed as one business). As a result of the increased investments in Brasil Online and OCC during the year and the acquisition of JobsDB in the prior year, these entities now represent significant individual businesses within the Group. SEEK now has a presence in China, South East Asia, Brazil and Mexico.

Segment EBITDA is the measure utilised by the CODM to measure the businesses’ profitability. Segment EBITDA is earnings before interest, tax, depreciation and amortisation and excludes share of net profits from associates and jointly controlled entities accounted for using the equity method, fair value gain/loss on acquisition, impairment loss, amortisation of share-based payments and long-term incentives and other non-operating gains/losses. Interest income and expenditure are not allocated to segments, as this type of activity is driven and managed centrally by the Group.

Segment revenue, expenses, assets and liabilities are those that are directly attributable to a segment and the relevant portion that can be allocated to the segment on a reasonable basis. Segment assets include all assets used by a segment and consist primarily of operating cash, receivables, other financial assets, plant and equipment and goodwill and other intangible assets, net of related provisions. While most of these assets can be directly attributable to individual segments, the carrying amounts of certain assets used jointly by segments are allocated based on reasonable estimates and usage. Segment liabilities consist primarily of trade and other creditors, other financial liabilities and employee entitlements.

Segment revenues, expenses and results include transfers between segments. Such transfers are priced on an “arm’s length” basis and are eliminated on consolidation.

The amounts provided to the CODM with respect to total assets and total liabilities are measured in a manner consistent with that of the financial statements. Assets and liabilities are allocated based on the operations of the segment.

Notes to the Financial Statements

Education International 30 June 2012 Notes Employment $’000 Learning $’000 Think $’000 Eliminations $’000 Total $’000 JobsDB $’000 Brasil Online(1) $’000 OCC(1) $’000 Int'l Other $’000 Total $’000 Consolidated $’000	Revenue	Segment revenue from external customers 5 247,769 45,473 86,913 – 132,386 52,926 8,818 355 – 62,099 442,254	Inter-segment revenue – 4,005 – (4,005) – – – – – – –	Total segment revenue 247,769 49,478 86,913 (4,005) 132,386 52,926 8,818 355 – 62,099 442,254	Interest income 5 2,976	Consolidated revenue 5 445,230	Segment EBITDA 152,146 15,261 5,283 – 20,544 20,752 2,982 112 (2,911) 20,935 193,625	Depreciation 13 (1,900) (998) (4,688) – (5,686) (1,017) (157) (45) – (1,219) (8,805)	Amortisation 14 (2,626) (308) (3,053) – (3,361) (5,448) (173) (37) – (5,658) (11,645)	Share of profts from associates and jointly controlled entities accounted for using the equity method 11(b) – 6,133 – – 6,133 – 4,654 821 19,263 24,738 30,871	Fair value gains on step acquisitions 29(a) – – – – – – 15,462 12,762 – 28,224 28,224	Impairment loss 14 – – (24,115) – (24,115) – – – – – (24,115)	Segment result 147,620 20,088 (26,573) – (6,485) 14,287 22,768 13,613 16,352 67,020 208,155	Amortisation of share-based payments and other long-term incentive schemes 7 (4,130)	Interest income 5 2,976	Interest expense 7 (23,650)	Other non-operating gain 6 1,130	Proft before tax 184,481	Income tax expense 8(a) (47,023)	Proft for the year 137,458	Non-controlling interests 20(a) (5,778)	Proft for the year attributable to the owners of SEEK Limited 131,680	1. As discussed in note 29(a), SEEK moved to controlling interests in Brasil Online (31 May 2012) and OCC (19 June 2012), and the EBITDA results in these businesses are refective of the period since control was gained.

Employment Education International 30 June 2011 Restated* Notes Employment $’000 Eliminations $’000 Total $’000 Learning $’000 Think $’000 Eliminations $’000 Total $’000 JobsDB $’000 Brasil Online $’000 OCC $’000 Int'l Other $’000 Total $’000 Consolidated $’000	Revenue	Segment revenue from external customers 5 224,005 – 224,005 41,244 69,078 – 110,322 8,727 – – – 8,727 343,054	Inter-segment revenue 32 (32) – 3,222 – (3,222) – – – – – – –	Total segment revenue 224,037 (32) 224,005 44,466 69,078 (3,222) 110,322 8,727 – – – 8,727 343,054	Interest income 5 1,681	Consolidated revenue 5 344,735	Segment EBITDA 133,517 – 133,517 13,046 (7,497) – 5,549 3,535 – – (6,965) (3,430) 135,636	Depreciation 13 (1,938) – (1,938) (640) (3,476) – (4,116) (149) – – – (149) (6,203)	Amortisation 14 (2,567) – (2,567) (173) (2,731) – (2,904) (921) – – – (921) (6,392)	Share of profts from associates and jointly controlled entities accounted for using the equity method 11(b) – – – 7,696 – – 7,696 715 4,144 749 11,381 16,989 24,685	Fair value loss on step acquisition – – – – – – – (811) – – – (811) (811)	Segment result 129,012 129,012 19,929 (13,704) 6,225 2,369 4,144 749 4,416 11,678 146,915	Amortisation of share-based payments and other long-term incentive schemes 7 (999)	Interest income 5 1,681	Interest expense 7 (14,588)	Proft before tax 133,009	Income tax expense 8(a) (36,295)	Proft for the year 96,714	Non-controlling interests 20(a) 974	Proft for the year attributable to the owners of SEEK Limited 97,688

Notes to the Financial Statements

Education International 30 June 2012 Notes Employment $’000 Learning $’000 Think $’000 Total $’000 JobsDB $’000 Brasil Online $’000 OCC $’000 Int'l Other $’000 Total $’000 Consolidated $’000	Assets	Total segment assets 68,358 92,794 114,371 207,165 381,302 416,649 163,816 126,903 1,088,670 1,364,193	Unallocated:	Deferred tax assets 8(d) 24,615	Current tax assets 2,924	Total assets 1,391,732	Total assets include:	Additions to non-current assets (other than fnancial assets and deferred tax) 5,971 852 8,690 9,542 1,336 131 – – 1,467 16,980	Carrying value of investments in associates and jointly controlled entity 11(b) – 74,028 – 74,028 – – – 122,035 122,035 196,063	Liabilities –	Total segment liabilities (39,665) (3,318) (31,388) (34,706) (23,963) (45,057) (7,494) (84,471) (160,985) (235,356)	Unallocated:	Non-current borrowings 16 (318,433)	Current tax liabilities (19,376)	Deferred tax liabilities 8(e) (47,434)	Total liabilities (620,599)

Education International 30 June 2011 Restated* Notes Employment $’000 Learning $’000 Think $’000 Total $’000 JobsDB $’000 Brasil Online $’000 OCC $’000 Int'l Other $’000 Total $’000 Consolidated $’000	Assets	Total segment assets 99,440 93,432 127,658 221,090 362,026 101,028 40,944 134,674 638,672 959,202	Unallocated:	Deferred tax assets 8(d) 11,397	Total assets 970,599	Total assets include:	Additions to non-current assets (other than fnancial assets and deferred tax) 2,566 4,121 8,681 12,802 100 – – – 100 15,468	Carrying value of investments in associates and jointly controlled entity 11(b) – 73,629 – 73,629 – 101,028 40,944 100,329 242,301 315,930	Liabilities	Total segment liabilities (38,304) (1,618) (27,036) (28,654) (21,633) – – (148,064) (169,697) (236,655)	Unallocated:	Non-current borrowings 16 (275,281)	Current tax liabilities (5,370)	Deferred tax liabilities 8(e) (18,534)	Total liabilities (535,840)	* As discussed in note 4(a) the International division has been restated to refect the acquisitions in the year.

Notes to the Financial Statements

4. Segment information continued

(c) Geographical information

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of the customers. Segments assets are based on the geographical location of the assets.

	2012 2011
	Revenue(1) $’000 Non-current assets(2) $’000 Revenue(1) $’000 Non-current assets(2) Restated* $’000
Australia	362,565 193,830 318,577 215,755
New Zealand	17,241 4,910 15,073 4,730
United Kingdom	349 – 676 –
Brazil	8,818 384,963 – 101,028
Mexico	355 153,022 – 40,944
China	10,410 80,584 1,679 59,674
Hong Kong(3)	20,438 339,416 3,290 327,629
Malaysia	723 44,833 152 43,724
Other South East Asia	21,355 3,736 3,607 5,234
Total allocated	442,254 1,205,294 343,054 798,718
Unallocated:
Interest income	2,976 – 1,681 –
Deferred tax assets	– 24,615 – 11,397
Total	445,230 1,229,909 344,735 810,115

• Refer to note 29(b) for details of restatement on the completion of acquisition accounting for JobsDB.

• Amounts allocated represent segment revenue from external customers.

• Amounts allocated represent all non-current assets excluding deferred tax assets.

• Non-current assets allocated to Hong Kong include goodwill and other indefinite life intangible assets assumed as part of the JobsDB acquisition, which is consistent with the approach for impairment testing (refer to note 14).

5. Revenue

5. Revenue
	Consolidated
	2012 $’000 2011 $’000
Revenue from continuing operations
Sales revenue
Employment – job and banner advertising	247,769 224,005
International – job, banner advertising and CV online	62,099 8,727
Education – commission revenue	41,652 37,377
Education – classroom-based training	90,734 72,945
Total sales revenue	442,254 343,054
Other revenue
Interest income	2,976 1,681
Total revenue from continuing operations	445,230 344,735

6. Other income

6. Other income
Notes	Consolidated
	2012 $’000 2011 $’000
Fair value gains on step acquisitions 29(a)	28,224 –
Other non-operating gain(1)	1,130 –
	29,354 –

1. Other non-operating gain relates to a forward exchange contract settled during the year.

7. Expenses

Net losses and expenses

Profit before income tax expense includes the following specific net losses and expenses:

Notes	Consolidated
	2012 $’000 2011 $’000
Specifc costs included within operations and administration
Depreciation of plant and equipment 13	8,805 6,203
Amortisation of intangible assets 14	11,645 6,392
Rental expense relating to operating leases:
Minimum lease payments	13,969 10,656
Net foreign exchange (gains)/losses recognised in proft before income tax expense	(428) 614
Net loss on disposal of plant and equipment	108 –
Fair value loss on step acquisition	– 811
Impairment loss 14	24,115 –
	58,214 24,676
Finance costs
Interest expense	23,650 14,588
Interest unwound on put option 17	2,003 254
Other fnance charges paid/payable	1,024 1,571
Total fnance costs	26,677 16,413
Employee benefts
Share-based payments and other long-term incentives	4,130 999
Salary costs	96,915 78,394
Superannuation costs	7,698 6,517
Total employee benefts	108,743 85,910

8. Income tax

(a) Income tax expense

(a) Income tax expense
Notes	Consolidated
	2012 $’000 2011 $’000
Current tax	48,761 36,981
Deferred tax	(4,380) (797)
Release of hedge reserves on step acquisitions 29(a)	3,169 –
Under/(over) provision in prior years	(527) 111
Income tax expense 8(b)	47,023 36,295
The entire income tax expense relates to proft from continuing operations.
Deferred income tax expense included in income tax expense comprises:
(Increase) in deferred tax assets	(3,558) (1,345)
(Decrease)/increase in deferred tax liability	(822) 548
	(4,380) (797)

Notes to the Financial Statements

8. Income tax continued

(b) Numerical reconciliation of income tax expense to prima facie tax payable:

(b) Numerical reconciliation of income tax expense to prima facie tax payable:
	Consolidated
	2012 $’000 2011 $’000
Proft from ordinary activities before income tax expense	184,481 133,009
Income tax calculated @ 30% (2011: 30%)	55,344 39,903
Tax effect of amounts that are not deductible/(taxable) in calculating income tax:
Fair value gains on fnancial assets	– 243
Fair value gains on step acquisitions	(5,298) –
Research and development claim	(240) (225)
Share of net proft of associates and jointly controlled entities	(9,261) (7,406)
Non-assessable dividend income	(379) 197
Impairment loss on goodwill	6,750 –
Non-deductible expenses:
Entertainment	166 148
Legal fees and acquisition costs	378 2,261
Share-based payments	345 802
Other non-deductible/non-assessable items	(236) 446
	47,569 36,369
Income tax adjusted for permanent differences:
Effect of change in tax rates	(19) –
Effect of different rates of tax on overseas income	– (185)
(Over)/under provision in prior year	(527) 111
Income tax expense attributable to proft from ordinary activities	47,023 36,295

(c) Amounts recognised directly in equity

Tax expense relating to items of other comprehensive income

(c) Amounts recognised directly in equity Tax expense relating to items of other comprehensive income
Notes	Consolidated
	2012 $’000 2011 $’000
Release of hedge reserve on step acquisitions 29(a)	3,169 –
Current tax (debited)/credited directly to hedge reserve	(3) 716
Deferred tax credited directly to hedge reserve	– 90
Deferred tax (debited) associated with share-based payment schemes 20(a)	(165) (316)
20(a)	3,001 490

Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss or other comprehensive income but directly debited or credited to equity

comprehensive income but directly debited or credited to equity
Notes	Consolidated
	2012 $’000 2011 $’000
Current tax credited directly to share-based payment reserves
Shares purchased on market	108 38
New issue of shares	225 –
Deferred tax credited directly to share-based payment reserves	– 49
20(a)	333 87

(d) Deferred tax assets

The balance comprises temporary differences attributable to:

(d) Deferred tax assets The balance comprises temporary differences attributable to:
Notes	Consolidated
	2012 $’000 2011 $’000
Amounts recognised in proft or loss:
Provision for impairment of trade receivables	1,866 1,672
Unearned income	1,719 –
Employee benefts	5,211 3,996
Provision for credit notes	942 563
Fringe benefts tax	51 50
Share-based payments	1,204 580
Accounting fees	284 240
Non-current provisions	6,362 –
Plant and equipment and intangible assets	5,056 2,240
Deferred expenditure – other	1,115 1,098
Foreign exchange gains/(losses)	116 (124)
Commissions – non-employment benefts	271 241
	24,197 10,556
Amounts recognised directly in equity:
Share-based payments	245 413
Hedge on acquisition of JobsDB	– 90
Capital raising costs	173 338
	418 841
Net deferred tax assets	24,615 11,397
Movements:
Opening balance at 1 July	11,397 10,421
Credited to the Consolidated Income Statement	3,558 1,345
Credited to equity	(165) (275)
Exchange differences	(593) (7)
Acquisition of subsidiary 29(a)	10,660 –
Under/(overs) in the prior year	(242) (87)
Closing balance at 30 June	24,615 11,397
Deferred tax assets to be recovered within 12 months	12,724 8,876
Deferred tax assets to be recovered after more than 12 months	11,891 2,521
	24,615 11,397

Notes to the Financial Statements

8. Income tax continued

(e) Deferred tax liabilities

(e) Deferred tax liabilities
Notes	Consolidated
	2012 $’000 2011 Restated* $’000
The balance comprises temporary differences attributable to:
Intangible assets	46,026 17,507
Withholding tax on undistributed profts	1,408 –
Borrowing costs	– 1,027
Net deferred tax liabilities	47,434 18,534
Movements:
Opening balance at start of year	18,534 6,694
(Credited)/charged to the Consolidated Income Statement	(822) 548
Acquisition of subsidiaries (restated*) 29	32,838 11,163
Exchange differences	(3,116) 129
Closing balance at end of year	47,434 18,534
Deferred tax liabilities expected to be recovered within 12 months	3,020 1,413
Deferred tax liabilities expected to be recovered after more than 12 months	44,414 17,121
Closing balance at end of year	47,434 18,534

• The prior year balance has been restated. Refer to note 29(b) for details of restatement on the completion of acquisition accounting for JobsDB and refer to note 29(a) for the current year acquisitions of Brasil Online and OCC.

Tax consolidation legislation

SEEK Limited and its wholly-owned Australian controlled entities implemented the tax consolidation legislation as of 1 July 2004. The Australian Taxation Office has been notified of this decision. The accounting policy on implementation of the legislation is set out in note 1(y).

On adoption of the tax consolidation legislation, the entities in the tax consolidated group entered into a tax sharing agreement which, in the opinion of the directors, limits the joint and several liability of the wholly owned entities in the case of a default by the head entity, SEEK Limited.

The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate SEEK Limited for any current tax payable assumed and are compensated by SEEK Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to SEEK Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly owned entities’ financial statements.

The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. The funding amounts are recognised as current intercompany receivable or payables.

9. Cash and cash equivalents

9. Cash and cash equivalents
	Consolidated
	2012 $’000 2011 $’000
Cash at bank and on hand	75,013 98,291
Short-term investments	17,690 –
	92,703 98,291

(a) Risk exposure

The Group’s exposure to interest rate risk is discussed in note 2. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of cash and cash equivalents mentioned above.

(b) Restricted cash in the People’s Republic of China

At 30 June 2012 cash of RMB45,057,000 ($7,015,000) was held by local subsidiaries in the People’s Republic of China (2011: $5,429,000). This cash can be used in the People’s Republic of China, but is not freely convertible into other currencies for transfer around the Group. The Group is currently considering capital management initiatives to utilise these funds.

(c) Short-term investments

Short-term investments comprise mainly bank deposits, debentures, fixed income funds and short-term marketable securities held by subsidiaries of SEEK’s controlled entity Brasil Online. These highly liquid deposits and investments are readily convertible into known cash amounts and are subject to insignificant risk of changes of value.

10. Trade and other receivables

10. Trade and other receivables
	Consolidated
	2012 $’000 2011 Restated* $’000
Trade receivables	55,475 36,686
Less: provision for impairment of receivables (note a)	(5,970) (7,642)
	49,505 29,044
Other receivables (note c)	11,593 13,579
Prepayments	4,468 2,191
	65,566 44,814

• Refer to note 29(b) for details of restatement on the completion of acquisition accounting for JobsDB.

(a) Impaired trade receivables

As at 30 June 2012 the amount of the provision for current trade receivables was $5,970,000 (2011: $7,642,000) with $2,248,000 (2011: $5,758,000) being provision for doubtful debts and $3,722,000 (2011: $1,884,000) being credit note provisions. The Group has recognised a loss of $5,732,000 (2011: $15,037,000) in respect of impaired trade receivables during the year ended 30 June 2012.

Movements in the provision for impairment of receivables are as follows:

Movements in the provision for impairment of receivables are as follows:
Notes	Consolidated
	2012 $’000 2011 $’000
Opening balances	7,642 5,181
Provision for impairment recognised during the year	5,732 15,037
Utilisation of provision for credit notes and receivables written off	(7,436) (12,485)
Unused amount reversed	(377) (50)
Acquisition of subsidiaries 29(a)	419 –
Exchange differences	(10) (41)
Closing balance	5,970 7,642

The creation or release of the doubtful debts provision has been included in ‘operations and administration’ expense in the Consolidated Income Statement and the creation or the release of the credit note provision has been included within revenue. Amounts charged to the provision are generally written off when there is no expectation of recovering additional cash.

(b) Ageing of net trade receivables from due date

(b) Ageing of net trade receivables from due date
	Consolidated
	2012 $’000 2011 $’000
Current–30 days	43,951 24,623
30–60 days(1)	3,773 3,259
60–90 days(1)	1,124 773
90–120 days(1)	347 217
120+ days(1)	310 172
Closing balance	49,505 29,044

1. Past due and not considered impaired. Trade receivables are considered past due when they are not collected within credit terms.

The Group does not hold any collateral in relation to these receivables.

(c) Other receivables

The other receivables balance mainly represents accrued revenue in the Education business.

The other classes within trade and other receivables do not contain impaired assets and are not past due. Based on the credit history of these other classes, it is expected that these amounts will be received when due.

Notes to the Financial Statements

10. Trade and other receivables continued

(d) Foreign exchange and interest rate risk

Information about the Group’s exposure to foreign currency risk and interest rate risk in relation to trade and other receivables is provided in note 2.

(e) Fair value and credit risk

Due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.

The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables mentioned above. Refer to note 2 for more information on the risk management policy of the Group and the credit quality of the entity’s trade receivables.

11. Investments accounted for using the equity method

The results of associates and the jointly controlled entity are reflected in the results of the Group for the period from the later of the date of SEEK’s investment or 1 July 2011 to the earlier of the date the investment ceased to be an associate or jointly controlled entity or 30 June 2012.

(a) Details of associates and jointly controlled entities

Information relating to associates and the jointly controlled entity is set out below:

Associates Country of incorporation	Ownership interest % 2012 2011 Year end Principal activities
IDP Education Pty Ltd (“IDP”) Australia	50.0 50.0 30 June Provides services for international students wishing to study in Australian educational institutions and also provides International English Language Testing (IELTS)
Zhaopin Ltd (“Zhaopin”) The Cayman Islands	56.1 56.1 31 December Provides both online and print employment classifed advertising services in China
Brasil Online Holdings Coöperatief U.A. (“Brasil Online”) The Netherlands	51.0 (c(i)) 30.0 31 December Owns Catho Online and Manager Online, two leading employment websites in Brazil
JobStreet Corporation Berhad (“Jobstreet”) Malaysia	22.0 22.0 31 December Provider of online employment websites in South East Asia (listed in Malaysia)
Online Career Center Mexico SA de CV (“OCC”) Mexico	56.7 (c(ii)) 41.1 31 December Leading provider of online employment websites in Mexico
Jointly controlled entity
Online Education Services Pty Ltd (“Swinburne Online”) Australia	50.0 (e) 50.0 30 June A joint venture entity between SEEK and Swinburne University of Technology to deliver online learning to students

(b) Investments in associates and jointly controlled entity

(b) Investments in associates and jointly controlled entity
Notes	Consolidated
	2012 $’000 2011 $’000
Carrying amount
Investments in associates 11(c)	195,637 313,476
Investments in jointly controlled entity 11(e)	426 2,454
Total investments accounted for using the equity method	196,063 315,930
Share of profts/(losses) after income tax
Investments in associates 11(c)	32,899 24,731
Investments in jointly controlled entity 11(e)	(2,028) (46)
Total investments accounted for using the equity method	30,871 24,685

(c) Movements in carrying amounts – associates

				Brasil
		IDP	Zhaopin	Online	JobStreet	OCC	JobsDB	Total
	Notes	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Carrying amount as at 30 June 2010		66,734	57,221	110,241	49,173	–	–	283,369
Investments during the year at cost		–	–	–	–	44,696	144,713	189,409
Dividends received
or declared in the year		(2,500)	–	(4,378)	(1,519)	(1,665)	–	(10,062)
Share of profts after income tax		7,742	8,702	4,144	2,679	749	715	24,731
Elimination recognised against
redemption reserve	20(c)	–	634	–	–	–	–	634
Movements in foreign currency
translation reserve	20(a)	(539)	(9,913)	(8,979)	(6,648)	(2,836)	(9,964)	(38,879)
Movements in hedge reserve
– cash fow hedges	20(a)	(262)	–	–	–	–	–	(262)
Acquisition of additional
controlling interest(1)		–	–	–	–	–	(128,450)	(128,450)
Loss on step acquisition(1)		–	–	–	–	–	(7,014)	(7,014)
Carrying amount as at 30 June 2011		71,175	56,644	101,028	43,685	40,944	–	313,476
Dividends and distributions
received or declared in the year		(6,000)	–	(4,235)	(1,544)	(1,076)	–	(12,855)
Share of profts after income tax		8,161	16,490	4,654	2,773	821	–	32,899
Movements in foreign currency
translation reserve	20(a)	43	4,102	(14,830)	(115)	(4,414)	–	(15,214)
Movements in hedge reserve
– cash fow hedges	20(a)	223	–	–	–	–	–	223
Acquisition of additional
controlling interests	29(a)	–	–	(86,617)	–	(36,275)	–	(122,892)
Carrying amount as at 30 June 2012		73,602	77,236	–	44,799	–	–	195,637

1. These movements were incurred as part of the acquisition accounting for JobsDB (refer to note 29(b) for further details on the JobsDB transaction).

(i) Brasil Online

On 31 May 2012, the Group acquired an additional 21.0% interest in Brasil Online for US$78,750,000 (A$80,563,000 at the exchange rate on the date of the transaction). The acquisition was funded through cash and an additional $30,000,000 drawdown on the syndicated bank debt facility and takes the total interest held in Brasil Online to 51.0%. As a result of this transaction, Brasil Online is now considered a subsidiary of SEEK and has been consolidated into the Group from the date of acquisition. Refer to note 29(a) for additional information on this transaction.

(ii) OCC

On 19 June 2012, the Group acquired an additional 15.6% interest in OCC for US$22,500,000 (A$22,250,000 at the exchange rate on the date of the transaction). The acquisition was funded through cash and takes the total interest held in OCC to 56.7%. As a result of this transaction, OCC is now considered a subsidiary of SEEK and has been consolidated into the Group from the date of acquisition. Refer to note 29(a) for additional information on this transaction.

(iii) JobsDB

SEEK Limited, through its controlled entity SEEK Asia, exercised significant influence over JobsDB from 23 December 2010 to 5 May 2011 and accounted for its share of profits using the equity method. On 5 May 2011, SEEK increased its ownership to 60% at which point it began accounting for JobsDB as a subsidiary and the original ownership of JobsDB was reclassified at fair value to goodwill and intangible assets. SEEK continues to consolidate JobsDB at 30 June 2012. Refer to note 29(b) for additional information.

(iv) JobStreet

JobStreet is listed in Malaysia. At 30 June 2012, the market value of the Group’s investment in JobStreet was $47,733,000 (2011: $63,725,000), based on the published share price as at that date.

Notes to the Financial Statements

11. Investments accounted for using the equity method continued

(d) Summarised financial information of associates

• (i) Group’s share of the results and aggregated assets (including goodwill) and liabilities of its associates

Ownership %	Group’s share of
	Assets $’000 Liabilities $’000 Revenues $’000 Proft $’000
30 June 2012
IDP 50.0%	67,120 16,106 102,317 8,161
Zhaopin 56.1%	64,032 38,335 66,036 16,490
Brasil Online(2)	4,654
JobStreet 22.0%	18,726 3,899 10,531 2,773
OCC(3)	821
Total	149,878 58,340 178,884 32,899
30 June 2011
IDP 50.0%	60,266 11,682 94,898 7,742
Zhaopin 56.1%	37,666 29,550 54,594 8,702
Brasil Online 30.0%	38,477 19,162 36,645 4,144
JobStreet 22.0%	15,256 2,943 9,411 2,679
OCC 41.1%	4,918 2,940 6,079 749
JobsDB(1)	715
Total	156,583 66,277 201,627 24,731

1. Represents profit as an associate from 23 December 2010 until 5 May 2011 when JobsDB became a subsidiary. Refer to note 29(b) for details.

2. Represents profit as an associate from 1 July 2011 until 31 May 2012 when Brasil Online became a subsidiary. Refer to note 29(a) for details.

3. Represents profit as an associate from 1 July 2011 until 19 June 2012 when OCC became a subsidiary. Refer to note 29(a) for details.

(ii) Contingent assets and liabilities of associates

The Group’s share of contingent liabilities in associates are as follows:

JobStreet

In 2008, JobStreet provided a corporate guarantee for SGD5.5 million to a financial institution for a treasury/foreign exchange facility granted to the company’s wholly-owned subsidiary, JobStreet.com Pte. Ltd. SEEK’s share of this guarantee is $920,000.

(iii) Commitments

The Group's share of expenditure commitments, relating to operating lease commitments, non-cancellable advertising contracts and capital commitments are as follows:

• IDP $3,013,000 (2011: $3,489,000)

• Zhaopin $5,626,000 (2011: $5,139,000)

• JobStreet $28,000 (2011: $155,000).

(e) Jointly controlled entity – Swinburne Online

On 12 January 2011 SEEK entered into a joint venture agreement with Swinburne University to deliver online tertiary courses specifically designed to meet the educational needs of working Australians. The two parties formed a new entity, Online Education Services Pty Ltd (“Swinburne Online”). Both SEEK and Swinburne each hold 50% of the equity of the entity, 50% of the voting rights and each has three Board seats and is entitled to 50% of the profits and losses of the entity. The first student intake occurred in the second half of the financial year.

In March 2011 each party contributed cash of $2,500,000 to the joint venture and the Group has recognised this contribution as an investment in Swinburne Online. As detailed in the joint venture agreement between SEEK and Swinburne University, each venturer committed to contribute an additional $2,500,000 to the joint venture. On 1 July 2012, both partners made this additional contribution. SEEK will recognise this transaction as an additional investment in Swinburne Online.

In accordance with the accounting policy described in note 1(b), the Group’s interest in Swinburne Online is accounted for in its consolidated financial statements using the equity method of accounting.

Further information relating to the joint venture is set out below:

	2012	2011
	$’000	$’000
Opening carrying amount at 30 June	2,454	–
Investment at cost	–	2,500
Share of (losses) after income tax	(2,028)	(46)
Closing carrying amount at 30 June	426	2,454
Group share of:
Assets	1,565	2,512
Liabilities	625	57
Revenues	1,087	–
Share of (losses) after income tax	(2,028)	(46)

Swinburne Online has no contingent liabilities or capital commitments at 30 June 2012 (30 June 2011: nil).

12. Other financial assets

12. Other fnancial assets
	Consolidated
	2012 $’000 2011 $’000
Other fnancial assets (i)	630 37
Amounts due from co-investors (ii)	– 17,342
	630 17,379

(i) Other financial assets

Other financial assets represent the fair value of interest rate swaps and cross-currency swaps and are discussed in further detail below.

In accordance with the Group’s accounting policy detailed in note 1(l), the gain or loss from remeasuring the hedging instruments at fair value is deferred in equity in the hedging reserves (cash flow hedge reserve and net investment hedge reserve), to the extent that the hedge is effective, and reclassified into the Consolidated Income Statement when the hedged instrument is recognised or when it is impaired or sold.

The Group’s capital risk management policy is discussed in note 2. The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of derivative financial assets mentioned above.

Notes to the Financial Statements

12. Other financial assets continued

Interest rate swap contracts – cash flow hedge

The Group has entered into interest rate swap contracts under which it is obliged to receive interest at variable rates and to pay interest at fixed rates. The contracts require settlement of net interest receivable or payable each 90 days. The settlement dates coincide with the dates on which interest is payable on the underlying debt. The contracts are settled on a net basis.

A loss of $42,000 has been recognised in the Consolidated Statement of Comprehensive Income reflecting the change in fair value of the interest rate swap in the financial year.

Cross-currency swap contracts – net investment hedge

During the financial year, SEEK entered into a net investment hedge for HKD388,725,000 (A$50,000,000). This is designated as a hedge against the Hong Kong assets, thereby protecting this portion of assets against depreciation of the HKD over the three year life of the swap.

A gain of $672,000 has been recognised in the Consolidated Statement of Comprehensive Income, reflecting the fair value of the net investment hedge at 30 June 2012.

(ii) Amounts due from co-investors

The amount receivable from co-investors at 30 June 2011 represented the outstanding cash consideration payable by the co-investors for the third stage of SEEK Asia’s investment in JobsDB, which was settled in July 2011. Refer to note 29(b) for further details.

13. Plant and equipment

13. Plant and equipment
Notes	Consolidated
	2012 $’000 2011 $’000
Opening at 1 July
Cost	50,863 33,218
Accumulated depreciation	(31,662) (18,929)
Net book amount at 1 July	19,201 14,289
Carrying amount at 1 July	19,201 14,289
Additions	8,767 9,929
Disposals	(174) –
Acquisition of subsidiaries 29	5,753 1,167
Exchange differences	2 19
Depreciation expense 4, 7	(8,805) (6,203)
Carrying amount at 30 June	24,744 19,201
Closing at 30 June
Cost	65,211 50,863
Accumulated depreciation	(40,467) (31,662)
Net book amount at 30 June	24,744 19,201

14. Intangible assets

				Course		Computer
				development		software
			Brands and	and	Customer	and website	Work in
		Goodwill	licences	accreditation	relationships	development	progress	Total
Consolidated	Notes	$’000	$’000	$’000	$’000	$’000	$’000	$’000
At 1 July 2010
Cost		93,052	20,889	5,119	3,860	14,866	229	138,015
Accumulated amortisation		–	–	(787)	(1,536)	(6,718)	–	(9,041)
Net book amount		93,052	20,889	4,332	2,324	8,148	229	128,974
Year ended 30 June 2011
Restated*								–
Opening net book amount		93,052	20,889	4,332	2,324	8,148	229	128,974
Exchange differences		(17)	422	–	230	15	–	650
Additions		–	–	2,194	–	1,005	2,340	5,539
Transfers		–	–	–	–	686	(686)	–
Acquisition of subsidiaries	29(b)	275,303	39,724	–	19,330	459	–	334,816
Amortisation charge(1)		–	–	(1,163)	(1,949)	(3,280)	–	(6,392)
Closing net book amount		368,338	61,035	5,363	19,935	7,033	1,883	463,587
At 30 June 2011 Restated*
Cost		368,338	61,035	7,313	23,420	17,031	1,883	479,020
Accumulated amortisation		–	–	(1,950)	(3,485)	(9,998)	–	(15,433)
Net book amount		368,338	61,035	5,363	19,935	7,033	1,883	463,587
Year ended 30 June 2012
Opening net book amount		368,338	61,035	5,363	19,935	7,033	1,883	463,587
Exchange differences		(8,992)	(2,921)	–	646	(196)	–	(11,463)
Additions		–	–	1,658	–	1,466	5,089	8,213
Transfers		–	–	–	–	2,834	(2,834)	–
Acquisition of subsidiaries(2)	29(a)	457,714	89,264	–	9,863	3,069	–	559,910
Amortisation charge(1)		–	–	(1,571)	(6,144)	(3,930)	–	(11,645)
Impairment charge	14(b)	(22,500)	(1,615)	–	–	–	–	(24,115)
Closing net book amount		794,560	145,763	5,450	24,300	10,276	4,138	984,487
At 30 June 2012
Cost		794,560	145,763	8,971	33,929	24,204	4,138	1,011,565
Accumulated amortisation		–	–	(3,521)	(9,629)	(13,928)	–	(27,078)
Net book amount		794,560	145,763	5,450	24,300	10,276	4,138	984,487

• Refer to note 29(b) for details of restatement on the completion of acquisition accounting for JobsDB.

• Amortisation charges have been included within ‘operations and administration’ expenses in the Consolidated Income Statement.

• Includes identifiable intangible assets acquired through the purchase of Brasil Online and OCC.

Intangible assets are amortised over their estimated useful life (as listed below) on a straight-line basis:

• Goodwill, brands and licences – indefinite life and not amortised;

• Course development and accreditation – five years;

• Customer relationships – one to six years; and

• Computer software and website development – three to six years.

Notes to the Financial Statements

14. Intangible assets continued

(a) Cash-generating units (CGUs)

For the purpose of undertaking impairment testing, the Group has determined its CGUs as the smallest group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. This assessment is usually determined by considering business and operating segments and areas of operation.

A segment level summary of the carrying amount of goodwill and intangible assets with indefinite useful lives is detailed below:

is detailed below:
Business segment CGU	2012 2011
	Goodwill $’000 Intangible assets with indefnite useful lives $’000 Goodwill Restated $’000 Intangible assets with indefnite useful lives Restated $’000
Employment SEEK New Zealand	4,779 – 4,709 –
Education DWT	2,140 – 2,140 –
Education SEEK Learning	3,666 – 3,666 –
Education Think	59,789 19,274 82,289 20,889
International JobsDB	288,596 42,059 275,534 40,146
International Brasil Online	311,401 65,629 – –
International OCC	124,189 18,801 – –
Total	794,560 145,763 368,338 61,035

• Refer to note 29(b) for details of restatement on the completion of acquisition accounting for JobsDB.

For Think, JobsDB and Brasil Online, the goodwill balance has been assessed across the group of CGUs that comprise these businesses, as the goodwill balance contributes to the generation of cash flows across the whole of these businesses. All other goodwill balances have been allocated to a single CGU (or business). This approach and the impact on impairment are discussed in more detail below.

(b) Impairment testing and key assumptions

The Group tests whether goodwill and other intangible assets have suffered any impairment in accordance with the accounting policy stated in note 1(h). The recoverable amount of assets and CGUs have been determined based on the higher of value-in-use and fair value less costs to sell. These calculations require the use of key assumptions including student numbers, course price and the cost base of the business in the Education segment, and advertising volumes and price in the Employment business, as well as discount rates applied in determining value in use.

The table below shows the pre-tax discount rates for each CGU where value in use has been used:

	Pre-tax discount rate
	2012 % 2011 %
Employment SEEK New Zealand	17.9 14.0
Education DWT	14.6 14.0
Education SEEK Learning	14.6 14.0

(i) SEEK New Zealand, DWT and SEEK Learning

The goodwill balances for SEEK New Zealand, DWT and SEEK Learning are all relatively small amounts in the Consolidated Balance Sheet and have been held for several years. Five year cash flow forecasts have been based on next year’s budgeted result, with the remaining years applying a real growth rate of 2.5% to budgeted EBITDA and using a terminal value cash flow beyond five years with a real growth rate of 0%. The pre-tax discount rate applied to these CGUs is between 14.6% and 17.9%. For these businesses any reasonable possible change in assumptions would not result in any impairment.

(ii) Think

During the year, SEEK has undertaken a detailed review of the business operations and strategy of Think. This review has indicated that its carrying value is higher than its fair value less costs to sell. The Think CGU is a reportable segment and is a group of CGUs. The fair value assessment was determined by applying valuation methodologies including discounted cash flow analysis and comparison with recent transactions in the industry (including the negotiations with a strategic investor for a potential minority shareholding, as disclosed in note 31). The key assumptions within the discounted cash flow analysis include five years of forecast cash flows, 0% real growth beyond five years and a pre-tax discount rate of 15.6%. Accordingly, an impairment charge of $24,115,000 has been recorded in the Consolidated Income Statement. The charge has been allocated between brands and licences ($1,615,000) and goodwill ($22,500,000).

(iii) JobsDB

JobsDB is a leading provider of online employment websites and operates across seven countries throughout South East Asia. Each key region has been determined as a CGU. As discussed above in (a), for the purpose of impairment testing, goodwill is tested across this group of CGUs.

The goodwill balance for JobsDB is a significant component of the Consolidated Balance Sheet and is attributable to JobsDB’s strong position across key markets throughout South East Asia and the high growth potential in these emerging markets.

JobsDB was consolidated into the SEEK Group when control was gained on 5 May 2011. The carrying value of the JobsDB assets and liabilities has been determined based on a purchase price allocation exercise performed by an external consultant in the 12 months post acquisition (note 29(b)). The independent purchase price allocation exercise was performed based on best estimates of the JobsDB business’s five year cash flow forecasts and applicable discount rates.

At 30 June 2012, given the proximity between the acquisition date and completion of the purchase price allocation exercise, the recoverable amount of the asset is based on fair value less costs to sell. In the next financial year, recoverable amount will be assessed based on future cash flow forecasts derived from budgeted results and long-term profit forecasts for the business.

(iv) International business – Brasil Online and OCC (acquired during the year)

Brasil Online operates the two leading employment websites in Brazil: Catho Online and Manager Online and considers them as two CGUs. As discussed above in (a), for the purpose of impairment testing, goodwill is tested across this group of CGUs.

OCC is the leading employment website in Mexico, and has been determined as a CGU in its entirety.

Brasil Online and OCC were consolidated into the SEEK Group when control was gained on 31 May 2012 and 19 June 2012 respectively. At 30 June 2012 the recoverable amount of both entities’ assets is based on fair value less costs to sell, determined with reference to the recent purchase price of the acquired interests. There are no indicators to suggest that the fair value of Brasil Online or OCC has significantly changed since acquisition.

15. Trade and other payables

15. Trade and other payables
	Consolidated
	2012 $’000 2011 Restated* $’000
Trade and other payables	53,839 40,427
GST payable	3,189 3,271
	57,028 43,698

• Refer to note 29(b) for details of restatement on the completion of acquisition accounting for JobsDB.

Notes to the Financial Statements

16. Borrowings

(a) Current borrowings

Standby cash advance facility

On 1 June 2012, the Group entered into a new $20,000,000 standby cash advance facility with National Australia Bank in line with the Permitted Financial Indebtedness under the Syndicated Facility Agreement.

The facility has not been drawn down or utilised and is valid for a term of 3 months expiring on 30 August 2012. The facility can be used to cover short-term financial requirements of the Group.

(b) Non-current borrowings

(b) Non-current borrowings
	Consolidated
	2012 $’000 2011 $’000
Bank borrowings – principal	320,487 278,704
Less: transaction costs capitalised	(2,054) (3,423)
Total non-current borrowings	318,433 275,281

Syndicated loan agreements (unsecured)

The Group’s current debt facility of $340,000,000 was entered into in December 2010 and is structured as a three year revolving unsecured senior debt facility, which is fully underwritten by a syndicate comprising the National Australia Bank, Westpac Banking Corporation, ANZ, Commonwealth Bank and HSBC.

At 30 June 2012, $320,487,000 (30 June 2011: $278,704,000) principal had been drawn down against this facility. Transaction costs of $4,108,000 were incurred to establish the facility and have been capitalised on the Consolidated Balance Sheet of which $2,054,000 has not yet been amortised through the Consolidated Income Statement.

The interest rate on bank borrowings has varied during the year from 5.8% to 7.6%. Interest is calculated on the principal outstanding at each interest period. The interest period and interest rates are agreed at each interest period.

Under the syndicated debt facility, certain entities within the Group are required to meet a number of covenants, all of which have been fully complied with during the year and as at the date of this report.

All Australian and New Zealand wholly-owned subsidiaries have entered into a deed of cross guarantee in respect of the facility.

At the date of this report the syndicated loan balance was $320,487,000.

The Group is in the process of refinancing the existing syndicated debt facility as discussed further in note 31.

(c) Risk exposure

Details of the Group exposure to risks arising from borrowings are set out in note 2.

17. Other financial liabilities

17. Other fnancial liabilities
	Consolidated
	2012 $’000 2011 $’000
Put option (i)	81,216 74,630
Payment due to vendor on acquisition (ii)	– 71,760
Deferred consideration (iii)	1,271 1,198
Foreign exchange contract – cash fow hedge	– 299
Total fnancial liabilities	82,487 147,887

JobsDB acquisition

During the financial year ended 30 June 2011, SEEK Asia acquired a controlling interest in JobsDB. Refer to note 29(b) for further details of this transaction and ownership interests. These financial liabilities relate to this transaction and are discussed opposite.

(i) Put option

In relation to the remaining ownership of JobsDB held by the vendor, between 23 June 2012 and 23 June 2014 the vendor has been granted the option to sell up to 20% of its remaining interest in JobsDB to SEEK Asia. The selling price is dependent on future earnings but capped at HK$640,000,000. At 30 June 2012 the SEEK Group has recognised a financial liability of $81,216,000 (2011: $74,630,000) which represents the net present value of the expected cash consideration to be paid to the vendor should the option be exercised at current exchange rates.

In accordance with accounting standards, SEEK has recognised an expense through ‘finance costs’ in the Consolidated Income Statement for the difference between the net present value of the option and the expected cash consideration. The charge for the current year is $2,003,000 (2011: $242,000).

In line with their relevant ownership interests, the co-investors have contractually agreed to fund their share should the put option be exercised, which based on the capped amount of HK$640,000,000 at current exchange rates would total approximately $25,000,000. In accordance with Australian accounting standards the Group has not recognised a financial asset for this contribution. The estimated net cash outflow if the option is exercised at the full capped amount at current exchange rates is approximately $56,000,000.

(ii) Payment due to vendor on acquisition

This relates to the consideration for the third stage of the investment in JobsDB of HK$600,000,000 (A$71,760,000 at 30 June 2011 exchange rates). This was settled during the year; refer to note 29(b) for further details.

(iii) Deferred consideration

This balance represents amounts which are required to be paid to the vendor of JobsDB at a future date to be agreed with the vendor and are translated at 30 June exchange rates.

18. Provisions

(a) Current provisions

(a) Current provisions
	Consolidated
	2012 $’000 2011 $’000
Employee benefts provision(1)	2,016 1,340
Lease incentives	833 583
	2,849 1,923

1. Includes long service leave, all of which is expected to be used in the next 12 months.

Movement in lease incentives

The movement in lease incentives during the financial year is set out below:

Movement in lease incentives The movement in lease incentives during the fnancial year is set out below:
	Consolidated
	2012 $’000 2011 $’000
Lease incentives
Carrying amount at start of year	583 351
Additional provision recognised in the year	429 382
Transferred from non-current provisions	447 89
Credited to the Consolidated Income Statement	(626) (239)
Carrying amount at end of the year	833 583

(b) Non-current provisions

(b) Non-current provisions
Notes	Consolidated
	2012 $’000 2011 $’000
Employee benefts provision(1)	1,748 1,793
Lease incentives	2,660 1,365
Make-good provisions	2,572 1,623
Other provisions 18(c)	24,332 –
	31,312 4,781

1. Includes long service leave and cash long-term incentive.

Notes to the Financial Statements

18. Provisions continued

Movement in provisions

The movement in lease incentives, make-good provisions and other provisions during the financial year is set out below:

is set out below:
Notes	Consolidated
	2012 $’000 2011 $’000
Lease incentives
Carrying amount at start of year	1,365 144
Additional provision recognised in the year	1,742 1,339
Transferred to current provisions	(447) (89)
Credited to the Consolidated Income Statement	– (29)
Carrying amount at end of year	2,660 1,365
Make-good provisions
Carrying amount at start of year	1,623 1,536
Additional provision recognised in the year	949 87
Carrying amount at end of year	2,572 1,623
Other provisions
Carrying amount at start of year	– –
Assumed in a business combination 29(a)	26,197 –
Additional provision recognised in the year	86 –
Exchange differences	(1,951) –
Carrying amount at end of year	24,332 –

(c) Other provisions

Other provisions relate to a number of outstanding legal, tax, labour and social security provisions in Brasil Online and its subsidiaries which were acquired on acquisition (refer to note 29(a)). All of these cases may take a number of years to come to conclusion and the difference between the settlement amounts and the amount provided for may be material.

may be material.
	Other provisions
	$’000
Legal (i)	3,962
Tax (ii)	6,219
Other provision	2,825
Acquired contingent liabilities (iii)	11,326
Total	24,332

As noted above, there are a number of outstanding legal, tax and social security cases and details of the significant and material cases for which a provision has been made have been provided below. The remaining cases are considered to be immaterial individually and in aggregate.

(i) Legal case provision and contingencies

Two of Brasil Online’s competitors, Curriculum Technologia Ltda and Gelre Informatica S/C Ltda initiated lawsuits against Catho Online (a subsidiary of Brasil Online) in May 2002 and March 2003. In both cases, judgements were rendered by the same judge against Catho Online which was ordered to pay damages, interest and costs. Brasil Online has subsequently filed a motion to appeal the decision and request that the judge clarify the legal grounds for the calculation of the amount of the indemnification and classification of Catho Online’s conduct as unlawful. Advice from local external legal counsel is that there are valid grounds for appeal in relation to the calculation of the damages awarded against Catho Online, and Catho Online has based its provision on the basis of the external legal advice.

(ii) Tax case provision and contingencies

Catho Online is also subject to a number of tax infraction notices from the tax authority in Brasil. These tax infractions are either open, subject to legal proceedings, or under appeal after legal proceedings. Based on advice from local legal counsel, Catho has estimated the most likely amounts payable including penalties and interest and have recognised this amount as a provision.

(iii) Acquired contingent liabilities

As disclosed in note 29(a) and in accordance with the Group’s accounting policy as described in note 1(g), the Group has recognised the fair value of contingent liabilities acquired as part of the business combination. Contingent liabilities of $12,236,000 were recognised at acquisition date, which at 30 June 2012 exchange rates were $11,326,000.

(iv) Unrecognised contingent liabilities

Unrecognised contingent liabilities represent the difference between the current value of any judgements or outstanding tax infraction notices or claims and the associated provisions. They represent the maximum potential outflow and do not reflect management’s estimate of the most likely amounts payable. There is $70,460,000 of unrecognised contingent liabilities at 30 June 2012, relating mainly to legal cases as well as a number of other tax, labour and social security cases.

In accordance with Australian Accounting Standards, unrecognised contingent liabilities have only been disclosed to the extent to which there is a possible outflow to settle the obligation.

19. Contributed equity

(a) Share capital

(a) Share capital
	Consolidated and parent entity
	2012 Shares 2011 Shares 2012 $'000 2011 $'000
Ordinary shares
Issued and fully paid	337,101,307 336,584,488 186,525 183,950

(b) Movements in ordinary share capital

		Number	Average
Date	Details	of shares	issue price	$’000
1 July 2010	Balance	336,584,488		183,950
30 June 2011	Balance	336,584,488		183,950
5 July 2011	Exercise of Director options	471,011	5.29	2,491
5 July 2011	Exercise of performance rights and options	10,208	–	–
18 August 2011	Exercise of options	13,500	2.34	32
25 November 2011	Exercise of options	22,100	2.34	52
	Movement	516,819		2,575
30 June 2012	Balance	337,101,307		186,525

(c) Ordinary shares

Ordinary shares have no par value and entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

(d) Exercise of staff options

During the current year, 516,819 shares were issued to fulfil employee options exercised in the year (2011: nil). In addition 107,360 shares were acquired on market in relation to other exercised employee options.

Notes to the Financial Statements

Contributed equity Reserves Retained profts Non- controlling interests Total equity 2012 Notes $’000 Share- based payments reserve $’000 Foreign currency transaction reserve $’000 Hedging reserve – cash fow hedge reserve $’000 Hedging reserve – net investment hedge $’000 Redemption reserve $’000 Total reserves $’000 $’000 $’000 $’000	Balance at 1 July 2011 Restated* 183,950 8,594 (33,513) 5,994 – (52,283) (71,208) 198,474 123,543 434,759	Proft for the year – – – – – – – 131,680 5,778 137,458	Exchange differences on translation of foreign controlled operations – – (7,696) – – – (7,696) – (6,538) (14,234)	Exchange differences on translation of foreign associates 11(c) – – (15,214) – – – (15,214) – – (15,214)	Gains/(losses) on hedge contracts of controlled entities – – – (136) 672 – 536 – – 536	Gains on hedge contracts of associates (net of tax) 11(c) – – – 223 – – 223 – – 223	Reserve balances recycled on step acquisition 29(a) – – 33,137 (10,561) – – 22,576 – – 22,576	Reserve balances recycled on closure of foreign operation(1) – – 165 – – – 165 – – 165	Income tax recognised in other comprehensive income 8(c) – (165) – 3,166 – – 3,001 – – 3,001	Total comprehensive income for the year – (165) 10,392 (7,308) 672 – 3,591 131,680 (760) 134,511	Transactions with owners in their capacity as owners:	Contributions of equity, net of transaction costs and tax 19 2,575 – – – – – – – – 2,575	Dividends and distributions provided for or paid 21 – – – – – – – (53,257) (4,628) (57,885)	Employee share options schemes – 4,263 – – – – 4,263 – – 4,263	Purchase of shares-on-market for employee share option scheme – (197) – – – – (197) (363) – (560)	Tax associated with employee share schemes 8(c) – (333) – – – – (333) 333 – –	Non-controlling interests at fair value arising on acquisition 29(a) – – – – – – – – 253,470 253,470	Balance at 30 June 2012 186,525 12,162 (23,121) (1,314) 672 (52,283) (63,884) 276,867 371,625 771,133	* Refer to note 29(b) for details of restatement on the completion of acquisition accounting for JobsDB. 1. During the year the SEEK Learning business in the UK was closed.

Contributed equity Reserves Retained profts Non- controlling interests Total equity 2011 Restated* Notes $’000 Share- based payments reserve $’000 Foreign currency transaction reserve $’000 Hedging reserve – cash fow hedge $’000 Redemption reserve $’000 Total reserves $’000 $’000 $’000 $’000	Balance at 1 July 2010 183,950 7,493 7,020 8,155 – 22,668 146,339 – 352,957	Proft for the year – – – – – – 97,688 (974) 96,714	Exchange differences on translation of foreign controlled operations – – (4,732) – – (4,732) – (2,144) (6,876)	Exchange differences on translation of foreign associates 11(c) – – (35,801) – – (35,801) – (3,078) (38,879)	(Losses) on hedge contracts of controlled entities – – – (2,705) – (2,705) – – (2,705)	(Losses) on hedge contracts of associates (net of tax) 11(c) – – – (262) – (262) – – (262)	Income tax recognised in other comprehensive income 8(c) – (316) – 806 – 490 – – 490	Total comprehensive income for the year – (316) (40,533) (2,161) – (43,010) 97,688 (6,196) 48,482	Transactions with owners in their capacity as owners:	Dividends and distributions provided for or paid 21 – – – – – – (45,439) – (45,439)	Employee share options schemes – 1,504 – – – 1,504 – – 1,504	Purchase of shares-on-market for employee share option scheme – (38) – – – (38) (163) – (201)	Tax associated with employee share schemes 8(c) – (49) – – – (49) 49 – –	JobsDB related items Restated*: 29(b) –	Non-controlling interest at fair value arising on acquisition – – – – – – – 64,624 64,624	Non-controlling interest acquired on acquisition – – – – – – – 1,279 1,279	Put option provided to vendor of JobsDB – – – – (50,629) (50,629) – (22,788) (73,417)	Non-controlling interest on initial investment by co-investors in SEEK Asia – – – – – – – 87,969 87,969	Acquisition of non-controlling interest in CJOL 20(c) – – – – (1,654) (1,654) – (1,345) (2,999)	Balance at 30 June 2011 Restated* 183,950 8,594 (33,513) 5,994 (52,283) (71,208) 198,474 123,543 434,759

Notes to the Financial Statements

20. Equity continued

(b) Nature and purpose of reserves

Share-based payments reserve

The reserve is comprised of two components:

• Unexercised: is used to recognise the fair value of options and deferred shares issued but not exercised.

• Exercised: is used to hold the fair value of options that have been exercised and options that have lapsed but are not required to be adjusted through the Consolidated Income Statement.

Foreign currency translation reserve

Exchange differences arising on the translation of foreign controlled entities and associates are recognised in the foreign currency translation reserve, as described in note 1(d).

Hedging reserve – cash flow hedges

The hedging reserve – cash flow hedges is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised directly in equity, as described in note 1(l). Amounts are recognised in the Consolidated Income Statement when the associated hedged transaction affects the profit or loss or when it is impaired or sold or if the forecast transaction is no longer expected to take place.

Hedging reserve – net investment hedge

The hedging reserve – net investment hedge is used to record gains or losses on a hedging instrument in a net investment hedge that are recognised directly in equity, as described in note 1(l). Amounts are recognised in the Consolidated Income Statement when the associated hedged transaction affects the profit or loss or when it is impaired or sold. Gains and losses accumulated in equity are reclassified to profit or loss when the foreign operation is partially disposed of or sold.

Redemption reserve

The redemption reserve is used to record the excess of the purchase price of non-controlling interests above the amount carried in the accounts and the reserve for future contractual purchases of non-controlling interests where the risks and rewards of ownership have not yet passed to the Group.

(c) JobsDB acquisition of non-controlling interest in CJOL

During the prior year JobsDB purchased an additional 23.7% interest in CJOL from SEEK’s associate Zhaopin (note 11), taking their total interest to 75.58%. The carrying amount of the non-controlling interest acquired was $224,000 and the consideration paid to the non-controlling interest was $3,857,000. The excess of the consideration paid was $3,633,000 and of this $634,000 was eliminated on consolidation in relation to SEEK’s share of Zhaopin’s profit on sale (refer to note 27(b)(i)). The net amount of $2,999,000 was recognised in the redemption reserve and non-controlling interests within equity.

21. Dividends

21. Dividends
			Franked	Total
	Payment	Amount	amount	dividend
Dividend	date	per share	per share	$’000
Year 2011
2010 fnal dividend	15 October 2010	6.7 cents	6.7 cents	$22,550
2011 interim dividend	19 April 2011	6.8 cents	6.8 cents	$22,889
				$45,439
Year 2012
2011 fnal dividend	12 October 2011	7.5 cents	7.5 cents	$25,277
2012 interim dividend	18 April 2012	8.3 cents	8.3 cents	$27,980
				$53,257
Dividends paid or declared by the Company after year end (to be paid out of retained profts			at 30 June 2012):
2012 fnal dividend	16 October 2012	9.0 cents	9.0 cents	$30,339

The franked portion of final dividends for the financial year paid after 30 June 2012 will be franked out of franking credits arising from the balance of the franking account as at the year end and the payment of income tax subsequent to the year ending 30 June 2012. The dividend payment on 16 October 2012 will reduce the franking credits available by $13,002,000 for the consolidated Group. At 30 June 2012 all Australian controlled entities are included in the consolidated income tax group and therefore their franking credits are fully available for distribution to shareholders of the Group.

of the Group.
		2012	2011
		$’000	$’000
Franking credits available for subsequent fnancial years based on a tax rate of	30%	97,735	72,158

The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for franking credits that will arise from the payment of the current tax liability.

22. Key management personnel disclosures

(a) Directors

The following persons were directors of SEEK Limited during the financial year:

R C G Watson	Chairman, non-executive director
A R Bassat	Managing Director and Chief Executive Offcer
C B Carter	Non-executive director
N G Chatfeld	Non-executive director
D I Bradley	Non-executive director

(b) Other key management personnel

The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, during the financial year:

Name	Position	Employer
J A Armstrong	Chief Financial Offcer	SEEK Limited
J S Powell	Managing Director (SEEK Employment (Australia and NZ))	SEEK Limited
J S Lenga	Managing Director (SEEK International)	SEEK Limited
P D Everingham	Managing Director (SEEK Education)	SEEK Learning Pty Ltd
M F Callaghan	Human Resources Director	SEEK Limited
H J Souness	Marketing Director	SEEK Limited
M J Ilczynski	Strategy Director, Education and Training	SEEK Limited
D J Gibbons	Chief Information Offcer (appointed 1 October 2011	SEEK Limited

(c) Key management personnel compensation

(c) Key management personnel compensation
	Consolidated and parent entity
	2012 $ 2011 $
Short-term employee benefts	6,482,366 5,832,451
Post-employment benefts	273,955 296,669
Share-based employee benefts	2,387,543 520,974
Fixed remuneration options(1)	(41,329) 725,144
Other long-term benefts	188,320 223,178
Cash LTI	– (674,426)
	9,290,855 6,923,990

1. Andrew Bassat has a fixed remuneration arrangement whereby he was issued 1,156,069 options over two years. The fair value expense has been disclosed separately in the table above and for 2011 has been re-allocated from share-based employee benefits for comparative purposes. The credit in the current year is due to the revaluation of the options after approval at the AGM in November 2011.

Detailed remuneration disclosures are provided in pages 24 to 35 of the Remuneration Report.

Notes to the Financial Statements

22. Key management personnel disclosures continued

(d) Equity instrument disclosures relating to key management personnel

(i) Options provided as remuneration and shares issued on exercise of such options

Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the options can be found in the Remuneration Report.

(ii) Option holdings and Performance Rights

The numbers of options over ordinary shares in the Company held during the financial year by each director of SEEK Limited and other key management personnel of the Group and the Company, including their personally related parties, are set out below:

						Other	Balance	Vested and	Unvested
	Balance at	Granted during		Exercised	Forfeited	changes	at the	exercisable	options at
	the start	the year as		during	during	during	end of	at the end	the end of
2012	of the year	compensation		the year	the year	the year	the year	of the year	the year
Executive directors
A R Bassat	2,688,292		964,065	–	–	–	3,652,357	1,608,258	2,044,099
Other key management personnel
J A Armstrong	174,259		176,000	(11,583)	(11,583)	–	327,093	77,563	249,530
J S Powell	323,610		269,970	(21,928)	(21,928)	–	549,724	150,316	399,408
J S Lenga	237,042		654,878	(14,178)	(14,177)	–	863,565	94,937	768,628
P D Everingham	24,386		232,520	(12,193)	(12,193)	–	232,520	–	232,520
M F Callaghan	142,392		143,411	(8,422)	(10,527)	–	266,854	63,443	203,411
H J Souness	131,463		94,797	(9,023)	(9,022)	–	208,215	60,418	147,797
M J Ilczynski	–		212,375	–	–	–	212,375	–	212,375
D Gibbons	–		113,821	–	–	–	113,821	–	113,821
						Other	Balance	Vested and	Unvested
	Balance at	Granted during		Exercised	Forfeited	changes	at the	exercisable	options at
	the start of	the year as		during	during	during	end of	at the end	the end of
2011	the year	compensation		the year	the year	the year	the year	of the year	the year
Executive directors
P M Bassat(1)	1,291,606		502,000	–	(1,322,595)	–	471,011	471,011	–
A R Bassat	1,291,606		1,658,069	–	(261,383)	–	2,688,292	471,011	2,217,281
Other key management personnel
J A Armstrong	100,729		73,530	–	–	–	174,259	–	174,259
C M T Eaton(2)	85,424		63,180	–	–	3,346	151,950	–	151,950
J S Powell	194,172		129,438	–	–	–	323,610	–	323,610
J S Lenga	123,292		113,750	–	–	–	237,042	–	237,042
P D Everingham	34,386		–	(10,000)	–	–	24,386	–	24,386
M F Callaghan(3)	–		60,000	(7,083)	–	89,475	142,392	–	142,392
H J Souness(3)	–		53,000	–	–	78,463	131,463	–	131,463
M J Ilczynski(3)	–		–	–	–	–	–	–	–

1. Paul Bassat resigned from SEEK effective 1 July 2011 and exercised his remaining 471,011 of options on that date.

2. Carey Eaton resigned from SEEK effective 1 July 2011 and exercised 10,208 options on that date. His remaining options of 141,742 lapsed on his resignation.

3. Granted and exercised options and Performance Rights are included from 22 July 2010. The balance of options and Performance Rights is included within 'other changes during the year'.

(iii) Share holdings

The numbers of ordinary shares in the Company held during the financial year by each director of SEEK Limited and other key management personnel of the Group, including their personally related parties, are set out on the opposite page. There were no shares granted during the reporting period as compensation.

		Received
		during the			Other
	Balance at	year on			changes	Balance at the
	the start of	exercise	Purchase	Sale of	during	end of
2012	the year	of options	of shares	shares	the year(1)	the year
Non-executive directors
R C G Watson	4,238,648	–	–	–	–	4,238,648
C B Carter	94,458	–	–	–	–	94,458
N G Chatfeld	32,656	–	401	–	–	33,057
D I Bradley	1,000	–	3,000	–	–	4,000
Executive directors
A R Bassat	13,500,113	–	–	–	–	13,500,113
Other key management personnel
J A Armstrong	92,276	11,583	–	(49,484)	–	54,375
J S Powell	6,336	21,928	–	(6,336)	–	21,928
J S Lenga	249,926	14,178	–	(49,997)	–	214,107
P D Everingham	147,448	12,193	–	(60,000)	–	99,641
M F Callaghan	33,494	8,422	11,675	–	–	53,591
H J Souness	11,233	9,023	–	(5,500)	–	14,756
M J Ilczynski	14,777	–	–	–	–	14,777
D J Gibbons	–	–	–	–	–	–
		Received
		during the			Other
	Balance at	year on			changes
	the start of	exercise	Purchase	Sale of	during	Balance at the
2011	the year	of options	of shares	shares	the year(1)	end of the year
Non-executive directors
R C G Watson	4,238,648	–	–	–	–	4,238,648
C B Carter	94,458	–	–	–	–	94,458
N G Chatfeld	32,656	–	–	–	–	32,656
D I Bradley	–	–	1,000	–	–	1,000
Executive directors
P M Bassat(1)	12,712,613	–	–	–	–	12,712,613
A R Bassat	13,500,113	–	–	–	–	13,500,113
Other key management personnel
J A Armstrong	92,276	–	–	–	–	92,276
C M T Eaton(2)	20,347	–	–	–	–	20,347
J S Powell	17,383	–	–	(13,000)	1,953	6,336
J S Lenga	299,926	–	–	(50,000)	–	249,926
P D Everingham	137,448	10,000	–	–	–	147,448
M F Callaghan(3)	–	7,083	–	–	26,411	33,494
H J Souness(3)	–	–	–	(11,000)	22,233	11,233
M J Ilczynski(3)	–	–	2,000	–	12,777	14,777

1. Paul Bassat resigned effective 1 July 2011.

2. Carey Eaton resigned on 1 July 2011.

3. Granted and exercised options and Performance Rights are included from 22 July 2010. The balance of shares is included within 'other changes during the year'.

(e) Loans to key management personnel

There have been no loans to directors or executives during the financial year (2011: nil).

(f) Other transactions with key management personnel

During the year there were no other transactions with key management personnel, apart from related party transactions disclosed in note 27(d).

Notes to the Financial Statements

23. Remuneration of auditors

During the year the following fees were paid for services provided by the auditor of the parent entity, its related practices and non-related audit firms:

practices and non-related audit frms:
	Consolidated
	2012 $ 2011 $
(a) PricewaterhouseCoopers Australia
Audit and other assurance services
Audit and review of fnancial reports	1,003,000 861,671
Other assurance services:
Due diligence services	674,404 1,345,462
Total remuneration for audit and other assurance services	1,677,404 2,207,133
Taxation services
Tax consulting – international	53,900 553,676
Tax consulting – domestic	586,962 55,195
Tax compliance	43,138 71,935
Total remuneration for taxation services	683,999 680,806
Other services
Education awards project	– 30,132
Executive team benchmarking	– 49,900
Other services	– 16,058
Total remuneration for other services	– 96,090
Total remuneration of PricewaterhouseCoopers Australia	2,361,403 2,984,029
(b) Network frms of PricewaterhouseCoopers Australia
Audit and other assurance services
Audit and review of fnancial reports	291,362 10,342
Total remuneration for audit and other assurance services	291,362 10,342
Taxation services
Tax compliance services, including review of company income tax returns	20,106 8,981
Total remuneration for taxation services	20,106 8,981
Total remuneration of Related Practices of PricewaterhouseCoopers Australia	311,468 19,323
(c) Non PricewaterhouseCoopers Australia
Audit and other assurance services
Audit and review of fnancial reports	110,059 –
Other assurance services:
Other	146,131 –
Total remuneration for audit and other assurance services	256,190 –
Taxation services
Tax compliance services, including review of company income tax returns	175,126 –
Total remuneration for taxation services	175,126 –
Other services
Executive share options valuation	54,075 –
Total remuneration for other services	54,075 –
Total remuneration of Non PricewaterhouseCoopers Australia	485,391 –

It is the Group’s policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit duties where PricewaterhouseCoopers’ expertise and experience with the Group are important. These assignments are principally tax advice and due diligence reporting on acquisitions, or where PricewaterhouseCoopers is awarded assignments on a competitive basis. It is the Group’s policy to seek competitive tenders for all major consulting projects.

24. Contingent liabilities

At 30 June 2012, the Group has unrecognised contingent liabilities relating to Brasil Online of $70,460,000 (2011: nil). Refer to Note 18: Provisions for further details. There are no other contingent liabilities.

25. Commitments for expenditure

Capital commitments

At 30 June 2012, the Group had no capital commitments (2011:nil).

Other commitments

Commitments for the payment of IT services, advertising and promotions under long-term contracts in existence at the reporting date but not recognised as liabilities payable are as follows:

at the reporting date but not recognised as liabilities payable are as follows:
	Consolidated
	2012 $’000 2011 $’000
Within one year	8,255 6,548
Later than one year but not later than fve years	3,795 268
More than fve years	– –
Total	12,050 6,816

Lease commitments

Operating leases

Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows:

	Consolidated
	2012 $’000 2011 $’000
Within one year	13,865 12,295
Later than one year but not later than fve years	32,765 25,328
More than fve years	6,254 2,772
Total	52,884 40,395

The Group leases various offices under non-cancellable operating leases expiring within one to six years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the lease are negotiated.

Notes to the Financial Statements

26. Share-based payments

Expenses arising from share-based payments transactions

Total expenses arising from share-based payments transactions (excluding Education LTI) recognised during the period as part of employee benefits expense were $4,430,000 (2011: $1,504,000), relating to:

• Deferred Share Plan $742,000

• Performance Rights and Options Plans $3,688,000.

Deferred Share Plan

The Deferred Share Plan is a new scheme in the year. Plan participants are eligible to receive shares up to the value of 20% of base salary each year depending on their individual performance. The shares are granted at the end of the performance year with the number granted based on a five day volume weighted average price (VWAP) prior to grant. Vesting of the shares is deferred for a further year and is dependent on the plan participant being a SEEK employee at the end of this two year period.

Performance Rights and Options Plans

For details of Performance Rights and Options Plans refer to the Remuneration Report contained in the Directors’ Report.

The table below summarises the movement in the number of options in these plans during the year.

2012 Grant date Expiry date (years) Exercise price	Number of options
	Opening balance Granted during the year Exercised during the year Forfeited during the year Other changes Closing balance Options vested and exercisable at the end of the year
Senior Executive Options Plan
11 November 2005 6 $2.34	35,600 – (35,600) – – – –
Total	35,600 – (35,600) – – – –
Executive Director Options
1 July 2008 5 $5.29	942,022 – (471,011) – – 471,011 471,011
30 November 2009 5 $4.10	559,212 – – – – 559,212 559,212
21 November 2011(1) 4 $6.80	1,156,069 – – – – 1,156,069 578,035
21 November 2011(1) 5 $5.36	– 964,065 – – – 964,065 –
Total	2,657,303 964,065 (471,011) – – 3,150,357 1,608,258
Performance Rights and Options Plans
1 July 2008 4 –	239,099 – (117,568) (121,531) – – –
30 June 2009 5 $4.10	781,040 – – (78,655) – 702,385 702,385
1 July 2010 5 $7.39	1,442,029 – – (120,274) – 1,321,755 –
1 September 2011 5 $5.36	– 1,998,178 – – – 1,998,178 –
Total	2,462,168 1,998,178 (117,568) (320,460) – 4,022,318 702,385
Total Plans	5,155,071 2,962,243 (624,179) (320,460) – 7,172,675 2,310,643
Weighted average exercise price	$5.64 $5.36 $4.13 $3.78 $0.00 $5.74

1. Approved and granted at AGM on 21 November 2011.

Number of options

									Options
									vested and
	Expiry			Granted	Exercised	Forfeited			exercisable
2011	date	Exercise	Opening	during	during	during	Other	Closing	at the end
Grant date	(years)	price	balance	the year	the year	the year	changes	balance	of the year
Senior Executive Options Plan
15 August 2005	6	$2.48	10,000	–	(10,000)	–	–	–	–
2 November 2005	6	$2.78	7,083	–	(7,083)	–	–	–	–
11 November 2005	6	$2.78	18,000	–	(18,000)	–	–	–	–
11 November 2005	6	$2.34	45,600	–	(10,000)	–	–	35,600	35,600
Total			80,683	–	(45,083)	–	–	35,600	35,600
Executive Director Options
1 July 2008	5	$5.29	1,464,788	–	–	(522,766)	–	942,022	942,022
30 November 2009	5	$4.10	1,118,424	–	–	(559,212)	–	559,212	–
21 November 2011	4	$6.80	–	1,156,069	–	–	–	1,156,069	–
Total			2,583,212	1,156,069	–	(1,081,978)	–	2,657,303	942,022
Performance Rights and Options Plan
1 July 2008	4	–	248,902	–	–	(13,149)	3,346	239,099	–
30 June 2009	5	$4.10	847,350	–	–	(66,310)	–	781,040	–
1 July 2010	5	$7.39	–	2,053,751	–	(611,722)	–	1,442,029	–
Total			1,096,252	2,053,751	–	(691,181)	3,346	2,462,168	–
Total Plans			3,760,147	3,209,820	(45,083)	(1,773,159)	3,346	5,155,071	977,622
Weighted average exercise price			$4.26	$7.18	$2.62	$5.56	$0.00	$5.64

The weighted average share price at the date of exercise of options exercised during the year ended 30 June 2012 was $6.19 (2011: $7.08).

The weighted average remaining contractual life of share options outstanding at the end of the year was 1.50 years (2011: 2.72 years).

Fair value of Options and Performance Rights

The fair value of Options and Performance Rights at grant date is independently determined in accordance with AASB2: Share-based payments , using a Black-Scholes or similar option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information.

Refer to pages 28 and 29 of the Remuneration Report contained within the Directors’ Report, for details on the fair value of Options and Performance Rights issued during the financial year.

Notes to the Financial Statements

27. Related party transactions

(a) Interests in controlled entities

Interests in controlled entities are set out in note 30.

(b) Transactions with associates

The following transactions occurred with associates:

(b) Transactions with associates The following transactions occurred with associates:
	Consolidated
	2012 $ 2011 $
Sale and purchase of investment (i)	– 633,750
Dividends and distributions received from associates	12,855,134 10,060,342
Directors' fees and other personnel costs charged to associates	195,000 195,000

(i) Sale and purchase of investment

As discussed in note 20(c), in the prior financial year the Group’s associate, Zhaopin, completed the disposal of its investment in CJOL to JobsDB, which is the majority shareholder of CJOL. Zhaopin recognised a gain on sale of RMB7,845,000 ($1,129,680) through profit and loss. The terms of this transaction were agreed on an arm’s-length basis. SEEK’s share of the profit recognised on the sale of CJOL of $633,750 was eliminated in the Consolidated Income Statement through ‘share of net profits of associates and jointly controlled entities’ and also from the redemption reserve.

(c) Transactions with key management personnel

Disclosures relating to key management personnel are set out in note 22.

(d) Transactions with other related parties

Other related parties comprise transactions with entities associated with key management personnel. The nature of the relationship with related parties includes the supply of advertising services and use of facilities between the related parties.

Aggregate amounts that resulted from transactions with other related parties:

Aggregate amounts that resulted from transactions with other related parties:
	Consolidated
	2012 $ 2011 $
Purchases from other related parties	208,000 201,000

At 30 June 2012 A R Bassat individually holds an investment in Career FAQ with a value of $349,558.

During the year, SEEK Learning paid an amount of $208,000 to Career FAQ in a lead generation deal on an arm’s length basis. A balance of $20,000 has been accrued and is outstanding at 30 June 2012.

Some of the Group’s independent non-executive directors are also non-executive directors for other companies. SEEK Limited, from time to time, may provide or receive services from these companies on an arm's-length basis.

28. Deed of cross guarantee

The following controlled entities have entered into a deed of cross guarantee:

Company	Financial year entered into agreement
SEEK Limited	30 June 2006
SEEK Learning Pty Ltd	30 June 2006
Dynamic Web Training Pty Ltd	30 June 2006
SEEK Campus Pty Ltd	30 June 2006
SEEK Commercial Pty Ltd	30 June 2007
SEEK Investments Pty Ltd	30 June 2007
SEEK International Investments Pty Ltd	30 June 2007
Think: Education Group Pty Limited	30 June 2010
Think: Colleges Pty Limited	30 June 2010
Think: Education Services Pty Limited	30 June 2010
APM Training Institute Pty Limited	30 June 2010
Australasian College of Natural Therapies (Holdings) Pty Limited	30 June 2010
Jansen Newman Institute Pty Limited	30 June 2010
Graduate Institute of Management and Technology Pty Limited	30 June 2010
Billy Blue English School Pty Limited	30 June 2010
Billy Blue Catering Pty Limited	30 June 2010
Commercial Arts Training College Pty Limited	30 June 2010
GMM Projects Pty Limited	30 June 2010

The companies that are party to this deed guarantee the debts of the others and represent the ‘Closed Group’ from the date of entering into the agreement.

These wholly-owned entities have been relieved from the requirement to prepare a financial report and directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investments Commission.

Notes to the Financial Statements

28. Deed of cross guarantee continued

(a) Income Statement, Other Comprehensive Income and a summary of movements in consolidated retained profits Since there are no other parties to the deed of cross guarantee that are controlled by SEEK Limited the companies detailed on page 107 also represent the ‘Extended Closed Group’.

detailed on page 107 also represent the ‘Extended Closed Group’.
	2012	2011
Statement of Comprehensive Income	$’000	$’000
Income Statement
Revenue from continuing operations	372,944	320,878
Other income	9,256	–
Operating expenses
Direct cost of services	(34,075)	(29,981)
Sales and marketing	(96,408)	(90,562)
Business development	(22,156)	(20,379)
Operations and administration	(89,782)	(55,665)
Finance costs	(22,844)	(16,105)
Total operating expenses	(265,265)	(212,692)
Share of profts of associates and jointly controlled
entities accounted for using the equity method	25,409	23,967
Proft before income tax expense	142,344	132,153
Income tax expense	(39,426)	(35,428)
Proft for the year	102,918	96,725
Other comprehensive income
Exchange differences on translation of foreign associates	4,030	(19,936)
Gains/(losses) on hedge contracts of controlled entities	537	(2,705)
Gains/(losses) on hedge contracts of associates (net of tax)	223	(262)
Income tax relating to other comprehensive income	3,001	490
Other comprehensive income for the year	7,791	(22,413)
Total comprehensive income for the year	110,709	74,312
Summary of movements in consolidated retained profts
Balance 1 July	193,016	141,844
Proft for the year	102,918	96,725
Tax credited directly to retained profts – share-based payments	333	49
Purchase of shares on-market on exercise of employee share options	(363)	(163)
Dividends paid	(53,257)	(45,439)
Balance 30 June	242,647	193,016

(b) Consolidated balance sheet

Set out below is a consolidated balance sheet as at 30 June 2012 of the Closed Group.

	2012	2011
Consolidated Balance Sheet	$’000	$’000
Current assets
Cash and cash equivalents	30,427	60,463
Trade and other receivables	47,463	36,094
Financial assets	630	31
Total current assets	78,520	96,588
Non-current assets
Investments in controlled entities	436,431	297,132
Investments accounted for using the equity method	196,063	214,268
Plant and equipment	17,979	18,048
Intangible assets	101,951	124,077
Deferred tax assets	14,080	11,102
Loans with controlled entities	523	–
Total non-current assets	767,027	664,627
Total assets	845,547	761,215
Current liabilities
Trade and other payables	30,450	31,808
Unearned income	29,584	25,579
Financial liabilities	–	299
Current tax liabilities	14,721	2,827
Provisions	2,486	1,923
Loans with controlled entities	–	41,160
Total current liabilities	77,241	103,596
Non-current liabilities
Borrowings	318,433	275,281
Deferred tax liabilities	5,471	7,324
Provisions	6,979	4,781
Total non-current liabilities	330,883	287,386
Total liabilities	408,124	390,982
Net assets	437,423	370,233
Equity
Contributed equity	186,525	183,950
Reserves	8,251	(6,733)
Retained profts	242,647	193,016
Total equity	437,423	370,233

Notes to the Financial Statements

29. Business combinations

(a) Brasil Online and OCC step acquisitions

During the year, SEEK continued the focus on international expansion and through its wholly-owned subsidiary Seek International Investments II Coöperatie U.A., acquired controlling interests in the following entities:

• On 31 May 2012, SEEK acquired an additional 21.0% interest in Brasil Online Holdings Coöperatief U.A. (“Brasil Online”) for $80,563,000 (US$78,750,000), bringing its ownership to 51.0%;

• On 19 June 2012, SEEK acquired an additional 15.6% interest in Online Career Center Mexico SA de CV (“OCC”) for $22,250,000 (US$22,500,000), bringing its ownership to 56.7%.

Brasil Online operates two leading employment websites (including the market leader Catho Online) in Brazil, and OCC is the leading employment website in Mexico. These acquisitions significantly enhance SEEK’s exposure to the two largest economies in the highly attractive Latin American online employment sector.

SEEK has a majority of voting rights and positions on the Board of Directors in both businesses and will play an active role in driving the strategic and growth agenda.

From the date of step acquisition, the Group has accounted for Brasil Online and OCC as controlled entities and recognised the relevant non-controlling interest in the Group financial statements. Prior to this, the Group accounted for its interests in both Brasil Online and OCC as associates under the equity accounting method (refer to note 11).

Purchase consideration

The cash consideration and total purchase consideration are detailed in the table below and discussed further in the following paragraphs.

in the following paragraphs.
Notes	AUD
	Brasil Online $’000 OCC $’000 Total $’000
Purchase consideration – cash outfow	80,563 22,250 102,813
Fair value of pre-existing interest	115,090 58,602 173,692
Purchase consideration prior to non-controlling interest	195,653 80,852 276,505
Non-controlling interests at fair value arising on acquisition 20(a)	187,980 65,490 253,470
Total purchase consideration	383,633 146,342 529,975

Details of net assets and liabilities acquired

The preliminary fair value of the assets and liabilities arising from the acquisition are as follows:

Notes	Preliminary fair value (AUD)
	Brasil Online $’000 OCC $’000 Total $’000
Cash and cash equivalents	18,293 8,175 26,468
Trade and other receivables	16,666 1,293 17,959
Plant and equipment 13	4,036 1,717 5,753
Intangible assets
Brands and licences 14	70,901 18,363 89,264
Customer relationships 14	1,763 8,100 9,863
Computer software and website development 14	2,980 89 3,069
Deferred tax assets 8(d)	8,739 1,921 10,660
Trade and other payables	(9,861) (1,114) (10,975)
Unearned income	(12,822) (5,508) (18,330)
Current tax liabilities	(1,883) (552) (2,435)
Non-current provisions 18	(26,197) – (26,197)
Deferred tax liabilities 8(e)	(25,401) (7,437) (32,838)
Net identifable assets	47,214 25,047 72,261
Add goodwill acquired 14	336,419 121,295 457,714
	383,633 146,342 529,975

The goodwill is attributable to Brasil Online and OCC’s strong positions in their respective markets and the high growth potential of those markets. Goodwill is not expected to be deductible for tax purposes.

Initial accounting

Given that the acquisition occurred close to year end, both the net asset value and allocation of the purchase price to acquired assets are still preliminary. In particular, the contingent liabilities and fair values assigned to intangible assets are still being assessed and may be subject to change. The acquisition accounting will be finalised within 12 months of the acquisition date.

Acquired receivables

Brasil Online: The fair value of trade and other receivables is $16,666,000 and includes trade receivables with a fair value of $13,623,000. The gross contractual amount of trade receivables due is $14,016,000, of which $366,000 is expected to be uncollectible.

OCC: The fair value of trade and other receivables is $1,293,000 and includes trade receivables with a fair value of $995,000. The gross contractual amount of trade receivables due is $1,048,000, of which $53,000 is expected to be uncollectible.

Acquired contingent liabilities

Within non-current provisions acquired of $26,197,000, as required by AASB3: Business Combinations , the Group has recognised an amount of $12,236,000 being the fair value of acquired contingent liabilities. Refer to Note 18(c) for further details.

Business combinations acquired in stages

In accordance with the accounting policy set out in Note 1(g) for a business combination achieved in stages, the Group has remeasured its previously held equity interests in Brasil Online and OCC at their acquisition-date fair value immediately prior to the business combinations. The Group has also recycled amounts held in reserves in relation to these associates, including foreign currency translation losses and cash flow hedge gains and losses. The resulting net gain before tax of $28,224,000 (after tax $25,055,000) has been recognised in ’Other income’ in the Consolidated Income Statement (refer to note 6).

Consolidated Income Statement (refer to note 6).
Notes	Gain on step acquisition (AUD)
	Brasil Online $’000 OCC $’000 Total $’000
Fair value of pre-existing interest	115,090 58,602 173,692
Less: carrying value of Brasil Online as an associate 11(c)	(86,617) (36,275) (122,892)
Less: foreign currency translation reserve loss recycled 20(a)	(25,887) (7,250) (33,137)
Add/(less): cash fow hedge reserve gain (before tax) recycled 20(a)	12,876 (2,315) 10,561
Fair value gains on step acquisitions (before tax) 6	15,462 12,762 28,224
Less/(add): tax on reserve balances recycled 8(c)	(3,863) 694 (3,169)
Fair value gains on step acquisitions (after tax)	11,599 13,456 25,055

Non-controlling interests

In accordance with the accounting policy set out in Note 1(g), the Group elected to recognise the non-controlling interests in Brasil Online and OCC at fair value rather than at the proportionate share of the net identifiable assets. The fair value of the non-controlling interest in Brasil Online and OCC has been determined with reference to the purchase price of the acquired interest, as this represented a transaction between a willing buyer and two independent willing sellers.

The current ownership structures of Brasil Online and OCC are as follows:

The current ownership structures of Brasil Online and OCC are as follows:
Investor	Ownership in
	Brasil Online OCC
SEEK Limited	51.0% 56.7%
Non-controlling interests
Tiger Global	49.0% 34.7%
OCC management	– 8.6%
Total non-controlling interests	49.0% 43.3%

Notes to the Financial Statements

29. Business combinations continued

Revenue and profit contribution

Brasil Online contributed revenues of $8,818,000 and net profit of $1,906,000 before non-controlling interests for the SEEK Group for the period from 31 May 2012 to 30 June 2012. If the acquisition occurred on 1 July 2011, the contribution to consolidated revenue and consolidated profit before non-controlling interests for the SEEK Group for the current year would have been $108,921,000 and $21,457,000 respectively, offset by a reduction in the share of net profit from associates of $4,654,000.

OCC contributed revenues of $355,000 and net profit of $35,000 before non-controlling interests for the SEEK Group for the period from 19 June 2012 to 30 June 2012. If the acquisition occurred on 1 July 2011, the contribution to consolidated revenue and consolidated profit before non-controlling interests for the SEEK Group for the current year would have been $14,757,000 and $1,704,000 respectively, offset by a reduction in the share of net profit from associates of $821,000.

These amounts have been calculated using the Group’s accounting policies and by adjusting the results of Brasil Online and OCC to reflect the additional amortisation that would have been charged assuming the fair value adjustments to intangible assets had applied from 1 July 2011, together with any tax effects.

Year end

The Brasil Online and OCC groups have a 31 December year end. For group reporting purposes, the financial year end has been aligned to that of the SEEK Group.

Acquisition related costs

Transaction costs relating to the acquisitions were $188,000 and have been recognised in the Consolidated Income Statement in ‘operations and administration’ expenses.

(b) Finalisation of JobsDB Inc step acquisition

During the previous financial year SEEK Limited, together with Consolidated Media Holdings Limited, Macquarie Capital and Tiger Global (together referred to as the “co-investors”), formed a new subsidiary SEEK Asia Limited (“SEEK Asia”). SEEK Limited’s ownership interest in SEEK Asia is 68.96%, with the co-investors holding the remaining 31.04%.

SEEK Asia was established to acquire a controlling interest in JobsDB Inc (JobsDB). This transaction builds upon SEEK’s existing international footprint and increases its exposure to the high growth potential for online employment advertising in emerging regions.

Further details of the acquisition and preliminary purchase consideration are disclosed in the annual report for the year ended 30 June 2011.

Details of assets and liabilities acquired

Given that the acquisition occurred close to the previous financial year end, the final net asset valuation and allocation of the purchase price to acquired assets and fair values assigned to intangible assets were preliminary. In accordance with the Group’s accounting policy, the accounting for the acquisition of JobsDB was finalised during the current year and the preliminary step acquisition balances have been updated accordingly. The completion of the net asset valuation process has led to a change in the purchase consideration of $154,000, and there have been reallocations of the purchase price to acquired assets and fair values assigned to intangible assets as outlined in the table opposite. The total final purchase consideration was $326,937,000 (preliminary $327,091,000) and final goodwill of $275,303,000 (preliminary $274,756,000).

The fair value of the assets and liabilities arising from the acquisition are as follows:

		Final	Preliminary
		Fair Value	Fair Value
	Notes	$’000	$’000
Cash and cash equivalents		19,118	19,118
Trade and other receivables		7,372	7,449
Plant and equipment		1,167	1,167
Intangible assets
Brands and licences	14	39,724	40,133
Customer relationships	14	19,330	19,471
Computer software and website development	14	459	459
Trade and other payables		(9,451)	(9,359)
Unearned income		(11,338)	(11,338)
Current tax liabilities		(2,305)	(2,320)
Deferred tax liabilities	8(e)	(11,163)	(11,845)
Non-controlling interests in JobsDB subsidiaries	20(a)	(1,279)	(600)
Net identifable assets		51,634	52,335
Add: goodwill acquired	14	275,303	274,756
		326,937	327,091

Cash consideration

As previously disclosed, the acquisition cash flows for the year ended 30 June 2011 were:

• Outflow of cash – investing activities of $186,134,000

• Inflow of cash – financing activities of $68,648,000.

Details of settled assets and liabilities and associated cash flows during the year 30 June 2012 are as follows:

(i) Payment due to vendor on acquisition

The consideration of the third stage of the investment in JobsDB was HK$600,000,000 ($ 71,760,000 at 30 June 2011 exchange rates). An amount of $70,260,000 (including foreign exchange translation differences) was settled on 7 July 2011 and the balance of $767,000 including the working capital adjustment was settled on 23 February 2012.

(ii) Amounts due from co-investors

The amount receivable from co-investors at 30 June 2011 of $17,342,000 represented the outstanding cash consideration payable by the co-investors for the third stage of SEEK Asia’s investment in JobsDB. During July 2011, an amount of $16,980,000 (including foreign exchange translation differences) was received from co-investors in settlement of this balance.

(iii) Acquisition related costs

Acquisition related costs of $6,203,000 were incurred in the previous year.

Acquired indemnification assets and liabilities

As a result of the final determination of fair values, the indemnification asset was increased to $1,016,000. The indemnification asset is recognised in relation to certain pre-acquisition liabilities. Should these liabilities be required to be settled, then the vendor has agreed to reimburse SEEK Asia for any loss. The indemnification asset has been calculated as SEEK Asia’s proportion of the related liability and is a fixed proportion of this related liability. This amount is included within ‘other receivables.’

(c) Reconciliation of purchase consideration to cash outflow

The following table details the purchase consideration and cash outflow in the current year in relation to the transactions discussed in the sections above:

transactions discussed in the sections above:
	Brasil Online	OCC	JobsDB	Total
	$’000	$’000	$’000	$’000
Cash consideration	80,563	22,250	71,027	173,840
Less: cash acquired	(18,293)	(8,175)	–	(26,468)
Payments for investments in subsidiaries, net of cash acquired	62,270	14,075	71,027	147,372

Notes to the Financial Statements

30. Interests in controlled entities

The consolidated financial statements incorporate the assets, liabilities and results of the following consolidated entities in accordance with the accounting policy described in note 1(b):

			Equity	Equity
			holding	holding
	Country of		2012	2011
Name of entity	incorporation	Class of shares	%	%
SEEK Campus Pty Ltd	Australia	Ordinary	100	100
SEEK NZ Limited(1)	New Zealand	Ordinary	100	100
SEEK Learning Pty Ltd	Australia	Ordinary	100	100
Dynamic Web Training Pty Ltd	Australia	Ordinary	100	100
SEEK Learning UK Limited(5)	United Kingdom	Ordinary	n/a	100
SEEK Commercial Pty Ltd	Australia	Ordinary	100	100
SEEK Investments Pty Ltd	Australia	Ordinary	100	100
Seek International Investments II Coöperatie U.A.(1)	Netherlands	n/a	100	100
Brasil Online Holdings Coöperatief U.A.	Netherlands	n/a	51	30
CTHO Online Holdings, LLC	USA	Ordinary	100	100
CTHO Online Ltda	Brazil	Ordinary	100	100
Catho Online, Ltda.	Brazil	Ordinary	100	100
Manager Online Servicos de Internet, Ltda.	Brazil	Ordinary	100	100
Manager Online Servicos de Informatica Ltda	Brazil	Ordinary	100	100
Online Career Centre Mexico SA de CV	Mexico	Ordinary	56.7	41.1
OCC Consultoría, SA. de CV.	Mexico	Ordinary	100	100
OCC Consultoría Ejecutiva, SA. de CV.	Mexico	Ordinary	100	100
Online Career Center Mexico Inc.	USA	Ordinary	100	100
Think: Education Group Pty Limited	Australia	Ordinary	100	100
Think: Colleges Pty Limited	Australia	Ordinary	100	100
Think: Education Services Pty Limited	Australia	Ordinary	100	100
APM Training Institute Pty Limited	Australia	Ordinary	100	100
Australasian College of Natural Therapies (Holdings) Pty Limited	Australia	Ordinary	100	100
Jansen Newman Institute Pty Limited	Australia	Ordinary	100	100
Graduate Institute of Management and Technology Pty Limited	Australia	Ordinary	100	100
Billy Blue English School Pty Limited	Australia	Ordinary	100	100
Billy Blue Catering Pty Limited	Australia	Ordinary	100	100
Commercial Arts Training College Pty Limited	Australia	Ordinary	100	100
GMM Projects Pty Limited	Australia	Ordinary	100	100
The Trustee for the CATC Trust	Australia	Ordinary	100	100
The CATC Trust	Australia	n/a	n/a	n/a

			Equity	Equity
			holding	holding
			2012	2011
Name of entity	Country of incorporation	Class of shares	%	%
SEEK International Investments Pty Ltd	Australia	Ordinary	100	100
SeekAsia Ltd(1)	Cayman Islands	Ordinary	69	69
Jobs DB Inc(1)(4)	British Virgin Islands	Ordinary	80	60
Jobs DB Hong Kong Limited	Hong Kong	Ordinary	100	100
Jobs DB Singapore Pte Limited	Singapore	Ordinary	100	100
Jobs DB Taiwan Limited	Taiwan	Ordinary	100	100
Jobs DB Australia Pty Limited	Australia	Ordinary	100	100
Jobs DB India Private Limited	India	Ordinary	100(6)	100
Jobs DB Recruitment (Thailand) Limited	Thailand	Ordinary	69.5(3)(6)	69.5(3)(6)
Jobs DB Malaysia Sdn. Bhd.	Malaysia	Ordinary	49(3)	49(3)
PT. Jobs DB Indonesia	Indonesia	Ordinary	90	90
PT. Prestige Indonesia	Indonesia	Ordinary	49(3)	49(3)
Jobs DB Philippines Inc.	Philippines	Ordinary	100	100
Jobs DB China Investments Limited	Hong Kong	Ordinary	100	100
Ezyjobs (Thailand) Limited	Thailand	Ordinary	69.5(3)(6)	69.5(3)(6)
Job88 (BVI) Inc.	British Virgin Islands	Ordinary	100	100
Job88.com Limited	Hong Kong	Ordinary	100	100
就業網絡信息技術(深圳)有限公司	People's Republic of China	Ordinary	100	100
廣州厚博信息科技有限公司	People's Republic of China	Ordinary	100	100
深圳市希捷爾人力資源有限公司	People's Republic of China	Ordinary	75.6	75.6
東莞市希捷爾人力資源有限公司	People's Republic of China	Ordinary	75.6	75.6
深圳市富才信息咨詢有限公司	People's Republic of China	Ordinary	n/a(7)	100
東莞市富才信息咨詢有限公司	People's Republic of China	Ordinary	n/a(7)	100
Jobs DB Assets (Thailand) Limited	Thailand	Ordinary	40(3)	40(3)
Jobs DB Prestige Inc.	Philippines	Ordinary	25(3)	25(3)
Sure Luck Invest Limited	British Virgin Islands	Ordinary	100	100
SEEK Deferred Share Plan Trust(2)	Australia	n/a	n/a	n/a
SEEK Exempt Share Plan Trust(2)	Australia	n/a	n/a	n/a

1. All subsidiaries have been granted relief from the necessity to prepare financial reports in accordance with Class Order 98/1418 issued by the Australian Securities and Investments Commission apart from SEEK NZ Limited, SEEK Learning UK Limited, SEEK Asia Ltd, JobsDB Inc and SEEK International Investments II Coöperatie UA.

2. The Trusts are included within the consolidated group as the Group has the power to govern the financial and operating policies of these entities.

3. At 30 June 2011 the Group has fully consolidated these entities because JobsDB Inc has the ability to control their financial and operating policies despite not holding a majority of equity as required by local regulations.

4. At 30 June 2011 the equity holding in JobsDB was 60%, however SEEK Asia was contractually committed to purchase an additional 20% interest in JobsDB on 7 July 2011, bringing the total holding to 80% at that date.

5. Entity liquidated during the year.

6. 6 Equity holding represents direct and indirect interest.

7. Deregistered during the year.

31. Events occurring after balance date

The following events occurred after balance date:

Syndicated debt facility

The Group is in the process of refinancing the existing syndicated debt facility to extend the maturity by at least a further three years. The refinancing process is progressing well and is expected to be completed within the next few weeks.

Notes to the Financial Statements

31. Events occurring after balance date continued

Minority shareholding in Think

SEEK is in exclusive discussions with a global education company with the company looking to acquire a minority shareholding (approximately 20%) in Think. If completed, the investment will be accompanied by board representation in Think proportionate to its shareholding and typical minority shareholder protection rights. The strategic rationale for SEEK is that it brings onto the Think Board additional expertise and capabilities to assist in the ongoing growth of Think.

Additional investment in Swinburne Online

On 1 July 2012, as detailed in the joint venture agreement, SEEK and Swinburne University each contributed an additional $2,500,000 to Swinburne Online. SEEK will recognise this transaction as an additional investment in Swinburne Online.

No other matters or circumstances have arisen since 30 June 2012 that have significantly affected, or may significantly affect the Group’s operations in future financial years, the results of those operations in future financial years, or the Group’s state of affairs in future financial years.

32. Reconciliation of profit for the year to net cash inflow from operating activities

Notes	Consolidated
	2012 $’000 2011 $’000
Proft for the year	137,458 96,714
Non-cash items
Depreciation and amortisation	20,450 12,595
Amortisation of share-based payments and other long-term incentive schemes 7	4,130 999
Net (gain)/loss on disposal of plant and equipment 7	108 –
Unrealised exchange (gains)/losses 7	(428) 614
Amortisation of syndicated loan transaction costs 16	1,369 2,518
Aggregated tax amounts arising in the reporting period recognised directly in equity	168 452
Share of profts of equity accounted investments 11(b)	(30,871) (24,685)
Impairment loss 14	24,115 –
Items relating to step acquisitions
Fair value (gains)/losses on step acquisitions 29	(28,224) 811
Tax on reserve balances recycled 29(a)	3,169 –
Other non-operating gain 6	(1,130) –
Classifed as fnancing and investing activities
Transaction costs on acquisition of subsidiary 29	188 6,203
Change in operating assets and liabilities:
(Increase)/decrease in trade and other receivables	(2,792) (1,549)
(Increase)/decrease in deferred tax assets	(2,648) (976)
(Increase)/decrease in current tax assets	(2,924) –
(Decrease)/increase in trade and other payables	2,355 9,468
(Decrease)/increase in deferred income	4,984 1,255
(Decrease)/increase in current tax liability	11,571 547
(Decrease)/increase in provisions	1,260 1,067
(Decrease)/increase in deferred tax liability	(3,938) 3,065
(Decrease)/increase in other fnancial liabilities	2,030 –
Exchange gain/(loss) on translation of foreign operations	868 (912)
Net cash infow from operating activities	141,268 108,186

33. Earnings per share

Information concerning the classification of securities

(a) Fully paid ordinary shares

All shares are fully paid and have been included in both the basic earnings per share (EPS) and the diluted earnings per share.

(b) Options

Options granted to employees under the SEEK Limited Option Plans are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share. The options have not been included in the determination of basic EPS. Details relating to these options are set out in note 26.

	Consolidated
	2012 cents per share 2011 cents per share
Basic EPS	39.1 29.0
Diluted EPS	38.9 28.9

Weighted average number of shares used as the denominator

Weighted average number of shares used as the denominator
	Consolidated
	2012 number 2011 number
Weighted average number of shares used as the denominator in calculating basic EPS	337,090,873 336,584,488
Weighted average number of Options and Performance Rights	1,065,927 974,089
Weighted average number of shares used as the denominator in calculating diluted EPS	338,156,800 337,558,577

Reconciliation of earnings used in calculating EPS

Reconciliation of earnings used in calculating EPS
	Consolidated
	2012 $’000 2011 $’000
Basic EPS
Earnings used in calculating basic EPS	131,680 97,688
Diluted EPS
Earnings used in calculating diluted EPS	131,680 97,688

34. Net tangible asset backing

34. Net tangible asset backing
		2011
	2012	Restated*
	cents per share	cents per share
Net tangible asset backing per share	(63.29)	(8.56)

• Refer to note 29(b) for details of restatement on the completion of acquisition accounting for JobsDB.

A large proportion of the Group’s assets are intangible in nature, consisting of goodwill and identifiable intangible assets relating to businesses acquired. These assets are excluded from the calculation of net tangible assets per security, which results in the negative outcome.

Net assets per share at 30 June 2012 was $2.29 (30 June 2011: $1.29).

Refer to note 16 for further information on the Group’s borrowings and debt facilities.

Notes to the Financial Statements

35. Parent entity financial information

(a) Summary financial information

The individual financial statements for the parent entity show the following aggregate amounts:

	2012	2011
	$’000	$’000
Balance sheet
Current assets	48,466	79,528
Total assets	713,533	651,885
Current liabilities	45,843	37,773
Total liabilities	365,409	315,189
Net assets	348,124	336,696
Equity
Issued capital	186,525	183,950
Reserves
Hedging reserve – cash fow hedge reserve	(429)	8,050
Foreign currency translation reserve	(92)	(166)
Share-based payments reserve	12,157	8,594
Retained earnings	149,963	136,268
	348,124	336,696
Proft for the year	67,979	78,295
Total comprehensive income	71,516	78,394

(b) Guarantees entered into by the parent entity

The parent entity has given unsecured guarantees along with its Australian subsidiaries in respect of the syndicated loan facility of $360,000,000, of which $320,487,000 has been drawn. Refer to note 16 for further details.

In addition, there are cross guarantees given by SEEK Limited, as described in note 28. No deficiencies of assets exist in any of these entities. The parent entity has further provided a guarantee in respect of obligations for rental commitments, as described in note 25.

(c) Contingent liabilities of the parent entity

The parent entity did not have any contingent liabilities as at 30 June 2012 or 30 June 2011.

(d) Contractual commitments

As at 30 June 2012, the parent entity had contractual commitments for minimum lease payments in relation to non-cancellable operating leases totalling $19,088,000 (2011: $10,545,000). Other commitments for the payment of IT services, advertising and promotions under long-term contracts in existence totalled $3,166,000 (2011: $5,694,000).

Directors’ Declaration

In the directors’ opinion:

• (a) the financial statements and notes set out on pages 47 to 118 are in accordance with the Corporations Act 2001 , including:

• (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

• (ii) giving a true and fair view of the consolidated entity's financial position as at 30 June 2012 and of their performance for the financial year ended on that date; and

• (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and

• (c) at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group identified in note 28 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of cross guarantee described in note 28.

Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001 .

This declaration is made in accordance with a resolution of the directors.

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Bob Watson Chairman

Melbourne 22 August 2012

Independent Auditor’s Report to the Members of SEEK Limited

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==> picture [481 x 675] intentionally omitted <==

Shareholder Information

The shareholder information set out below was applicable as at 4 October 2012.

A. Distribution of shareholders

Analysis of numbers of ordinary shareholders by size of holding:

Range	Total holders	Shares	% of Issued Capital
1–1,000	4,695	2,450,631	0.73
1,001–5,000	5,868	14,579,720	4.33
5,001–10,000	1,222	8,858,776	2.63
10,001–100,000	680	15,488,105	4.59
100,001+	100	295,724,075	87.72
Total	12,565	337,101,307	100.00

There were 357 holders of less than a marketable parcel of ordinary shares.

B. Twenty largest quoted equity security holders

The names of the twenty largest registered holders of quoted equity securities are listed below:

Name	Ordinary shares
	Number held % of Issued Capital
JP Morgan Nominees Australia Limited	86,965,434 25.80
National Nominees Limited	63,102,328 18.72
HSBC Custody Nominees (Australia) Limited	35,243,941 10.45
UBS Nominees Pty Ltd	19,515,000 5.79
Kiteford Pty Ltd (Andrew Bassat Family Trust)	11,250,113 3.34
Netherlane Pty Ltd (Paul Bassat Family Trust)	9,752,837 2.89
Citicorp Nominees Pty Limited	9,370,082 2.78
HSBC Custody Nominees (Australia) Limited (Nt-Comnwlth Super Corp A/C)	5,536,235 1.64
UBS Wealth Management Australia Nominees Pty Ltd	5,181,525 1.54
Citicorp Nominees Pty Limited (Colonial First State Inv Account)	4,838,207 1.44
Daleford Way Pty Ltd	4,238,648 1.26
BNP Paribas Noms Pty Ltd (Master Cust DRP)	2,890,038 0.86
RBC Investor Services Australia Nominees Pty Limited (GSAM Account)	2,638,113 0.78
Mr Andrew Reuven Bassat	2,250,000 0.67
JP Morgan Nominees Australia Limited (Cash Income Account)	1,858,948 0.55
Invia Custodian Pty Limited (GSJBW Managed A/C)	1,469,197 0.44
BNP Paribas Noms Pty Ltd (Sl Non Cash Col)	1,280,000 0.38
AMP Life Limited	1,230,784 0.37
Mr Roger William Allen	1,145,820 0.34
Mutual Trust Pty Ltd	1,140,504 0.34
Top 20 holders of ordinary fully paid shares (total)	270,897,754 80.36
Other shareholders	66,203,553 19.64
Total	337,101,307 100.00

Unquoted equity securities

Options issued to take up ordinary shares under the:

Unquoted equity securities Options issued to take up ordinary shares under the:
	Number held	Number of holders
Performance Rights and Options Plans	9,272,968(1)	32

1. The following persons hold 20% or more of these securities: Andrew Bassat 39.39%

C. Substantial holders

Substantial holders in the company are set out below:

C. Substantial holders Substantial holders in the company are set out below:
	Number held(1)	% of Issued Capital
Fidelity International Group	44,137,072	13.09
Hyperion Asset Management	39,897,648	11.84
AustralianSuper Pty Ltd	16,865,855	5.00

1. Number of shares held by substantial shareholders is based on the most recent notifications lodged by substantial shareholders with the ASX.

D. Voting rights

The voting rights attaching to each class of equity securities are set out below:

Ordinary shares

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Options

No voting rights.

Five Year Financial Summary

	2008	2009	2010	2011	2012
	$’000	$’000	$’000	$’000	$’000
OperatingResults
Sales revenue
Employment	188,815	170,464	172,685	224,037	247,769
Education – Learning	21,350	30,051	43,628	44,466	49,478
Education – Think	–	9,929	69,558	69,078	86,913
International	–	–	–	8,727	62,099
Eliminations – intercompany transactions	–	(2,099)	(5,139)	(3,254)	(4,005)
Total sales revenue(1)	210,165	208,345	280,732	343,054	442,254
Segment EBITDA(2)	109,809	97,767	117,365	135,636	193,625
Segment EBITDA to sales (%)	52.2%	46.9%	41.8%	39.5%	43.8%
Share of net (losses)/profts of associates(3)	2,718	(1,436)	11,427	24,685	30,871
Net proft after tax (NPAT)	76,280	55,301	89,521	96,714	137,458
Non-controlling interests	–	–	–	974	(5,778)
Proft for the year attributable
to owners of SEEK Limited	76,280	55,301	89,521	97,688	131,680
SEEK's share of associates' andjointlycontrolled entities'		NPAT(3)
IDP	9,075	13,835	9,795	7,742	8,161
Zhaopin	(6,231)	(17,254)	(3,764)	8,702	16,490
Think	(126)	(39)	–	–	–
Brasil Online Holdings	–	2,022	4,374	4,144	4,654
JobStreet	–	–	1,022	2,679	2,773
OCC	–	–	–	749	821
JobsDB	–	–	–	715	–
Swinburne Online	–	–	–	(46)	(2,028)
Total SEEK's share of associates' and
jointly controlled entities' NPAT(3)	2,718	(1,436)	11,427	24,685	30,871
Balance Sheet
Current assets	60,504	70,164	76,472	160,484	161,823
Non-current assets	149,267	390,471	437,174	810,115	1,229,909
Total assets	209,771	460,635	513,646	970,599	1,391,732
Current liabilities	36,523	50,775	50,426	237,244	223,420
Non-current liabilities	30,771	121,220	110,263	298,596	397,179
Total liabilities	67,294	171,995	160,689	535,840	620,599
Net assets	142,477	288,640	352,957	434,760	771,133
Equity	142,477	288,640	352,957	434,759	771,133
Gearing (debt/debt+equity)	17.4%	28.0%	22.1%	38.8%	29.2%
Per ordinary share (cents) (from continuing operations)
Dividends – interim	8.7	4.5	5.2	6.8	8.3
Dividends – fnal	9.9	4.7	6.7	7.5	9.0
Dividends – total	18.6	9.2	11.9	14.3	17.3
Basic earnings per share	26.6	18.8	26.6	29.0	39.1
Diluted earnings per share	26.3	18.7	26.5	28.9	38.9

1. Sales revenue is revenue excluding interest, dividend, other revenue and other income from fair value gains on acquisitions.

2. Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation and excluding share of net (losses)/profits of associates accounted for using the equity method, fair value gain/loss on acquisition, dividend income and amortisation of share-based payments and long-term incentives.

3. Share of net (losses)/profits of associates accounted for using the equity method.

Corporate Directory

Directors

Robert (Bob) C G Watson Chairman

Andrew R Bassat Managing Director and Chief Executive Officer

Colin B Carter

Neil G Chatfield

Denise I Bradley

Secretary Moana Weir

Principal registered office in Australia Level 6 541 St Kilda Road Melbourne, Victoria 3004 03 8517 4100

Share register Computershare Investor Services Pty Limited 452 Johnston Street Abbotsford, Victoria 3067 03 9415 4000

Auditor

PricewaterhouseCoopers Freshwater Place 2 Southbank Boulevard Southbank, Victoria 3006

Solicitors Arnold Bloch Leibler Level 21 333 Collins Street Melbourne, Victoria 3000

Bankers

Westpac Banking Corporation

Stock exchange listing SEEK Limited shares are listed on the Australian Stock Exchange (Listing code: SEK)

Website address www.seek.com.au

Notice of Annual General Meeting The Annual General Meeting of SEEK Limited will be held at: Crown Melbourne Limited 8 Whiteman Street Southbank, Victoria 3006

Time: 3:00pm Date: 29 November 2012

seek.com.au seek.co.nz seekvolunteer.com.au seeklearning.com.au seekcommercial.com.au

jobsdb.com occ.com.mx catho.com.br manager.com.br think.edu.au dynamicwebtraining.com.au apm.edu.au billyblue.edu.au catc.edu.au williamblue.edu.au acnt.edu.au jni.edu.au ssnt.edu.au ancb.edu.au ebsglobal.com.au