REA GROUP LTD - Annual Report 2021

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ASX Announcement 20 September 2021

REA Group 2021 Annual Report

On behalf of REA Group Ltd (ASX:REA) please find attached the 2021 Annual Report.

-ends-

For further information, please contact:

REA Group Ltd Investors: REA Group Ltd Media: Graham Curtin Prue Deniz General Manager Group Reporting Executive Manager Corporate Affairs P: +61 3 8456 4288 M: + 61 438 588 460 E: [email protected] E: [email protected]

The release of this announcement was authorised by Tamara Kayser, Company Secretary.

About REA Group Ltd: (www.rea-group.com): REA Group Ltd ACN 068 349 066 (ASX:REA) (“REA Group”) is a multinational digital advertising business specialising in property. REA Group operates Australia’s leading residential and commercial property websites – realestate.com.au and realcommercial.com.au – as well as the leading website dedicated to share property, Flatmates.com.au. REA Group owns Smartline Home Loans Pty Ltd and Mortgage Choice Pty Ltd, Australian mortgage broking franchise groups, and PropTrack Pty Ltd, a leading provider of property data services. In Australia, REA Group holds strategic investments in Simpology Pty Ltd, a leading provider of mortgage application and e-lodgement solutions for the broking and lending industries; Realtair Pty Ltd, a digital platform providing end-to-end technology solutions for the real estate transaction process, Campaign Agent Pty Ltd, Australia’s leading provider of Buy Now Pay Later solutions for the Australian real estate market and Managed Platforms Pty Ltd, an emerging Property Management software platform. Internationally, REA Group holds a controlling interest in REA India (formerly Elara Technologies Pte. Ltd.), operator of established brands Housing.com, Makaan.com and PropTiger.com and owns leading portals in Hong Kong (squarefoot.com.hk) and China (myfun.com). REA Group also holds a significant minority shareholding in Move, Inc., operator of realtor.com in the US, and the PropertyGuru Group, operator of leading property sites in Malaysia, Singapore, Thailand, Vietnam and Indonesia.

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Changing the way the world experiences property

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Annual Report 2021

2021 Annual Report

About us	2
Year in review	4
2021 Highlights	7
Chairman’s message	8
CEO’s message	10
Our people and culture	12
Supporting the long-term prosperity of Australia’s property sector	14
Australian highlights	16
Global footprint	22
Supporting a sustainable future	24
Executive Leadership Team	26
Board of Directors	28
Directors’ Report	30
Auditor’s Independence Declaration	43
Remuneration Report	44
Consolidated Financial Statements	62
Directors’ Declaration	125
Independent Auditor’s Report	126
Historical Results	131
Shareholder Information	132
Corporate Directory	134

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2021 Highlights Page 7

Global footprint Page 22

Supporting a sustainable future

Page 24

REA Group Ltd | Annual Report 2021

Our Purpose

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Our Business

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Our People

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To change the way the world experiences property.

REA Group is a global digital advertising company, specialising in property. We use new technology and our collective genius to deliver the best products and services to our customers and consumers.

Our people are the key to our success. With operations in three continents, we have a team of almost 2,800 people who come to work every day living our values. They are purpose-driven and collaborative, which drives our innovative culture.

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Annual Report 2021 | REA Group Ltd

About us

Changing the way the world experiences property

STRATEGIC FOCUS

A relentless focus on innovation to drive unrivalled customer value and consumer engagement.

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The 2021 financial year (FY21)
was a defining period for REA
Group Ltd and its subsidiaries
(the ‘Group’ or ‘REA’) with
the delivery of exceptional
financial results fuelled by Largest audiences, most
innovation and an unwavering engaged consumers
focus on the Group’s purpose
– to change the way the world
experiences property. The
Group accelerated its growth
ambitions and delivered
superior customer value and
consumer experiences while
continuing to support its
people and communities.
Delivering on our
growth strategy
REA continued to make
great strides in the delivery Building the
of its growth strategy, which next generation
is centred around four core markeplaces
objectives. These core
objectives are: providing our
customers with access to the
largest and most engaged
audience of property seekers;
delivering superior customer
value; providing the richest
content, data and insights to
empower our customers and
consumers; and creating the
next generation of property- Superior Unparalleled
related market places. customer value data insights
world
the exp
ay eri
w e
n
e c
th e
s
g
ign pro
n p
a e
h tr
C y
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REA Group Ltd | Annual Report 2021

A values-led organisation with people at the heart of our success

Our workforce of almost 2,800 people is at the heart of REA’s success, and our people make our organisation truly great. We share a common language about who we are and what’s important to us. Our purpose and strategy guide us, and we live by a common set of values that drive us.

Our values

Our people continued to respond brilliantly to the complexities experienced throughout FY21 as a result of the COVID-19 (COVID) pandemic, often working remotely for prolonged periods of time. Their drive and determination saw the delivery of market-leading innovations and customer support and service, while at the same time our people were looking out for each other.

Our global network

Australia

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Everything we achieve, we achieve as one team. It’s our collective genius that gives us our edge and a willingness to stand by any decision that’s made for the greater good of REA.

People are at the heart of REA. Every connection with each other, with our customers, with consumers and with our community matters. We care and we’re not afraid to show it.

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India/Asia

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We don’t expect anyone to fit a certain mould – we accept everyone for who they are, quirks and all. We’re not afraid to have a laugh. We take our work seriously, but never ourselves.

We’re thirsty for knowledge – and generous with it too. Our curiosity is endless, and every day we seek out opportunities to grow ourselves and others. We don’t do comfort zones.

We always seek to do the right thing, and if things don’t quite go to plan, we own it. We review what happened, learn from it and move on, smarter and better than before.

We’re not afraid to try new things or fail fast. We’re all about challenging the status quo and taking risks. And at times, while it may feel uncomfortable, we know this is where the magic happens.

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North America

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Annual Report 2021 | REA Group Ltd

Year in review

FINANCIAL HIGHLIGHTS

The Group delivered an excellent financial performance in FY21.

The Group’s result reflects an ongoing focus on innovation and the release of new products and features to deliver increased customer value and highly personalised consumer experiences.

Financial highlights from core operations[1] include year-onyear (YoY) revenue[1] growth of 13% to $928 million. EBITDA[2] increased 19% to $565 million and net profit from core operations[3] increased 18% to $318 million. These results include the consolidation of the Elara business from 1 January 2021. Excluding the impact of acquisitions, revenue increased by 11% for the year, EBITDA[2] increased by 21% and NPAT[3] was up 24%. Strong cost management across the year resulted in core operating cost growth (excluding acquisitions) being contained to 3% YoY.

Pleasingly the Group maintained its strong core EBITDA[1] margin at 60%. The Board declared total dividends of 131 cents per share in respect of the 2021 financial year, a 19% increase on the prior year, reflecting the strength of the business.

Alongside REA’s strong financial results, significant milestones were achieved despite ongoing COVID disruptions. Our core business saw the achievement of record audience levels, record uptake of key advertising solutions and the unveiling of new products and features to drive more leads to our customers. At the same time we accelerated our strategy, announcing a number of pivotal investments in Australia, India and Southeast Asia designed to deliver long-term sustainable growth.

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Revenue [1]
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13% $927.8m

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2021
2020
2019
2018
2017
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Total dividends per share

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131.0¢ 19%
2021
2020
2019
2018
2017
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Further details regarding business operations and financial results can be found in the Directors Report on pages 30 – 42.

1 Revenue is defined as revenue from property and online advertising, and revenue from Financial Services less expenses from franchisee commissions.

REA Group Ltd | Annual Report 2021

EBITDA[2,3]

19% $564.8m

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2021
2020
2019
2018
2017
Earnings per share [3]
247.4¢ 21%
2021
2020
2019
2018
2017
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Net Profit [3]
18%
$318.0m
2021
2020
2019
2018
2017
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2 Earnings before Interest, Tax, Depreciation and Amortisation including share of associates and joint ventures. 3 Reported results adjusted for significant non-recurring items such as restructure costs, gain/loss on acquisitions and disposals, related transaction costs, integration costs, and historic tax provision (historic indirect tax provision reflects potential retrospective changes to interpretation of tax law). In the prior year, this included items such as restructure costs, revaluation of contingent consideration, gain/loss on acquisitions, disposals and divestments, and impairment charges.

Annual Report 2021 | REA Group Ltd

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6 REA Group Ltd | Annual Report 2021
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Year in review

2021 Highlights

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12.6m

121.9m

55m

realestate.com.au monthly average audience[4]

average monthly visits to realestate.com.au on all platforms up 35% YoY[5]

average monthly launches of the realestate.com.au app up 49% YoY[6]

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2.6m

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50:50

record average monthly buyer enquiries up 55% YoY[7]

Connect offering launched with digital services helping to streamline agent workflows

employee gender parity across Australian business

4[th]

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Pivotal investments – Mortgage Choice acquisition; controlling interest in Elara; PropertyGuru investment

Named Australia’s 4th best workplace by Great Place to Work

Certified carbon neutral by the Australian Government’s Climate Active program

4 Nielsen Digital Media Ratings (Monthly Tagged), Jan 21 - Jun 21 (average), P2+, Digital (C/M), text, realestate.com.au, Unique Audience.

5 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 vs. Jul 19 - Jun 20 (average), P2+, Digital (C/M), text, realestate.com.au, Total Sessions.

6 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 vs. Jul 19 - Jun 20 (average), P2+, Digital (C/M), text, realestate.com.au, App Launches. 7 Adobe Analytics, internal data, Jul 20 – Jun 21 vs. Jul 19 – Jun 20.

Annual Report 2021 | REA Group Ltd

Year in review

Chairman’s message

“ I am continually impressed by the organisation’s ability to successfully navigate operational intensity and remain focused on progressing our long-term strategic imperatives.”

REA delivered an outstanding result for the 2021 financial year, despite ongoing disruptions and volatility caused by COVID-19. I am continually impressed by the organisation’s ability to successfully navigate operational intensity and remain focused on progressing our long-term strategic imperatives.

Financial highlights from core

operations[8] for the full year included revenue[9] of $928 million, an increase of 13% and EBITDA including associates of $565 million, an increase of 19%. REA also maintained its strong core EBITDA margin at 60%.

The Board has declared a final dividend of 72 cents per share fully franked. This represents a total dividend of 131 cents per share for FY21, a 19% increase on the prior year. While Australia’s real estate market was impacted by the pandemic and surrounding economic uncertainty, REA Group’s share price traded at record highs given the strong performance delivered in FY21.

The Group’s strong financial results were testament to the dedication of REA’s talented workforce. Under our CEO Owen Wilson’s leadership, the team displayed an unwavering resolve to adapt at speed to introduce new customer and consumer innovations and various support measures to help agents and agencies. This operational excellence was complemented by the successful completion of a number of strategically significant transactions, which will deliver long-term sustainable growth opportunities.

Building on the strong foundation of our financial services business, REA acquired Mortgage Choice Limited. Bringing Mortgage Choice together with our Smartline broker business accelerates our financial services strategy and gives REA the opportunity to become the leading mortgage broking business in Australia.

REA moved to a controlling position in Elara Technologies Pte. Ltd. (“Elara”), which operates the Indian property websites Housing.com, Makaan.com and PropTiger.com.

India is one of the world’s fastest growing trillion dollar economies, experiencing rapid digitisation. This transaction presents a significant opportunity to leverage the combined talent and digital expertise across both REA and Elara and become the undisputed number one digital real estate business in India. Against the backdrop of a market heavily impacted by COVID-19, Elara delivered an impressive 23% YoY local currency revenue growth in FY21.

In Asia, REA announced the transfer of its Malaysia and Thailand operations to PropertyGuru Pte. Ltd. (“PropertyGuru”), a leading digital proptech company operating marketplaces in Singapore, Vietnam, Malaysia, Thailand and Indonesia. This was in exchange for REA receiving an 18%[10] interest in PropertyGuru, which will provide the Group with a strategic shareholding in a larger, more diversified company. This transaction presents a unique opportunity to create the most compelling digital proptech group in Southeast Asia.

8 Financial results from core operations are defined as reported results adjusted for significant non-recurring items such as restructure costs, gain/loss on acquisitions and disposals, related transaction costs, integration costs and historic tax provision (historic indirect tax provision reflects potential retrospective changes to interpretation of tax law). In the prior year, this included items such as restructure costs, revaluation of contingent consideration, gain/loss on acquisitions, disposals and divestments, and impairment charges.

9 Revenue is defined as revenue from property and online advertising, and revenue from Financial Services less expenses from franchisee commissions. 10 Undiluted, 16.6% on a fully diluted basis if all warrants and ESOPs are exercised.

REA Group Ltd | Annual Report 2021

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We look forward to supporting PropertyGuru with its ambitious plans for the digitisation of the property industry in this dynamic region.

REA’s Asia business performance was negatively impacted by COVID-19. Significant extended lockdowns and the cancellation of events across all markets contributed to revenues declining by 16%.[11] EBITDA before associates and joint ventures was $10 million.[12] Our primary focus remained on supporting our people and ensuring their health and safety during the prolonged lockdowns experienced across the region.

Our investment in North America’s Move, Inc., the operator of realtor.com®, delivered a strong performance with reported revenue increasing by an impressive 36% in FY21 to US$641 million.

The Board is committed to the continual improvement of REA’s Environmental, Social and Governance (ESG) measures. This year we were delighted to become a carbon neutral organisation after completing the Australian Government’s

Climate Active certification process. The Group also improved its MSCI ESG rating from BBB to an A.

Positive progress was made in further increasing REA’s workforce diversity during FY21. Five out of nine members of the executive leadership team are female, while there is equal gender representation within our employee group across our Australian business.

On behalf of the Board, I would like to express my sincere thanks to Owen, his leadership team and all of REA’s employees for their incredibly hard work to finish the year so strongly. We will continue to invest in creating a next generation organisation underpinned by an exceptional culture – accelerating our efforts to bolster our organisational agility, leadership and capabilities.

I would also like to thank my fellow Board members for their collective efforts to support our continual success. In November 2020, Roger Amos retired as a Director of the Company. I would like

to acknowledge Roger’s tremendous efforts since joining the REA Group Board in 2006, serving as Chairman of the Audit, Risk & Compliance Committee and as a member of the Human Resources Committee. We were delighted to have Jennifer Lambert join the board in December following Roger’s retirement. Jennifer’s extensive business and leadership experience across property and finance further complements and strengthens the Board and its diversity.

REA has strong foundations, a clear purpose and an exciting growth strategy, all of which point to a rewarding and prosperous future. We thank all our valued stakeholders for your ongoing support and look forward to a very successful 2022 fiscal year.

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Hamish McLennan Chairman REA Group

11 Prior year number includes contribution from Singapore and Indonesia.

12 Financial results from core operations are defined as reported results adjusted for significant non-recurring items such as restructure costs, gain/loss on acquisitions and disposals, related transaction costs, integration costs and historic tax provision (historic indirect tax provision reflects potential retrospective changes to interpretation of tax law). In the prior year, this included items such as restructure costs, revaluation of contingent consideration, gain/loss on acquisitions, disposals and divestments, and impairment charges.

Annual Report 2021 | REA Group Ltd

Year in review

CEO’s message

“ Through a year that saw extraordinary disruption, the business accelerated its growth ambitions and delivered exceptional financial results.”

The 2021 financial year has been a defining period for REA Group. Through a year that saw extraordinary disruption, the business accelerated its growth ambitions and delivered exceptional financial results. I am extremely proud of our team’s ability to respond to the changing needs of our customers and consumers, while delivering a number of significant strategic milestones and pivotal investments.

In Australia, realestate.com.au delivered record audience numbers and extended its leadership position as Australia’s number one place for property. An average of 121.9 million visits were received each month, up 35% YoY[13] and 3.3 times more visits than the nearest competitor.[14] When compared to other leading digital brands, realestate.com.au is now Australia’s eighth largest in terms of audience,[15] reaching over 60% of the adult population.[16] This shows that our brand has become part of the everyday lives of so many Australians.

A key part of our strategy is to leverage our unique data to provide rich content, news and insights to both customers and consumers. Access to Australia’s most comprehensive property data provides REA with the ability to deliver highly personalised experiences. An example of this was the launch of our Property Owner Dashboard, which provides tailored information to help owners monitor their market and make confident property choices. It is also serving as a powerful way for buyers, sellers and renters to connect with agents and agencies.

New products, features and support measures were launched to help our customers overcome the challenges associated with prolonged lockdowns. This included the launch of Connect, our suite of digital Agency services which provides our customers with products across every stage of the prospecting journey to help attract, nurture and convert prospective vendors. Our deep collaboration with our customers saw REA receive our highest ever customer sentiment rating, something we are extremely proud of.

Building next generation marketplaces is central to our growth strategy and our financial services business is integral to this. We were delighted to complete the acquisition of Mortgage Choice Limited and announce our 34% strategic investment in Simpology Pty Limited (“Simpology”), a leading provider of mortgage application and e-lodgement solutions for the broking and lending industries. We see considerable longterm growth opportunities across our multichannel financial services proposition, leveraging our larger broker network, REA’s digital expertise, our high-intent property seeker and owner audience and our unique data and insights.

In India, REA increased its shareholding from 13.5% to 60.7%[17 ] in Elara. India is an incredibly attractive market and one that provides excellent long-term growth opportunities, while complementing REA’s global footprint in Asia and North America. Elara achieved a number of key milestones during the year, despite the significant impacts of COVID-19.

13 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 vs. Jul 19 - Jun 20 (average), P2+, Digital (C/M), text, realestate.com.au, Total Sessions. 14 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 (average), P2+, Digital (C/M), text, realestate.com.au vs. Domain, Total Sessions.
15 Nielsen Digital Media Ratings (Monthly Total), Jun 21, P2+, Digital (C/M) Text, All Categories, Unique Audience.
16 Nielsen Digital Content Ratings (Monthly Tagged), Jun 21, P18+, Digital (C/M), text, realestate.com.au, Active Reach %.
17 The Group held a 59.65% shareholding on acquisition and subsequently increased its holding to 60.65% as at 30 Jun 21. Shareholding increased to 65.49% in Jul 21.

REA Group Ltd | Annual Report 2021

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Our flagship site, Housing.com, made excellent inroads in the battle for market leadership. Site visits increased 92% YoY[18 ] and app usage was up a staggering 242% YoY.[19] REA’s journey in India is still in its infancy, however the progress this year points to an exciting future.

Building on the success of our operations in Malaysia and Thailand, REA announced the transaction to combine our iProperty.com.my and ThinkofLiving.com businesses with PropertyGuru. As the digitisation of the property market continues to accelerate across Southeast Asia, PropertyGuru is perfectly placed to build on its leadership position and capture future growth opportunities. As PropertyGuru’s largest strategic investor, we look forward to being part of this journey and I am personally looking forward to joining the PropertyGuru Board later this year.

Our FY21 results were made possible only due to the truly outstanding way our people have responded to the unique challenges encountered

throughout 2021. Our people and culture give REA a competitive edge and we were thrilled to be recognised as Australia’s fourth best workplace by Great Place to Work in 2021. In a world where the competition for talent is as fierce as it’s ever been, the retention of our highly talented employees and attraction of new staff is paramount to ensure we are well placed to deliver on our ambitious growth agenda.

During the year REA strengthened its Executive Leadership Team, welcoming Tamara Kayser as General Counsel & Company Secretary and Chris Venter as Chief Technology Officer. I would like to acknowledge my Executive Leadership Team for their invaluable support and expertise. They are true professionals.

Finally, I would like to thank our people once again for their enormous contribution while often working under challenging conditions. Our people are what makes this company truly great. I would also like to thank REA’s Board of Directors for their ongoing counsel.

REA’s current momentum, coupled with our strategic investments and exciting product roadmap, provides an excellent platform for ongoing growth, as we continue to change the way the world experiences property. We have emerged from 2021 a stronger business, and REA’s future is very exciting.

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Owen Wilson Chief Executive Officer REA Group

18 Similarweb, average site visits Jul 20 – Jun 21 vs. Jul 19 – Jun 20. 19 Internal data, Jun 21 vs. Jun 20.

Annual Report 2021 | REA Group Ltd

Year in review

Our people and culture

THE HEART OF OUR BUSINESS

Our people are at the heart of everything we do at REA. Our strategy and our purpose guide us, while our people, values and culture drive us.

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84%
employee
engagement
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A great place to work

REA prides itself on its workplace culture and in June 2021 the organisation was officially certified as a Great Place to Work. Following this, the Great Place to Work Best Workplaces List was announced in August 2021, with REA ranking fourth for companies of more than 1,000 employees. This placed the Group as the highest ranked ASX listed business within our category. Great Place to Work is known as the global authority on workplace culture and has been recognising the best places to work in Australia for the past 14 years.

The certification and recognition are particularly meaningful as they’re not only an outcome of an in-depth review of our workplace policies and practices, but also the direct result of our people’s assessment of their experience at REA.

REA is focused on retaining and attracting the brightest and best talent, and recognition such as our Great Place to Work ranking significantly supports this focus. We’re proud of our diverse and inclusive workplace and invest in programs and initiatives such as our Women in Tech program. This initiative continues to move the dial on improving the gender ratio in technologybased roles, growing from 20.4%

female representation when it was first established, to 32% as of June 2021. REA also offers generous non-gender specific primary and secondary carer parental leave benefits and ensures there is a 50:50 gender balance in candidate offers for our award-winning graduate program.

Our people are proud to work at REA, with 88% of our engagement survey participants responding favourably to this question when posed in our annual survey in October 2020. Overall employee engagement increased 6% to 84%. REA’s strategy and purpose are clearly communicated, with 92% of our people answering favourably to ‘I know how my work contributes to the goals of REA’.

REA Group Ltd | Annual Report 2021

Future of work at REA

REA has operated with flexible and agile work practices for many years, and in December 2020 the Group officially adopted a hybrid workplace model. Our team undertook an extensive research and design process to determine what REA’s future workplace would look like.

Through this we gained a rapid understanding of employee sentiment, the competitor landscape and business needs. The resultant model was designed by our people for our people. In practice, hybrid working at REA looks slightly different for everyone. Central to the model is ensuring we balance business impact, flexibility and the unique REA culture.

As we would with any REA experience, product or feature, we continue to test, learn, and adapt our hybrid workplace model. Results from a company-wide hybrid working progress survey in May 2021 showed 91% of our people enjoy hybrid work and 90% feel REA has created an effective hybrid way of working. In addition, 90% of our leaders feel their team’s performance and engagement is as good as, or better than, ever in the hybrid environment.

Investment in our leaders

Throughout FY21 the Group spent a significant amount of time investing in its leaders. Mental health training specifically for leaders was adopted to help them best support their teams. The Group revised its personal leave policy so that employees could use it for a variety of reasons including home schooling, care, mental health breaks and accessing essential services during the height of COVID lockdowns. People leaders were provided guidance on how to have quality mental health focused conversations and how to best connect employees with support resources such as REA’s employee assistance program (EAP). We also upskilled a portion of our People and Culture function with mental health first aid accreditation.

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It would have been easy to roll out a hybrid working approach that simply told our people when they needed to come into the office. Instead, we empowered our people and teams to make decisions that are right for them, while always considering the needs of the business. Our aim is to get the best of both virtual and office worlds, and our recent survey results pleasingly tell us that we are well on our way to achieving that.

Georgia Fraser Senior Human Resources Manager – Strategic Projects

We have taken a dedicated approach to supporting leaders in how to lead their teams in a hybrid workplace. REA partnered with our EAP provider to run leadership sessions on how people manage change. People leaders were also equipped with a practical toolkit to assist with the co-creation of a Ways of Working agreement with their team to help ensure balance between the team’s and the individuals’ needs in the hybrid environment.

People Leader Town Halls throughout the year offered leaders the opportunity to share challenges leading a team in a hybrid environment, and many also shared learnings and approaches on how to lead successfully. These sessions have been met with overwhelmingly positive feedback, with our people learning from their peers in the broader leadership community.

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It is amazing to work for a company that invests in the growth of its people. The leadership program I took part in this year gave me confidence and a safe space to explore and put into practice different leadership frameworks, and to make them my own. A few months later, I was delighted to be promoted and I now lead a team of product managers.

Katerina Martianova Senior Product Manager

Focus on career development

REA believes great careers are built from passion and personal commitment. Throughout FY21 we have continued to work to understand our people’s motivations and ambitions, to help identify tangible opportunities. This work not only provides an environment in which our people thrive, but it also optimises our people’s capability, helping to meet the needs of our current and future business.

A strong focus was placed on engaging in rich career conversations, which aid our understanding of what brings people joy at work, along with identifying development focus areas for each employee. In addition to career conversations, talent and succession conversations were a key focus in FY21 and were designed as a key development tool. These conversations provided leaders with the opportunity to share insights with each other about growth, learning, mindset, and impact.

Annual Report 2021 | REA Group Ltd 13

Year in review

Supporting the long-term prosperity of Australia’s property sector

PRIORITISING CUSTOMER NEEDS

Australia’s property sector proved remarkably resilient during FY21, despite the industry facing ongoing restrictions to operating conditions as a result of COVID.

Focus on shared objectives

Australia’s property sector proved remarkably resilient during FY21, despite the industry facing ongoing restrictions to operating conditions as a result of COVID. REA’s success depends on its customers’ success and the Group continued to prioritise their immediate needs, responding to changing market conditions and offering ongoing support measures throughout the year. This included reduced subscription fees, the ability to re-list and upgrade at no cost, campaign extensions, our Pay on Sale product, regular informative customer webinars and the deferral of price increases.

In Victoria, the extended lockdown in the first quarter of FY21 prevented customers from conducting face-to-face inspections or auctions for almost three months. During this time, we saw an increase in consumers accessing Digital Inspections on realestate.com.au, as well as vendors moving to Online Auctions. These features continue to receive excellent uptake and have helped reshape the way people think about property transactions.

As Victoria worked its way out of lockdown in September 2020, the Group worked alongside the property industry and the Real Estate Institute of

Victoria to successfully lobby the state government for the safe easing of real estate restrictions to align with other comparable low-risk industries. Given the relatively low risk environment, the Group’s CEO, Owen Wilson, publicly urged the state government to reinstate physical property inspections earlier than had been outlined in the recovery roadmap. Pleasingly this date was brought forward by a month, enabling the market to return to more normal conditions sooner than expected.

Recognising the benefits of

collaboration, in October 2020 REA invited customers to help shape future initiatives through the launch of a new realestate.com.au Property Panel. The online community actively participates in polls, focus groups and discussion forums, which ultimately play a role in influencing REA’s product development pipeline.

Advocating for positive change

REA strongly believes that everybody deserves a safe place to sleep every night, with our community partnerships focused on addressing the issue of homelessness. In May 2021, REA Group’s CEO took the opportunity to add his voice to this issue externally,

stating that social housing is not only good economic policy, but is the right thing to do: “The current economic downturn and subsequent historic low interest rates provide an opportunity for governments to invest heavily in social housing and really transform the lives of the most vulnerable members of our community. The benefits are far-reaching from creating construction sector jobs, providing economic stimulus and reducing homelessness.”

The Group also continued to advocate for property tax reform throughout FY21, specifically relating to stamp duty. While the data shows that the revenue generated from stamp duty is significant, it also shows how unreliable it is as a revenue stream. We know that where the number of housing transactions and house prices decrease, it is only natural that revenue from stamp duty will also fall. REA is of the view that stamp duty is a regressive and volatile tax with big fluctuations depending on movement in the market, and will continue to advocate for property tax reform in FY22 and beyond.

REA Group Ltd | Annual Report 2021

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In FY21, REIA and REA partnered strategically to better serve and strongly support real estate agents and agencies. Our partnership saw joint advocacy during COVID-19 lockdowns and progress towards national stamp duty reform. REA also recognised industry best practice through its sponsorship of the REIA National Awards for Excellence 2021 and the inaugural REIA Getting Real Strategic Policy Forum.

Anna Neelagama Real Estate Institute of Australia Chief Executive Officer

Ongoing industry collaboration

REA formed a partnership with the Real Estate Institute (REIA) of Australia to sponsor the national body’s inaugural Strategic Policy Forum and the annual REIA Awards for Excellence in June 2021. Fostering strong industry partnerships and working alongside our customers

is a key component of REA’s strategic direction and ultimate success. These events not only helped cement even stronger working relationships, but they also provided a great opportunity to recognise and celebrate the real estate industry’s successes.

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Annual Report 2021 | REA Group Ltd

Year in review

Australian highlights

STRONG RECOVERY

In Australia, REA Group operates the leading residential and commercial sites, realestate.com.au[20] and realcommercial.com.au,[21] as well as the leading website dedicated to share property, Flatmates.com.au.[22]

Residential property market bounces back

Revenue increased 13% to $870 million, driven largely by increases in the Residential, Developer and Data businesses.

After a challenging Q1 FY21, impacted by Melbourne COVID lockdowns, the Australian residential property market recovered strongly for the remainder of the year. Australian Residential revenue increased by 18%, reflecting higher national listings, improved depth and Premiere penetration, increased subscription revenues and continued growth in add-on products.

Revenue from our Commercial and Developer businesses increased 5% with Developer benefiting from a 17% increase in new project commencements, driven in part by government stimulus, an increase in project profile duration and higher subscriptions. This was partially offset by a decline in Commercial revenues due to the negative impact of COVID on listing volumes.

Collectively media, data and other revenues were broadly flat YoY, with growth in Data and Media revenues offset by a reduction in other revenues.

Financial Services operating revenue increased 9% driven by higher settlements, increased broker recruitment and improved productivity. This was more than offset by a reduction in partnership revenue as the current NAB agreement performance payments reached maturity in September 2020.

In March 2021, REA Group announced its proposal to acquire 100% of the shares in Mortgage Choice Limited, providing a compelling opportunity to establish a leading mortgage broking business with increased scale. The acquisition aligns with REA’s financial services strategy and complements our existing Smartline broker footprint, resulting in greater national broker coverage. The transaction completed on 1 July 2021. Consideration was $244 million, funded by an increase in REA’s debt facilities.

On 15 June 2021 the Group acquired a 34% interest in Simpology, further accelerating REA Group’s financial services strategy. Simpology is a leading provider of mortgage application and e-lodgement solutions for the broking and lending industries.

20 Nielsen Digital Media Ratings (Monthly Tagged), Jan 21 – Jun 21 (average), P2+, Digital (C/M), text, Real Estate/Apartments subcategory, Unique Audience.

21 Nielsen Digital Media Ratings (Monthly Tagged), Jan 21 – Jun 21 (average), P2+, Digital (C/M), text, realcommercial.com.au vs commercialrealestate.com.au, Unique Audience. 22 Similarweb, visits to flatmates.com.au vs flatmatefinders.com.au, Jul 20 – Jun 21.

REA Group Ltd | Annual Report 2021

The $15 million consideration for the transaction was funded from the Group’s existing cash reserves.

Realestate.com.au extends audience leadership

Fundamental to REA’s success is realestate.com.au having the largest and most engaged audience of property seekers. realestate.com.au is now Australia’s eighth largest online brand in terms of audience,[23] reaching over 60% of the adult population.[24] This year we extended our audience leadership

position with an average of 121.9 million visits received each month, up 35% YoY.[25] This is 3.3 times more visits than the nearest competitor.[26] Of the 12.6 million people who visit realestate.com. au each month on average,[27] 6.4 million use our site exclusively.[28]

The realestate.com.au app remains Australia’s number one property app with an average of 55 million launches each month, up 49% YoY.[29] The app is a significant driver of buyer activity, fuelling over 52% of buyer enquiries for FY21.[30]

12.6m

people visiting realestate.com.au each month on average

Reaching over

23 Nielsen Digital Media Ratings (Monthly Total), Jun 21, P2+, Digital (C/M) Text, All Categories, Unique Audience.
24 Nielsen Digital Content Ratings (Monthly Tagged), Jun 21, P18+, Digital (C/M), text, realestate.com.au, Active Reach %.
25 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 vs Jul 19 - Jun 20 (average), P2+, Digital (C/M), text, realestate.com.au, Total Sessions.
26 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 – Jun 21 (average), P2+, Digital (C/M), text, realestate.com.au vs Domain, Total Sessions.
27 Nielsen Digital Media Ratings (Monthly Tagged), Jan 21 - Jun 21 (average), P2+, Digital (C/M), text, realestate.com.au, Unique Audience.

60% of Australia’s adult population

28 Nielsen Digital Content Planning, Jan-May 21 (average), P2+, Digital C/M, text, Exclusive Reach, realestate.com.au and Domain.
29 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 vs Jul 19 - Jun 20 (average), P2+, Digital (C/M), text, realestate.com.au, App Launches.

30 Adobe Analytics, internal data, Jul 20 – Jun 21.

Annual Report 2021 | REA Group Ltd

Year in review

Australian highlights

continued

The delivery of personalised consumer experiences underpinned our audience growth, and enabled REA to provide our customers with highly qualified leads. This is illustrated by the growing number of buyer enquiries delivered to agents and agencies to help them grow their businesses. Over 2.6 million average monthly buyer enquiries were received, up 55% YoY.[31]

Realcommercial.com.au is Australia’s leading commercial property site.[21] During FY21 the site attracted 1.2 million people on average each month,[32] while average monthly visits increased by 25% YoY.[33]

Flatmates.com.au is the leading website dedicated to share property in Australia,[34] with average monthly visits of more than 2.8 million[35] and over 300,000 new members[36] welcomed during FY21.

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Highly personalised consumer experiences driving engaged members

One of our goals at REA is to convert Australia’s largest audience of property seekers into realestate.com.au members. The delivery of valuable insights and experiences, powered by our unrivalled property data, saw our membership base grow 31% YoY.[37]

Our member profiles enable REA to deliver targeted personalised experiences, providing consumers with the right information at the right time based on their activity across the site. This in turn increases consumer engagement, which also grew during the year, demonstrated by a 20% increase in members[36] who were active on our site.

The launch of our Property Owner Dashboard was an example of the new features REA brought to market in FY21 to empower consumers throughout their property journey. Launched in December 2020, this experience allows home owners to monitor their market and make confident choices when selling, renting, renovating or financing.

31 Adobe Analytics, internal data, Jul 20 – Jun 21 vs Jul 19 – Jun 20.
32 Nielsen Digital Media Ratings (Monthly Tagged), Jan 21 - Jun 21, P2+, Digital (C/M), text, realcommercial.com.au, Unique Audience.
33 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 vs Jul 19 - Jun 20 (average), P2+, Digital (C/M), text, realcommercial.com.au, Total Sessions.
34 Similarweb, visits to flatmates.com.au vs flatmatefinders.com.au, Jul 20 – Jun 21.
35 Google Analytics, internal data, visits to flatmates. com.au, Jul 20-Jun 21 (average).
36 REA internal data at Jun 2021 compared to Jun 2020.
37 REA internal data, Jul 20 – Jun 21 vs Jul 19 – Jun 20.

REA Group Ltd | Annual Report 2021

Using the unique combination of our consumer behaviour data, property supply data, content and calculators, owners can now access information personalised to their property on a tailored dashboard. Importantly, the dashboard also serves as a powerful way for buyers and sellers to connect with agents and agencies. Almost 25% of owners visiting the dashboard have become a seller, refinance or landlord prospect since launch,[38] while the volume of leads delivered has increased over 70%.[39]

The strength of our relationship with consumers is also demonstrated by the 52% YoY increase in properties being tracked by home owners,[40] while the total number of properties being tracked also grew significantly, up 62% YoY.[41]

38 REA Internal data as at Jun 30 2021. 39 REA Internal data as at Jun 30 2021. 40 REA internal data at Jun 2021 compared to Jun 2020.

Connecting customers with more buyers, sellers and renters

The pace at which the real estate industry is adopting digital solutions post COVID places REA in an excellent position to connect our customers with more buyers, sellers and renters. Our ability to provide customers with the largest and most engaged audience of property seekers has become stronger than ever.

During the year we saw 1.8 million average monthly visits to the Find Agent section of our Agency Marketplace, up 17% YoY.[42] Our existing suite of products and features such as Agent Profiles and Ratings and Reviews received excellent uptake, helping our customers stand out from the competition and generate more leads. Pleasingly, we saw a 67% YoY increase in seller lead volumes.[43]

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55m average monthly launches of the realestate.com.au app 49%

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2.6m

average monthly buyer enquiries 55%

41 REA internal data at Jun 2021 compared to Jun 2020. 42 Adobe Analytics, internal data, Jul 20 – Jun 21 vs Jul 19 – Jun 20. 43 REA internal data for FY21 compared to FY20.

Annual Report 2021 | REA Group Ltd

Year in review

Australian highlights

continued

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Our suite of digital Agency Services supports our customers to grow their businesses and win their next listing. REA Group acquired a 22.33% stake in Realtair Pty Limited (“Realtair”) during the year. Realtair is a proptech platform that provides an end-to-end real estate sales solution. This allows agents to pitch, sign, automate and streamline the steps from property appraisal to settlement through mobile, easy to use technology.

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----- Start of picture text -----

67%
increase in seller
lead volumes
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REA launched our new Connect subscription in April 2021, partnering with Realtair. Connect provides our customers with products across every stage of the prospecting journey to help attract, nurture and convert seller leads. This includes providing customers with access to our unrivalled demand and property data via our comparative market analysis tool. While still early days, there have been over 10,000 pitches to vendors using Connect since launch and customer feedback has been overwhelmingly positive.

When it comes to REA’s advertising solutions, our FY21 results reflect the superior value being delivered to our customers and their vendors. Premiere continued to outperform with record penetration, and add-on products experienced strong growth – uptake of Audience Maximiser campaigns increased 126% YoY.[44]

REA announced a strategic partnership with CampaignAgent in February 2021, acquiring a 27% interest in the company. CampaignAgent is the owner of VPAPay, the market leading buy now pay later solution for vendor paid advertising. Our partnership allows customers to provide prospective vendors with greater choice and flexibility in payment options for their advertising campaigns.

The ability for agents to effectively track and monitor their campaign performance was enhanced during the year with the launch of REA’s new agency dashboard, unveiled in April. Seamlessly accessible from our Ignite self-service platform, agency principals can now view data including how many seller leads their agency is receiving, the number of new sale and rental listings their agency has listed, and where their agency ranks based on their market share of new listings.

Providing access to unique data and marketplace intelligence

REA’s Hometrack data business was rebranded to PropTrack in FY21, representing the Group in the market as a trusted leader in property data and automated valuations. PropTrack delivered record growth in FY21, successfully signing several multi-year customer contracts and delivering property data insights and valuations services to Australia’s largest financial institutions.

Our REA Insights brand continued to gain strong momentum, with our team of in-house economists providing unparalleled data-driven insight into the Australian property market. Several new reports were launched including the REA Insights Listings Report. This monthly report provides a comprehensive overview on new and active listings for properties for sale on realestate.com.au, providing the most accurate view of new listing data in the market.

Building next generation marketplaces

A key focus of REA’s growth strategy is creating next generation marketplaces, and financial services is integral to this. Our financial services broker business performed strongly with broker recruitment increasing 26% YoY,[45] while record submissions and settlements were achieved, up 31% YoY[46 ] and 23% YoY[47] respectively.

44 REA internal data for FY21 compared to FY20.

45 REA internal data for FY21 compared to FY20. Does not include Mortgage Choice.

46 REA internal data for FY21 compared to FY20. Does not include Mortgage Choice.

47 REA internal data for FY21 compared to FY20. Does not include Mortgage Choice.

20 REA Group Ltd | Annual Report 2021

New features such as our Loan Tracker and Comparison feature were launched to provide a highly personalised home loan experience. These features are receiving positive consumer engagement and driving more qualified, higher value mortgage leads.

Building on this success, the acquisition of Mortgage Choice was an exciting milestone that accelerated our financial services strategy. This transaction strengthens REA’s ability to service 100% of the market, with the Mortgage Choice broker network complementing the existing broker footprint of our Smartline business.

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REA also acquired a 34.4% strategic investment in Simpology in June 2021, an Australian company focused on increasing the efficiency of the mortgage application process. Simpology’s products enable brokers to seamlessly lodge home-loan applications directly into lenders’ back-end systems. The strategic alliance with Simpology will enable REA to provide consumers with greater choice and simplicity when navigating their home loan options. It will also deliver productivity improvements to REA’s broker network through higher quality loan submissions, resulting in less re-work, faster loan approval times and streamlined business operations.

REA’s broker business, combined with the Group’s digital expertise, high intent property seeker and owner audience, and our unique data and insights, provide a formidable combination that will support the delivery of significant longterm growth opportunities.

Rental marketplace

Expanding our rent offering is also core to REA creating next generation marketplaces. realestate.com.au is the clear number one place for rent with over 21.8 million average monthly visits to the rent section, up 15% YoY.[48] Building on our rent leadership position, our vision is to seamlessly connect property managers, tenants and property owners through innovative products that deliver an enhanced consumer experience.

In August 2020 we launched our new self-managed landlord feature to tap into the significant number of investors who privately manage their rental properties. This new feature allows selfmanaged landlords to either connect with an agency via our site or list their property directly on realestate. com.au. Our objective is to provide renters with access to the most comprehensive view of rental properties.

At the same time, we want to drive more property management enquiries to our customers. While still early days, customer and consumer sentiment has been positive towards this new feature.

As part of our rent journey, REA also launched our new centralised rental application experience on our selfservice platform Ignite, delivering a faster, more efficient process for consumers and agencies. Consumers now provide and have their application information verified once, rather than repeating the process each time they apply through a different agency. This new rental application workflow is fully integrated and consumers can now search, inspect and apply directly through realestate.com.au.

We continue to see a significant acceleration in the volume of digital rental applications, up 48% YoY.[49] At the same time, the need for consumers to drive certainty and trust in their rental applications contributed to a 50% YoY[50 ] increase in tenant verification purchases.

48 Adobe Analytics, average monthly visits to realestate.com.au/rent (Jul 20 - Jun 21).

49 REA internal data for FY21 compared to FY20. 50 REA internal data for FY21 compared to FY20.

Annual Report 2021 | REA Group Ltd

Year in review

Global footprint

KEY MARKETS

REA’s footprint spans three continents providing exposure to some of the fastest growing global markets experiencing rapid digitisation.

Asia financial performance

REA Group continued to leverage its unique capabilities across its Asian businesses comprising iProperty.com.my in Malaysia, squarefoot.com.hk and SmartExpo.com in Hong Kong, ThinkOfLiving.com in Thailand and myfun.com in China. Asia revenue[51] declined by 16% in FY21 after being negatively impacted by significant extended COVID lockdowns, cancellation of events across all markets and a one-off COVID related reduction in syndicated MyFun listings in the first half of FY21. EBITDA before associates and joint ventures[52 ] was $10 million, with revenue declines partially offset by continued cost management across the region.

Creating the most compelling proptech group in Southeast Asia

On 31 May 2021, REA entered into a binding agreement to transfer ownership of its Malaysia and Thailand entities to PropertyGuru, in exchange for an initial 18% equity interest in PropertyGuru. This strategic shareholding will provide REA with exposure in a larger, more diversified Southeast Asian company. The transaction completed on 3 August 2021, following REA’s divestment of its 27% interest in 99 Group on 30 July 2021.

Southeast Asia is one of the fastest growing regions globally, predicted to become the fourth largest economy by 2030 in terms of combined GDP. COVID has brought a permanent and massive spike in digital adoption across the region’s real estate sector, presenting significant future opportunities. The transaction creates new opportunities and access to a deeper pool of expertise, technology and investment to provide enhanced digital solutions to meet the needs of home seekers, property agents and developers. The enlarged PropertyGuru business is uniquely positioned to accelerate the next wave of proptech innovation across Southeast Asia.

REA takes controlling position in Elara

On 17 December 2020, REA moved to a controlling position in Elara, holding a 60.7% shareholding as at 30 June 2021[53] with News Corp holding 39.0%. Elara delivered local currency revenue growth of 23% in FY21, despite the Indian market being heavily impacted by COVID. Digital adoption of real estate has accelerated and new consumer segments are migrating online

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51 Prior year number includes contribution from Singapore and Indonesia.
52 Financial results from core operations are defined as reported results adjusted for significant non-recurring items such as restructure costs, gain/loss on acquisitions and disposals, related transaction costs, integration costs and historic tax provision (historic indirect tax provision reflects potential retrospective changes to interpretation of tax law). In the prior year, this included items such as restructure costs, revaluation of contingent consideration, gain/loss on acquisitions, disposals and divestments, and impairment charges.
53 The Group held a 59.65% shareholding on acquisition and subsequently increased its holding to 60.65% as at 30 Jun 21. Shareholding increased to 65.49% in Jul 21.

REA Group Ltd | Annual Report 2021

at a much faster rate. Elara continued to invest in the creation of new innovations, enhancing the consumer experience and delivering excellent customer value.

Housing Edge was launched on Housing.com as part of the focus to create a seamless consumer property journey. Housing Edge digitises multiple services for home owners and tenants including rent agreements, tenant verification and home loan options, all designed to make the process of moving home as simple as possible. In addition, six new native language search experiences were launched on Housing.com, enabling the ability to attract new users and reach more of India’s population.

Strong Move, Inc. performance

In North America REA has a 20% investment in Move, Inc. which delivered a strong financial result and continued growth in realtor.com®’s audience. Average monthly unique users of realtor.com®’s web and mobile sites for Q4 grew 32% YoY to 106 million.[54]

Move’s reported revenue increased by 36% in FY21 to US$641m, driven by continued strength in the referral model and traditional lead generation product. The traditional lead generation product continued to see a strong increase in demand from agents, driving improvements in sell-through, yield and retention, while the referral model benefited from an increase in average home values and transaction volumes.[55]

54 News Corp’s Earnings Release stated in US Dollars (5 August 2021) for the twelve-month period ended 30 June 2021: Average monthly unique users for Q4 FY 2021 and compared to the same period Q4 FY 2020.

56 News Corp’s Form 10-K stated in US Dollars for the 12-month period ended 30 June 2021.

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Annual Report 2021 | REA Group Ltd

Sustainability

Supporting a sustainable future

BECAUSE WE CARE

At REA, our commitment to responsible and sustainable business practices is fundamental to all that we do.

The Group’s sustainability program reflects the pillars of Environment, Social and Governance across our operations and during the year we made strong progress to our targets. Our dedicated Sustainability Report, to be published on rea-group.com in October 2021, will contain a detailed overview of the Group’s Environmental, Social and Governance (ESG) programs, policies and initiatives, as well as our focus for FY22.

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I’m incredibly proud to work for an organisation that has committed to, and achieved, Climate Active carbon neutral certification. REA supports its people to live more sustainably through workshops, events and even access to electric vehicle charging. It’s inspiring and gives me hope for a sustainable future.

Chloe Arntzen Tech Business Lead

Environment

The Group published its first Climate Change Policy in October 2020, outlining a commitment to address climate change with the inclusion of sciencebased aligned targets for carbon emission reduction by 2030.

The culmination of long-term efforts to measure the company’s carbon footprint, and reduce and offset emissions, resulted in the company receiving carbon neutral certification from the Australian Government’s Climate Active program in March 2021.

In addition, REA improved its MSCI ESG rating to an A in FY21 from BBB in FY20. MSCI ESG Ratings are designed to measure a company’s resilience to longterm, industry material ESG risks.

Social

The Group’s community investment and community programs are focused on the issue of homelessness, based on the firm belief that everyone deserves a safe place to sleep, every night. We have ongoing partnerships with community organisations that address the issue of homelessness, and this year we extended our relationships with Launch Housing, The Big Issue and Orange Sky Australia through to 30 June 2022.

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$145,218

in combined employee and company-matched donations through Matched Payroll Giving program

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$226,500

Advantage Community Grants provided to customers to support local causes

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$43,727

distributed to community organisations through employee community grants

REA Group Ltd | Annual Report 2021

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REA’s Employee Community Grants program doesn’t just help provide tangible benefits to community organisations that matter to me, I also feel more supported as an individual knowing the community that I belong to receives support from organisations like REA.

Cameron Sutherland Data Analyst

$100,000

donated to UNICEF India to support the COVID-19 crisis

Our Because We Care program supports and empowers employees to give back to community causes close to their hearts. The program offers matched payroll giving, volunteer leave, employee community grants, a community café in the Group’s Melbourne office and a specific community-based hack day initiative.

In response to the devasting impact of COVID in India, REA offered additional support to its Elara employees in FY21 including setting up a makeshift clinic and support centre for employees and their families, and the Group donated to UNICEF India’s COVID Crisis appeal.

Governance

Best practice governance is the responsibility of every employee within REA. The Group recognises that good governance principles of being ethical, transparent, and accountable are essential, and best support the interests of our shareholders, employees, customers, consumers and the broader community. The Governance section within the FY21 Sustainability Report details our approach to governance, including Ethics and integrity, Risk management, Cyber security, Innovation, Responsible marketing, Sustainable procurement, and Human rights and labour standards.

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Achieved Climate Active Carbon Neutral certification

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Recognised as Top Fundraising Workplace in Orange Sky’s national fundraising campaign, ‘The Sudsy Challenge’ with over $16,000 raised

Annual Report 2021 | REA Group Ltd 25

Our Leaders

Executive Leadership Team

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Owen Wilson Chief Executive Officer (CEO)

Owen Wilson is responsible for driving the company’s growth, operations and global investments.

With more than 30 years’ experience working across the information technology, recruitment and banking industries, Owen is a strategic leader who is passionate about building high performing teams and creating personalised experiences to help change the way the world experiences property.

Prior to being appointed CEO, Owen was the company’s Chief Financial Officer for four years and looked after all aspects of the Group’s finance portfolio including strategy, M&A and operations, as well as REA’s Financial Services businesses. Owen joined REA Group from Chandler MacLeod Group Ltd where he was Chief Financial Officer and Company Secretary. He has previously held positions with ANZ and KPMG across Australia, Asia and the UK. During his 15 years at ANZ, his roles included Chief Operating Officer of ANZ’s Institutional and Investment Bank and Managing Director Retail Banking and International Partnerships Asia.

Owen holds a Bachelor of Commerce in Accounting and Computer Science from Deakin University.

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Janelle Hopkins Chief Financial Officer and CEO, Financial Services

Janelle Hopkins is responsible for all aspects of the Group’s finance portfolio and global investments.

Her portfolio includes risk and assurance, tax, and investor reporting, and she also oversees the Financial Services business, including Smartline and Mortgage Choice.

Janelle is an accomplished finance executive with more than 25 years’ experience. She joined REA Group from Australia Post, where she was the Group Chief Financial Officer. Prior to Australia Post, Janelle held a number of senior finance roles at National Australia Bank including financial controllership of the Australian region, MLC and strategic transformation roles within the Wholesale division. She started her career with Professional Services firm Deloitte Touche Tohmatsu, where she developed her passion for leadership, business transformation and growth.

Janelle is a graduate of the Australian Institute of Company Directors. She holds a Master of Business Administration from the Australian Graduate School of Management, and a Bachelor of Commerce from Melbourne University.

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Henry Ruiz

Chief Strategy and Customer Product Officer and CEO, Asia

Henry Ruiz is responsible for REA Group’s strategy, as well as supporting the growth and success of REA’s customers spanning Residential, Developer, Commercial and Media segments.

He has played a central role in driving the digital strategy for REA Group over the last 12 years, joining the company in 2009 as Chief Product Officer, before moving into the role of Chief Digital Officer in 2014 and being appointed CEO for the Asia region in 2017. More recently, in 2019 he has moved into the role of Chief Strategy and Customer Product Officer. Henry is responsible for driving REA Group’s longterm growth strategy across Australia & Asia; as well as the end-to-end delivery of world-class products and services, working closely with the Sales and Marketing teams, to ensure they best meet the needs of each customer group.

Henry has more than 20 years of digital industry experience gained in leadership roles across the globe at companies including Local Matters in the USA and Asia Pacific, World Directories in Europe across five countries and Sensis in Australia.

Henry holds a Master of Applied Psychology from the Royal Melbourne Institute of Technology; a Bachelor of Behavioural Science (Honours) from Latrobe University, a certificate in Strategy, Disruption and Innovation from Harvard University. He is a member of the Australian Institute of Company Directors.

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Val Brown

Chief Consumer Product Officer

Val Brown is responsible for creating compelling product offerings to meet the needs of consumers in a continuously evolving digital landscape.

She leads the Consumer Experience team of almost 200 people, bringing together the functions of product management, design and engineering to create intuitive and personalised experiences that help individuals make great property decisions.

Val has worked with REA Group for more than 12 years. During this time, she has held several leadership roles across consumer and customer product, product strategy, mobile and personalisation.

Prior to REA Group, Val’s experience spanned across a number of industries including automotive, FMCG and classifieds, operating in both domestic and global markets.

Val holds a Bachelor of Business Marketing from RMIT. She is a graduate member of the Australian Institute of Company Directors.

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Melina Cruickshank Chief Audience and Marketing Officer and CEO, PropTrack

Melina Cruickshank is responsible for driving the brand, marketing and content strategy for the Group’s Australian and global brands.

She leads a high performing team of professionals to bring REA’s story to life and communicate our purpose in compelling ways to consumers and customers worldwide. With a deep passion for property data and how it can help solve customer needs, Melina also leads the PropTrack product, sales, and engineering teams in Australia.

With more than 20 years’ experience in online product, marketing and publishing roles in Australia and the UK, Melina’s background covers e-commerce, advertising, online classifieds and transactional customer channels. Her work has primarily centred on building and commercialising large online consumer audiences.

Melina joined REA Group from Domain, where she was Chief Editorial and Marketing Officer responsible for the national consumer and customer marketing channels across Domain, Commercial Real Estate and Allhomes.

Melina holds a BA (Hons) from Monash University and Grad Diploma from Birkbeck University of London. She is currently a board director of IAB Australia and is also a graduate member of the Australian Institute of Company Directors.

REA Group Ltd | Annual Report 2021

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Tamara Kayser General Counsel and Company Secretary

Tamara Kayser is responsible for the company’s global legal and secretariat function.

Tamara is a senior corporate lawyer with significant experience across a wide range of areas including mergers & acquisitions, corporate governance and regulatory affairs. Prior to joining REA, she held the position of Group General Counsel at Incitec Pivot Limited. Prior to this, she held senior roles in King & Wood Mallesons and Linklaters in Australia and London.

She holds a Bachelor of Laws with Honours and a Bachelor of Commerce. She was included in the Legal 500 GC Powerlist Australia and New Zealand, which recognises Corporate Counsels who are driving the legal business forward.

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Mary Lemonis Chief People Officer

Mary Lemonis is responsible for the Group’s people strategy across its global network.

She leads teams across business partnering, talent acquisition, remuneration, organisation development, HR operations, employee communication, community partnerships and sustainability.

With more than 20 years’ experience in HR, Mary is passionate about realising enterprise value and growth by creating an exceptional employee experience. Mary joined REA from Campbell Arnott’s where she was the Vice President – Human Resources for Asia Pacific for eight years and worked in a variety of senior HR roles with Campbell Soup Company both in Australia and the US. Mary holds a Bachelor of Manufacturing Management from the University of Technology Sydney and is a founding member of the International Women’s Forum Australia.

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Kul Singh Chief Customer Officer

Kul Singh is responsible for all aspects of sales across REA Group Australia, including sales team supporting Residential, Developers, Commercial and Media customer segments.

In this role, Kul’s focus is on ensuring the delivery of innovative products and solutions that align with customers’ business objectives and deliver long term value.

Kul joined REA Group in 2015, assuming a number of leadership roles across Marketing, International and Customer portfolios during this time. Prior to this he held senior sales, marketing and strategy positions at GE Capital and GlaxoSmithKline.

Kul holds a Masters in Public Health from Melbourne University, a Bachelor of Medical Science and Marketing from La Trobe University and is a graduate member of the Australian Institute of Company Directors.

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Chris Venter Chief Technology Officer

Chris Venter is responsible for leading REA Group’s technology strategy and providing the platforms underpinning REA’s products, services and operations.

Chris is a passionate technologist who is focused on building a talented, engaged and motivated engineering organisation. He loves creating solutions that make it easy for people to experience the world, whilst maintaining the philosophy to start with the customer and work backwards to find the right technology to enable the best customer experience.

Chris has over 27 years’ experience within the IT industry ranging from professional services at Accenture and Deloitte to start-ups and large software companies such as Oracle. Prior to joining REA, he held various senior positions at ANZ leading their agile transformation and Digital portfolios.

Chris holds a Bachelor of Information Technology from The University of Sydney and provides strategic guidance to the Computer Information Systems department within Melbourne School of Engineering at The University of Melbourne.

Annual Report 2021 | REA Group Ltd

Our Leaders

Board of Directors

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Hamish McLennan Non-executive Director

Appointed 21 February 2012 and Chairman since 10 April 2012. Age 55.

Independent:

No – Nominee Director of News Corp Australia.

Skills and experience:

Mr McLennan is an experienced media and marketing industry executive. He was Executive Chairman and Chief Executive Officer of Ten Network Holdings until July 2015 and, before that, Executive Vice President, Office of the Chairman, at News Corp. Previously, Mr McLennan was Global Chairman and CEO of Young & Rubicam, part of WPP, one of the world’s largest communications services group.

Directorships of listed entities, current and recent (last three years):

Chairman of HT&E Limited (since October 2018)
Vice Chairman of Magellan Financial Group (joined March 2016, Vice Chairman since June 2019)
Director of Scientific Games Corp (since November 2020)
– Director of iProperty Group Pty Ltd (from February 2016 to February 2019) (delisted).

Board Committee membership:

Chairman of the Board
– Member of the Human Resources Committee.

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Owen Wilson BCom, ACA, GAICD Executive Director and Chief Executive Officer

Appointed 7 January 2019. Chief Financial Officer from 3 September 2014 until 6 January 2019. Age 57.

Skills and experience:

As CEO of REA Group, Mr Wilson is responsible for driving the Company’s growth, operations and global investments. With more than 30 years’ experience working across the information technology, recruitment and banking industries, Mr Wilson is a strategic leader who is passionate about building high performing teams and creating personalised experiences to help change the way the world experiences property. Prior to being appointed CEO, Mr Wilson was REA Group’s Chief Financial Officer for four years and looked after all aspects of the Group’s finance portfolio including strategy, M&A and operations, as well as REA Group’s Financial Services businesses.

Previously, Mr Wilson was Chief Financial Officer and Company Secretary of Chandler MacLeod Group. He has previously held positions with ANZ and KPMG across Australia, Asia and the UK. During his 15 years at ANZ, his roles included Chief Operating Officer of ANZ’s Institutional and Investment Bank and Managing Director Retail Banking and International Partnerships Asia.

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Kathleen Conlon BA (ECON)(DIST), MBA, FAICD Independent non-executive Director

Appointed 27 June 2007. Age 57.

Skills and experience:

Ms Conlon brings over 20 years of professional management consulting experience. She is a recognised thought leader in the fields of strategy and business improvement and was a Partner and Director of the Boston Consulting Group for seven years.

Directorships of listed entities, current and recent (last three years):

Chairman of Lynas Corporation Limited (joined November 2011, Chairman since September 2020)
Director of Aristocrat Leisure Limited (since February 2014)
– Director of BlueScope Steel Limited (since February 2020)

Board Committee membership:

Member of the Audit, Risk & Compliance Committee
– Member of the Human Resources Committee.

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Nick Dowling BAcc, GradDipAppFin Independent non-executive Director

Appointed 9 May 2018. Age 45.

Skills and experience:

Mr Dowling is Chief Executive Officer of the Jellis Craig Group, a leading real estate business based in Melbourne, Australia. He assumed the role in June 2011 and is responsible for overseeing the growth, risk management, and long-term strategic direction of the group. Prior to this, Mr Dowling was the Head of Real Estate, Business Banking at Macquarie Bank Limited. He commenced his career with National Australia Bank across various divisions of the bank.

Directorships of listed entities, current and recent (last three years):

n/a

Board Committee membership:

Chair of the Human Resources Committee.

Directorships of listed entities, current and recent (last three years):

n/a

Board Committee membership:

– Mr Wilson attends all Audit, Risk & Compliance Committee and Human Resources Committee meetings at the invitation of the Board/ Committees.

REA Group Ltd | Annual Report 2021

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Tracey Fellows BEc Non-executive Director

Appointed Executive Director and Chief Executive Officer 20 August 2014 until 25 January 2019, before becoming a non-executive Director on 26 January 2019. Age 56.

Independent:

No – Nominee Director of News Corp Australia and former Chief Executive Officer.

Skills and experience:

Ms Fellows is a digital media executive with extensive experience in real estate, technology and communications across Australian and international markets. Ms Fellows is President of Global Digital Real Estate for News Corp, responsible for driving the strategy and growth of its digital real estate interests. Ms Fellows was previously the Chief Executive Officer of REA Group where she drove the rapid expansion of the digital real estate business in Australia and Asia, as well as leading the company’s investments in India and North America. She has also held the positions of Executive General Manager of Communication Management Services at Australia Post, President, Asia Pacific at Microsoft and Chief Executive Officer of Microsoft Australia.

Directorships of listed entities, current and recent (last three years):

Director of Hemnet Group AB (since November 2020)

Board Committee membership:

Ms Fellows attends all Human Resources Committee meetings at the invitation of the Board/Committee.

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Richard J Freudenstein BEc, LLB (Hons) Non-executive Director

Appointed 21 November 2006 (Chairman from 2007 to 2012). Age 56.

Independent: No – Nominee Director of News Corp Australia.

Skills and experience:

Mr Freudenstein is a former media executive with extensive experience in Australian and international markets. He was Chief Executive Officer of Foxtel from 2011 to 2016, and previously CEO of News Digital Media (the digital division of News Limited) and The Australian newspaper. Mr Freudenstein was previously the Chief Operating Officer of British Sky Broadcasting.

Directorships of listed entities, current and recent (last three years):

Director of Coles Group Limited (since November 2018)
Director Astro Malaysia Holdings Berhad (from September 2016 to August 2019)

Board Committee membership:

Member of the Audit, Risk & Compliance Committee
– Member of the Human Resources Committee.

Alternate Director:

Marygrace DeGrazio (age 45) was appointed an Alternate Director for Richard J Freudenstein on 5 May 2020. Ms DeGrazio has not attended any meetings or exercised any powers in that capacity since that time. Ms DeGrazio is currently the Senior Vice President, Global Financial Operations at News Corp responsible for global accounting and financial reporting. Prior to joining News Corp, she spent 15 years in the audit practice of PricewaterhouseCoopers servicing entertainment and media clients. Ms DeGrazio holds a Masters of Business Administration and is a Certified Public Accountant.

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Michael Miller B.A.Sc, Communication and Media Non-executive Director

Appointed 12 November 2015. Age 52.

Independent:

No – Nominee Director of News Corp Australia.

Skills and experience:

Mr Miller was appointed Executive Chairman Australasia of News Corp Australia in November 2015. He has over 25 years’ experience working in senior executive roles in the media industry, most recently as the CEO of APN News and Media (now HT&E). Mr Miller was previously the Regional Director for News Limited in New South Wales, the Managing Director of Advertiser News Media in South Australia, and News Limited’s Group Marketing Director.

Directorships of listed entities, current and recent (last three years): n/a

Board Committee membership: n/a

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Jennifer Lambert BBus, MEc, CA, FAICD Independent non-executive Director

Appointed 1 December 2020. Age 54.

Skills and experience:

Ms Lambert has extensive business and leadership experience at the senior executive and board level with more than 25 years of financial management and accounting experience, including over 15 years specialising in the property industry. Ms Lambert was CFO at Valad then 151 Property for 13 years, and prior to this was a director at PwC specialising in audit, capital raisings and acquisitions and disposals.

Directorships of listed entities, current and recent (last three years):

Director of BlueScope Steel Limited (since September 2017)
– Director of NEXTDC Limited (since October 2019)

Board Committee membership:

Chair of the Audit, Risk & Compliance Committee
– Member of the Human Resources Committee

Annual Report 2021 | REA Group Ltd 29

Directors’ Report

The Directors present their report together with the Financial Statements of the consolidated entity (“the Group” or “REA”), being REA Group Ltd (the “Company”) and its controlled entities, for the year ended 30 June 2021 and the Independent Auditor’s Report thereon.

Meetings of directors

The number of Board and Committee meetings held during the year and the number of meetings attended by each Director are disclosed in the following table:

Director	Board Meetings1 Audit, Risk & Compliance Committee2 Human Resources Committee2
	A B A B A B
Hamish McLennan Owen Wilson Kathleen Conlon Nick Dowling Tracey Fellows Richard J Freudenstein Michael Miller Jennifer Lambert (appointed 1 December 2020) Roger Amos (retired 17 November 2020)	25 25 – 7 9 9 25 25 – 7 – 9 25 23 7 7 9 9 25 24 – 3 9 9 25 25 – 2 – 9 25 22 7 6 9 9 25 25 – – – 1* 18 18 3 3 5 5 6 6 4 4 4 4

Column A: number of meetings held while a member. Column B: number of meetings attended.

From time to time the Board also establishes ad hoc committees to support the Board in carrying out its responsibilities. During the 2021 financial year, the Board established several subcommittees to oversee various matters, including M&A proposals. Membership of these subcommittees varied. A total of 20 subcommittee meetings were held during the year.
Committee meetings are open to all Directors to attend. Where a Director has attended a meeting of a Committee of which he or she was not a member, this is indicated by *.

Principal activities

REA provides property and property-related services on websites and mobile apps across Australia and Asia.

The purpose of the Group is to ‘change the way the world experiences property’. It fulfils this purpose by:

Providing digital tools, information and data for people interested in property. REA refers to those who use these services as ‘consumers’
Helping real estate agents, developers, property-related businesses and advertisers promote their services. REA refers to those who use these services as ‘customers’
Helping consumers finance their property needs through a multi-channel digital and broker proposition.

REA’s growth strategy is centred around four core objectives:

Providing our customers with access to the largest and most engaged audience of property seekers
Delivering unparalleled customer value
Providing the richest content, data and insights to empower our customers and consumers throughout their property journey
Creating the next generation of property and property-related marketplaces.

Further details are set out in the business strategies and future developments section of this Directors’ Report.

30 REA Group Ltd | Annual Report 2021

Operating and financial review

Reconciliation of results from core operations

A summary of financial results from core operations for the year ended 30 June 2021 is set out below.

For the purposes of this report, core operations are defined as the reported results set out in the financial statements adjusted for significant non-recurring items such as gain/loss on acquisitions and disposals, related transaction costs, integration costs and historic tax provision (historic indirect tax provision reflects potential retrospective changes to interpretation of tax law). In the prior year, this included items such as restructure costs, revaluation of contingent consideration, gain/loss on acquisitions, disposals and divestments, and impairment charges.

A reconciliation of results from core operations and non-IFRS (International Financial Reporting Standards) measures compared with the reported results in the financial statements on page 62 is set out below. The following non-IFRS measures have not been audited but have been extracted from the audited financial statements.

	2021	2020
Core and reported results	$’000	$’000	Growth
Reported operating income EBITDA from core operations (excluding share of gains and losses of associates and joint ventures)* Share of gains/(losses) of associates and joint ventures	927,811 555,620 12,618	820,269 492,073 (15,411)	13% 13% >100%
Gain on associate disposals and transaction costs	(3,480)	(1,059)	>(100%)
EBITDA from core operations*	564,758	475,603	19%
Restructure costs	(926)	(8,159)	89%
Net gain/(loss) on acquisitions and disposals and transaction costs	(1,023)	(1,000)	2%
Integration costs Impairment charges Revaluation of contingent consideration Historic tax provision Reported EBITDA*	(3,923) – – (3,245) 555,641	– (148,569) 1 – 317,876	n/a n/a n/a n/a 75%
Net profit from core operations	318,024	268,865	18%
Restructure costs, net of tax	(648)	(5,711)	89%
Net gain/(loss) on acquisitions and disposals and transaction costs, net of tax	1,665	(2,001)	>100%
Integration costs, net of tax Impairment charges Unwind, revaluation and finance costs of contingent consideration Historic tax provision, net of tax Reported net profit	(3,786) – – (2,272) 312,983	– (148,569) 1 – 112,585	n/a n/a n/a n/a >100%

The Directors believe the additional information to IFRS measures included in the report is relevant and useful in measuring the financial performance of the Group.

Group results from core operations

Group operating income from core operations increased 13% to $927.8 million. This includes the consolidation of the Elara business from 1 January 2021. Excluding the impact of acquisitions, revenue increased by 11% for the year. The Group delivered an exceptional result, successfully navigating the pandemic while also accelerating its growth strategy through pivotal investments.

In Australia, the residential property market recovered strongly after a challenging first quarter, impacted by COVID-19 lockdowns in Melbourne. Positive buying conditions resulting from fiscal and monetary policy settings have helped fuel housing demand with national residential listings increasing 15%, Melbourne listings up 11% and Sydney listings up 25%. The increase in listings, combined with improved depth and Premiere penetration, increased subscription revenues and continued growth in add-on products resulted in an increase in Australian residential revenue of 18%.

Annual Report 2021 | REA Group Ltd 31

Directors’ Report

continued

Operating and financial review (continued)

The Group moved to a controlling position in Elara on 17 December 2020, with consolidated results in the second half contributing $17.3 million of revenue, and an $18.0 million EBITDA loss.

The Group’s EBITDA from core operations increased 19% to $564.8 million and net profit from core operations increased 18% to $318.0 million. Strong cost management across the year resulted in core operating cost growth (excluding acquisitions) being contained to 3%. Cost growth was driven primarily by increased headcount and volume-related costs and incentives linked to stronger revenue growth, partly offset by lower costs in Asia.

Australia remained the primary revenue driver for the business. The Group’s result reflects an ongoing focus on continued innovation and the release of new products and features to deliver excellent customer value and highly personalised consumer experiences.

realestate.com.au continued to accelerate audience metrics, reaching new all-time highs during the year. Average monthly visits to realestate.com.au topped 121.9 million[1] , outperforming the closest competitor by 3.3 times on average[2] .

Strong operating cashflows in the year were partly reduced by higher income tax payments following temporary deferral of FY20 instalments as a result of COVID-19. The Group continued to invest through innovation and acquisitions as well as continuing to provide shareholder returns in the form of dividends, resulting in a cash balance of $168.9 million at 30 June 2021. The Group had net current assets of $335.4 million as at 30 June 2021. The Group generated positive operating cashflows and traded profitably for the period. The Directors expect this to continue for the foreseeable future.

In June 2021, the Group refinanced the syndicated debt facility and funded the Mortgage Choice acquisition through a bridge facility with NAB for $520 million. As at 30 June 2021, the total debt drawn on the NAB bridge facility was $414 million. The bridge facility matures in July 2022, however the Group is expected to replace this with a new syndicated facility in Q1 FY22. Refer to Note 9 for further details.

Dividends

Dividends paid or determined to be paid by the Company during, and since, the end of the financial year are set out in Note 12 to the Financial Statements and below:

	Final	Interim	Final
	2021	2021	2020
Per share (cents)	72.0	59.0	55.0
Total amount ($’000)	95,124	77,949	72,443
Franked*	100%	100%	100%
Payment date	16 Sept 2021	23 Mar 2021 17 Sept 2020

All dividends are fully franked based on tax paid at 30%.

1 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 (average), P2+, Digital (C/M), text, realestate.com.au, Total Sessions. 2 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 (average), P2+, Digital (C/M), text, realestate.com.au vs Domain, Total Sessions.

REA Group Ltd | Annual Report 2021

Performance by region

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----- Start of picture text -----

North
Australia Asia India America Corporate Total
Property
& Online Financial
Advertising Services
2021 $’000 $’000 $’000 $’000 $’000 $’000 $’000
Segment operating
income [1]
Total segment operating
income [1] 848,025 23,974 41,037 17,335 – – 930,371
Inter-segment operating
income [1] (1,716) – (844) – – – (2,560)
– –
Operating income [1] 846,309 23,974 40,193 17,335 927,811
Results
Segment EBITDA
from core operations
(excluding share of gains
and losses of associates
–
and joint ventures) 580,010 6,417 10,099 (18,048) (22,858) 555,620
Share of gains/ (losses)
of associates and joint
ventures (1,422) – (2,869) (2,446) 15,875 3,480 12,618
Gain on acquisitions and
disposals [3] – – – – – (3,480) (3,480)
Segment EBITDA from
core operations 578,588 6,417 7,230 (20,494) 15,875 (22,858) 564,758
Restructure costs – – – – – (926) (926)
Net gain/(loss) on
acquisitions and
disposals and transaction
costs – – – – – (1,023) (1,023)
– – – – –
Integration costs (3,923) (3,923)
– – – – –
Historic tax provision [2] (3,245) (3,245)
EBITDA 578,588 6,417 7,230 (20,494) 15,875 (31,975) 555,641
Depreciation and
amortisation (82,612)
EBIT 473,029
Net finance expense (4,669)
Profit before income tax 468,360
----- End of picture text -----

1 This represents revenue less commissions for financial services.

2 Historic indirect tax provision reflects potential retrospective changes to interpretation of tax law.

3 Gain relating to Move, Inc. sale of Top Producer.

Annual Report 2021 | REA Group Ltd 33

Directors’ Report

continued

Performance by region (continued)

2020 Restated2	Australia Asia India North America Corporate Total
	Property & Online Advertising $’000 Financial Services $’000 $’000 $’000 $’000 $’000 $’000
Segment operating income1 Total segment operating income1 Inter-segment operating income1	747,467 25,707 48,795 – – – 821,969 (767) – (933) – – – (1,700)
Operating income1	746,700 25,707 47,862 – – – 820,269
Results Segment EBITDA from core operations (excluding share of losses of associates and joint ventures) 495,545 10,046 8,880 – – (22,398) 492,073 Share of gains/ (losses) of associates and joint ventures (154) (182) (1,418) (7,493) (7,223) 1,059 (15,411) Gain on acquisitions and disposals – – – – – (1,059) (1,059)
Segment EBITDA from core operations 495,391 9,864 7,462 (7,493) (7,223) (22,398) 475,603
Impairment – – – – – (148,569) (148,569) Restructure costs – – – – – (8,159) (8,159) Revaluation of contingent consideration – – – – – 1 1 Net gain/(loss) on acquisitions and disposals – – – – – (1,000) (1,000)
EBITDA 495,391 9,864 7,462 (7,493) (7,223) (180,125) 317,876 Depreciation and amortisation (78,620)
EBIT 239,256
Net finance expense (5,562)
Profit before income tax 233,694

1 This represents revenue less commissions for financial services.

2 Comparative information for the year ended 30 June 2020 has been restated to show India as a separate operating segment.

34 REA Group Ltd | Annual Report 2021

Australia

The Group operates Australia’s leading residential and commercial sites, realestate.com.au[3] and realcommercial.com.au[4] , and the leading website dedicated to share property, Flatmates.com.au[5] .

Australian operating income increased by 13% to $870.3 million during the year due to improvements in residential listings, with increases in new listing volume of 15%, while new project commencement increased by 17%. The result also benefited from improved depth and Premiere penetration, increased subscription revenues and continued growth in add-on products.

realestate.com.au continues to be the number one property portal in Australia[3] , attracting 121.9 million visits each month on all platforms, increasing 35% YoY[6] . 12.6 million people visited the site each month on average[7] , with a new record of 13.2 million in March[8] . This unrivalled audience of people looking to buy, sell, rent or share property provides valuable insights to the Group on how people search and view property. In addition, our audience comprises high intent property seekers, making it possible for REA to deliver more leads to our customers.

More consumers are using the realestate.com.au app than ever before. Average monthly launches of the realestate.com.au app increased 49% YoY to 55 million[9] , while consumers are spending almost four times longer on the realestate.com.au app[10] than the nearest competitor. When compared to other leading digital brands, realestate.com.au was Australia’s eighth largest in terms of audience[11] , reaching over 60% of Australia’s adult population[12] .

As we continue to grow our audience, we are also placing emphasis on growing our membership base and active monthly users in order to deliver the best leads and most leads to our customers. The strength of our relationship with consumers is demonstrated by a 52% increase in properties being tracked by owners[13] . The total number of properties being tracked also increased 62% YoY[13] . Supporting the ongoing strength of our relationship with property owners, was the launch of our Property Owner Dashboard in December. This experience is empowering homeowners to monitor their market and make confident property choices about the key milestones of selling, renting, renovating and financing a property. This demonstrates a highly engaged audience who remain passionate and invested in the property market.

Property and online advertising

Property and Online Advertising operating income increased by 13% to $846.3 million.

Australian residential revenue increased 18% to $627.5 million, reflecting the increase in buy listings, stronger Premiere penetration and continued growth in add-on products, including Audience Maximiser. This was partially offset by the impact of COVID-19 support measures and the effect of the prolonged Melbourne lockdown on yield. Rental revenue benefited from increased depth penetration and product mix, however this was partially offset by a decline in rental listings, which were negatively impacted by lack of migration and restrictions on tenant evictions during the year.

Commercial and Developer revenue increased 5% with Developer benefiting from a 17% increase in new project commencements, driven in part by Government stimulus, an increase in project profile duration and higher subscriptions. This was partially offset by a decline in Commercial revenues due to the negative impact of COVID-19.

realcommercial.com.au continues to be the leading commercial property app in Australia, with 12.7 times more app launches[14] than the nearest competitor.

Media, Data and Other revenue were broadly flat YoY, with growth in Data and Media revenues offset by a reduction in Other revenue.

The Group continues to strengthen its existing leadership positions through investment in new technology, aimed at improving the digital offering for customers and consumers alike and through strategic acquisitions that complement our existing business and accelerate our strategic initiatives.

3 Nielsen Digital Media Ratings (Monthly Tagged), Jan 21 – Jun 21, P2+, Digital (C/M), text, Real Estate/Apartments subcategory, Unique Audience.
4 Nielsen Digital Media Ratings (Monthly Tagged), Jan 21 – Jun 21, P2+, Digital (C/M), text, realcommercial.com.au vs commercialrealestate.com.au, Unique Audience. 5 Similarweb, visits to flatmates.com.au vs flatmatefinders.com.au, Jul 20 – Jun 21.
6 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 vs Jul 19 - Jun 20 (average), P2+, Digital (C/M), text, realestate.com.au, Total Sessions.
7 Nielsen Digital Media Ratings (Monthly Tagged), Jan 21 - Jun 21 (average), P2+, Digital (C/M), text, realestate.com.au, Unique Audience.
8 Nielsen Digital Media Ratings (Monthly Tagged), Mar 21, P2+, Digital (C/M), text, realestate.com.au, Unique Audience.
9 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 vs Jul 19 - Jun 20 (average), P2+, Digital (C/M), text, realestate.com.au, App Launches.
10 Nielsen Digital Media Ratings, (Monthly Tagged), Jul 20 - Jun 21, P2+, Mobile (App), text, realestate.com.au vs Domain, Time spent (App).
11 Nielsen Digital Media Ratings (Monthly Total), Jun 21, P2+, Digital (C/M) Text, All Categories, Unique Audience.
12 Nielsen Digital Media Ratings (Monthly Tagged), Jun 21, P18+, Digital (C/M), text, realestate.com.au, Active Reach %..
13 REA internal data as at 30 Jun 21 and compared to 30 Jun 20.
14 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 (average), P2+, Digital (C/M), text, realcommercial.com.au vs commercialrealestate.com.au, App Launches.

Annual Report 2021 | REA Group Ltd 35

Directors’ Report

continued

Australia (continued)

In December 2020, REA acquired a 17.9% share in Realtair Pty Limited (“Realtair”). The purchase price of the investment was $6.4 million cash consideration, of which $1.0 million is deferred until December 2022. REA subsequently increased its holding in January 2021 and March 2021 to 22.33% for an aggregated cash consideration of $2.1 million. Realtair is a proptech platform that provides an end-to-end real estate sales solution. This allows agents to pitch, sign, automate and streamline the steps from property appraisal to settlement through mobile, easy to use technology.

In February 2021, the Group acquired a 27% interest in Campaign Agent Pty Ltd for $13.3 million. CampaignAgent owns ‘VPAPay’, the market leading buy now pay later solution for vendor paid advertising, and other financial solutions for the residential real estate market.

The combination of Realtair and CampaignAgent with our existing agent promotion products, will create a market leading offering to help our customers win their next listing.

Financial Services

Financial Services’ operating income is generated from the activities of Smartline and the National Australia Bank (“NAB”) Partnership, including realestate.com.au Home Loans. Our investment in Financial Services continues to perform well following the consolidation the Group’s broker offerings under the Smartline brand. Financial Services’ operating revenue increased 9% driven by higher settlements, increased broker recruitment and improved productivity. This was more than offset by a reduction in partnership revenue as the current NAB agreement performance payments reached maturity in September 2020.

In June 2021, the Group acquired 100% of the shares in Mortgage Choice Limited (“Mortgage Choice”), a leading Australian mortgage broking business. The acquisition provides a compelling opportunity to establish a leading mortgage broking business with increased scale. The acquisition aligns with REA’s financial services strategy by leveraging the Group’s digital expertise, high intent property seeker audience and data insights across a larger network. It also complements the existing Smartline broker footprint, resulting in greater national broker coverage.

On 15 June 2021, the Group acquired a 34.4% share in Simpology Pty Limited (“Simpology”) for $15.2 million. Simpology is a leading provider of mortgage application and e-lodgement solutions for the broking and lending industries.

Building on the strong foundations of the existing financial services business, the Mortgage Choice and Simpology acquisitions will allow the Group to accelerate the financial services strategy.

Asia

The Group’s Asian operations comprise the leading property portal in Malaysia[15] , and prominent portals in Hong Kong and Thailand, as well as Chinese site, myfun.com.

The Asian business revenue was negatively impacted by significant extended COVID-19 lockdowns, cancellation of events across all markets, and the one-off COVID-19 related reduction in syndicated Myfun listings in the first half of the financial year. The prior period comparatives also include the Singapore and Indonesia businesses, which were deconsolidated from 1 March 2020 as part of the 99 Group transaction.

During May 2021, the Group entered into a binding agreement to combine REA’s Malaysia and Thailand businesses with PropertyGuru Pte. Ltd, in exchange for an 18% interest in the combined group[16] . The transaction will provide REA with a strategic shareholding in a larger, more diversified company in a region that continues to experience rapid digital transformation.

India

On 17 December 2020, the Group moved to a controlling position in Elara Technologies (“Elara”). The Group held a 60.7% shareholding as at 30 June 2021, with News Corp holding 39.0% of the remaining minority interest in Elara.

The Indian market was heavily impacted by COVID-19 during the year, however digital adoption of real estate has accelerated, and new consumer segments are migrating online at a much faster rate. Against this backdrop, Elara delivered strong audience growth in FY21, up 92% YoY[17] , driven by continued Search Engine Optimisation (SEO) and brand investment, and the launch of new languages on housing.com. Despite the COVID-related challenges, Elara delivered local currency revenue growth of 23% in FY21.

In the first half of FY21, the Group result included an equity accounted loss of $2.4 million from its 13.5% stake in Elara. REA consolidated Elara from 1 January 2021, contributing revenue of $17.3 million in H2 FY21 and an $18.0 million EBITDA loss.

15 SimilarWeb, monthly visits for iproperty.com.my site compared to the nearest competitor (Jul 20 - Jun 21). Excludes app. 16 Diluted interest of 16.6%.

17 Similarweb data, average site visits Jul 20 – Jun 21 vs Jul 19 – Jun 20.

REA Group Ltd | Annual Report 2021

North America

The Group holds a 20% investment in Move, Inc., a leading provider of online real estate services in the United States. News Corp holds the remaining 80%.

Move, Inc. primarily operates realtor.com®, a premier real estate information services marketplace, under a perpetual agreement and trademark licence with the National Association of Realtors®, the largest trade organisation in the USA.

realtor.com® is a leading property portal in the United States, the world’s largest real estate market. Move, Inc’s reported revenue growth of 36% to US$641 million[18] was due to the continued strength in the referral model and traditional lead gen product. The Group’s share of Move, Inc. for the year resulted in a $15.9 million gain from core operations.

Average monthly unique users of realtor.com®’s web and mobile sites for Q4 grew 32% YoY to 106 million[19] .

State of affairs

In the Directors’ opinion, other than the investments and divestments referenced in the operating and financial review of this report, there have been no significant changes in the state of affairs of the Group during the year.

Events since the end of the financial year

Details of any events that have arisen from 30 June 2021 to the date of signing this report that have significantly affected, or may significantly affect, the Group’s operations, the results of those operations, or the Group’s state of affairs, in future financial years are provided in Note 27.

Business strategies and future developments

The way people search and find property continues to evolve, and consumer expectations are shaped by their digital experience. REA’s goal is to provide an easy, stress-free, and highly relevant experience for both its customers and consumers across Australia, India and Asia, right throughout their property journey.

REA Group has access to the largest network of property seekers across Australia and increasing audience numbers in key markets across Asia and India. This provides the Group with rich data and insights about what people are searching for and their individual property needs, enabling the delivery of highly relevant and personalised experiences.

Property

The foundation of the business is the online advertising of property listings, supported by data on residential and commercial property. Agents continue to play a critical role in the success of the business.

The Group focuses on improving the way properties are displayed on its sites and apps, to ensure people are provided with the best and most up-to-date content. It does this by using rich data to support the development of innovative products and experiences. This creates more opportunities for customers to continue growing their business, while creating personalised experiences for consumers.

Finance

Home finance is an integral part of the property purchase journey. As part of the Group’s Finance strategy, the Group offers the realestate.com.au Home Loans experience in partnership with NAB. It combines searching for property and obtaining a home loan in a single experience and allows consumers the choice of a digital loan application or to be connected to a mortgage broker.

The Group recognises the value mortgage brokers bring to people looking to finance their next property. Through its ownership of Smartline and Mortgage Choice, the Group now has over 900 brokers in market. REA’s audience, brand strength and digital expertise provides a unique position for long-term growth within the financial services industry.

Property-related services

REA Group’s strength lies in the ability to understand its audience and it is continually looking for new ways to create value for our customers and consumers and remove any barriers for them to be able to achieve their property dreams.

The Group does this by providing rich data and market insights to help customers and consumers make the most informed propertyrelated decisions.

18 News Corp’s Form 10-K stated in US Dollars for the 12-month period ended 30 June 2021.

19 News Corp’s Earnings Release stated in US Dollars (5 August 2021) for the twelve-month period ended 30 June 2021: Average monthly unique users for Q4 FY 2021 and compared to the same period Q4 FY 2020.

Annual Report 2021 | REA Group Ltd

Directors’ Report

continued

Business strategies and future developments (continued)

For consumers, this means we provide a personalised experience, inspiring content and a range of tools, calculators and other information so that people are equipped to make the right decision depending on where they are in their property journey.

And for customers, it’s about giving them deep insight into market trends and consumer behaviour to support their business growth.

Corporate Sustainability Statement

REA Group’s commitment to responsible and sustainable business practices underpins everything we do. In October 2020, REA Group published its second Sustainability Report which is available on the website at www.rea-group.com/investor-centre. REA Group’s Sustainability Report, which is published annually after the Group’s Annual Report, details business activity and commitments across the areas of Environment, Social and Governance (“ESG”).

The Group’s policies reflect the standards REA expects of its people and ensures that REA monitors and adheres to those standards. The Group values the opportunity to share the ESG activity and associated commitments in order to continually improve overall sustainability performance and play a role in creating positive change.

The Board is responsible for corporate governance and is committed to developing and implementing appropriate policies while adhering to a fundamental commitment to create and sustain long-term value for its shareholders and stakeholders. This is achieved through:

Implementing sound corporate governance practices;
Operating in a responsible manner towards employees through fair and equitable practices;
Transparent reporting on operations and activities;
Monitoring potential risks and applying mitigating policies and practices;
Making a positive impact on the community; and
Reducing our impact on the environment.

Corporate governance

REA Group is committed to being ethical, transparent and accountable. It believes this is essential for the long-term performance and sustainability of the Company and supports the interests of shareholders.

The REA Group Ltd Board of Directors is responsible for ensuring that the Company has an appropriate corporate governance framework to protect and enhance company performance and build sustainable value for shareholders. This corporate governance framework acknowledges the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (ASX Principles and Recommendations) and is designed to support business operations, deliver on strategy, monitor performance and manage risk.

The Corporate Governance Statement addresses the recommendations contained in the fourth edition of the ASX Principles and Recommendations and is available on the website at www.rea-group.com/corporate-governance. This statement should be read in conjunction with REA’s website and the Directors’ Report, including the Remuneration Report.

Environmental regulation

Good environmental practices and the impact that operations have on the environment are of great importance to REA. The Group is committed to adopting responsible environmental practices.

The operations of the Group are not subject to any particular or significant environmental regulations under a Commonwealth, State or Territory law.

Opportunities and risks

REA is driven by its purpose to ‘change the way the world experiences property’ through product innovation and investment. Having a clearly defined purpose provides the Group with opportunities to drive further value. These include:

Broadening the suite of products and services to maximise value for customers;
Utilising content, data and insights to provide a new or enhanced experience for consumers and/or further support customers in achieving their strategic aims;
Exploring and pursuing adjacencies such as building a market-leading home loan offering via its mortgage broking businesses, Smartline and Mortgage Choice, and leveraging REA’s leading digital capability; and
Entering international markets where there is a strategic opportunity.

REA Group Ltd | Annual Report 2021

Opportunities and risks (continued)

REA remains committed to delivering the best experience and value for both customers and consumers. This includes engaging with people at every step of their property journey and making the experience easy and stress free. Effective risk management is about taking the right risks, at the right time, for the right return. To achieve this, REA follows accepted standards and guidelines for managing risk. The Group is committed to ensuring that a consistent and integrated approach is established at all levels and is embedded in the Company’s processes and culture.

The REA Risk Management Framework comprises several important elements:

Identifying and analysing the main risks facing the Group;
Evaluating those risks – making judgements about whether they are acceptable;
Implementing and documenting appropriately designed controls to manage these risks;
Testing of controls to ensure they are appropriately designed and operating effectively;
Planning for business interruptions and crises; and
Ongoing monitoring, consultation, communication and review.

The Group has identified five material risk categories to which the Company has its most significant risk exposures, being:

Strategic risk;
Operational risk;
Compliance risk;
Regulatory risk; and
Credit risk.

Each of these material risk categories has either a framework, procedure or policy that sets out how the risks that fall within these categories are to be identified and managed. Clear accountabilities, roles and responsibilities are also articulated from the Board all the way through to a risk and/or control owner.

The Executive Risk Committee oversees the implementation of the REA Risk Management Framework, ensuring management fulfils its risk management responsibilities and that risks are operating within the Risk Appetite Statement and Limits approved by the Board. Key REA business risks include:

The development of new technologies and increased competition from existing or new sites and apps, which could affect the existing business model. REA operates in a highly competitive market and constantly monitors and assesses the competitive environment and any potential risks to the Australian and international operations. REA must continue to earn the support of consumers and customers by delivering a market-leading consumer experience and outstanding value for agents and their vendors.
Security incidents caused by adversarial, accidental or environmental threat that may result in the theft or destruction of confidential consumer/customer data and/or loss of REA system integrity. As a technology-focused business, managing security and taking care of consumer and customer data is of crucial importance. REA is vigilant in managing the risk of damaging security incidents, and has appropriate data management, security and compliance policies, procedures and practices in place.
Lack of availability or downtime of websites and apps may result in a poor experience for consumers and customers. To manage the risk of any of the Group’s sites or apps going down, REA has developed and implemented disaster recovery strategies, highavailability architecture, and processes for monitoring the health of systems on an ongoing basis.
Key group business activities (specifically, real estate listings and financial services) are highly dependent on the exposure to macroeconomic, regulatory, legal and geopolitical conditions across the Australian, Indian and Asian markets in which REA operates. These conditions impact economic growth rates, the property market (house prices and availability of stock), interest rates and consumer confidence which can adversely impact the volume of real estate listings and consumers’ willingness and ability to acquire credit. REA mitigates these risks by proactively managing stakeholder relationships, keeping abreast of regulatory change through dedicated committees, monitoring key risk indicators and market conditions.
A breach of REA’s privacy obligations could occur. REA recognises that privacy compliance is critical to maintaining consumer and customer trust. REA maintains a comprehensive privacy compliance program and updates the program to align with changes in the law. REA is committed to the ‘privacy by design’ method of embedding privacy considerations into the company’s products, processes and systems.

Annual Report 2021 | REA Group Ltd 39

Directors’ Report

continued

Sustainability

REA Group is committed to responsible and sustainable business practices. This is reflected in our values and underpins everything we do. Our Sustainability program incorporates community investment, community programs (internally “Because We Care”) and our commitment to the environment.

REA’s community investment and community programs are focused on our belief that everyone deserves a safe place to sleep, every night. This is aligned to delivering on REA’s purpose to change the way the world experiences property. We have well established partnerships with charities that address the issue of homelessness and have extended our relationships with Launch Housing, Orange Sky Australia and The Big Issue through to 30 June 2022.

The Because We Care program supports and empowers employees to give back to causes that are important to them. They can do this through matched payroll giving, volunteer leave, employee community grants, our community café in Melbourne and the Hack it Forward Award as part of REAio Hack Days.

FY21 was the second year of REA’s environment program, and we made progress towards understanding and reducing the company’s impact on the environment. The FY21 Sustainability Report will be published on the company’s corporate website in October 2021.

Highlights from REA’s sustainability program in FY21:

Published REA Group’s first Climate Change Policy in October 2020 outlining our commitment to address climate change in three broad ways: understanding climate risk, reducing and offsetting our emissions and supporting our customers and consumers to reduce their impact. This policy includes science based aligned targets for carbon emission reduction by 2030.
REA Group was certified carbon neutral by the Australian Government’s Climate Active program in March 2021. This was the culmination of long-term efforts to measure the company’s carbon footprint for the first time and form working groups focused on emissions reduction.
Commenced a program of work to understand and report on REA Group’s climate risk aligned to the Task Force on Climaterelated Financial Disclosures.
MSCI ESG rating for REA Group improved to an A in FY21 from BBB in FY20. MSCI ESG Ratings are designed to measure a company’s resilience to long-term, industry material environmental, social and governance (ESG) risks.
Continued financial and in-kind support of Launch Housing, including funding of the National Rapid Rehousing Fund, supporting women and children escaping family violence to prevent homelessness. Since commencement of the Fund in February 2015, the Rapid rehousing program has assisted 4,771 women and children. Free advertising and listings are also provided to Launch Housing’s social enterprise real estate agency, HomeGround Real Estate. REA Group also supported Launch Housing’s tender for the Hotels to Homes (H2H) grant to support private rental accommodation for homeless people moved to temporary hotel accommodation during the pandemic.
Continued financial and in-kind support of Orange Sky Australia, including supporting the operating costs for mobile washing and shower services across Australia, and connecting volunteers with vulnerable and disadvantaged community members since 2017. REA Group employees formed a team to support Orange Sky’s national fundraising campaign ‘The Sudsy Challenge’ and finished as the Top Fundraising Team and Top Fundraising Workplace, raising over $16,000.
Continued financial and in-kind support of The Big Issue Australia since 2014, including support of the Women’s Subscription Enterprise, which employs vulnerable and disadvantaged women to pack copies of The Big Issue for subscribers. REA Group supported The Big Issue 25th birthday celebration in June 2021.
Smartline has donated $10 from every loan they facilitate towards a community fund for the last 20 years. To date, Smartline has donated over $2.5 million to charities around Australia including Cancer Council, Lifeline and Kickstart for Kids.
REA continues not to charge Australian real estate agencies which have been endorsed as Deductible Gift Recipients, for subscriptions.
realestate.com.au’s Advantage Program, provided individual community grants to Australian residential customers helping them improve their local communities.
In response to the devastating COVID-19 crisis in India, REA Group supported Elara employees with increased health measures including setting up a makeshift clinic and support centre, immunity kits and a donation to UNICEF India’s COVID-19 Crisis appeal.

REA Group Ltd | Annual Report 2021

Directors’ qualifications, experience and special responsibilities

The names of Directors and details of their qualifications, experience and special responsibilities can be found on pages 28 and 29. Details of the number of Board and Board Committee meetings held during the year and Directors’ attendance at those meetings are shown on page 30.

Details of directorships of other listed companies held by each current Director in the three years before the end of the 2021 financial year are listed on pages 28 and 29.

Directors’ shareholdings in the Company

The relevant interests of each director in shares of the Company as at the date of this report are disclosed in the Remuneration Report.

Company Secretary’s qualifications and experience

Tamara Kayser joined REA as General Counsel and Company Secretary in November 2020. Ms Kayser (LLM, LLB (Hons), BCom) is a corporate lawyer with over 20 years of legal and governance experience. Prior to joining REA, Ms Kayser held the position of Group General Counsel at Incitec Pivot Limited. Prior to this, she practised as a lawyer at King & Wood Mallesons in Australia and Linklaters in London.

Erin Thorne held the position of Acting Company Secretary from May 2020 to November 2020. Ms Thorne has extensive governance and finance expertise gained at senior levels across corporate and government. Ms Thorne holds a Bachelor of Business (Accounting), Graduate Diploma in Chartered Accounting and Graduate Diploma of Applied Corporate Governance. She is a member of the Institute of Chartered Accountants Australia & New Zealand, the Governance Institute of Australia and a Graduate of the Australian Institute of Company Directors.

Indemnification and insurance of directors and officers

The Company has entered a standard form deed of indemnity, insurance and access with the non-executive Directors against liabilities they may incur in the performance of their duties as Directors of REA Group Ltd, except liabilities to REA Group Ltd or a related body corporate, liability for a pecuniary penalty or compensation order under the Corporations Act 2001, and liabilities arising from conduct involving a lack of good faith. REA Group Ltd is obliged to maintain an insurance policy in favour of non-executive Directors for liabilities they incur as Directors of REA Group Ltd and to grant them a right of access to certain company records. In addition, each Director is indemnified, as authorised by the Constitution, on a full indemnity basis and to the full extent permitted by law, for all losses or liabilities incurred by the Director as a Director of a member of the Group. The indemnity operates only to the extent that the loss or liability is not covered by insurance.

During or since the end of the financial year, the Company has paid premiums insuring the Directors and Officers of the Company, its controlled entities and associates, against liability incurred in that capacity to the extent allowed by the Corporations Act 2001. The terms of the policies prohibit disclosure of the details of the liability and the premium paid.

During the year the Group has been covered under the Directors & Officers (“D&O”) insurance policy for the News Corp Group of companies.

Indemnification of auditors

The Group has agreed to indemnify its auditors, Ernst & Young Australia, to the extent permitted by law, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the end of the financial year.

Auditor and non-audit services

Ernst & Young continues in office in accordance with section 327 of the Corporations Act 2001.

The Company may decide to employ the external auditor on assignments additional to its statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important.

Annual Report 2021 | REA Group Ltd 41

Directors’ Report

continued

Auditor and non-audit services (continued)

The Board of Directors has considered the position and, in accordance with advice received from the Audit, Risk & Compliance 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 these services 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, Risk & Compliance Committee, in line with the Committee Charter, to ensure they do not impact the impartiality and objectivity of the auditor; and
None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

During the year, the following fees were paid or payable for non-audit services provided by the external auditor (Ernst & Young) of the parent entity and its related practices:

Consolidated	2021	2020
REA Group	$	$
Category 2 fees - assurance services required by legislation to be provided by auditor	12,000	–
Category 3 fees - other assurance services	10,000	7,800
Category4 fees - other services	323,153	351,715
Total remuneration for non-audit services	345,153	359,515

Further details on the fee categories and compensation paid to Ernst & Young are provided in Note 25 to the Financial Statements.

Auditor’s Independence Declaration

A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 43.

Proceedings on behalf of the Company

No application has been made under section 237 of the Corporations Act 2001 (Cth) in respect of the Company, and there are no proceedings that a person has brought or intervened in on behalf of the Company under that section.

Rounding of amounts

The Company is a company of the kind referred to in Australian Securities and Investments Commission Instrument 2016/191 pursuant to sections 341(1) and 992(B) of the Corporations Act 2001. Amounts in the Directors’ Report and the accompanying Financial Statements have been rounded off in accordance with that Instrument to the nearest thousand dollars, except where otherwise indicated.

REA Group Ltd | Annual Report 2021

Auditor’s Independence Declaration

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Ernst & Young Tel: +61 3 9288 8000 8 Exhibition Street Fax: +61 3 8650 7777 Melbourne VIC 3000 Australia ey.com/au GPO Box 67 Melbourne VIC 3001

Auditor’s independence declaration to the directors of REA Group Ltd

As lead auditor for the audit of the financial report of REA Group Ltd for the financial year ended 30 June 2021, I declare to the best of my knowledge and belief, there have been:

a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b. No contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of REA Group Ltd and the entities it controlled during the financial year.

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Ernst & Young

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David McGregor Partner 6 August 2021

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Annual Report 2021 | REA Group Ltd 43

Remuneration Report

Dear Shareholder,

On behalf of the Board, I am pleased to present our Remuneration Report for the financial year ended 30 June 2021, my first as Chair of the Human Resources Committee.

REA Group in FY21 – strong results in an uncertain world

The impact of the COVID-19 pandemic on the residential and commercial property market was without precedent. The effect of various government lockdowns and social restrictions on residential property sales and auctions during calendar 2020 had an enormous impact on our business and the residential and commercial property sector generally.

During 2021, REA responded decisively to the changing needs of customers and consumers during the pandemic, whilst accelerating the growth strategy through pivotal investments. realestate.com.au continued to accelerate audience metrics, reaching new all-time highs during FY21. Average monthly visits to realestate.com.au topped 121.9 million[1] , outperforming the closest competitor by 3.3 times on average[2] . The business delivered record customer sentiment, rolled out a number of new products (eg. Connect, Rental Applications) and new consumer experiences such as the Property Owner Dashboard. The business delivered strong revenue and EBITDA from core operations growing 13% and 19% respectively.

Remuneration decisions in FY21 – recovery and preparing for the future

At the beginning of FY21, the Board made a number of remuneration decisions. These were proportionate given the market volatility and the impact that the uncertain conditions were likely to have, on REA Group, our shareholders, our employees, and our customers. They included:

Deferring our normal salary reviews from July/August 2020 to the end of the calendar year and implementing increases in December 2020/January 2021 for KMP. Our market benchmarking highlighted that some of our remuneration levels remained comparatively below market peers, resulting in increases to the salaries and incentive opportunities of our KMP (detailed below).
The performance measures applicable to the LTI Plan 2021 and LTI Plan 2022 grants were rendered almost unachievable on our best forecasting back at the beginning of FY21. As a result, we introduced a recovery incentive for executives to incentivise management to focus on the things that they could control to chart REA’s recovery from the setbacks of the pandemic. These recovery awards deliver proportionate rewards in equity only, and only in circumstances where our key operational and strategic goals are met.
Delaying the setting of targets under the LTI Plan 2023 (as disclosed last year) to moderate the impact of COVID-19 by shortening the revenue and EPS target performance period to two years commencing on 1 July 2021 and including the introduction of rTSR in this plan. Applicable outcomes will be disclosed in the 2023 Remuneration Report.

Other changes made to improve the alignment of our remuneration with performance of REA were:

The introduction of relative total shareholder return (rTSR) as a performance measure into our Long Term Incentive (LTI) Plan 2023 (as disclosed in our Notice of Meeting for the 2020 AGM), to augment our existing revenue and EPS growth targets with a metric that focuses on our long term performance for shareholders relative to ASX peers. Pursuant to this performance measure, we compare REA Group’s share price and dividend performance against a bespoke group of 41 ASX150 companies that we feel represent our key competitors for shareholder capital and outperforming against this group would represent a ‘win’ for shareholders.
The introduction of short-term incentive (STI) deferral where rather than 100% of STI awards being paid immediately in cash, 30% of any awards that vest will be delivered in restricted shares. This has been introduced to help our executive team grow their shareholdings in REA over time, and to align the value of that part of the STI award with shareholder experience for an extended period after the end of the performance year.

1 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 (average), P2+, Digital (C/M), text, realestate.com.au, Total Sessions. 2 Nielsen Digital Media Ratings (Monthly Tagged), Jul 20 - Jun 21 (average), P2+, Digital (C/M), text, realestate.com.au vs Domain, Total Sessions.

44 REA Group Ltd | Annual Report 2021

Remuneration outcomes in FY21 – moderate outcomes reflecting solid performance

With respect to the annual salary reviews conducted at the end of calendar 2020, the following changes to KMP remuneration were approved:

CEO: – in recognition of Mr Wilson’s established tenure in the role of CEO, performing at a high level and leading the company through significant growth (in revenue, profit and share price), and in consideration of his remuneration relative to market peers, his fixed annual remuneration (FAR) was increased effective 1 January 2021 to $1,500,000.
His STI and LTI opportunities were also increased, at target, from 61% of fixed remuneration to 73% of fixed remuneration. In line with REA policy, these changes have resulted in an increase to the incentive opportunities available to the CEO. This includes an additional $300,000 worth of rights which will be granted under the LTI Plan 2023 (and subject to the same terms and conditions as the other rights for the LTI Plan 2023). This will be the subject of a resolution at the upcoming AGM and separate from the resolution relating to the LTI Plan 2024.
CFO: – Based on a review of market peers, Ms Hopkins’ long-term incentive (LTI) target was increased by 11.5% with Fixed Remuneration and short-term incentive (STI) targets remaining unchanged for FY21.

Changes to directors’ fees for FY22

In line with our historical approach, we undertook a review of directors’ fees. Independent advice from external consultants was part of this review, which highlighted that our directors’ fees, in particular for our Chairman, have fallen below market peers. In order to ensure that REA remains able to attract and retain directors of appropriate skill and experience, we resolved to make an 8% increase in directors fees and a 16% increase in the Chairman’s fees to bring them more into line with market. Further details will be disclosed in the FY22 remuneration report.

The HR Committee continues to believe that REA has a robust and fit for purpose remuneration framework that, pandemics aside, serves the organisation well. It appropriately balances competitive fixed pay levels to reward core performance, has a short-term incentive (STI) that underpins the achievement of the annual budget and strategic plan, and a long-term incentive (LTI) that is focused on delivering top and bottom-line growth. I invite you to read our report, to support the Board and the Committee in its endeavours to attract, retain and motivate a top team of talented executives and, as always, to provide us with any feedback on this report or our remuneration practices.

Finally, I would like to take this opportunity to thank Kathleen Conlon for her considerable work as previous Chair of the Human Resources Committee.

Yours sincerely,

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Mr Nick Dowling Chair Human Resources Committee

Annual Report 2021 | REA Group Ltd 45

Remuneration Report

continued

This report details REA Group’s remuneration framework and outcomes for Key Management Personnel ‘KMP’ for the financial year ended 30 June 2021. This report forms part of the Directors’ Report for this period.

1. Introduction and scope of report

The information provided in the Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001. This Remuneration Report for the year ended 30 June 2021 outlines the remuneration arrangements in place for KMP of REA Group Ltd and its controlled entities (‘the Group’), which comprises all Directors (executive and non-executive) and those executives who have authority and responsibility for planning, directing and controlling the activities of the Group.

The following executives of the Group were classified as KMP during the 2021 financial year and unless otherwise indicated were classified as KMP for the entire year.

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Executive Directors
Owen Wilson Chief Executive Officer
Senior Executives
Janelle Hopkins Chief Financial Officer
Non-Executive Directors
Hamish McLennan Chairman
Kathleen Conlon Independent Director
Nick Dowling Independent Director
Tracey Fellows Director
Richard J Freudenstein Director
Michael Miller Director
Jennifer Lambert Independent Director (appointed 1 December 2020)
Roger Amos Independent Director (retired 17 November 2020)
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2. Role of the Human Resources Committee

The Human Resources Committee (‘HR Committee’) is responsible for reviewing and making recommendations to the Board on the remuneration arrangements for non-executive Directors, the Chief Executive Officer (‘CEO’), the Chief Financial Officer (‘CFO’) and other executives. Further information on the HR Committee’s role and responsibilities is contained in its Charter, which is available on the Group’s website at www.rea-group.com.

To assist in performing its duties, and making recommendations to the Board, the HR Committee may seek independent advice and data from external consultants on various remuneration related matters. The HR Committee follows protocols around the engagement and use of external remuneration consultants to ensure compliance with the relevant executive remuneration legislation. Any remuneration recommendations and data are provided by the external consultant directly to the Chair of the Committee. No remuneration recommendations were provided by external consultants for FY21.

3. Executive remuneration philosophy and framework

The Group’s executive remuneration philosophy is founded on the objectives of:

driving desired leadership behaviours;
recognising both individual and organisational performance, with measures that are focused on achieving the Group’s longer term corporate plans;
generating acceptable returns for shareholders; and
rewarding executive performance for generating high growth returns above expected threshold levels.

REA Group Ltd | Annual Report 2021

3. Executive remuneration philosophy and framework (continued)

The four core ‘guiding principles’ of our executive remuneration framework approved by the Board are shown in the diagram below:

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Remuneration Guiding Principles
Shareholder aligned Rewards for high Consistency & Simplicity
performance transparency
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3.1 Remuneration structure Executive total remuneration is made	up of the following three components:
		How does it link to strategy
Component	What is it?	&	performance?
Fixed Annual Remuneration	FAR consists of base compensation and	–	Provides competitive ongoing
(‘FAR’)	statutory superannuation contributions.		remuneration in recognition of
	KMP may also elect to have other benefits		day-to-day accountabilities.
Short Term Incentive (‘STI’)	provided out of their FAR, including additional superannuation and the provision of a motor vehicle. The STI program is a combination of a cash	–	Rewards delivery of key strategic and
	based and equity deferral plan that involves		financial objectives in line with the
	linking specific financial and non-financial		annual business plan.
	targets with the opportunity to earn incentives based on a percentage of fixed salary.	–	Enables diferentiation of reward on the basis of individual performance.
		–	Ensures annual remuneration is
Long Term Incentive (‘LTI’)1	The LTI Plan is designed to link long-term executive reward with ongoing creation of shareholder value, with the allocation of equity awards which are subject to satisfaction of long-term performance conditions.	– –	competitive. Rewards delivery against longer-term strategy and sustained shareholder value creation. Provides greater alignment between shareholder and executive outcomes.

1 A one-off recovery incentive was introduced for the period 1 July 2020 to 30 June 2022.

Details on each of the individual components are set out in section 5 of this report.

3.2 Remuneration mix

Remuneration mix refers to the proportion of Total Remuneration that is made up of each remuneration component. The following diagrams set out the remuneration mix for each KMP at both target (the amount that would be paid for delivering target performance) and maximum (the amount that would be paid for delivering stretch performance) remuneration levels. Remuneration mix is presented based on contractual remuneration packages rather than actual remuneration received during the year.

Annual Report 2021 | REA Group Ltd 47

Remuneration Report

continued

3. Executive remuneration philosophy and framework (continued)

Target Remuneration[1] Maximum Remuneration[2]

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25.4%
29.7%
37.3%
40.6%
CEO CEO
29.7% 37.3%
Fixed Annual Remuneration
Short Term Incentive
Long Term Incentive
19.1%
25.6%
33.7%
CFO CFO
50.5%
30.4%
40.7%
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1 As a result of the delay in remuneration reviews last year, the CEO’s LTI target was adjusted from $800,000 to $1,100,000 on 1 January but approved by the Board to have effect for the FY21 year, meaning the Board has approved an additional $300,000 worth of rights to be granted pursuant to the FY23 plan (on terms disclosed in the 2020 notice of AGM), which will be put to shareholders at the 2021 AGM. This will be separate from the FY24 LTI grant to the CEO which will be separately voted on at the AGM.

2 Pay mix for maximum based on value of performance rights at grant date.

4. Link between group performance, shareholder wealth and executive remuneration

A key underlying principle of the Group’s executive remuneration framework is that executive remuneration outcomes should be linked to performance. Understanding REA Group’s performance over both the financial year ended 30 June 2021 and the longerterm will provide shareholders and other interested stakeholders with important context when reviewing our remuneration framework and outcomes in more detail over the following pages of this report.

4.1 REA Group performance

Summary of Group performance

The table below summarises key indicators of the Group’s performance and the effect on shareholder value over the past five years.

KeyIndicators	2017	2018	2019	2020	2021
Revenue*	671,206	807,678	874,949	820,269	927,811
EBITDA*	380,906	463,706	501,204	475,603	564,758
Net profit after tax*	228,298	279,946	295,495	268,865	318,024
Earnings per share**	173.3c	212.5c	224.3c	204.1c	247.4c
Dividends per share	91.0c	109.0c	118.0c	110.0c	131.0c
Share Price 30 June	$66.40	$90.87	$96.04	$107.88	$169.03

From core operations $’000.

** From core operations attributable to the ordinary equity holders of the company.

REA Group Ltd | Annual Report 2021

4. Link between group performance, shareholder wealth and executive remuneration (continued)

Compound Annual Growth & Share price performance

The Group’s growth over the last five years has been exceptional, and as detailed in the following graphs, has delivered strong revenue and earnings per share (“EPS”) compound annual growth rates (“CAGR”). The Group’s relative share price in comparison to the ASX 100 is also outlined below. REA’s share price has significantly outperformed the ASX 100 in the last 3 years.

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Revenue ($m)
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927.8
874.9
807.7 820.3 +13%
671.2
FY17 FY18 FY19 FY20 FY21
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EBITDA ($m)
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564.8
501.2 +19%
463.7 475.6
380.9
FY17 FY18 FY19 FY20 FY21
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EPS (cents)

Share Price Growth

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247.4
500
224.3 +21%
212.5
204.1 450
400
173.3
350
300
250
200
150
100
50
June 2017 June 2018 June 2019 June 2020 June 2021
FY17 FY18 FY19 FY20 FY21 REA Group Limited ASX 100
Relative share price
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4.2 KMP performance outcomes

The following table provides a summary of KMP financial and non-financial objectives and outcomes for the 2021 STI Plan:

Category Financial	Objective Group revenue targets	Outcome 182% of target
	Group EBITDA targets	200% of target
Consumer and customer satisfaction	Increase key consumer metrics including	Exceeded
Growth	customer satisfaction and loyalty metrics Adoption of product – impact on volume and revenue PropTrack Financial Services Asia	Met Met Exceeded Below target
People	Employee engagement	Exceeded

Annual Report 2021 | REA Group Ltd 49

Remuneration Report

continued

4. Link between group performance, shareholder wealth and executive remuneration (continued)

The following table sets out LTI Plan performance outcomes for the three-year performance period ended 30 June 2021:

Performance measure	Outcome	% of target LTI payable
Revenue CAGR	4.7%	0%
EPS CAGR	5.2%	0%
		0% achievement

The following table sets out Recovery Incentive Plan performance outcomes for tranche 1 of the Recovery Incentive 2021-2022:

Performance measure	Outcome	% of tranche 1 incentive payable
Relative TSR	100%	25%
EBITDA	100%	25%
Strategic Measures	93.3%	46.7%
		96.7% achievement

4.3 KMP remuneration outcomes

The following table sets out the STI outcomes for the 2021 financial year based on achievement of financial and non-financial objectives:

Executives	Actual STI payment	% of target STI payable
CEO	$1,612,650	147%**
CFO	$945,820	181%**

** 70% paid in cash and 30% deferred in restricted shares

The following table sets out details of performance rights held by and granted to Mr Wilson and Ms Hopkins during the 2021 financial year under the LTI Plans along with the number of performance rights forfeited.

						$ value of
	Balance at	Granted	Vested	Forfeited	Balance at	rights at grant
Name	1 July2020	during year	during year1	during year2	30 June 20213	date
O Wilson
LTI Plan 2021 (Plan 12)4	7,335	–	–	7,335	–	638,240
LTI Plan 2022 (Plan 13)	8,342	–	–	–	8,342	800,000
LTI Plan 2023 (Plan 14)5	–	7,093	–	–	7,093	800,000
RecoveryIncentive Plan 2021/20226	–	12,541	–	–	12,541	1,414,327
Total	15,677	19,634	–	7,335	27,976	3,652,567
J Hopkins
LTI Plan 2022 (Plan 13)	3,858	–	–	–	3,858	370,000
LTI Plan 2023 (Plan 14)	–	2,926	–	–	2,926	330,000
RecoveryIncentive Plan 2021/20226	–	3,147	–	–	3,147	354,936
Total	3,858	6,073	–	–	9,931	1,054,936

1 The number of performance rights vested during the year is equal to the number of performance rights settled during the year.
2 Forfeited during the year as a result of underperformance compared to company targets.
3 The balance of performance rights at 30 June 2021 are unvested.

4 These rights granted to O Wilson comprise two separate awards: 5,321 awards were granted on 1 July 2018 with a total value at grant date of $489,250; and 2,014 awards granted on 7 January 2019 with a total value at grant date of $148,990.

5 As a result of the delay in remuneration reviews last year, the CEO’s LTI target was adjusted from $800,000 to $1,100,000 on 1 January but approved by the Board to have effect for the FY21 year, meaning the Board has approved an additional $300,000 worth of rights to be granted pursuant to the FY23 plan (on terms disclosed in the 2020 notice of AGM), which will be put to shareholders at the 2021 AGM. This will be separate from the FY24 LTI grant to the CEO which will be separately voted on at the AGM.
6 These rights granted to O Wilson and J Hopkins relate to the Recovery Incentive Plan 2021/2022.

50 REA Group Ltd | Annual Report 2021

4. Link between group performance, shareholder wealth and executive remuneration (continued)

The table below sets out the details of the percentage performance achieved and percentage vested against the applicable LTI Plan. Refer to section 5.6 for the percentage of total remuneration that consists of performance rights.

			Value per
Plan LTI Plan 2021(Plan 12) LTI Plan 2021(Plan 12)	Grant date 1 July2018 7 January2019	Vestingdate1 1 July2021 1 July2021	performance right atgrant date2 $85.44 $69.05	Revenue target % achieved 4.7% 4.7%	EPS target % achieved 5.2% 5.2%	% vested 0% 0%
LTI Plan 2022(Plan 13)	1 July2019	1 July2022	$97.55	To be	determined	–
LTI Plan 2022(Plan 13)	13 January2020	1 July2022	$107.30	To be	determined	–
			$165.77
LTI Plan 2023(Plan 14)	28 June 2021	1 July2023	-$237.51	To be	determined	–

1 Subject to Board approval of the performance hurdles being met.
2 Value per grant date calculated using the Black Scholes model.

The table below sets out the details of the percentage performance achieved and percentage vested against the applicable Recovery Incentive Plan. Refer to section 5.6 for the percentage of total remuneration that consists of performance rights.

			Value per
			performance	Relative TSR	EBITDA	Strategic
			right	target %	target %	targets %
Plan	Grant date	Vestingdate1	atgrant date2	achieved	achieved	achieved	% vested
Recovery
Incentive Plan
2021 - 2022	17 November		$128.57
(tranche 1) Recovery Incentive Plan 2021 - 2022 (tranche 2)	2020 17 November 2020	1 July2021 1 July2022	-$142.35 $126.36 -$140.95	100%	100% To be determined	93.3%	96.7% –

1 Subject to Board approval of the performance hurdles being met.
2 Value per grant date calculated using the Black Scholes model.

5. Executive remuneration components

5.1 How REA Group determines appropriate remuneration levels

As the Group continues to grow and diversify into different markets and business lines, it is important to review to ensure that the remuneration levels support the Group in attracting and retaining high-calibre talent within what is a competitive market. Executive remuneration is therefore reviewed on an annual basis.

Market positioning

How much is paid to each executive depends on a number of factors including the scope of their role and their overall contribution to the Group but, as a starting position, REA compares current fixed remuneration to the 50th percentile and target total remuneration to a position between the 50th and 75th percentiles in the market. This aligns with the Group’s principle of rewarding for above threshold performance.

Benchmarking methodology

The HR Committee utilises market data provided by external consultants as part of the review process. Remuneration levels are compared to the following two comparator groups:

Size-based comparator group having regard to both revenue and 12-month average market capitalisation (excluding companies from outside our market for talent, e.g. resources sector)
All companies within the ASX10-50 and ASX35-85 respectively

This methodology provides the Group with a balanced approach factoring in both company size and general ASX market practice into remuneration decision making. Full details of remuneration received during the 2021 financial year are detailed in section 5.6.

Annual Report 2021 | REA Group Ltd

Remuneration Report

continued

5. Executive remuneration components (continued)

Setting remuneration for new KMP (or on promotion)

In addition to utilising benchmark information from our two comparator groups, when setting remuneration levels for new KMP (or on promotion), the Board consider the skills and experience of the new KMP (relative to the outgoing KMP where applicable) along with their current remuneration package (where applicable).

5.2 Short term incentive arrangements

The following table summarises the key components, operation and outcomes of the Group’s 2021 STI Plan and, as provided in the remuneration mix section, this table demonstrates annualised on-target performance for the CEO and CFO in their current roles:

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Short Term Incentive Summary
KMP participants CEO and CFO
Award type 30% payable in deferred shares with the balance paid in cash
Performance period One-year performance period beginning 1 July 2020 and ended on 30 June 2021
When are performance – Performance against financial measures are determined in-line with approval of the
conditions tested? Financial Statements at the end of the financial year.
– Performance against non-financial measures within individual KPIs are determined
after a review of executive performance by the CEO, in consultation with the HR
Committee and in the case of the CEO, by the Board.
Performance metrics
and weightings
25%
30%
35%
Individual KPIs
CEO CFO 50% EBITDA
Revenue
25%
35%
Target [1] $1,100,000 $524,000
Maximum [2] $2,200,000 $1,048,000
Relationship between Financial measures – % of target
performance and payment level of performance incentive awarded
Below Threshold 0%
Threshold 50%
Target 100%
Stretch 200%
Incremental payment is made between Threshold and Target, as well as Target and Above Target points.
Individual performance is determined based on performance against KPIs with the individual
component paying out between 0% and 200% of target.
Calculation of outcome STI Plan
2021 Revenue EBITDA Individual STI Plan
Outcome + Outcome + Outcome = Outcome
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1 Amount that would be paid for delivering on-target performance. CEO STI target adjusted from $800,000 with effect from 1 January 2021.
2 Amount that would be paid for delivering stretch performance.

52 REA Group Ltd | Annual Report 2021

5. Executive remuneration components (continued)

Why were these performance measures chosen?

The Board considers the financial measures to be appropriate as they are aligned with the Group’s objective of delivering profitable growth and, ultimately, improved shareholder returns. The non-financial performance measures for the CEO have been set by the Board to drive strategic initiatives, leadership performance and behaviours consistent with the Group’s corporate philosophy and its overall business strategy. The CEO sets individual and business key performance indicators for the executive team in consultation with the Board.

5.3 Long term incentive

The following table summarises the key components and operation of the Group’s LTI plan:

	Long Term Incentive Summary
KMP participants	CEO and CFO
Award type	Performance rights
Performance period	The performance rights allocated during the year are subject to a three-year performance period beginning 1 July 2020 and ending on 30 June 2023. Due to the uncertainties created by COVID-19, the EPS and revenue performance conditions under the LTI Plan 2023 apply over a two year period, from 1 July 2021 to 30 June 2023. The measurement period for rTSR commenced in February 2020, to moderate the impact of COVID-19 from the Company and peer group, given the significantly diferent levels and speeds of recovery across the peer group as at 1 July 2020 (when the performance period would normally commence). The Group refers to this grant as the “LTI Plan 2023” as the performance period ends in FY23.
Performance metrics	Metric Weighting
	CAGR – Revenue 25%
	CAGR – EPS 50%
	rTSR 25%
When are performance conditions tested?	Incentive payments are determined in line with the approval of the Financial Statements at the end of the performance period.
How is the LTI grant determined?	The number of performance rights issued to each executive is calculated by dividing their ‘target LTI’ value by the value per right. The value per right is determined on a face value basis using a 10-day volume-weighted average price (VWAP) over the period 31 July to 13 August 2020, representing the five working days before, and the five working days afer annual results. Each performance right is a right to acquire one share in REA upon vesting.
Target LTI value	CEO CFO
	$1,100,0001 delivered in performance rights $330,000 delivered in performance rights
Relationship between performance and vesting	The following vesting schedule applies to the Revenue and EBITDA hurdles for the LTI Plan 2023 granted this year. The LTI Plan 2021 that was performance tested at the end of this financial year had 0% vesting as performance was below threshold.
	Performance level % of target awards vesting*
	Below Threshold 0% vesting
	Threshold 60% vesting
	Target 100% vesting
	Stretch** 200% vesting
	Incremental vesting is made between Threshold and Target, as well as Target and Stretch points. * Vesting of over-performance (between Target and Stretch) provides acceleration to provide greater diferentiation for out-performance.

Annual Report 2021 | REA Group Ltd 53

Remuneration Report

Remuneration Report continued

5. Executive remuneration components (continued)

Long term Incentive Summary

rTSR

Relative TSR compared to a select group of 41 ASX150 companies (excluding mining and resources, energy and infrastructure, materials, industrials and healthcare companies) measured over the period 1 February 2020 to 30 June 2023

The peer group at the beginning of the performance period for the rTSR performance hurdle comprised:

	– Aferpay – Altium – Appen – Aristocrat Leisure – carsales.com.au – Charter Hall Group – Coles Group – Computershare – Crown Resorts – Dexus – Domain – Domino’s Pizza Enterprises – Flight Centre Travel Group – Goodman Group – GPT Group – JB Hi-Fi – Lendlease Group – Link Administration Holdings – Metcash – Mirvac Group – National Storage – NextDC – Nine Entertainment Company – Scentre Group – SEEK – Shopping Centres Australia Property Group – Stockland – Super Retail Group – Tabcorp Holdings – Telstra Corporation – The a2 Milk Company – The Star Entertainment Group – TPG Telecom – Treasury Wine Estates – Unibail-Rodamco- Westfield – Vicinity Centres – Wesfarmers – Wisetech Global – Woolworths Group – Xero
	The following vesting schedule applies to the rTSR performance hurdle for the LTI Plan 2023 granted this year.
	Performance level Below Threshold Threshold Target Stretch Performance level 0% vesting 75% vesting 100% vesting 200% vesting

–
Aferpay
–
Altium
–
Appen
–
Aristocrat Leisure
–
carsales.com.au
–
Charter Hall Group
–
Coles Group
–
Computershare
–
Crown Resorts
–
Dexus
–
Domain
–
Domino’s Pizza
Enterprises
–
Flight Centre Travel
Group
–
Goodman Group
–
GPT Group
–
JB Hi-Fi
–
Lendlease Group
–
Link Administration
Holdings
–
Metcash
–
Mirvac Group
–
National Storage
–
NextDC
–
Nine Entertainment
Company
–
Scentre Group
–
SEEK
–
Shopping Centres
Australia Property
Group
–
Stockland
–
Super Retail Group
–
Tabcorp Holdings
–
Telstra Corporation
–
The a2 Milk Company
–
The Star Entertainment
Group
–
TPG Telecom
–
Treasury Wine Estates
–
Unibail-Rodamco-
Westfield
–
Vicinity Centres
–
Wesfarmers
–
Wisetech Global
–
Woolworths Group
–
Xero

The following vesting schedule applies to the rTSR performance hurdle for the LTI Plan 2023
granted this year.

Performance level
Below Threshold
Threshold
Target
Stretch
Performance level
0% vesting
75% vesting
100% vesting
200% vesting

1 As a result of the delay in remuneration reviews last year, the CEO’s LTI target was adjusted from $800,000 to $1,100,000 on 1 January but approved by the Board to have effect for the FY21 year, meaning the Board has approved an additional $300,000 worth of rights will be granted pursuant to the FY23 plan (on terms disclosed in the 2020 notice of AGM), which will be put to shareholders at the 2021 AGM. This will be separate from the FY24 LTI grant to the CEO which will be separately voted on at the AGM.

Why were these performance conditions chosen?

The Board considers the combination of the Revenue and EPS hurdles to be an appropriate counterbalance to ensure that any ‘top line’ growth is long term focused and balanced with an improvement in earnings.

In particular, revenue is considered to be an appropriate hurdle given that the Group continues to be in a phase of growth.

Additionally, the Board selected EPS as a performance measure on the basis that it:

is a relevant indicator of increase in shareholder value; and
is a target that provides a suitable line of sight to encourage and motivate executive performance.

Relative total shareholder return (rTSR) has been introduced as a performance measure into our LTI Plan 2023 (as disclosed in our Notice of Meeting for the 2020 AGM), to augment our existing revenue and EPS growth targets with a measure that focuses on our long term performance for shareholders relative to ASX peers.

REA Group Ltd | Annual Report 2021

5. Executive remuneration components (continued)

Are there any restrictions placed on the rights?

Group policy prohibits executives from entering into transactions or arrangements which operate to transfer or limit the economic risk of any securities held under the LTI Plan while those holdings are subject to performance hurdles or are otherwise unvested.

What happens in the event of a change of control?

In accordance with the LTI Plan rules, the Board has discretion to waive any vesting conditions attached to the performance rights in the event of a change of control.

What happens if the executive ceases employment?

Unvested performance rights lapse on cessation of employment except to the extent that the Board exercises a discretion to allow them to remain on foot. Generally, where the Board has exercised its discretion in the past it has done so where REA has terminated an executive’s employment with notice (a ‘good leaver’) and in that circumstance has allowed retention of a pro-rata portion (by reference to time served in the performance period), with the unvested rights continuing until the usual performance testing date, without acceleration of vesting.

5.4 Recovery incentive

The following table summarises the key components and operation of the Group’s recovery incentive:

	Recovery Incentive Summary
KMP participants	CEO and CFO
Award type	Performance rights
Performance period Performance metrics When are performance conditions tested?1 How is the Recovery Incentive grant determined?	The performance rights allocated during the year are subject to a two-year performance period beginning 1 July 2020 and ending on 30 June 2022, with 40% of the total grant available for testing afer the first year (tranche 1), and 60% available for testing as at 30 June 2022 (tranche 2)1. The measurement period for rTSR commenced in February 2020, to moderate the impact of COVID-19 from the Company and peer group, given the significantly diferent levels and speeds of recovery across the peer group as at 1 July 2020 (when the performance period would normally commence). The Group refers to this grant as the “Recovery Incentive 2021-2022” as the performance period ends in FY22. Metric Weighting EBITDA 25% rTSR 25% Strategic targets set with reference to FY22 key deliverables 50% Incentive payments are determined in line with the approval of the Financial Statements at the end of each year in the performance period. The number of performance rights issued to each executive is calculated by dividing their ‘target LTI’ value by the value per right. The value per right is determined on a face value basis using a 10-day volume-weighted average price (VWAP) over the period 31 July to 13 August 2020, representing the five working days before, and the five working days afer annual results. Each performance right is a right to acquire one share in REA upon vesting.
Total Target Recovery Incentive	CEO CFO
value (tranche 1 & tranche 2)	$1,414,327 delivered in performance rights $354,936 delivered in performance rights

Annual Report 2021 | REA Group Ltd 55

Remuneration Report

continued

5. Executive remuneration components (continued)

	Recovery Incentive Summary
Relationship between performance and vesting	The following vesting schedule applies to the strategic and EBITDA performance hurdles for the Recovery Incentive granted this year.
	Performance level % of target awards vesting*
	Below Threshold 0% vesting
	Threshold 50% vesting
	Target 100% vesting
	* Vesting continues on a straight-line basis between threshold and target levels of performance for EBITDA growth and strategic targets performance conditions.
	rTSR Relative TSR compared to a select group of 41 ASX150 companies (excluding mining and resources, energy and infrastructure, materials, industrials and healthcare companies) measured over the period 1 February 2020 to 30 June 2021 (with this period commencing in February 2020 for the reason noted above). The peer group at the beginning of the performance period for the rTSR performance hurdle comprised:
	– Aferpay – Altium – Appen – Aristocrat Leisure – carsales.com.au – Charter Hall Group – Coles Group – Computershare – Crown Resorts – Dexus – Domain – Domino’s Pizza Enterprises – Flight Centre Travel Group – Goodman Group – GPT Group – JB Hi-Fi – Lendlease Group – Link Administration Holdings – Metcash – Mirvac Group – National Storage – NextDC – Nine Entertainment Company – Scentre Group – SEEK – Shopping Centres Australia Property Group – Stockland – Super Retail Group – Tabcorp Holdings – Telstra Corporation – The a2 Milk Company – The Star Entertainment Group – TPG Telecom – Treasury Wine Estates – Unibail-Rodamco- Westfield – Vicinity Centres – Wesfarmers – Wisetech Global – Woolworths Group – Xero
	The following vesting schedule applies to the rTSR performance hurdle for the Recovery Incentive granted this year.
	Performance level Below target Target (median) % of target awards vesting* 0% vesting 100% vesting
Outcome for Tranche 1	The Recovery Incentive 2021-2022 that was performance tested at the end of this financial year had 96.7% vesting as performance was between threshold and target.

1 The CFO’s entire Recovery Incentive 2021-2022 is tested in full at the conclusion of the performance period 30 June 2022.

REA Group Ltd | Annual Report 2021

5. Executive remuneration components (continued)

Why were these performance conditions chosen?

Strategic targets were chosen as a performance condition as they represent the key drivers of future growth in the areas of new product and product enhancement, data and digital advancement and audience capture and engagement.

Relative TSR was chosen as a performance condition to provide a direct link between the experience of our shareholders and executive long-term rewards. The performance period commenced in February 2020, to moderate the impact of COVID-19 from the Company and peer group, given the significantly different levels and speeds of recovery across the peer group as at 1 July 2020 (when the performance period would normally commence).

Given the resilience of the Company’s share price through this period of uncertainty, the Board believes that ‘top half’ performance justifies the vesting of all performance rights subject to the relative TSR measure.

EBITDA growth was chosen as a performance condition as the Company continues to focus upon short-term control of costs through COVID-19 without impacting long-term business success.

Are there any restrictions placed on the rights?

What happens in the event of a change of control?

In accordance with the Recovery Incentive Plan rules, the Board has discretion to waive any vesting conditions attached to the performance rights in the event of a change of control.

What happens if the executive ceases employment?

5.5 Service agreements

The table below sets out the main terms and conditions of the employment contracts of the CEO and CFO. All contracts are for unlimited duration.

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Title Notice Period / Termination Payment
CEO / CFO – 9 months for the CEO and 6 months for the CFO (or payment in lieu)
– Immediate termination for misconduct, breach of contract or bankruptcy
– Statutory entitlements only for termination with cause
– Where employment terminates prior to STI or LTI vesting due to resignation or termination for
cause, all holdings and short-term incentive payments are forfeited. Good leaver provisions apply
as detailed in Section 5.3
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Annual Report 2021 | REA Group Ltd 57

Remuneration Report

continued

5. Executive remuneration components (continued)

5.6 Executive remuneration table

Details of the remuneration paid to KMP for the 2021 and 2020 financial years are set out as follows:

KMP	Short term employee benefits Salary STI Plan1 Other Post-em- ployment benefits Long term employee benefits Deferred STI Plan2, 3 LTI Plan4 Total Perfor- mance related % LTIP %
O Wilson 2021 2020
	1,378,306 1,128,855 – 21,964 63,058 483,795 1,287,130 4,363,108 66% 30%
	1,278,997 640,000 – 21,014 33,021 – -190,060 1,782,972 25% 0%
J Hopkins 2021 2020
	848,306 662,074 – 21,964 4,323 309,868 419,724 2,266,259 61% 19%
	848,997 350,000 150,000 21,014 2,679 100,000 125,449 1,598,139 36% 8%
Total 2021 2020
	2,226,612 1,790,929 – 43,928 67,381 793,663 1,706,854 6,629,367 65% 26%
	2,127,994 990,000 150,000 42,028 35,700 100,000 64,611 3,381,111 33% 1%

1 STI Plan represents accrued payment for the current year net of under/over accrual from prior year.

2 Deferred STI Plan represents restricted shares awarded in the FY21 STI net of under/over accrual from prior year.

3 Deferred STI for 2020 includes $100,000 of restricted shares for J Hopkins awarded in the FY20 STI.

4 LTI Plan represents accrued expenses amortised over vesting period of grant. Refer to Note 18 of the Financial Statements.

6. Non-executive director remuneration

6.1 Policy

Overview of policy

The Board seeks to set the fees for the non-executive Directors at a level which provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.

During 2021 the Board’s policy was that the Chairman and Directors – other than current News Corp employees – receive remuneration for their services as Directors.

Promote independence and objectivity

The Chairman and non-executive Director remuneration consists only of fixed fees (inclusive of superannuation).

To preserve independence and impartiality, non-executive Directors do not receive any performance related compensation.

Aggregate fees approved by shareholders

The current aggregate fee pool for the non-executive Directors of $1,500,000 was approved by shareholders at the 2016 AGM. Board and Committee fees, as well as statutory superannuation contributions made on behalf of the non-executive Directors, are included in the aggregate fee pool.

Regular reviews of remuneration

The Chairman and non-executive Director fees are reviewed regularly and set and approved by the Board based on benchmarking, undertaken by external consultants, against other ASX companies of a comparable size. The last increases to Chairman and non-executive Director fees were effective 1 July 2018.

REA Group Ltd | Annual Report 2021

6. Non-executive director remuneration (continued)

6.2 Non-executive director fees

The table below shows the structure and level of annualised non-executive Director fees.

		Chair	Member
Fee applicable Board Audit, Risk & Compliance Commitee	Year 2021 2020 2021 2020	$ 495,000 495,000 40,000 40,000	$ 180,000 180,000 21,000 21,000
Human Resources Commitee	2021	37,000	20,000
	2020	37,000	20,000

6.3 Non-executive director remuneration

Details of remuneration for the Chairman and independent non-executive Directors are set out in the table below. As outlined above, two of the non-independent Directors do not receive any directors’ fees as they are current News Corp employees.

		Fees and	Post- employment
		allowances	benefits	Total
Remuneration applicable	Year	$	$	$
H McLennan (Chairman)	2021	473,306	21,694	495,000
	2020	473,998	21,014	495,012
R Amos K Conlon R Freudenstein	2021 2020 2021 2020 2021	83,497 219,179 209,571 217,352 201,826	7,932 20,831 19,909 20,654 19,174	91,429 240,010 229,480 238,006 221,000
	2020	201,826	19,174	221,000
N Dowling	2021	190,411	18,089	208,500
	2020	182,648	17,352	200,000
J Lambert Total	2021 2020 2021 2020	127,345 – 1,285,956 1,295,003	12,098 – 98,896 99,025	139,443 – 1,384,852 1,394,028

Annual Report 2021 | REA Group Ltd 59

Remuneration Report

continued

7. Shareholdings of key management personnel and Board of Directors

The numbers of ordinary shares in the Company held during the financial year (directly and indirectly) by each Director and other key management personnel of the Group, including their related parties are set out below[1] :

		Received on setlement of	Purchase /
	Balance at	performance	(Sale) of	Balance at
	1 July2020	rights	shares	30 June 20212
Executives
O Wilson	13,682	–	(1,682)	12,000
J Hopkins	–	886	–	886
Non-executive directors
H McLennan	1,095	–	–	1,095
R Amos3	2,481	–	–	2,481
K Conlon	2,248	–	–	2,248
N Dowling	433	–	–	433
T Fellows	7,386	–	–	7,386
R Freudenstein	1,470	–	–	1,470

1 If KMP or non-executive director is not listed, there are no shares held.

2 Includes shares held directly, indirectly or beneficially by KMP.

3 The closing balance for R Amos reflects his shareholding on the date he ceased being KMP.

Declaration

This Directors’ Report and Remuneration Report is made in accordance with a resolution of Directors.

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Mr Hamish McLennan Chairman

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Mr Owen Wilson Chief Executive Officer

Melbourne

6 August 2021

REA Group Ltd | Annual Report 2021

FINANCIAL STATEMENTS 62 Consolidated Income Statement 62 Consolidated Statement of Comprehensive Income 63 Consolidated Statement of Financial Position 64 Consolidated Statement of Changes in Equity 66 Consolidated Statement of Cash Flows 67 ABOUT THIS REPORT 68 Basis of preparation 68 1. Corporate information 68 OUR PERFORMANCE 69 2. Segment information 69 3. Revenue from contracts with customers and other income 72 4. Expenses 75 5. Earnings per share (EPS) 76 6. Intangible assets and impairment 77 7. Income tax 80 RETURNS, RISK AND CAPITAL MANAGEMENT 83 8. Cash and cash equivalents 83 9. Financial risk management 84 10. Leases 91 11. Commissions 94 12. Dividends 95 13. Equity and reserves 95 14. Trade and other receivables and contract assets 97 15. Trade and other payables 98 16. Contingencies and commitments 99	OUR PEOPLE 100
	17. Employee benefits 100
	18. Share-based payments 101
	GROUP STRUCTURE 105
	19. Business combinations 105
	20. Assets and liabilities held for sale 110
	21. Investment in associates and joint ventures 111
	22. Parent entity financial information 113
	OTHER DISCLOSURES 115
	23. Property, plant and equipment 115
	24. Related parties 117
	25. Remuneration of auditors 122
	26. Other significant accounting policies 123
	27. Events afer the Statement of Financial Position date 124

Annual Report 2021 | REA Group Ltd 61

Financial Statements

Consolidated Income Statement

for the year ended 30 June 2021

		2021	2020
	Notes	$’000	$’000
Revenue from property and online advertising	3	903,837	794,562
Revenue from financial services	3	101,529	87,295
Expense from franchisee commissions	3	(77,555)	(61,588)
Revenue from financial services after franchisee commissions		23,974	25,707
Total operating income	3	927,811	820,269
Employee benefits expenses	17	(234,230)	(190,199)
Consultant and contractor expenses		(9,988)	(7,842)
Marketing related expenses		(58,277)	(64,964)
Technology and other expenses		(44,462)	(36,674)
Operations and administration expense		(40,959)	(44,029)
Impairment expense	4	–	(148,569)
Share of losses of associates and joint ventures		12,618	(15,411)
Gain on acquisition and disposal of subsidiaries	19	3,128	5,295
Earnings before interest, tax, depreciation and amortisation (EBITDA)		555,641	317,876
Depreciation and amortisation expense	4	(82,612)	(78,620)
Profit before interest and tax (EBIT)		473,029	239,256
Net finance expense	4	(4,669)	(5,562)
Profit before income tax		468,360	233,694
Income tax expense	7	(155,377)	(121,109)
Profit for the year		312,983	112,585
Profit for the year is attributable to:
Non-controlling interest		(9,694)	212
Owners of the parent		322,677	112,373
		312,983	112,585
Earnings per share attributable to the ordinary equity holders of REA Group Ltd
Basic earnings per share	5	244.6	85.3
Diluted earnings per share	5	244.6	85.3

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

62 REA Group Ltd | Annual Report 2021

Consolidated Statement of Comprehensive Income

for the year ended 30 June 2021

2021	2020
$’000	$’000
Profit for the year 312,983	112,585
Other comprehensive income Items that may be reclassified subsequently to the Consolidated Income Statement Exchange differences on translation of foreign operations, net of tax (32,810) Other comprehensive income for the year, net of tax (32,810)	(1,291) (1,291)
Total comprehensive income for the year 280,173	111,294
Total comprehensive income for the year is attributable to: Non-controlling interest (9,694) Owners of the parent 289,867 280,173	212 111,082 111,294

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

Annual Report 2021 | REA Group Ltd 63

Financial Statements

Consolidated Statement of Financial Position

as at 30 June 2021

		2021	2020
	Notes	$’000	$’000
ASSETS
Current assets
Cash and cash equivalents	8	168,869	222,845
Trade and other receivables	14	147,886	99,391
Contract assets	14	–	5,552
Commission contract assets	11	148,692	45,356
Assets of disposal group held for sale	20	221,565	–
Total current assets		687,012	373,144
Non-current assets
Property, plant and equipment	23	89,369	101,577
Intangible assets	6	836,444	650,365
Deferred tax assets	7	13,911	11,086
Other non-current assets	14	5,013	1,585
Investment in associates and joint ventures	21	309,195	304,910
Commission contract assets	11	431,342	147,856
Total non-current assets		1,685,274	1,217,379
Total assets		2,372,286	1,590,523
LIABILITIES
Current liabilities
Trade and other payables	15	95,673	78,478
Current tax liabilities		15,079	58,600
Provisions		13,794	7,870
Contract liabilities		75,843	60,755
Interest bearing loans and borrowings	9	8,822	76,470
Commission liabilities	11	113,899	35,603
Liabilities of disposal group held for sale	20	28,458	–
Total current liabilities		351,568	317,776
Non-current liabilities
Contract liabilities		–	739
Other non-current payables		7,552	–
Deferred tax liabilities	7	55,126	36,335
Provisions		7,048	4,605
Interest bearing loans and borrowings	9	486,781	250,682
Commission liabilities	11	324,990	115,893
Total non-current liabilities		881,497	408,254
Total liabilities		1,233,065	726,030
Net assets		1,139,221	864,493

64 REA Group Ltd | Annual Report 2021

Consolidated Statement of Financial Position

continued

		2021	2020
	Notes	$’000	$’000
EQUITY
Contributed equity	13	152,140	92,050
Reserves Retained earnings Parent interest Non-controlling interest	13	40,358 876,547 1,069,045 70,176	67,805 704,262 864,117 376
Total equity		1,139,221	864,493

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

Annual Report 2021 | REA Group Ltd 65

Financial Statements

Consolidated Statement of Changes in Equity

for the year ended 30 June 2021

Notes Contributed equity $’000 Reserves $’000 Retained earnings $’000	Parent interest $’000 Non- controlling interest $’000	Total equity $’000
Balance at 1 July 2020 92,050 67,805 704,262	864,117 376	864,493
Profit for the year – – 322,677 Other comprehensive income 13 – (32,810) –	322,677 (9,694)	312,983
	(32,810) –	(32,810)
Total comprehensive income for the year – (32,810) 322,677	289,867 (9,694)	280,173
Transactions with owners in their capacity as owners Share-based payment 17 – 9,097 – Acquisition of treasury shares 13 (3,721) – – Settlement of vested performance rights 13 3,734 (3,734) – Issue of new shares 13 59,851 – – Acquired minority interest 19 – – – Dividends paid 12 – – (150,392) Change in non-controlling interest 226 – –

	9,097 –	9,097
	(3,721) –	(3,721)
	– –	–
	59,851 –	59,851
	– 81,336	81,336
	(150,392) (247)	(150,649)
	226 (1,595)	(1,369)
Balance at 30 June 2021 152,140 40,358 876,547	1,069,045 70,176	1,139,221
Balance at 1 July 2019 89,544 68,120 747,312	904,976 459	905,435
Profit for the year – – 112,373 Other comprehensive income 13 – (1,291) –	112,373 212 (1,291) –	112,585 (1,291)
Total comprehensive income for the year – (1,291) 112,373	111,082 212	111,294
Transactions with owners in their capacity as owners Share-based payment 17 – 4,931 – Acquisition of treasury shares 13 (344) – – Settlement of vested performance rights 13 2,850 (3,955) – Dividends paid 12 – – (155,423)	4,931 – (344) – (1,105) – (155,423) (295)	4,931 (344) (1,105) (155,718)
Balance at 30 June 2020 92,050 67,805 704,262	864,117 376	864,493

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

66 REA Group Ltd | Annual Report 2021

Consolidated Statement of Cash Flows

for the year ended 30 June 2021

	2021	2020
	Notes $’000	$’000
Cash flows from operating activities
Receipts from customers (inclusive of GST)	997,422	924,746
Payments to suppliers and employees (inclusive of GST) Interest received Interest paid	(471,967) 525,455 2,468 (6,094)	(401,743) 523,003 2,785 (7,057)
Income taxes paid	(200,378)	(98,178)
Share-based payment on settlement of incentive plans	–	(1,407)
Net cash inflow from operating activities	8 321,451	419,146
Cash flows from investing activities Payment for acquisition of subsidiary, net of cash acquired Payment for investment in associates and joint ventures Payment for property, plant and equipment	(267,385) (34,022) (2,710)	(16,519) (11,300) (10,830)
Payment for intangible assets	6 (64,225)	(62,523)
Payment for convertible note receivable	21 (11,814)	–
Purchase of subsidiary shares from non-controlling interest	(1,368)	–
Net cash outflow from investing activities Cash flows from financing activities Dividends paid to company’s shareholders Dividends paid to non-controlling interests in subsidiaries	(381,524) 12 (150,392) (247)	(101,172) (155,423) (782)
Payment for acquisition of treasury shares	(3,721)	(344)
Proceeds from borrowings	413,356	169,116
Repayment of borrowings and leases	9 (247,229)	(246,084)
Net cash inflow / (outflow) from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents held for sale at end of the year	11,767 (48,306) 222,845 (782) (4,888)	(233,517) 84,457 137,897 491 –
Cash and cash equivalents at end of the year	8 168,869	222,845

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

Annual Report 2021 | REA Group Ltd 67

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

ABOUT THIS REPORT

Basis of preparation

REA Group Ltd and its controlled entities (together referred to as the ‘Group’) is a for-profit entity for the purposes of preparing the Financial Statements.
These general purpose Financial Statements have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”).
The Financial Statements of the Group also comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
These Financial Statements have been prepared on a going concern basis under the historical cost convention except for convertible note receivables and financial assets and liabilities measured at fair value.
The preparation of the Financial Statements requires the use of certain critical accounting estimates. It also requires the exercise of 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 separately in each relevant note.
The Company is of a kind referred to in Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to the ‘‘rounding off’’ of amounts in the Financial Statements. Amounts in the Financial Statements have been rounded off in accordance with that Instrument to the nearest thousand dollars unless otherwise stated.

1. Corporate information

REA Group Ltd (the ‘Company’) is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange (“ASX”).

The consolidated Financial Statements of the Company as at and for the year ended 30 June 2021 comprise the Financial Statements of the Company and its subsidiaries, together referred to in these Financial Statements as the ‘Group’ and individually as the ‘Group entities’.

The nature of the operations and principal activities of the Group are described in the Directors’ Report.

68 REA Group Ltd | Annual Report 2021

OUR PERFORMANCE

This section highlights the performance of the Group for the year, including results by operating segment, revenue, expenses, earnings per share, income tax expense, intangibles and the annual impairment assessment.

2. Segment information

Accounting policies

Operating segments are reported in a manner consistent with internal reporting provided to the chief operating decision maker, being the CEO, who provides the strategic direction and management oversight of the company through the monitoring of results and approval of strategic plans for the business.

The Group’s operating segments are determined firstly based on location, and secondly by function, of the Group’s operations. Following the acquisition of Elara Technologies Pte. Ltd. (refer to Note 19), the Group re-assessed its operating segments, and concluded that India represents a standalone region. Comparative information for the year ended 30 June 2020 has been restated for the effects of the change in reporting related to India.

The Group has two revenue streams, the first of which is the provision of advertising and other property-related services to the real estate industry. While the Group offers different brands to the market from this stream, it is considered that this offering is a single type of product/service, from which the Property & Online Advertising operating segments in each of Australia, Asia, India and North America derive their revenues. The second revenue stream comes from the Financial Services operating segment in Australia, which derives its revenue through commissions earned from mortgage broking and home financing solutions offered to consumers.

Corporate includes the costs of certain head office functions that are not considered appropriate to be allocated to the Group’s operating businesses. Intersegment transactions are reported separately, with intersegment revenue eliminated from total reported revenue of the Group.

Annual Report 2021 | REA Group Ltd 69

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

2. Segment information (continued)

The following tables present operating income and results by operating segments for the years ended 30 June 2021 and 30 June 2020.

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1 This represents revenue less commissions for financial services.

2 Historic indirect tax provision reflects potential retrospective changes to interpretation of tax law.

3 Gain relating to Move, Inc. sale of Top Producer.

70 REA Group Ltd | Annual Report 2021

2. Segment information (continued)

2020 Restated2	Australia Asia India North America Corporate Total
	Property & Online Advertising $’000 Financial Services $’000 $’000 $’000 $’000 $’000 $’000
Segment operating income1 Total segment operating income1 Inter-segment operating income1	747,467 25,707 48,795 – – – 821,969 (767) – (933) – – – (1,700)
Operating income1	746,700 25,707 47,862 – – – 820,269
Results Segment EBITDA from core operations (excluding share of losses of associates and joint ventures) 495,545 10,046 8,880 – – (22,398) 492,073 Share of gains/ (losses) of associates and joint ventures (154) (182) (1,418) (7,493) (7,223) 1,059 (15,411) Gain on acquisitions and disposals – – – – – (1,059) (1,059)
Segment EBITDA from core operations 495,391 9,864 7,462 (7,493) (7,223) (22,398) 475,603
Impairment – – – – – (148,569) (148,569) Restructure costs – – – – – (8,159) (8,159) Revaluation of contingent consideration – – – – – 1 1 Gain/(loss) on acquisitions and disposals – – – – – (1,000) (1,000)
EBITDA 495,391 9,864 7,462 (7,493) (7,223) (180,125) 317,876 Depreciation and amortisation (78,620)
EBIT 239,256
Net finance expense (5,562)
Profit before income tax 233,694

1 This represents revenue less commissions for financial services.

2 Comparative information for the year ended 30 June 2020 has been restated for the effects of the change in reporting related to India.

Annual Report 2021 | REA Group Ltd 71

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

3. Revenue from contracts with customers and other income

(a) Revenue recognition

Accounting policies

Revenue is recognised at an amount that reflects the consideration to which the Group expects to be entitled in exchange for transferring products or services to a customer. The contract transaction price that will be recognised as revenue excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control over a product or service to a customer. Where services have been billed in advance and the performance obligations to transfer the services to the customer have not been satisfied, the consideration received will be recognised as a contract liability until such time when or as those performance obligations are met and revenue is recognised.

The Group’s customer contracts may include multiple performance obligations. In these cases, the Group allocates the transaction price to each performance obligation based on the relative standalone selling prices of each distinct service. Standalone selling prices are determined based on prices charged to customers for individual products and services taking into consideration the size and length of contracts, product rate cards and the Group’s overall go-to-market strategy.

Contract liabilities relate to consideration received in advance of the provision of goods or services to a customer and primarily arise from the difference in timing between billing and satisfaction of the performance obligation.

==> picture [484 x 357] intentionally omitted <==

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Type of revenue Recognition criteria
Property & online advertising
Subscription services Subscription revenues are derived by providing property advertising services over a
contracted period. Consideration is recorded as deferred when it is received which is
typically at the time of sale and revenue is recognised over time as the customer receives
and consumes the benefits of the access to display listings over the contract period. The
measurement of progress in satisfying this performance obligation is based on the passage
of time (i.e. on a straight-line basis). The amount of revenue recognised is based on the
amount of the transaction price allocated to this performance obligation.
Listing depth products Listing depth revenues are derived by providing property advertising services over
a contracted period. Transaction price is allocated to the performance obligations
(i.e. upgrades of listings to feature more prominently) and revenue is recognised over time
as obligations are satisfied. Depth products are billed monthly in advance and the timing
and duration of the contract may result in contract liabilities.
Banner advertising Revenues from banner advertising are recognised over the time which the advertisements
are placed or as the advertisements are displayed, depending on the structure of the
contract. Advertising customers are billed on a monthly basis, and contract liabilities
may arise between the date of contract commencement and the date all performance
obligations are met.
Performance advertising Revenues from performance advertising and performance contracts are recognised at a
and contracts point in time, being when the performance measure occurs and is generated (e.g. cost per
click or cost per impression). Customers are billed monthly in arrears.
Events Event revenue is recognised over the period of time that the event takes place. Customers
are billed monthly in arrears.
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REA Group Ltd | Annual Report 2021

3. Revenue from contracts with customers and other income (continued)

==> picture [484 x 414] intentionally omitted <==

----- Start of picture text -----

Type of revenue Recognition criteria
Data revenue Automated valuation model (“AVM”) income is derived from providing customers access
to AVMs over a contracted period. Consideration is received monthly in arrears, with
customers charged either a flat monthly fee or based on volume. Revenue is recognised
over time where a flat fee is charged as the performance obligation is to stand ready to
provide services, whereas volume driven fees are recognised at a point in time when the
valuation is performed.
Platform build revenue is recognised based on contract milestones. Where the Group has
an enforceable right to payment for performance completed to date and no alternative use
for the asset, it recognises revenue for the period build, based on time incurred. Platform
licence fees are recognised over time as the customer receives and consumes the benefits
of the access to the platform evenly over time.
Financial services
Lender commissions The Group provides mortgage broking services, where the service provided by the Group
is to establish a loan contract between financial institutions and the borrower. No other
services are provided by the Group to the borrower on behalf of the financial institution
once the loan has been established. In exchange for that mortgage broking service,
the Group is entitled to consideration in the form of an upfront commission and a trail
commission.
The upfront commission is recognised once the loan has been established and is subject to
a clawback provision. The trail commission is received over the life of the loan to the extent
that the borrower continues to hold the loan with the financial institution. The outcomes
of both these uncertainties are outside the control of the Group, however the Group has
extensive historical data and incorporates current market data to support the assessment
of the consideration.
Both commissions are accounted for as variable consideration and are estimated on an
expected value basis. The estimated amount is included in the transaction price to the
extent it is highly probable that a change in the upfront commissions or trail commission
estimation would not result in a significant reversal of the cumulative revenue recognised.
Revenue is updated each reporting period based on any changes in the estimates of
variable consideration.
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The Group applies the practical expedients in accordance with AASB 15 Revenue from Contracts with Customers paragraph 94, to expense the commissions in relation to obtaining contracts, and AASB 15 paragraph 121, to be exempt from disclosure of information about remaining performance obligations where the performance obligations are part of contracts that have original expected durations of one year or less, or remaining performance obligations where we have a right to consideration from a customer in an amount that corresponds directly with the value provided to the customer for the entity’s performance obligations completed to date.

Annual Report 2021 | REA Group Ltd 73

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

3. Revenue from contracts with customers and other income (continued)

(b) Revenue from contracts with customers reconciliation

(b) Revenue from contracts with customers reconciliation
Total revenue for the Group: Type of services Property & Online Advertising $’000	Consolidated for the year ended 30 June 2021
	Financial Services $’000 Asia $’000 India $’000 Total $’000
Revenue from property & online advertising 846,309 Revenue from financial services –	– 40,193 17,335 903,837
	101,529 – – 101,529
Total revenue 846,309	101,529 40,193 17,335 1,005,366

Total revenue for the Group: Timingof revenue Property & Online Advertising $’000	Consolidated for the year ended 30 June 2021
	Financial Services $’000 Asia $’000 India $’000 Total $’000
Services transferred at a point in time 14,690 Services transferred over time 831,619	101,529 31 8,420 124,670
	– 40,162 8,915 880,696
Total revenue 846,309	101,529 40,193 17,335 1,005,366

Total revenue for the Group: Type of services Property & Online Advertising $’000	Consolidated for the year ended 30 June 2020
	Financial Services $’000 Asia $’000 India $’000 Total $’000
Revenue from property & online advertising 746,700 Revenue from financial services –	– 47,862 – 794,562 87,295 – – 87,295
Total revenue 746,700	87,295 47,862 – 881,857

Total revenue for the Group: Timingof revenue Property & Online Advertising $’000	Consolidated for the year ended 30 June 2020
	Financial Services $’000 Asia $’000 India $’000 Total $’000
Services transferred at a point in time 12,229 Services transferred over time 734,471	87,295 59 – 99,583 – 47,803 – 782,274
Total revenue 746,700	87,295 47,862 – 881,857

Reconciliation of operating income:

Reconciliation of operating income:
	2021	2020
	$’000	$’000
Total revenue	1,005,366	881,857
Expense from franchisee commissions	(77,555)	(61,588)
Total operatingincome	927,811	820,269

REA Group Ltd | Annual Report 2021

3. Revenue from contracts with customers and other income (continued)

(c) Contract liabilities

As of 1 July 2020, contract liabilities amounted to $61.5 million, of which $61.5 million was recognised during the year ended 30 June 2021 (FY20: $50.0 million was recognised during the year ended 30 June 2020 relating to opening contract liabilities of $54.0 million).

4. Expenses

4. Expenses
	2021 $’000	2020 $’000
Profit before income tax includes the following specific expenses:
Finance (income)/expense
Interest income	(2,179)	(2,878)
Interest expense	6,574	7,587
Foreign exchange loss - financing	274	853
Total finance expense Depreciation of property, plant and equipment Amortisation of intangibles	4,669 17,372 65,240	5,562 17,270 61,350
Total depreciation and amortisation expense	82,612	78,620
Advertising placement costs	15,477	9,192
Net foreign exchange (gain)/loss	1,947	(2,132)
Impairment of goodwill	–	106,761
Impairment of investment in associate	–	41,808

(a) Goods and services tax (GST)

Accounting policies

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 with other receivables or payables in the Consolidated Statement of Financial Position. 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.

Annual Report 2021 | REA Group Ltd 75

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

5. Earnings per share (EPS)

Accounting policies

The Group presents basic and diluted EPS in the Consolidated Income Statement.

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.

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 additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

	2021	2020
(a)Earningsper share	Cents	Cents
Basic and diluted earningsper share attributable to the ordinaryequityholders of the company	244.6	85.3
	2021	2020
(b) Reconciliation of earnings used in calculating earnings per share	$’000	$’000
Profit attributable to the ordinary equity holders of the company used in calculating basic and diluted
earningsper share	322,677	112,373
	2021	2020
(c) Weighted average number of shares	Shares	Shares
Weighted average number of ordinary shares used as the denominator in calculating basic and
diluted earningsper share1	131,927,327	131,714,699

1 The Group does not have any dilutive potential ordinary shares. There is no effect of the share rights granted under the share-based payment plans on the weighted average number of ordinary shares, as shares are purchased on-market.

REA Group Ltd | Annual Report 2021

6. Intangible assets and impairment

Accounting policies

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill is not amortised, instead goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. For impairment testing purposes the Group identifies its cash generating units (“CGUs”), which are the smallest identifiable groups of assets that generate cash inflows largely independent of cash inflows of other assets or other groups of assets. The Group monitors goodwill at a segment level and the carrying amount of goodwill acquired through business combinations has been assessed for impairment testing on that basis.

IT development and software costs incurred in developing products or systems and costs incurred in acquiring software and licences that will contribute to future period financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. Costs capitalised include external direct costs of materials and services and direct payroll and payroll related costs of employees’ time spent on the project. Amortisation is calculated on a straight-line basis over three to five years. IT development costs include only those costs directly attributable to the development phase and are only recognised following completion of technical feasibility and where the Group has an intention and ability to use the asset.

Other intangible assets such as customer contracts and brands acquired by the Group are stated at cost less accumulated amortisation and impairment losses. Amortisation is charged to the Consolidated Income Statement on a straight-line basis over the estimated useful lives of the intangible assets, ranging from three to 17 years for customers contracts, and 15 years for those brands that do not have an indefinite useful life (for which no amortisation charge is recognised).

In April 2021, the IFRS Interpretations Committee (IFRIC) issued a final agenda decision, Configuration or customisation costs in a cloud computing arrangement. The decision clarifies how current accounting standards apply to Software-as-a-Service (SaaS), including whether configuration or customisation expenditure relating to cloud computing arrangements is able to be recognised as an intangible asset and if not, over what time period the expenditure is expensed. SaaS arrangements are service contracts providing the Group with the right to access the cloud provider’s application software over a period of time. The IFRIC clarified that costs incurred to configure or customise, and the ongoing fees to obtain access to, the cloud provider’s application software, are recognised as operating expenses as incurred. However, costs incurred in relation to the development of bridging modules to existing on-premise systems or bespoke additional capability which the Company controls, are capitalised as intangible software assets, and amortised over the useful life of the software on a straight-line basis. The Group’s analysis indicates that the impact of this agenda decision is not material.

Key estimate and judgement

The assets’ residual values, useful lives and amortisation methods are reviewed and adjusted if appropriate, at each financial year end. The estimation of useful lives of assets has been based on historic experience and turnover policies. Any changes to useful lives may affect prospective amortisation rates and asset carrying values. In assessing whether a brand has a finite or indefinite useful life, the Group makes use of information on the long-term strategy of the brand, the level of growth or decline of the markets that the brand operates in, the history of the market and the brand’s position within that market. Assets other than goodwill and intangible assets that have an indefinite useful life are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to impairment.

Judgement is applied to identify the Group’s CGUs. The recoverable amount of an asset or CGU is the higher of its fair value less costs of disposal and its value in use. The determination of recoverable amount requires the estimation and discounting of future cash flows. These estimates include establishing forecasts of future financial performance, discount rates and terminal growth rates. Each of these is based on a ‘best estimate’ at the time of performing the valuation, and by definition, the estimate will seldom equal the related actual results.

Annual Report 2021 | REA Group Ltd 77

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

6. Intangible assets and impairment (continued)

	Goodwill $’000	Sofware1 $’000	Customer contracts $’000	Brands2 $’000	Total $’000
Year ended 30 June 2021
Opening net book amount	414,747	123,900	27,592	84,126	650,365
Additions - internally generated	–	64,225	–	–	64,225
Other business combinations3	266,892	40,966	45,961	27,041	380,860
Disposals (net of amortisation)	–	(868)	–	–	(868)
Amortisation charge	–	(61,980)	(3,107)	(153)	(65,240)
Transferred to assets held for sale	(102,667)	(11,800)	(2,842)	(74,159)	(191,468)
Exchange differences	–	(1,430)	–	–	(1,430)
Closingnet book amount	578,972	153,013	67,604	36,855	836,444
As at 30 June 2021
Cost	832,967	428,768	79,443	50,155	1,391,333
Accumulated amortisation and impairment	(253,995)	(275,755)	(11,839)	(13,300)	(554,889)
Closingnet book amount	578,972	153,013	67,604	36,855	836,444
Year ended 30 June 2020
Opening net book amount	545,706	121,897	31,191	84,293	783,087
Additions - internally generated	–	62,523	–	–	62,523
Other business combinations	–	108	–	–	108
Disposals (net of amortisation)	(24,198)	(3,313)	–	–	(27,511)
Amortisation charge	–	(57,584)	(3,599)	(167)	(61,350)
Impairment charge	(106,761)	–	–	–	(106,761)
Exchange differences	–	269	–	–	269
Closingnet book amount	414,747	123,900	27,592	84,126	650,365
As at 30 June 2020
Cost	877,545	384,485	45,353	97,274	1,404,657
Accumulated amortisation and impairment	(462,798)	(260,585)	(17,761)	(13,148)	(754,292)
Closingnet book amount	414,747	123,900	27,592	84,126	650,365

1 Software includes capitalised development costs, being an internally generated intangible asset.

2 Brands includes indefinite life intangible assets allocated to the Financial Services CGU of $15.3 million (FY20: $3.9 million), to the India CGU of $14.5 million (FY20: nil) and to the Asia CGU of nil (FY20: $73.9 million).

3 Acquisitions of Mortgage Choice and Elara.

78 REA Group Ltd | Annual Report 2021

6. Intangible assets and impairment (continued)

(a) Impairment tests for goodwill and indefinite life intangibles

The Group monitors goodwill at segment level and the carrying amount of goodwill acquired through business combinations has been assessed for impairment testing as follows:

	Discount rates Terminalgrowth rates Goodwill $’000
	2021 2020 2021 2020 2021 2020
Asia Australia – Financial Services Australia – Property & Online Advertising India	10.7% 11.1% - 17.6% 1.9% 2.3% - 4.3% 120,214 222,881 14.4% 13.9% 2.4% 3.0% 132,673 29,124 13.1% 12.6% 2.4% 3.0% 162,742 162,742 N/A N/A N/A – 163,343 –
Total	578,972 414,747

The recoverable amounts for Australia – Property and Online Advertising, Australia Financial Services and Asia have been determined based on a value-in-use calculation using cash flow projections based on financial forecasts approved by the Board. These cash flow projections cover a five-year period. Cash flows beyond the final year of cash flows are extrapolated using a terminal growth rate.

The recoverable amount for India has been determined based on a fair value less costs of disposal calculation, based on a market value methodology utilising a revenue multiple and Board approved financial forecasts. The inputs would be categorised as Level 2 within the fair value hierarchy.

(b) Result of impairment testing

The Group has not recorded an impairment charge as at 30 June 2021 (2020: $106.7 million).

The impairment charges in prior year are recorded in the Consolidated Income Statement and recognised in the Corporate segment for segment reporting purposes.

(c) Key assumptions used for valuation calculations

The calculation of value-in-use for each segment is most sensitive to the following assumptions:

Discount rates (pre-tax) represent the current market specific to each segment, taking into consideration the time value of money and individual risks that have not been incorporated in the cash flow estimates. The discount rate calculation is based on specific circumstances of the Group and the segment and is derived from its weighted average cost of capital (“WACC”). Segment-specific risk is incorporated by applying additional regional risk factors. The WACC is evaluated annually based on publicly available market data.

Growth rate estimates are based on industry research and publicly available market data. The rates used to extrapolate the cash flows beyond the budget period includes an adjustment to current market rates where required to approximate a reasonable longterm average growth rate. Over the extended forecast period, growth rate assumptions are above the terminal growth rate as the Group operates in a high growth industry.

Real estate industry and lending industry conditions impact assumptions including volume of real estate and borrowing transactions, number of real estate agencies, broker productivity and new development project spend. Assumptions are based on research and publicly available market data.

(d) Sensitivity to changes in assumptions

There is no reasonable possible change in a key assumption used to determine the recoverable amount that would result in impairment.

Annual Report 2021 | REA Group Ltd 79

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

7. Income tax

Accounting policies

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 law in the countries where the subsidiaries, associates, and joint ventures operate and generate taxable income. The Group establishes liabilities 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, the deferred income tax is not accounted for if it arises from 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 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. Utilisation of tax losses also depends on the ability of the entity to satisfy certain tests at the time the losses are recouped. Deferred tax liabilities and assets are not 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. Where there are current and deferred tax balances attributable to amounts recognised directly in equity, these are also recognised directly in equity.

Tax consolidation legislation

The head entity, REA Group Ltd 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 standalone taxpayer in its own right. Details about the tax funding agreement in place between REA Group Ltd and wholly owned entities are disclosed in Note 24.

Adoption of Voluntary Tax Transparency Code

On 3 May 2016, the Australian Treasurer released a Voluntary Tax Transparency Code (the Voluntary Code). The Voluntary Code recommends additional tax information be publicly disclosed to help educate the public about the corporate sector’s compliance with Australia’s tax laws. REA Group supports the Voluntary Tax Transparency Code as part of our commitment to paying the right amount of tax and complying with all tax laws and signed up to this Voluntary Code for FY21.

Key estimate and judgement

The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in determining the worldwide provision for income taxes. There are 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 the Group’s 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 tax provisions in the period in which such determination is made. In addition, the Group has recognised deferred tax assets relating to carried forward tax losses to the extent there are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority and the same subsidiary against which the unused tax losses can be utilised. However, utilisation of the tax losses also depends on the ability of the entity to satisfy certain tests at the time the losses are recouped.

The Group is also required to assess if it has any uncertain tax treatments. An uncertain tax treatment is any tax treatment applied by an entity where there is uncertainty over whether that treatment will be accepted by the relevant tax authority, and these require additional disclosures.

REA Group Ltd | Annual Report 2021

7. Income tax (continued)

(a) Income tax expense

(a) Income tax expense
	2021	2020
	$’000	$’000
Current tax Adjustments for current tax of prior periods Deferred tax	159,078 279 (4,839)	130,286 51 (9,002)
Adjustments for deferred tax of prior periods	859	(226)
Total income tax expense reported in the Consolidated Income Statement	155,377	121,109

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

(b) Numerical reconciliation of income tax expense to prima facie tax payable
2021	2020
$’000	$’000
Accounting profit before income tax 468,360 Tax at the Australian tax rate of 30% (2020: 30%) 140,508 Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: Research and development deduction (1,621)	233,694 70,109 (1,967)
Share of (gains)/losses of associates and joint ventures (3,785)	4,623
Prior period adjustments including research and development claim 1,138	(176)
Effect of foreign tax rate 28	(318)
Tax losses not recognised 15,665 Impairment of goodwill in subsidiaries – Impairment of investment in associate – (Gain)/loss on acquisitions (1,337) (Gain)/loss on sale of business –	9,946 32,028 14,843 618 (2,301)
Tax cost setting adjustments for acquired entities (358)	(8,044)
Transaction costs 2,701	–
Other 2,438	1,748
Total income tax expense reported in the Consolidated Income Statement 155,377	121,109

(c) Amounts recognised directly into equity

(c) Amounts recognised directly into equity
Aggregate current and deferred tax arising in the reporting period and not recognised in the Consolidated Income Statement or other comprehensive income but directly debited/(credited)	2021 $’000	2020 $’000
to equity:
Current tax – credited directly to equity	–	(311)
Net deferred tax – debited/(credited) directly to equity	(384)	21
Total amount recognised directly into equity	(384)	(290)

Annual Report 2021 | REA Group Ltd

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

7. Income tax (continued)

(d) Summary of deferred tax

(d) Summary of deferred tax
	2021	2020
	$’000	$’000
The balances comprise temporary differences attributable to:
Employee benefits	4,972	2,738
Expected credit losses	1,201	1,851
Accruals and other	7,738	6,497
Intangible assets	(53,689)	(34,513)
Foreign currency revaluation of associate	(1,437)	(1,822)
Total temporary differences	(41,215)	(25,249)
Deferred tax assets	13,911	11,086
Deferred tax liabilities	(55,126)	(36,335)
Net deferred tax liabilities	(41,215)	(25,249)
Movements:
Opening balance	(25,249)	(33,810)
Credited to the Consolidated Income Statement	3,980	9,228
(Debited)/Credited to equity	384	(21)
Deferred taxes on acquisition of subsidiary	(38,858)	(646)
Transferred to assets held for sale	18,528	–
Closing balance	(41,215)	(25,249)
Deferred tax assets expected to be recovered within 12 months	11,546	8,693
Deferred tax assets expected to be recovered after more than 12 months	2,365	2,393
Deferred tax liabilities expected to be payable within 12 months	–	–
Deferred tax liabilities expected to be payable after more than 12 months	(55,126)	(36,335)
Net deferred tax liabilities	(41,215)	(25,249)

(e) Unrecognised temporary differences

The Group has unused tax losses for which no deferred tax asset has been recognised of $238.0 million (2020: $43.3 million) on the basis that it is not probable that the Group will derive future assessable income of a nature and amount sufficient to enable the temporary difference to be realised. Of the $238.0 million, $49.0 million has no time limit expiry and $189.0 million is subject to a time limit of expiry ranging five to eight years from when the loss was incurred.

REA Group Ltd | Annual Report 2021

RETURNS, RISK AND CAPITAL MANAGEMENT

This section sets out the policies and procedures applied to manage capital structure and the related risks and rewards. Capital structure is managed in such a way so as to maximise shareholder return, maintain optimal cost of capital and provide flexibility for strategic investment.

8. Cash and cash equivalents

Accounting policies

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of less than 12 months and are subject to an insignificant risk of change in value. For cash flow statement presentation purposes, cash and cash equivalents are as defined above, net of outstanding bank overdrafts.

Bank overdrafts are shown within borrowings in current liabilities in the Consolidated Statement of Financial Position.

Cash at bank and in hand Short-term deposits	2021 $’000 168,410 459	2020 $’000 222,407 438
Total cash and short-term deposits	168,869	222,845

(a) Cash flow reconciliation

(a) Cash flow reconciliation
	2021	2020
Profit for the year Depreciation and amortisation Impairment charges Share-based payment expense	$’000 312,983 82,612 – 9,097	$’000 112,585 78,620 148,569 4,931
Net exchange differences	3,661	(2,789)
Share of (gains)/losses of associates and joint ventures	(12,618)	15,411
Share-based payment on settlement of LTI Plans	–	(1,407)
Contingent consideration revaluation and unwind Other non-cash items Change in operating assets and liabilities Acquisition of net working capital Divestment of subsidiary	– 580 29,097 –	(1) 5,854 3,129 (1,742)
(Increase)/Decrease in trade receivables	(34,047)	19,177
(Increase)/Decrease in other current assets	(114,263)	(412)
Decrease/(Increase) in deferred tax assets	(2,826)	2,409
(Increase) in other non-current assets Increase in trade and other payables Increase in contract liabilities (Decrease)/Increase in provisions (Decrease)/Increase in deferred tax liabilities (Decrease)/Increase in current tax liabilities	(287,126) 313,510 18,308 8,787 37,321 (43,625)	(14,533) 30,195 7,519 (7,960) (10,970) 30,561
Net cash inflow from operating activities	321,451	419,146

Annual Report 2021 | REA Group Ltd

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

9. Financial risk management

The financial risks arising from the Group’s operations comprise market, credit and liquidity risk. The Group seeks to manage risks in ways that will generate and protect shareholder value. Management of risk is a continual process and an integral part of business management and corporate governance. The Group’s risk management strategy is aligned with the corporate strategy and company vision to ensure that the risk management strategy contributes to corporate goals and objectives.

The Board determines the Group’s tolerance for risk, after taking into account the strategic objectives, shareholder expectations, financial and reporting requirements and the financial position, organisational culture and the experience or demonstrated capacity in managing risks. Management is required to analyse its business risk in the context of Board expectations, specific business objectives and the organisation’s risk tolerance.

One of the key areas of the Group’s risk management focus is on financial risk management of financial instruments, used to raise and distribute funds for the Group’s operations and opportunities. Borrowings are made at variable interest rates. Cash and cash equivalents draw interest at variable interest rates. All other financial assets and liabilities are non-interest-bearing. The Group holds the following financial instruments:

		2021	2020
	Notes	$’000	$’000
Current financial assets/(liabilities) not measured at fair value1
Cash and cash equivalents	8	168,869	222,845
Trade and other receivables		147,886	104,943
Current commission contract assets2	11	148,692	45,356
Trade and other payables	15	(95,673)	(78,478)
Current commission liabilities	11	(113,899)	(35,603)
Interest bearing loans and borrowings		(8,822)	(76,470)
Financial guarantees		–	(1,844)
Total current net financial assets		247,053	180,749
Non-current financial assets/(liabilities) not measured at fair value1
Other non-current assets	14	5,013	1,585
Non-current commission contract assets2	11	431,342	147,856
Non-current commission liabilities	11	(324,990)	(115,893)
Interest bearing loans and borrowings		(486,781)	(250,682)
Financial guarantees		–	(167)
Total non-current net financial liabilities		(375,416)	(217,301)

1 Measurement consistently applied to assets and liabilities presented as held for sale as at 30 June 2021, except for the convertible note receivable which is measured at fair value, refer to Note 20 for details.

2 Commission contract assets are accounted for in accordance with AASB 15, with an ECL measured in accordance with AASB 9. Refer to Note 11 for further details.

The Group assessed that the fair values of cash and cash equivalents, trade receivables and other assets, and trade and other payables approximate their carrying amounts largely due to the short-term maturities of these instruments. Refer to section (c) for measurement details on borrowings.

84 REA Group Ltd | Annual Report 2021

9. Financial risk management (continued)

(a) Financial assets

Accounting policies

Recognition and measurement

Financial assets are classified at initial recognition and subsequently measured at amortised cost, fair value through other comprehensive income (“OCI”), and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s business model for managing them. Except for trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially 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. For a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”) on the principal amount outstanding on specified dates. This assessment is referred to as the SPPI test and is performed at an instrument level. The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets at amortised cost is the category most relevant to the Group.

The Group measures financial assets at amortised cost if both of the following conditions are met:

The financial asset is held within a business model with the objective to hold financial assets to collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest rate (“EIR”) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group’s financial assets at amortised cost include trade receivables (Note 14).

Financial assets designated at fair value through OCI (equity instruments)

Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under AASB 132 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis. Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the Consolidated Income Statement when the right of payment has been established, except when the Group benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment. The Group does not currently hold investments under this category.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model.

Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value, with net changes in fair value recognised in the statement of profit or loss.

Impairment of financial assets

The Group recognises an allowance for expected credit loss (ECL) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. Further information about the Group’s ECLs on trade receivables and other assets in Note 14.

Annual Report 2021 | REA Group Ltd 85

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

9. Financial risk management (continued)

(b) Financial liabilities

Accounting policies

Recognition and measurement

Financial liabilities are classified as subsequently measured at amortised cost, except for:

Financial liabilities at fair value through profit or loss.
Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies
Financial guarantee contracts
Commitments to provide a loan at a below-market interest rate
Contingent consideration recognised by an acquirer in a business combination to which AASB 3 applies.

All financial liabilities are recognised initially at fair value, and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade and other payables, and loans and borrowings.

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, as well as through the EIR amortisation process. Amortised cost is calculated by considering any discount or premium on acquisition, and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss. 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 of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is 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. This category generally applies to interest-bearing loans and borrowings (refer to section (c)).

Financial guarantees

After initial recognition, guarantees issued are subsequently measured at the higher of:

the amount of the loss allowance determined in accordance with the ECL model under AASB 9 Financial Instruments; and
the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the principles in AASB 15.

ECLs are calculated based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. Further information about the Group’s ECLs on guarantee liabilities is disclosed in this note.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading, and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by AASB 9. Gains or losses on liabilities held for trading are recognised in the Consolidated Income Statement. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in AASB 9 are satisfied.

86 REA Group Ltd | Annual Report 2021

9. Financial risk management (continued)

(c) Borrowings

(c) Borrowings
			2021	2020
Facility1	Interest rate	Maturity	$’000	$’000
Unsecured bridge facility2 Unsecured syndicated revolving loan facility4 Sub Facility A Sub Facility B	BBSY +0.80%3 BBSY +0.85% - 1.45% BBSY +2.00% - 2.75%	July 2022 December 2021 December 2021	413,745 – –	– 170,000 –
Unsecured NAB revolving loan facility5	BBSY +0.85% - 1.40%	April 2021	–	70,000
Unsecured NAB overdraft facility6	NAB benchmark rate - 4.22%	On demand	–	–

1 The carrying value of the debt approximates fair value.

2 Bridge facility with National Australia Bank. The undrawn amount at 30 June 2021 was $106.25 million.

3 Interest rate margin is set at 0.8% to 31 December 2021, 1.1% between 1 January 2022 and March 2022 and 1.4% between 1 April 2022 and the termination of the facility.

4 The loan facility was provided by a syndicate comprising Australia and New Zealand Bank, National Australia Bank and HSBC. The facility was repaid using the unsecured bridge facility on 8 June 2021.

5 Facility matured and was repaid on 27 April 2021.

6 Facility was closed on 9 June 2021. The facility was undrawn.

(i) Unsecured bridge facility

On 8 June 2021, the Group repaid the unsecured syndicated revolving facility using the funds from the $520 million unsecured bridge facility which matures in July 2022. The proceeds from the bridge facility were used to repay the $170.0 million of Sub Facility A in addition to providing finance for Group acquisitions. The total drawn amount at 30 June 2021 was $413.7 million.

A total of $0.4 million in interest was paid for the year ended 30 June 2021 at a weighted average interest rate of 0.8%. Transaction costs of $0.6 million, which were incurred to establish the facility, have been capitalised on the Consolidated Statement of Financial Position, of which $0.5 million has not yet been amortised through the Consolidated Income Statement.

The loan facility requires the Group to maintain a net leverage ratio of not more than 3.50 to 1.0 and an interest coverage ratio of not less than 3.0 to 1.0. As of 30 June 2021, the Group was in compliance with all applicable debt covenants.

(ii) Unsecured syndicated revolving loan facility

On 8 June 2021, the $170.0 million of Sub Facility A of the unsecured revolving loan facility was repaid using proceeds from the unsecured bridge facility. On 15 June 2021, the undrawn $148.5 million of Sub Facility B of the unsecured revolving loan facility was closed. The overall unsecured syndicated revolving loan facility was treated as an extinguishment and a loss of $0.4 million recognised in the Consolidated Income Statement. The interest rate margin was between 0.85% and 2.00% (2020: between 0.85% and 2.00%). $1.6 million in interest was paid for the year ended 30 June 2021 (2020: $3.7 million) at a weighted average interest rate of 0.49% (2020: 1.9%).

The Group was in compliance with all applicable debt covenants up until the date of closure of the facility.

(iii) Unsecured NAB revolving loan facility

On 27 April 2021 the facility matured and was repaid by the Group. The facility was treated as an extinguishment and a gain of $0.1 million recognised in the Consolidated Income Statement.

The interest rate margin was 0.85% (2020: 0.85%). $0.6 million in interest was paid for the year ended 30 June 2021 (2020: $1.2 million) at a weighted average interest rate of 0.95% (2020: 1.7%).

Debt covenant requirements for the facility are consistent with those applied to the unsecured syndicated revolving loan facility. The Group was in compliance with all of the applicable debt covenants up until the date of closure of the facility.

(iv) Unsecured NAB revolving loan facility

On 9 June 2021, the Group closed the $20.0 million overdraft facility. The facility was undrawn up until the date of closure. The facility was treated as an extinguishment and a loss of $0.1 million recognised in the Consolidated Income Statement.

Annual Report 2021 | REA Group Ltd 87

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

9. Financial risk management (continued)

(d) Market risk – foreign exchange

Nature of risk Risk management Material arrangements Exposure Foreign currency risk arises The Group manages foreign At the reporting date, cash and Sensitivity analysis was when future transactions or currency risk by evaluating cash equivalents included the performed to illustrate the financial assets and liabilities its exposure to fluctuations AUD equivalent of $14.8 million impact of movements in each are denominated in a currency and entering forward foreign (2020: $9.2 million) in MYR, foreign currency with all other other than the entity’s currency contracts, where THB, SGD, HKD, USD, INR and variables held constant and functional currency. appropriate. CNY. utilising a range of +5% to -5%: The Group operates The Group also holds foreign At reporting date, no forward Cash and cash equivalents: the internationally and is therefore currency cash balances or foreign currency contracts impact to the profit and loss exposed to foreign exchange in order to fund significant were in place. would be between ($0.7 million) risk, relating to the US Dollar transactions denominated in The Group’s exposure to and $0.7 million. (USD), Singapore Dollar (SGD), non-functional currencies. foreign currency changes Hong Kong Dollar (HKD), for all other currencies is not Malaysian Ringgit (MYR), Thai considered material. Baht (THB), Indian Rupee (INR) and Chinese Yuan (CNY).

(e) Market risk – cash flow interest rate

==> picture [483 x 263] intentionally omitted <==

----- Start of picture text -----

Nature of risk Risk management Material arrangements Exposure
The Group is exposed to Funds that are excess to short- As at 30 June 2021, the Group Sensitivity analyses were
variable interest rate risk on term liquidity requirements are held cash and cash equivalents performed to illustrate the
its interest bearing financial generally invested in short-term of $168.9 million (2020: $222.8 impact of movements in interest
assets and liabilities due to deposits. The Group is primarily million), of which $0.5 million rates, with all other variables
the possibility that changes in exposed to domestic interest (2020: $0.4 million) was held in held constant.
interest rates will affect future rate movements, therefore short-term deposits. Borrowings: the weighted
cash flows. exposure and impact to foreign As at 30 June 2021, the Group average interest rate for the
As at 30 June 2021, the Group’s interest change is considered held interest bearing loans and year ended 30 June 2021 was
primary exposure to interest immaterial. borrowings (excluding lease 0.49% (2020: 1.89%). If the
rate risk arises from interest The Group manages interest liabilities) of $413.4 million interest rate were to increase
bearing loans and borrowings rate risk by evaluating its (2020: $240.0 million) which or decrease by 1%, the impact
(excluding lease liabilities) and exposure to interest rate are exposed to interest rate to the interest expense would
cash and cash equivalents. changes and entering contracts movements. See further details be between $0.1 million and
Cash and cash equivalents where appropriate. in section (c) on the Group’s ($0.1 million).
consist primarily of cash and borrowing facilities. Cash and cash equivalents:
short-term deposits, which are if cash and cash equivalents
predominately interest bearing were to increase or decrease
accounts. by 1%, based on historic interest
rates, the impact to interest
income would be between
$0.1 million and ($0.1 million).
----- End of picture text -----

(f) Market risk – price

The Group does not have any listed equity securities that are susceptible to market price risk arising from uncertainties about future values of the investment securities at 30 June 2021 (2020: nil).

REA Group Ltd | Annual Report 2021

9. Financial risk management (continued)

(g) Credit risk

Nature of risk Risk management

Credit risk can arise from It is the Group’s policy that the non-performance by all customers who wish to counterparties of their trade on credit terms are contractual financial subject to credit verification obligations towards the Group. procedures, which may include The Group is exposed to an assessment of their financial credit risk from its operating position, past experience and activities (primarily from trade industry reputation, depending receivables and commission on the amount of credit to be contract assets) and from its granted. financing activities, including Receivable balances are deposits with financial monitored on an ongoing basis. institutions. Refer to Note 14 for further details on the expected credit loss policy.

Material arrangements

The gross trade receivables balance at 30 June 2021 was $125.1 million (2020: $93.5 million). Refer to Note 14 for an aging analysis of this balance. As at 30 June 2021, the Group held cash and cash equivalents of $168.9 million (2020: $222.8 million) of which $0.5 million (2020: $0.4 million) was held in short-term deposits.

Exposure

The Group’s maximum exposures to credit risk at balance date in relation to each class of recognised financial assets is the carrying amount of those assets.

Refer to Note 14 for details on the provision for expected credit losses as at 30 June 2021.

Credit risk arising from other financial assets, i.e. cash and cash equivalents, arises from default of the counterparty. The Group’s treasury policy specifies a minimum long term “BB” or better investment grade risk rating for financial institutions in order to transact with the Group.

(h) Liquidity risk

==> picture [483 x 253] intentionally omitted <==

----- Start of picture text -----

Nature of risk Risk management Material arrangements Exposure
Liquidity risk is the risk that the Liquidity risk is managed via the The gross trade receivables The table below categorises
Group will encounter difficulty regular review of forecasted balance at 30 June 2021 the Group’s financial liabilities
in meeting obligations as they cash inflows and outflows, was $125.1 million (2020: into their relevant maturity
fall due. with any surplus funds being $93.5 million). Refer to Note 14 groupings. The amounts
Liquidity risk management placed in short term deposits to for an aging analysis of this included are the contractual
implies maintaining sufficient maximise interest revenue. balance. undiscounted cash flows.
cash and the availability of Principally the Group sources As at 30 June 2020, the Balances due within 12 months
funding through an adequate liquidity from cash generated Group held cash and cash equal their carrying balances
amount of committed credit from operations and where equivalents of $168.9 million as the impact of discounting is
facilities to meet obligations required external bank facilities. (2020: $222.8 million), of which not significant.
when due. $0.5 million (2020: $0.4 million)
was held in short-term
deposits. The Group also had
access to the Bridge facility
with an undrawn amount of
$106.3 million.
See further details in section (i)
on the Group’s contractual
maturities of financial assets
and liabilities.
----- End of picture text -----

Annual Report 2021 | REA Group Ltd 89

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

9. Financial risk management (continued)

(i) Contractual maturities of financial assets and liabilities

					Total
					contractual	Carrying
	< 6 months	6-12 months	1-2 years	>2 years	cash flows	amount
	$’000	$’000	$’000	$’000	$’000	$’000
At 30 June 2021
Commission contract assets	87,246	67,237	115,437	412,148	682,068	580,034
Commission contract liabilities	(66,730)	(51,043)	(87,362)	(311,192)	(516,327)	(438,889)
Trade payables	(95,673)	–	–	–	(95,673)	(95,673)
Borrowings	(5,295)	(5,540)	(424,032)	(71,759)	(506,626)	(495,603)
	(80,452)	10,654	(395,957)	29,197	(436,558)	(450,131)
At 30 June 2020
Commission contract assets	28,637	26,214	45,663	156,407	256,921	193,212
Commission contract liabilities	(20,776)	(18,936)	(32,794)	(106,302)	(178,808)	(151,496)
Trade payables	(78,478)	–	–	–	(78,478)	(78,478)
Contingent consideration	(37,994)	–	–	–	(37,994)	(2,011)
Borrowings	(4,265)	(74,959)	(180,233)	(81,285)	(340,742)	(327,152)
	(112,876)	(67,681)	(167,364)	(31,180)	(379,101)	(365,925)

(j) Reconciliation of liabilities arising from financing activities

	Balance at		Principal		Balance at
	1 July 2020	Additions1	payments	Other	30 June 2021
	$’000	$’000	$’000	$’000	$’000
Current loans	69,456	–	(240,000)	170,544	–
Current lease liabilities	7,014	1,284	(7,229)	7,753	8,822
Total current interest bearing loans and borrowings	76,470	1,284	(247,229)	178,297	8,822
Non-current loans	169,777	413,356	–	(169,750)	413,383
Non-current lease liabilities	80,897	1,625	–	(9,124)	73,398
Total non-current interest bearing loans and
borrowings	250,674	414,981	–	(178,874)	486,781

1 Additions include $2.7 million relating to lease liabilities as part of the acquisitions of Mortgage Choice.

	Balance at		Principal		Balance at
	1 July 2019	Additions	payments	Other	30 June 2020
	$’000	$’000	$’000	$’000	$’000
Current loans	239,809	69,516	(240,000)	131	69,456
Current lease liabilities	6,399	1,407	(6,084)	5,292	7,014
Total current interest bearing loans and borrowings	246,208	70,923	(246,084)	5,423	76,470
Non-current loans	69,940	100,484	–	(647)	169,777
Non-current lease liabilities	67,111	21,314	–	(7,528)	80,897
Total non-current interest bearing loans and
borrowings	137,051	121,798	–	(8,175)	250,674

REA Group Ltd | Annual Report 2021

10. Leases

Accounting policies

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. A portion of an asset is an identified asset if it is physically distinct. If it is not physically distinct, the portion of an asset is not an identified asset, unless the lessee has the right to use substantially all the capacity of the asset during the lease term. To assess whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in AASB 16.

As a lessee

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component based on its relative stand-alone prices. However, for leases of property the Group has elected not to separate non-lease components and therefore account for the lease and non-lease components as a single lease component.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. Right‐of‐use assets are depreciated on a straight‐line basis over the lease term. If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the incremental borrowing rate. Generally, the Group used its incremental borrowing rate as the discount rate.

The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease for each lessee and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable under a residual value guarantee; and
the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

The Group presents right-of-use assets in ‘property, plant and equipment’ and lease liabilities in ‘interest bearing loans and borrowings’ in the Consolidated Statement of Financial Position.

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

Annual Report 2021 | REA Group Ltd 91

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

10. Leases (continued)

Key estimate and judgement

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

If the Group cannot readily determine the interest rate implicit in the lease, it uses the lessee’s incremental borrowing rate (“IBR”) to measure lease liabilities. The IBR is the rate of interest that the lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group would have to pay, which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary’s functional currency).

The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary’s stand-alone credit rating).

(a) Leases as a lessee

The Group typically leases office space over periods of two to seven years, with an option to renew the lease after that date. Lease payments are renegotiated on the exercise of renewal options to reflect market rentals. Some leases provide for additional rent payments that are based on changes in local price indices. For certain leases, the Group is restricted from entering into any sub-lease arrangements.

The Group leases IT equipment with contract terms of one to five years. These leases are short-term and/or leases of low-value items. The Group has elected not to recognise right-of-use assets and lease liabilities for these leases.

(i) Right-of-use assets

Right-of-use assets are presented as property, plant and equipment (see Note 23). The Group leases various assets including buildings and IT equipment. Information about leases for which the Group is a lessee is presented below.

	Property	Equipment	Total
	$’000	$’000	$’000
Balance at 1 July 2020	82,372	83	82,455
Additions	250	–	250
Other business combinations1	2,374	–	2,374
Remeasurement	(39)	483	444
Depreciation	(9,640)	(566)	(10,206)
Disposals (net of accumulated depreciation)	(275)	–	(275)
Transferred to assets held for sale	(1,022)	–	(1,022)
Exchange differences (net)	(255)	–	(255)
Balance at 30 June 2021	73,765	–	73,765
Balance at 1 July 2019	71,045	358	71,403
Additions	22,721	–	22,721
Remeasurement	(136)	–	(136)
Depreciation	(9,163)	(275)	(9,438)
Disposals (net of accumulated depreciation)	(2,191)	–	(2,191)
Exchange differences (net)	96	–	96
Balance at 30 June 2020	82,372	83	82,455

1 Acquisition of Mortgage Choice.

92 REA Group Ltd | Annual Report 2021

10. Leases (continued)

Lease liabilities

Lease liabilities are presented as interest bearing loans and borrowings (see Note 9).

Maturity analysis – undiscounted cash flows Less than one year One to five years	2021 $’000 10,835 37,181	2020 $’000 9,244 37,950
More than five years	44,865	53,568
Total undiscounted lease liabilities at 30 June	92,881	100,762
Lease liabilities included in the Consolidated Statement of Financial Position at 30 June	82,220	87,919
Current	8,822	7,014
Non-current Transferred to liabilities of disposal group held for sale	73,398 1,064	80,905 –

(ii) Amounts recognised in profit and loss

(ii) Amounts recognised in profit and loss
	2021	2020
	$’000	$’000
Interest on lease liabilities	2,217	2,305
Variable lease payment not included in the measurement of lease liabilities	–	–
Expenses relating to short-term leases	548	288
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets (iii) Amounts paid during the year	125 2021 $’000	135 2020 $’000
Total cash outflow for leases	9,430	8,390

(iv) Extension options

A number of the Group’s property leases contain extension options exercisable by the Group, up to six months before the end of the non-cancellable contract period. Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility. The extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease commencement date whether it is reasonably certain to exercise the extension options. The Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant changes in circumstances within its control. The Group has an exposure of $2.2 million (2020: nil) from extension options not reflected in the lease liability.

Annual Report 2021 | REA Group Ltd 93

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

11. Commissions

Accounting policies

On initial recognition at settlement, the Group recognises trailing commission revenue and a related commission contract asset representing management’s estimate of the variable consideration to be received from completion of the performance obligation. The Group uses the ‘expected value’ method of estimating variable consideration which requires significant judgement. A significant financing component is also involved when determining this variable consideration. As such, the contract asset is adjusted by recalculating the net present value of estimated future cash flows at the original effective interest rate. The transaction price is a percentage of the expected outstanding balance of the loan.

A corresponding expense and payable is also recognised, initially measured at fair value being the net present value of expected future trailing commission payable to brokers. These calculations require the use of assumptions that are unobservable inputs categorised as Level 3 within the fair value hierarchy. The trail commission liabilities that are initially recognised at fair value are subsequently carried at amortised cost using the effective interest rate (“EIR”) method. Any resulting adjustment to the carrying value is recognised as income or expense in the Consolidated Income Statement.

Key estimate and judgement

The determination of the assumptions used in the valuation of trailing commissions is based primarily on an annual actuarial assessment at year end of the underlying loan portfolio, including historical run-off rate analysis and consideration of current and future economic factors. These factors are complex and the determination of assumptions requires a high degree of judgement.

The key assumptions underlying the expected value calculations of the trailing commission contract asset and the corresponding liability due to franchisees at 30 June are detailed below. The assumptions reflect the ‘best estimate’ of COVID-19 on the trailing commission asset and corresponding liability at the time of performing the valuation. Any increase/decrease in the below assumptions would lead to a corresponding increase/decrease in the carrying value of the trailing commissions balance. In June 2021, the Group acquired Mortgage Choice Limited, which contributed significant commission contract assets and commission contract liabilities on acquisition. Refer to Note 19 (a) for further details.

	2021	2020
Weighted average loan life	4.2 years	4.3 years
Discount rate per annum	4.5 – 6.5%	5.0 – 6.5%
Overall average percentage paid to franchisees	75.7%	78.4%

Future trail commission contract assets are due from a combination of highly rated major lenders. There have been no historical instances where a loss has been incurred, including through the global financial crisis. ECLs are not considered material and consequently have not been recognised.

The carrying amounts of financial assets and financial liabilities recognised as they relate to trailing commissions are detailed below:

2021	2020
$’000	$’000
Future trailing commission contract asset – current 122,375	38,317
Upfront commission contract asset - current 26,317	7,039
Total current commission contract assets 148,692	45,356
Future trailing commission contract asset – non-current 431,342	147,856
Future trailing commission liability - current 92,236	29,988
Upfront commission liability – non-current 21,663	5,615
Total current commission liabilities 113,899	35,603
Future trailing commission liability – non-current 324,990	115,893

REA Group Ltd | Annual Report 2021

12. Dividends

Accounting policies

Dividend declared is provided for when it is appropriately authorised and no longer at the discretion of the company on or before the end of the reporting period but not distributed at the end of the reporting period.

	2021	2020
	$ʼ000	$ʼ000
Declared and paid during the period (fully franked at 30%)
Interim dividend for 2021: 59.0 cents (2020: 55.0 cents)	77,949	72,443
Final dividend for 2020: 55.0 cents (2019: 63.0 cents)	72,443	82,980
Total dividends provided for or paid	150,392	155,423
Proposed and unrecognised as a liability (fully franked at 30%) Final dividend for 2021: 72.0 cents (2020: 55.0 cents). Proposed dividend is expected to be paid on 16 September 2021 out of retained earnings at 30 June 2021 but is not recognised as a liability at year end	95,124	72,443
Franking credit balance (based on a tax rate of 30%)
Franking credits available for future years, adjusted for franking credits and debits that will arise from
the settlement of liabilities or receivables for income tax and dividends after the end of the year	585,871	450,202
Impact on the franking account of the dividend recommended by the Directors since year end, but
not recognised as a liability at year end	(40,767)	(31,047)

13. Equity and reserves

(a) Equity

Accounting policies

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. The company does not have authorised share capital or par value in respect of its shares.

The number of ordinary shares issued at 30 June 2021 was 132,117,217 (2020: 131,714,699).

	Contributed equity $ʼ000	Other contributed equity $ʼ000	Total $ʼ000
Balance at 1 July 2019	102,616	(13,072)	89,544
Acquisition of treasury shares	–	(344)	(344)
Settlement of vested performance rights Balance at 30 June 2020 Acquisition of treasury shares Settlement of vested performance rights Issue of new shares	– 102,616 – – 59,851	2,850 (10,566) (3,721) 3,734 –	2,850 92,050 (3,721) 3,734 59,851
Other – change in non-controlling interest	–	226	226
Balance at 30 June 2021	162,467	(10,327)	152,140

Annual Report 2021 | REA Group Ltd

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

13. Equity and reserves (continued)

As detailed in Note 19, the Group issued 402,518 new shares as scrip consideration for the acquisition of Elara, of which 318,323 shares were issued on 17 December 2020 and 84,195 shares were issued on 30 December 2020. The closing share price on 17 December 2020 and 30 December 2020 was $148.59 and $149.07 respectively.

The provision of shares to satisfy grants under share-based payment plans was made through the on-market purchase of shares, not by issuing new shares. Refer to Note 18 for more details of the plans.

(b) Reserves

Accounting policies

Share-based payments reserve represents the value of the grant of rights to executives under the Long-Term Incentive Plans and other compensation granted in the form of equity. The amounts are transferred out of the reserve when the rights vest and the shares are purchased on-market. Refer to Note 18 for further details on share-based payment arrangements.

Currency translation reserve is used to record exchange differences arising from the translation of the Financial Statements of its overseas subsidiaries and equity investments.

	Share-based	Currency
	payments	translation
	reserve	reserve	Total
	$ʼ000	$ʼ000	$ʼ000
Balance at 1 July 2019	8,021	60,099	68,120
Foreign currency translation differences	–	(1,291)	(1,291)
Total other comprehensive gain	–	(1,291)	(1,291)
Share-based payments expense	4,931	–	4,931
Settlement of vested performance rights	(3,955)	–	(3,955)
Balance at 30 June 2020	8,997	58,808	67,805
Foreign currency translation differences	–	(32,810)	(32,810)
Total other comprehensive gain	–	(32,810)	(32,810)
Share-based payments expense	9,097	–	9,097
Settlement of vested performance rights	(3,734)	–	(3,734)
Balance at 30 June 2021	14,360	25,998	40,358

REA Group Ltd | Annual Report 2021

14. Trade and other receivables and contract assets

Accounting policies

Trade receivables are initially recognised at the transaction price. Due to their short-term nature, trade receivables have not been discounted. Trade receivables are generally due for settlement between 15 and 60 days. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for expected credit losses) is made when the Group expects that it will not be able to collect all amounts due according to the original terms of the receivables. The amount of the impairment allowance is the difference between the assetʼs carrying amount and the present value of estimated future cash flows.

Contract assets relate to the provision of goods or services to a customer in advance of consideration being received or due and primarily arise because the consideration to be received is conditional.

A provision matrix is used to calculate expected credit losses (“ECLs”) for trade receivables. The provision rates are based on days past due for groupings of customer segments that have similar loss patterns.

The ECL calculation performed at each reporting date reflects the Groupʼs historical credit loss experience, adjusted for forward- looking factors specific to debtor profiles and the economic environment. Generally, trade receivables are written off if past due for more than one year. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 9.

Impairment losses are recognised in the Consolidated Income Statement within operations and administration expenses. When a trade receivable for which an allowance has been recognised becomes uncollectible in a subsequent period, it is written off against the provision account.

Key estimate and judgement

The provision matrix used to calculate ECLs is initially based on the Groupʼs historical observed default rates and the matrix is adjusted for forward-looking information including the expected impact of COVID -19. The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is an estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Groupʼs historical credit loss experience and forecast of economic conditions may also not be representative of customersʼ actual default in the future.

2021	2020
$ʼ000	$ʼ000
Trade receivables 125,094	93,499
Provision for expected credit losses (5,528) Net trade receivables 119,566 Current prepayments 21,008 Accrued income and other receivables 7,312 Current trade and other receivables 147,886 Non-current prepayments 824	(6,611) 86,888 9,659 2,844 99,391 875
Other assets 4,189	710
Other non-current assets 5,013	1,585
Total trade receivables and other assets 152,899	100,976

Annual Report 2021 | REA Group Ltd 97

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

14. Trade and other receivables and contract assets (continued)

(a) Ageing of trade receivables

(a) Ageing of trade receivables
	2021	2020
	$ʼ000	$ʼ000
Not due	103,649	75,896
1-30 days past due not impaired	9,531	6,964
31-60 days past due not impaired	1,001	1,993
61+ days past due not impaired	5,385	2,035
Provisions for expected credit losses	5,528	6,611
Total gross trade receivables	125,094	93,499

During the year, a total expense of $1.0 million (2020: $1.2 million) was recognised in the Consolidated Income Statement in relation to trade receivables written off.

Information about the Groupʼs exposure to foreign currency, interest rate and credit risk in relation to trade and other receivables is provided in Note 9.

(b) Contract assets

Contracts assets relate to the provision of services in advance of consideration being received or due because the consideration to be received is conditional. Upon achievement of these conditions, the amount recognised as a contract asset will be reclassified to trade receivables. As at 30 June 2021, the Group has nil contract assets (2020: $5.6 million).

15. Trade and other payables

Accounting policies

Trade and other payables are carried at amortised cost and are not discounted. 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 paid in accordance with vendor terms.

	2021	2020
	$ʼ000	$ʼ000
Trade payables	5,909	23,498
Accrued expenses	78,183	33,902
Other payables	11,581	21,078
Total trade and other payables	95,673	78,478

REA Group Ltd | Annual Report 2021

16. Contingencies and commitments

(a) Contingent liabilities

(i) Claims

Various claims arise in the ordinary course of business against REA Group Ltd and its subsidiaries. The amount of the liability (if any) at 30 June 2021 cannot be ascertained, and any resulting liability would not materially affect the financial position of the Group.

(ii) Guarantees

At 30 June 2021, the Group had bank guarantees totalling $4.5 million (2020: $3.6 million) in respect of various property leases for offices used by the Group.

In December 2020, REA and News Corp acquired preference shares in Elara Technologies Pte. Ltd. by issuing cash consideration for repayment of the USD$69.0 million revolving credit facility (“RCF”) with Citibank. This resulted in the derecognition of a $1.3 million guarantee liability and accrued income asset on settlement of the RCF facility on completion.

(iii) Other Matters

From time to time, the Group is subject to both formal and informal reviews by various tax authorities as well as legal claims. The final outcome of any tax review or audit cannot be determined with an acceptable degree of reliability. At 30 June 2021 the Consolidated Statement of Financial Position accurately reflects all potential taxation liabilities and the Group is taking reasonable steps to conclude all outstanding matters with the relevant tax authorities.

(b) Commitments

The Group has no capital commitments at 30 June 2021 (2020: nil).

As set out in Note 19(b) (vii) REA has agreed to provide ongoing funding to Elara for a minimum of 18 months from the date of acquisition, on terms consistent with the RCF previously held by Elara.

As at 30 June 2021, the Group is committed to provide future funding up to a maximum of USD$8.77 million to the 99 Group. Refer to Note 27 for further information.

Annual Report 2021 | REA Group Ltd 99

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

OUR PEOPLE

This section provides information about employee benefit obligations, including annual leave, long service leave and postemployment benefits. It also includes details about employee share plans.

17. Employee benefits

Accounting policies

Wage and salary liabilities are recognised in respect of employeesʼ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.

Long service leave liabilities are measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Expected future payments are discounted using market yields at the end of the reporting period of high-quality corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognised in the Consolidated Income Statement.

Termination benefits are payable when employment is terminated before the normal retirement date or an employee accepts voluntary redundancy in exchange for these benefits. It is recognised when the Group is demonstrably committed to either terminating employment according to a detailed formal plan without possibility of withdrawal or to providing termination benefits as a result of an offer made to encourage voluntary redundancy.

Share-based payments are further described in Note 18.

Provisions are measured at the present value of the Groupʼs best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value 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.

2021	2020
$ʼ000	$ʼ000
Employee benefits Salary costs 208,084	168,763
Defined contribution superannuation expense 17,049	16,505
Share-based payments expense 9,097	4,931
Total employee benefits expenses 234,230	190,199
Provisions Current employee benefit provisions1 13,794	7,625
Non-current employee benefit provisions2 4,852	2,814
Total employee benefit provisions 18,646	10,439

1 Included within current provisions.

2 Included within non-current provisions.

100 REA Group Ltd | Annual Report 2021

18. Share-based payments

Accounting policies

The cost of equity settled transactions is recognised in employee benefits expense in the Consolidated Income Statement, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date). At each reporting date until vesting, the cumulative charge to the Consolidated Income Statement is in accordance with the vesting conditions.

Equity settled awards granted by the Company to employees of subsidiaries are recognised in the subsidiariesʼ separate Financial Statements as an expense with a corresponding credit to equity. As a result, the expense recognised by the Group is the total expense associated with all such awards. Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated.

Key estimate and judgement

The Group measures the cost of equity settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The Long Term Incentive (“LTI”) plan, deferred share and deferred equity plan valuations were performed using the Black Scholes model. The accounting estimates and assumptions relating to equity settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity.

(a) LTI plan

The Group operates a LTI plan for executives identified by the Board. The plan is based on the grant of performance rights that vest as shares on a one-to-one basis at no cost to the employee subject to performance hurdles. Settlement of the performance rights is made in ordinary shares purchased on-market. The performance measures approved by the Board for all executives are based upon Group revenue and EPS annual growth rate achievement over the performance period. LTI plans issued during the year also include a performance measure based upon relative Total Shareholder Returns over the performance period.

Rights are vested after the performance period. The LTI Plan 2021 rights performance period ended on 30 June 2021 and they will vest upon approval by the Board in August 2021. As all other performance periods conclude in the future, no performance rights are exercisable (or have been exercised) at balance date.

Annual Report 2021 | REA Group Ltd 101

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

18. Share-based payments (continued)

The fair value of each performance right is estimated on the grant date using the Black Scholes model.

The tables below summarise the movement in the Groupʼs LTI plan during the year and other information required to understand how the fair value of the equity instruments has been determined.

		Balance at			Forfeited/
		start of the	Granted during	Exercised	cancelled	Balance at end
		year	the year	during the year	during the year	of the year1
Plan	Performanceperiod	Number	Number	Number	Number	Number
LTI Plan 2020 (Plan 11)	1 July 2017 - 30 June 2020	17,883	–	–	(17,883)	–
LTI Plan 2021 (Plan 12)	1 July 2018 - 30 June 2021	18,983	–	–	(1,740)	17,243
LTI Plan 2022 (Plan 13)	1 July 2019 - 30 June 2022	27,717	–	–	(2,085)	25,632
LTI Plan 2023 (Plan 14)	1 July 2020 - 30 June 2023	–	21,456	–	–	21,456
LTI Recovery Plan 2021	1 July 2020 - 30 June 2021	–	11,553	–	–	11,553
LTI Recovery Plan 2022	1 July 2020 - 30 June 2022	–	23,173	–	–	23,173
Total		64,583	56,182	–	(21,708)	99,057

1 The weighted average remaining contractual life of these rights at the end of the reporting period is 13 months.

			Expected life
Value per right at	Expected	Risk-free	of performance	Annual
Plan measurement date	volatility1	interest rate	rights	dividendyield
LTI Plan 2021 (Plan 12) $69.05 - $85.44 LTI Plan 2022 (Plan 13) $97.55 - $107.30 LTI Plan 2023 (Plan 14) $165.77 - $237.51 LTI Recovery Plan 2021 $128.57 - $142.35 LTI Recovery Plan 2022 $126.36 - $140.95	22.0% 25.0% 35.0% 40.0% 37.5%	2.0% 0.9% 0.1% 0.0% - 0.1% 0.0% - 0.1%	38 months 38 months 38 months 14 months 26 months	2.3% 1.6% 1.0% 1.0% 1.0%

1 The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the rights is indicative of future trends, which may not necessarily be the actual outcome.

102 REA Group Ltd | Annual Report 2021

18. Share-based payments (continued)

(b) Deferred equity plan

The deferred equity plan operates in the same manner as the Groupʼs LTI plan, for certain non-executive employees, dependent on their position in the Groupʼs remuneration framework. The performance measures approved by the Board for these employees are based upon personal performance and Group revenue and EBITDA annual growth rate achievement over the performance period. Plans issued during the year also include a performance measure based upon relative Total Shareholder Returns over the performance period.

Rights are vested after the performance period. The deferred equity plan 2021 rights performance period ended on 30 June 2021 and they will vest upon approval by the Board in August 2021. As all other performance periods conclude in the future, no performance rights are exercisable (or have been exercised) at balance date.

The fair value of each performance right is estimated on the grant date using the Black Scholes model.

The tables below summarise the movement in the Groupʼs deferred equity plan during the year and other information required to understand how the fair value of the equity instruments has been determined.

Plan		Performanceperiod 1 July 2018 – 30 June	Balance at start of the year Number	Granted during the year Number	Exercised during the year1 Number	Forfeited/ cancelled during the Number	Balance at end of the year2 Number
Deferred equity plan	2020	2020	23,044	–	(11,531)	(11,513)	–
		1 July 2019 - 30 June
Deferred equity plan	2021	2021	23,093	–	–	(1,336)	21,757
		1 July 2020 - 30 June
Deferred equity plan	2022	2022	–	23,833	–	(920)	22,913
Total			46,137	23,833	(11,531)	(13,769)	44,670

1 The weighted average share price over the settlement period for these rights was $117.95.

2 The weighted average remaining contractual life of these rights at the end of the reporting period is seven months.

Plan		Value per right at measurement date	Expected volatility1	Risk-free interest rate	Expected life ofperformance	Annual dividendyield
Deferred equity plan	2021	$136.50 - $142.35	40.0%	0.0%	26 months	1.0%
Deferred equity plan	2022	$131.45 - $140.95	37.5%	0.1%	26 months	1.0%

Annual Report 2021 | REA Group Ltd 103

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

18. Share-based payments (continued)

(c) Deferred share plan

Rights granted under these plans vest 24 months after grant date, except for rights under the key talent share plan which vest 36 months after grant date. Each share right automatically converts into one ordinary share at an exercise price of nil at the end of the performance period, subject to service conditions. All performance periods conclude in the future and no performance rights are exercisable at balance date. The fair value of each performance right is estimated on the grant date using the Black Scholes model. The number of share rights granted is determined based on the dollar value of the award divided by the weighted average price using a VWAP leading up to the date of grant.

The tables below summarise the movement in the Groupʼs deferred share plan during the year and the fair value of these equity instruments.

		Balance at			Forfeited/
		start of the	Granted during	Exercised	cancelled	Balance at end
	Performance	year	the year	during the year1	during the	of the year2
Plan	period end date	Number	Number	Number	Number	Number
Key talent deferred share plan 2017	31 August 2020	11,736	–	(11,736)	–	–
Deferred share plan 2018	30 June 2020	3,145	–	(3,145)	–	–
Future leaders deferred share plan
2020	31 August 2020	3,488	–	(3,488)	–	–
Deferred share plan 2019	6 January 2021	7,437	–	(7,437)	–	–
Deferred share plan 2019	21 May 2021	2,055	–	(2,055)	–	–
Deferred share plan 2019	30 June 2021	3,588	–	–	(671)	2,917
Deferred share plan 2021	30 June 2021	–	9,727	(6,098)	–	3,629
Deferred share plan 2022	30 June 2022	–	9,666	–	(1,065)	8,601
Future leaders deferred share plan
2022	30 June 2022	–	5,611	–	(1,227)	4,384
Total		31,449	25,004	(33,959)	(2,963)	19,531

1 The weighted average share price over the settlement period for these rights was $135.26.

2 The weighted average remaining contractual life of these rights at the end of the reporting period is 10 months.

	Value per right at
Plan	measurement date
Deferred share plan 2019	$101.62
Deferred share plan 2021	$142.35
Deferred share plan 2022	$140.95 - $142.35
Future leaders deferred share plan 2022	$142.35

104 REA Group Ltd | Annual Report 2021

GROUP STRUCTURE

This section provides information on the Group structure and how this impacts the results of the Group as a whole, including parent entity information, details of investments in associates and joint ventures and business combinations.

19. Business combinations

Accounting policies

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquireeʼs identifiable net assets.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and relevant conditions. All identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of AASB 9, is measured at fair value with the changes in fair value recognised in the Consolidated Income Statement.

Acquisition-related costs are expensed as incurred and included in consultant and contractor expenses and operations and administrative expenses, and net gain on acquisition of subsidiaries.

Key estimate and judgement

The purchase price of businesses acquired as well as its allocation to acquired assets and liabilities requires estimates and judgements.

On acquisition date, the fair value of the identifiable assets acquired, including intangible assets such as brands, customer relationships, software and liabilities is determined. The assumptions and estimates made have an impact on the assets 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 Groupʼs future profit or loss.

The Group has also adopted the fair value method in measuring contingent consideration. The determination of these fair values involves judgement and the ability of the acquired entity to achieve certain financial results.

(a) Mortgage Choice Limited

On 18 June 2021, the Group obtained control of 100% of Mortgage Choice Limited (“Mortgage Choice”), a leading Australian mortgage broking business. The acquisition provides the Group with an expanded broker network, accelerating REAʼs financial services strategy.

(i) Purchase consideration

The total purchase consideration is detailed below:

	$ʼ000
Cash paid	243,745
Total purchase consideration	243,745

Annual Report 2021 | REA Group Ltd 105

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

19. Business combinations (continued)

(ii) Details of net assets and liabilities acquired

The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition. The net identifiable assets acquired will be finalised within 12 months of the acquisition date, in line with accounting standards. Provisional accounting in the determination of net assets acquired has been applied and is detailed below:

==> picture [484 x 504] intentionally omitted <==

----- Start of picture text -----

|||
|---|---|
|Fair value|
|recognised on|
|acquisition|
|$ʼ000|
|Current assets|
|Cash and cash equivalents|16,395|
|Trade and other receivables|2,591|
|Commission contract assets|106,034|
|Current tax assets|848|
|Total current assets|125,868|
|Non-current assets|
|Property, plant and equipment|2,809|
|Intangible assets|73,823|
|Other non-current assets|3,176|
|Commission contract assets|283,374|
|Total non-current assets|363,182|
|Current liabilities|
|Trade and other payables|16,655|
|Provisions|1,304|
|Contract liabilities|742|
|Interest bearing loans and borrowings|1,194|
|Commission liabilities|89,511|
|Total current liabilities|109,406|
|Non-current liabilities|
|Other non-current payables|1,652|
|Deferred tax liabilities|27,415|
|Provisions|684|
|Interest bearing loans and borrowings|1,459|
|Commission liabilities|208,237|
|Total non-current liabilities|239,447|
|Net identifiable assets acquired|
|Add: goodwill|103,548|
|Net assets|243,745|
|Cash flows on acquisition|
|Cash consideration|243,745|
|Less: cash acquired|(16,395)|
|Outflow of cash|227,350|

----- End of picture text -----

The goodwill acquired is attributable to Mortgage Choiceʼs strong market position and the expected future growth. Goodwill is not deductible for tax purposes. The Group has provisionally identified intangible assets including brand, franchisee relationships and software that have been provisionally separated from goodwill, net of deferred taxes.

106 REA Group Ltd | Annual Report 2021

19. Business combinations (continued)

(iii) Acquisition related costs

Acquisition related costs of $5.0 million were accounted for as expenses within Operations and Administration expenses and Consultant and Contractor expenses in the period in which they were incurred.

(iv) Revenue and profit before tax from continuing operations

There is no material revenue or profit contributions arising from the Mortgage Choice acquisition included in the continuing operations of the Group for the year ended 30 June 2021. If the business combination had occurred on 1 July 2020, the Mortgage Choice acquisition would have contributed $43.8 million to total revenue and $2.7 million to profit before tax from continuing operations of the Group.

(b) Elara Technologies Pte. Ltd.

In December 2020, the Group completed the acquisition of a majority stake in Elara Technologies Pte. Ltd. (“Elara”), a digital real estate classifieds and transaction services company. The acquisition was achieved in stages through a combination of subscribing for new preference shares and the acquisition of the existing shareholdings of certain minority shareholders. The Group held a 59.65% shareholding on acquisition and subsequently increased its interest to 60.65% as at the reporting date.

(i) Purchase consideration

The total purchase consideration and fair value of each class of consideration is detailed below:

==> picture [484 x 56] intentionally omitted <==

----- Start of picture text -----

|||
|---|---|
|$ʼ000|
|Cash paid|49,091|
|Shares issued|56,588|
|Total purchase consideration|105,679|

----- End of picture text -----

Cash consideration paid was $48.9 million (US$34.5 million) on 17 December 2020 with a further $0.2 million paid in January 2021. The consideration included newly issued REA shares with a total consideration value of $56.6 million. The Group issued 318,323 new REA shares on 17 December 2020 and made a subsequent issue of 84,195 shares on 30 December 2020. The fair values of the REA shares issued were based on the listed share price of the Company at 17 December 2020 and 30 December 2020.

(ii) Fair value of Elara

News Corp also subscribed for US$34.5 million of preference shares in Elara. Following the subscription of preference shares by REA and News Corp, Elaraʼs debt facility was repaid.

As at 30 June 2021, News Corp held a non-controlling interest in Elara at 39.13% and minority interests held the remaining 0.22%. The non-controlling interest was calculated using the fair value approach. This value was based on the fair value of consideration paid and the total number of Elara shares outstanding. This resulted in a share price at completion date which was used to determine the fair value of the non-controlling interest. The Group determined the non-controlling interest to be $81.3 million on acquisition date.

==> picture [484 x 152] intentionally omitted <==

----- Start of picture text -----

|||
|---|---|
|$ʼ000|
|Purchase consideration|105,679|
|Fair value of previously held equity interest|10,853|
|Non-controlling interest|81,336|
|Fair value of Elara|197,868|
|(iii) Goodwill on acquisition|
|$ʼ000|
|Fair value of Elara|197,868|
|Less: Net identifiable assets and liabilities acquired|(34,436)|
|Goodwill|163,432|

----- End of picture text -----

The Goodwill acquired is attributable to Elaraʼs established digital real estate business market position and the high long-term growth potential of this market. Goodwill is not deductible for tax purposes. The Group has identified intangible assets including software and brands that have been separated from goodwill, net of deferred taxes.

Annual Report 2021 | REA Group Ltd

107

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

19. Business combinations (continued)

(iv) Details of net assets and liabilities acquired

The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition:

==> picture [484 x 391] intentionally omitted <==

----- Start of picture text -----

|||
|---|---|
|Fair value|
|recognised on|
|acquisition|
|$ʼ000|
|Current assets|
|Cash and cash equivalents|9,498|
|Trade and other receivables|6,990|
|Total current assets|16,488|
|Non-current assets|
|Property, plant and equipment|1,081|
|Intangible assets|40,057|
|Other non-current assets|864|
|Total non-current assets|42,002|
|Current liabilities|
|Trade and other payables|5,812|
|Provisions|1,256|
|Contract liabilities|4,950|
|Total current liabilities|12,018|
|Non-current liabilities|
|Deferred tax liabilities|9,946|
|Provisions and other payables|2,090|
|Total non-current liabilities|12,036|
|Net identifiable assets acquired|34,436|
|Add: goodwill|163,432|
|Net assets|197,868|
|Cash flows on acquisition|
|Cash consideration|49,091|
|Less: cash acquired|(9,498)|
|Outflow of cash|39,593|

----- End of picture text -----

The fair value of trade and other receivables is $7.0 million and includes trade receivables with a fair value of $3.2 million. The gross contractual amount of trade receivables due is $5.7 million. An expected credit loss of $2.5 million has been disclosed for contractual cash flows not expected to be collected.

(v) Acquisition related costs

The fair value of the equity interest in Elara held by REA immediately before the acquisition date was $10.9 million. The investment was remeasured immediately before the acquisition resulting in a fair value gain of $1.1 million which was recognised in the Consolidated Income Statement. As part of the acquisition accounting a $7.1 million foreign exchange gain relating to the original investment was transferred from foreign currency translation reserve to the Consolidated Income Statement.

A net gain on acquisition was recognised in the Consolidated Income Statement of $3.1 million. This comprised $7.1 million gain from the release of the historic foreign exchange reserve, $1.1 million fair value gain on the original Elara investment, $3.7 million compensation expense relating to historic management incentives and other transaction related costs of $1.4 million. Acquisition related costs have been recognised in the gain/loss on acquisition in the Consolidated Income Statement.

REA Group Ltd | Annual Report 2021

108

19. Business combinations (continued)

(vi) Revenue and profit before tax from continuing operations

From the date of acquisition, the Elara acquisition contributed $17.3 million to total revenue and ($19.1) million to profit before tax from continuing operations of the Group. If the business combination had occurred on 1 July 2020, the Elara acquisition would have contributed $28.4 million to total revenue and ($33.1) million to profit before tax from continuing operations of the Group.

(vii) Commitments

REA has agreed to provide ongoing funding to Elara for a minimum of 18 months from the date of acquisition, on terms consistent with the RCF previously held by Elara. Funding will be provided in any combination of equity and debt as may be determined at REAʼs discretion to be utilised by Elara for business operations.

In July 2021 the Group subscribed for new Class I Preference Shares increasing its shareholding from 60.65% to 65.49%. Total funding provided was $20.8 million, with News Corp continuing to hold a non controlling interest in Elara of 34.3%. This has been disclosed as a subsequent event in Note 27.

(viii) Non-controlling interest

Elara Technologies Pte Ltd	2021 39.35%

As at 30 June 2021, News Corp held a non-controlling interest (ʻNCIʼ) in Elara at 39.13% and minority interests held the remaining 0.22%. Refer to below table for movements in Elara NCI during the current period:

	2021
	$ʼ000
Opening balance 1 July 2020	–
Additions through business combination Change in shareholding Share of profit / (losses) Closing balance 30 June 2021	81,336 (1,595) (9,924) 69,817

As at 30 June 2021, Elara had current assets of $17.7 million, non-current assets of $203.8 million, current liabilities of $22.8 million and non-current liabilities of $14.1 million (all reported pre-intercompany eliminations). Revenue and profit of the group is disclosed in section (vi) above.

Annual Report 2021 | REA Group Ltd 109

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

20. Assets and liabilities held for sale

Accounting policies

Non-current assets, or disposal groups comprising assets and liabilities, are classified as held for sale if it is highly probable that they will be recovered primarily through sale rather than through continuing use. Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs of sale. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets or employee benefit assets, which continue to be measured in accordance with the Group’s other accounting policies. Impairment losses on initial classification as held-for-sale and subsequent gains or losses on remeasurement are recognised in profit and loss.

Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortised or depreciated, and any equity-accounted investee is no longer equity accounted.

In May 2021, the Group announced that it had entered into a binding agreement to transfer ownership of its Malaysia and Thailand entities to PropertyGuru Pte Ltd (“PropertyGuru”), a leading digital proptech company operating marketplaces in Asia, in exchange for an 18% equity interest in PropertyGuru (16.6% diluted). The transaction completed on 3 August 2021, refer to Note 27. As part of the agreement, the Group entered into a contract to sell the 27% interest in 99 Group Pte. Ltd. (“99 Group”) and associated convertible note prior to completion. Accordingly, the Malaysia and Thailand entities and 99 Group investment and associated convertible note are presented as a disposal group held for sale at 30 June 2021.

(a) Assets and liabilities of disposal group held for sale

At 30 June 2021, the disposal group was stated at the lower of their carrying amount and fair value less costs of sale and comprised the following assets and liabilities[1] .

		2021
	Notes	$’000
Cash and cash equivalents		4,888
Trade and other receivables		2,031
Property, plant and equipment	23	2,101
Intangible assets2	6	191,468
Other non-current assets		11,671
Investment in associates and joint ventures		9,406
Assets of disposal group held for sale		221,565
Trade and other payables		4,588
Current tax liabilities / (assets)		(103)
Provisions		421
Contract liabilities		3,960
Interest bearing loans and borrowings		1,064
Deferred tax liabilities	7	18,528
Liabilities of disposal group held for sale		28,458
Net assets of disposal group held for sale		193,107

1 Financial assets and liabilities are measured at historical cost, except for other non-current assets which include convertible note receivables of $11.5 million (2020: $ nil) measured at fair value through the profit or loss.

2 The Asia goodwill balance has been allocated between the disposal group and the residual Asia operations based on their relative value.

(b) Cumulative income or expenses included in OCI

There is $3.7 million relating to historical foreign exchange losses included in OCI relating to the disposal group.

110 REA Group Ltd | Annual Report 2021

21. Investment in associates and joint ventures

Accounting policies

The Group’s interest in equity accounted investees comprise interests in associates and joint ventures.

Associates are those entities in which the Group has significant influence, but no control or joint control over the financial or operating policies. Joint ventures are arrangements in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement rather than rights to its assets and obligations for its liabilities.

Interests in associates and joint ventures are accounted for using the equity method. They are recognised initially at cost which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of profit or loss and other comprehensive income of equity accounted investees until the date of significant influence or joint control ceases.

At each reporting date, the Group determines whether there is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, the Group recognises the loss as an impairment expense in the Consolidated Income Statement.

Key estimate and judgement

The Group determined that the arrangement with 99 Group was an investment in associate. The structure of the arrangement provided the Group with significant influence over the financial and operating policies of 99 Group. The arrangement was reclassified from an investment in associate to held for sale in June 2021, refer to Note 20.

(i) Move, Inc.

The Group has a 20% interest in Move, Inc. (“Move”), which is equity-accounted in the Group financial statements. The remaining 80% of Move is held by News Corp who granted the Group a put option to require News Corp to purchase the Group’s interest in Move, which can be exercised at any time beginning two years from the date of acquisition at fair value, which has been assessed to be greater than the carrying value at 30 June 2021.

(ii) Elara Technologies Pte. Ltd.

In December 2020, the Group completed the acquisition of a majority stake in Elara Technologies Pte. Ltd. (“Elara”), a digital real estate classifieds and transaction services company. The acquisition was achieved in stages through a combination of subscribing for new preference shares and the acquisition of the existing shareholdings of certain minority shareholders. On completion, Elara moved from equity accounted to a fully consolidated subsidiary of the Group. The Group holds a controlling interest of 60.65% in Elara at 30 June 2021.

(iii) 99 Group Pte. Ltd.

The Group holds a 27% interest in 99 Group Pte. Ltd. (“99 Group”), which was equity accounted until June 2021, and subsequently reclassified as held for sale, refer to Note 20. On 30 November 2020, the Group subscribed for US$8.7 million ($11.8 million) of convertible notes issued by 99 Group. The convertible notes earn 4% interest per annum and matures on 30 November 2023. Share of associates’ losses during the period was $2.9 million (2020: $1.4 million).

In May 2021 the Group committed to sell its 27% shareholding in 99 Group, refer to Note 20. As the sale is highly probable and expected to complete within 12 months, the Group’s investment in 99 Group of $9.4 million has been reclassified from an investment in associate to an asset held for sale in the Consolidated Balance Sheet as at 30 June 2021.

The related convertible note receivable of $11.5 million was also classified to Assets Held for Sale in the Consolidated Balance Sheet as at 30 June 2021.

(iv) Managed Platforms Pty Ltd

The Group has a 27.6% share in Managed Platforms Pty Ltd, a cloud‐based property management and investment platform business, for agency customers to manage residential rent rolls more efficiently, and at lower cost. The Group equity‐accounts for the investment as it is deemed to have significant influence.

Annual Report 2021 | REA Group Ltd 111

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

21. Investment in associates and joint ventures (continued)

(v) Realtair Pty Limited

On 1 December 2020, the Group acquired a 17.9% share in Realtair Pty Limited (“Realtair”). The purchase price of the investment was $6.4 million cash consideration, of which $1.0 million is deferred until 1 December 2022. The Group subsequently increased its holding on 27 January 2021 and 11 March 2021 to 22.33% for an aggregated cash consideration of $2.1 million. Realtair is a proptech platform that provides an end-to-end real estate sales solution. This allows agents to pitch, sign, automate and streamline the steps from property appraisal to settlement through mobile, easy to use technology. The investment is equity accounted as the Group is deemed to have significant influence holding 1 out of 5 board seats with equal voting rights.

(vi) Campaign Agent Pty Ltd

In February 2021, the Group acquired a 27.0% share in Campaign Agent Pty Ltd (“Campaign Agent”). The purchase price of the investment was $13.3 million. Campaign Agent is a financing company that provides financing of the vendor marketing schedule and agent commissions with the residential property market. The investment is equity accounted as the Group is deemed to have significant influence holding 1 out of 5 board seats with equal voting rights.

(vii) Simpology Pty Limited

In June 2021, the Group acquired a 34.37% share in Simpology Pty Limited (“Simpology”). The purchase price of the investment was $15.2 million cash consideration. Simpology is an end-to-end digital platform solution for electronic loan lodgements designed to improve the mortgage application process. The investment is equity accounted as the Group is deemed to have significant influence holding 2 out of 7 board seats with equal voting rights.

A reconciliation of the carrying amounts of investments in associates and joint ventures is provided below:

	Move Elara Other
	2021 $’000 2020 $’000 2021 $’000 2020 $’000 2021 $’000 2020 $’000
Carrying amount of the investment	271,748 279,425 – 10,095 37,447 15,390

The following illustrates the summarised financial information of the Group’s material investments in associates:

	Move
	2021 (adjusted) $’000 2020 (adjusted) $’000
Current assets Non-current assets Current liabilities Non-current liabilities	270,793 139,226 1,425,5271 1,577,1491 (268,359) (242,826) (69,221) (76,426)
Equity	1,358,740 1,397,123
Proportion of the Group’s ownership Carrying amount of the investment	20.0% 20.0% 271,748 279,425

Revenue Other operating costs Interest/dividend income Interest expense Depreciation and amortisation2 Other Income tax (expense)/benefit	857,081 717,520 (688,539) (677,920) 174 868 (17) (627) (62,110) (70,216) 22,712 (10,914) (32,526) 10,467
Profit/(loss) for the year from continuing operations Total comprehensive profit/(loss) Share of gain/(loss) of associates	96,775 (30,822) 96,775 (30,822) 19,355 (6,164)

1 Amount includes fair value uplift of intangible assets acquired and other adjustments.

2 Inclusive of amortisation of fair value uplift on acquisition of associates.

REA Group Ltd | Annual Report 2021

112

22. Parent entity financial information

Accounting policies

The financial information for the parent entity has been prepared on the same basis as the Consolidated Financial Statements, except as set out below.

Investments in subsidiaries, associates and joint ventures are accounted for at cost. Dividends received from associates and joint ventures are recognised in the parent entity’s Income Statement, rather than being deducted from the carrying amount of these investments.

In addition to its own current and deferred tax amounts, REA Group Ltd 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 the Company for any current tax payable assumed and are compensated by the Company for any current tax receivable and deferred taxes relating to unused tax losses or unused tax credits that are transferred to REA Group Ltd under the tax consolidation legislation.

The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts receivable 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.

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.

The individual Financial Statements for the parent entity, REA Group Ltd show the following aggregate amounts:

Current assets Non-current assets Total assets	2021 $’000 6,448 455,978 462,426	2020 $’000 45,876 395,530 441,406
Current liabilities	20,666	59,688
Non-current liabilities	–	–
Total liabilities Net assets Contributed equity Reserves Retained earnings	20,666 441,760 150,028 5,071 286,661	59,688 381,718 90,178 3,078 288,462
Total shareholders’ equity	441,760	381,718
Profit and other comprehensive income of the parent entity	148,591	152,823

REA Group Ltd had net current liabilities of $14.2 million as at 30 June 2021 (2020: $13.8 million), driven by intercompany balances with its subsidiaries. REA Group Ltd intends to repay these balances as they fall due.

Annual Report 2021 | REA Group Ltd 113

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

22. Parent entity financial information (continued)

(a) Guarantees entered into by the parent entity

The parent entity has not provided unsecured financial guarantees in respect of loans of subsidiaries (2020: $nil).

Refer to Note 24 for further information relating to the Deed of Cross Guarantee.

(b) Commitments and contingencies

Refer to Note 16(b) for commitments held by the parent entity.

Various claims arise in the ordinary course of business against REA Group Ltd. The amount of the liability (if any) at 30 June 2021 cannot be ascertained, and any resulting liability is not expected to materially impact the REA Group Ltd’s financial position.

114 REA Group Ltd | Annual Report 2021

OTHER DISCLOSURES

This section includes other balance sheet and related disclosures not included in the other sections, for example fixed assets, related parties, remuneration of auditors, other significant accounting policies and subsequent events.

23. Property, plant and equipment

Accounting policies

Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. The cost of property, plant and equipment includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset. The estimated useful life of leasehold improvements is the lease term; plant and equipment is over two to five years; and right of use assets is over two to 12 years. An asset which generates independent cash flows is written down immediately if its carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the Consolidated Income Statement.

Key estimate and judgement

The assets’ residual values, useful lives and depreciation methods are reviewed and adjusted if appropriate, at each financial year end. The estimation of useful lives of assets has been based on historic experience, lease terms and turnover policies. Any changes to useful lives may affect prospective depreciation rates and asset carrying values. Assets other than goodwill and intangible assets that have an indefinite useful life are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Annual Report 2021 | REA Group Ltd 115

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

23. Property, plant and equipment (continued)

23. Property, plant and equipment (continued)
	Plant and	Leasehold
	equipment	improvements	Property3	Total
	$’000	$’000	$’000	$’000
Year ended 30 June 2021
Opening net book amount	4,939	14,266	82,372	101,577
Additions1	3,879	89	250	4,218
Other business combinations2	914	602	2,374	3,890
Disposals (net of accumulated depreciation)	–	(11)	(314)	(325)
Depreciation charge	(4,135)	(3,596)	(9,641)	(17,372)
Transferred to assets held for sale	(470)	(609)	(1,022)	(2,101)
Transfers	2,533	(2,533)	–	–
Exchange differences (net)	(118)	(146)	(254)	(518)
Closing net book amount	7,542	8,062	73,765	89,369
At 30 June 2021
Cost	26,430	26,292	92,979	145,701
Accumulated depreciation	(18,888)	(18,230)	(19,214)	(56,332)
Net book amount	7,542	8,062	73,765	89,369
Year ended 30 June 2020
Opening net book amount	7,985	9,163	–	17,148
Additions	2,046	8,784	93,630	104,460
Disposals (net of accumulated depreciation)	(589)	(141)	(2,191)	(2,921)
Depreciation charge	(4,540)	(3,567)	(9,163)	(17,270)
Exchange differences (net)	37	27	96	160
Closing net book amount	4,939	14,266	82,372	101,577
At 30 June 2020
Cost	24,403	28,881	91,239	144,523
Accumulated depreciation	(19,464)	(14,615)	(8,867)	(42,946)
Net book amount	4,939	14,266	82,372	101,577

1 Additions include $0.7 million in non-cash items relating to right of use assets, and $0.8 million in other plant and equipment.

2 Acquisitions of Mortgage Choice and Elara.

3 Property comprises of right of use assets, refer to Note 10 for further details.

No items of plant and equipment have been impaired during the year ended 30 June 2021 (2020: nil).

116 REA Group Ltd | Annual Report 2021

24. Related parties

(a) Transactions with related parties

(a) Transactions with related parties
	2021	2020
	$	$
Ultimate parent entity (News Corp) and group entities Sale of goods and services Purchase of goods and services	1,724,841 5,645,684	1,874,807 6,452,014
Dividends paid	92,485,723	95,740,780
Management fee	155,000	155,000
Amounts receivable from parent entity	33,555	486,041
Amounts owing to parent entity	3,657,237	3,128,661
Key management personnel Short term employee benefits Post-employment benefits Long term employee benefits	5,303,496 142,825 67,381	4,562,997 141,053 35,700
Deferred Short Term Incentive Plan (STI Plan)	793,663	100,000
Long Term Incentive Plan (LTI Plan)	1,706,854	(64,611)

(i) Parent entities

The parent entity within the Group is REA Group Ltd. The ultimate parent entity of the Group is News Corp, a resident of the United States of America, which owns 61.42% of REA Group Ltd via its wholly owned subsidiary News Australia Pty Limited. News Corp is listed on the New York Stock Exchange.

During the year, the Group sold advertising space at arm’s length terms to News Corp (or one of its related entities) and recharged promotional costs. The Group also utilised advertising and support services of News Corp (or one of its related entities) on commercial terms and conditions.

In addition to the above, insurance premium recharges were paid to News Corp (or one of its related entities) and News Corp (or one of its related entities) recharged the Group relating to the use of IT content delivery services. The Group has entered certain agreements with independent third parties under the same terms and conditions as those negotiated by News Corp.

(ii) Key management personnel

For a list of key management personnel and additional disclosures, refer to the Remuneration Report.

During the year, the Group sold residential subscriptions and other advertising products, and provided training sponsorships at arm’s length terms, normal terms and conditions to the franchisees and offices of the Jellis Craig Group (Director-related entity).

(iii) Commitments

Refer to Note 16 for details.

(iv) Associates

On 30 November 2020, the Group subscribed for US$8.7 million ($11.8 million) of convertible notes issued by 99 Group. The convertible notes earn 4% interest per annum and matures on 30 November 2023. Refer to Note 21 for further information on the 99 Group.

Annual Report 2021 | REA Group Ltd 117

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

24. Related parties (continued)

(b) Investment in subsidiaries, associates and joint ventures

Accounting policies

Subsidiaries are all those entities which the Group controls. Control exists if the Group has:

Power over the investee (i.e. ability to direct the relevant activities of the investee);
Exposure, or rights, to variable returns from its involvement with the investee; and
The ability to use its power over the investee to affect its returns.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on which control is transferred out of the Group. A change in ownership interest of a subsidiary that does not result in a loss of control is accounted for as an equity transaction.

The Financial Statements of subsidiaries are prepared for the same reporting period as the parent company, with the exception of certain Asian entities with a financial reporting period ending 31 December and Elara Group with a financial reporting period ending 31 March. All subsidiaries apply consistent accounting policies to their Financial Statements.

The consolidated Financial Statements incorporate the assets, liabilities and results of the following subsidiaries and associates of REA Group Ltd as at 30 June 2021 in accordance with the above accounting policy.

		Equity	Equity
		Holding	Holding
	Country of	2021	2020
Name of entity	incorporation	%	%
REA US Holding Co. Pty Ltd	Australia	100	100
realestate.com.au Pty Limited	Australia	100	100
1Form Online Pty Ltd	Australia	100	100
Austin Rollco Pty Limited1	Australia	–	100
Flatmates.com.au Pty Ltd	Australia	100	100
REA Austin Pty Ltd1	Australia	–	100
PropTrack Pty Ltd (previously Hometrack Australia Pty Limited)	Australia	100	100
realestate.com.au Home Loans Mortgage Broking Pty Ltd	Australia	100	100
NOVII Pty Ltd	Australia	56.2	56.2
Ozhomevalue Pty Ltd2	Australia	56.2	56.2
REA Financial Services Holding Co. Pty Ltd3	Australia	100	–
Mortgage Choice Limited4	Australia	100	–
FinChoice Pty Limited4	Australia	100	–
Help Me Choose Pty Limited4	Australia	100	–
REA Asia Holding Co. Pty Ltd5	Australia	100	–
Smartline Home Loans Pty Ltd	Australia	100	100
Smartline Operations Pty Limited	Australia	100	100
Austin Bidco Pty Ltd	Australia	100	100
iProperty Group Pty Ltd	Australia	100	100
iProperty Group Asia Pte. Ltd	Singapore	100	100
IPGA Management Services Sdn Bhd	Malaysia	100	100
iProperty.com Events Sdn Bhd	Malaysia	100	100
iProperty.com Malaysia Sdn Bhd	Malaysia	100	100
Brickz Research Sdn Bhd	Malaysia	100	100
Think iProperty Sdn Bhd	Malaysia	100	100
REA Hong Kong Management Co Limited	Hong Kong	100	100
GoHome HK Co Limited	Hong Kong	100	100

118 REA Group Ltd | Annual Report 2021

24. Related parties (continued)

24 Rltd ti tid
. eae pares (connue)		Equity	Equity
		Holding	Holding
	Country of	2021	2020
Name of entity	incorporation	%	%
Finance18.com Limited6	Hong Kong	–	100
House18.com Services Limited6 SMART Expo Limited Big Sea International Limited GoHome Macau Co Ltd iProperty (Thailand) Co., Ltd7	Hong Kong Hong Kong Macau Macau Thailand	– 100 100 100 100	100 100 100 100 100
Prakard IPP Co., Ltd8	Thailand	100	100
Kid Ruang Yu Co., Ltd9	Thailand	100	100
Flagship Studio Co., Ltd10	Thailand	–	100
Prakard.com (Hong Kong) Limited11	Hong Kong	–	100
REA Group Hong Kong Ltd	Hong Kong	100	100
Primedia Limited11 REA HK Co Limited REA Group Consulting (Shanghai) Co. Limited Elara Technologies Pte. Ltd.12 Locon Solutions Private Limited13	Hong Kong Hong Kong China Singapore India	– 100 100 60.7 60.7	100 100 100 13.5 –
IREF Solutions Private Limited13	India	60.7	–
Realty Business Intelligence Private Limited13	India	60.7	–
Sadanika Solutions Private Limited13	India	60.7	–
PropTiger Marketing Services Private Limited13	India	60.7	–
Aarde Technosoft Private Limited13	India	60.7	–
Makaan.com Private Limited13 Oku Tech Private Limited14 Associates and joint ventures: Move, Inc.15 Managed Platforms Pty Ltd16	India India United States Australia	60.7 60.7 20 27.6	– – 20 27.8
99 Group Pte. Ltd17	Singapore	27	27
ScaleUp Media Fund 2.0 Pty Limited18	Australia	16.7	16.7
Realtair Pty Limited19	Australia	22.3	–
Campaign Agent Pty Ltd20	Australia	27	–
SimpologyPtyLimited21	Australia	34.4	–

1 Deregistered on 15 July 2020.

2 Ozhomevalue Pty Ltd is 100% owned by NOVII Pty Ltd.

3 Incorporated on 16 April 2021.

4 Acquired on 18 June 2021 (legal completion as of 1 July 2021).

5 Incorporated on 8 June 2021.

6 Deregistered on 6 November 2020.

7 iProperty (Thailand) Co., Ltd is 50.5% owned by All Excellence Ltd. (a nominee shareholder of iProperty Group Asia Pte. Ltd.).

8 iProperty Group Pty Ltd and iProperty Group Asia Pte. Ltd. each hold one share in Prakard IPP Co., Ltd. and Flagship Studio Co., Ltd.

9 iProperty Group Pty Ltd holds one share, iProperty Group Asia Pte. Ltd. holds 4,899 shares and iProperty (Thailand) Co., Ltd holds 5,100 shares in Kid Ruang Yu Co., Ltd.

10 Deregistered on 26 April 2021.
11 Deregistered on 20 November 2020.
12 Equity Holding increased to 59.65% on acquisition and subsequently increased to 60.45% in January 2021 and then to 60.65% in March 2021. Refer to Note 19 Business Combinations for further details.
13 100% owned by Elara Technologies Pte. Ltd.

14 80.09% owned by Elara Group (7.73% held by Locon Solutions Private Limited and 72.36% held by Oku Tech Private Limited). Balance owned by external parties.

15 Investment is held by REA US Holding Co. Pty Ltd.
16 Investment is held by realestate.com.au Pty Limited. Shareholding decreased to 27.58% in August 2020.
17 Investment is held by iProperty Group Asia Pte. Ltd.
18 Investment is held by realestate.com.au Pty Limited.
19 Investment is held by realestate.com.au Pty Limited and 17.9% was initially acquired on 1 December 2020. Investment subsequently increased to 19.9% on 27 January 2021 and 22.33% on 12 March 2021.
20 Investment is held by realestate.com.au Pty Limited and was acquired on 4 February 2021.
21 Investment is held by realestate.com.au Pty Limited and was acquired on 15 June 2021.

Annual Report 2021 | REA Group Ltd 119

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

24. Related parties (continued)

(c) Deed of Cross Guarantee

Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785, relief has been granted to realestate.com.au Pty Limited, Austin Bidco Pty Ltd, PropTrack Pty Ltd (previously Hometrack Australia Pty Limited), Flatmates.com.au Pty Ltd, Smartline Home Loans Pty Ltd, Smartline Operations Pty Limited and iProperty Group Pty Ltd (the ‘Closed Group’) from the Corporations Act 2001 requirements for the preparation, audit and lodgement of separate Financial Statements.

As a condition of the Class Order, REA Group Ltd and realestate.com.au Pty Limited entered into a Deed of Cross Guarantee (the ‘Deed’) on 26 May 2009, with all other entities added to the Deed during the 2019, 2020 and 2021 financial years. The effect of the Deed is that REA Group Ltd guarantees to each creditor payment in full of any debt in the event of winding up of the aforementioned entities under certain provisions or if they do not meet their obligations under the terms of overdrafts, loans, leases or other liabilities subject to the guarantee. The controlled entities have also given a similar guarantee in the event that any other party to the Deed is wound up or if it does not meet its obligations under the terms of overdrafts, leases or other liabilities subject to the guarantee.

The summarised Consolidated Income Statement, Consolidated Statement of Financial Position and Retained Earnings of the Closed Group are below.

	2021	2020
Consolidated Income Statement	$’000	$’000
Profit from continuing operations before income tax	505,671	396,710
Income tax expense	(156,577)	(120,669)
Profit for the year	349,094	276,041
Summary of movements in consolidated retained earnings
Retained earnings at beginning of the financial year	1,429,019	1,297,575
Earnings for the year	349,094	276,041
Other	(39,866)	10,826
Dividends provided for or paid during the year	(150,392)	(155,423)
Retained earnings at end of the financial year	1,587,855	1,429,019

REA Group Ltd | Annual Report 2021

120

24. Related parties (continued)

24. Related parties (continued)
	2021	2020
Consolidated Statement of Financial Position	$’000	$’000
ASSETS Current assets Cash and cash equivalents Trade and other receivables Total current assets	160,994 589,882 750,876	203,940 413,242 617,182
Non-current assets Plant and equipment Intangible assets Deferred tax assets Other non-current assets Investment in associates and joint ventures Investment in subsidiaries Total non-current assets	84,649 99,282 12,971 282,834 37,447 682,346 1,199,529	95,758 91,502 10,167 200,518 11,941 1,150,229 1,560,115
Total assets	1,950,405	2,177,297
LIABILITIES Current liabilities Trade and other payables Current tax liabilities Provisions Contract liabilities Interest bearing loans and borrowings Total current liabilities	307,064 29,303 11,454 69,961 6,691 424,473	105,053 79,537 7,375 55,051 75,040 322,056
Non-current liabilities Deferred tax liabilities Provisions Other non-current liabilities Interest bearing loans and borrowings Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity Reserves Retained earnings Total Equity	6,992 4,756 188,859 485,212 685,819 1,110,292 840,113 (782,934) 35,192 1,587,855 840,113	5,731 4,407 169,393 248,243 427,774 749,830 1,427,467 (30,824) 29,272 1,429,019 1,427,467

Annual Report 2021 | REA Group Ltd 121

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

25. Remuneration of auditors

Services provided by the auditor of the parent entity and its related practices, as well as non-EY audit firms, are categorised as below:

Category 1: Fees paid or payable to the auditor of the parent entity for auditing the statutory financial report of the parent covering the group, and for auditing statutory financial reports of any controlled entities;
Category 2: Fees paid or payable for assurance services that are required by legislation, and are required by that legislation to be provided by the auditor of the parent entity;
Category 3: Fees paid or payable for other assurance and agreed-upon procedures services that are required by legislation or other contractual arrangements, where there is discretion as to whether the service is provided by the auditor of the parent or another non-EY audit firm; and
Category 4: Fees paid or payable for other services (including tax compliance).

During the year, the following fees were paid or payable for services provided by the auditor of the parent entity and its related practices, as well as non-EY audit firms, split for the categories described above:

	EY Australia Relatedpractices of EY Australia Non EY Audit Firms1
	2021 $ 2020 $ 2021 $ 2020 $ 2021 $ 2020 $
Category 1 fees Category 2 fees Category 3 fees Category 4 fees	1,682,027 1,166,534 695,575 263,400 196,620 10,000 12,000 – – – – – 10,000 7,800 – – 304,105 186,824 280,650 240,853 42,503 110,862 1,141,468 407,524
Total auditor’s remuneration	1,984,677 1,415,187 738,078 374,262 1,642,193 604,348

1 Non EY Audit Firms are not the group auditors.

122 REA Group Ltd | Annual Report 2021

26. Other significant accounting policies

Accounting policies

Foreign currency translation

The consolidated Financial Statements are presented in Australian dollars, which is the Group’s presentation currency. Items included in the Financial Statements of each of the Group’s entities are measured using the currency of the primary economic environments in which the entity operates (“the functional currency”).

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 the Income Statement. They are deferred in equity if they relate to qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.

All foreign exchange gains and losses are presented in the Income Statement on a net basis within operations and administration expenses.

Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in the Income Statement as part of the fair value gain or loss. Translation differences on non-monetary assets are included in the fair value reserve in equity.

The results and financial position of all the 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, with all resulting exchange differences are recognised in OCI:

Assets and liabilities for each Statement of Financial Position presented are translated at the closing rate at the date of that Statement of Financial Position; and
Income and expenses for each Income Statement 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).

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.

New and amended Accounting Standards and Interpretations

New standards effective from 1 July 2021: The Group has not adopted any new or amended Accounting Standards or Interpretations this year that have had a material impact on the Group.

New standards and interpretations not yet adopted: There are a number of new accounting standards, amendments and interpretations that have been issued but are not yet effective, however these are not considered relevant to the activities of the Group nor are they expected to have a material impact on the financial statements of the Group.

Annual Report 2021 | REA Group Ltd 123

Financial Statements

Notes to the Consolidated Financial Statements

for the year ended 30 June 2021

27. Events after the Statement of Financial Position date

Completion of sale of Malaysia and Thailand businesses and investment in Property Guru Pte Ltd

On 3 August 2021, the Group completed the sale of its Malaysia and Thailand entities (which operate iProperty.com.my and Brickz.my in Malaysia and thinkofliving.com and Prakard.com in Thailand) to PropertyGuru Pte Ltd (“PropertyGuru”). In exchange, the Group received an 18% equity interest (16.6% diluted) of the combined PropertyGuru group and the right to appoint one Director to the PropertyGuru board.

The PropertyGuru transaction completed after the Group entered into a contract to sell the 27% interest in 99 Group Pte. Ltd. (“99 Group”) and associated convertible note, which had a combined book value of $21 million at 30 June 2021. As part of the contractual arrangement, the Group has divested the shareholder rights associated with the investment, with a settlement period of up to 36 months. In the unlikely event that the sale proceeds are not settled within that period, a market sale process would be initiated to recover the funds. In addition, committed funding of up to US$8.7 million for 99 Group will continue to be supported by a letter of credit from the Group.

The transactions are expected to result in an overall net gain of approximately A$12 million.

On 24 July 2021, PropertyGuru announced a business combination with the special purpose acquisition company Bridgetown 2 Holdings Limited, through which the PropertyGuru business plans to list on the New York Stock Exchange (NYSE). REA has committed to subscribe for US$52 million of equity in the listed entity subject to completion of the business combination, which is anticipated to occur in the fourth quarter of the 2021 calendar year, or the first quarter of 2022. After taking into account the capital raising conducted concurrently with the business combination, REA expects to hold a 15.8% (14.9% diluted) equity interest in the listed entity and will nominate REA CEO Owen Wilson to the board.

Increase in Elara shareholding

In July the Group subscribed for new Class I Preference Shares increasing its shareholding from 60.65% to 65.49%. Total funding provided was $20.8 million, with News Corp continuing to hold a non controlling interest in Elara of 34.3%.

Except for those items disclosed above, from the end of the reporting period to the date of this report, no matters or circumstances have arisen which have significantly affected the operations of the Group, the results of the operations or the state of affairs of the Group.

124 REA Group Ltd | Annual Report 2021

Directors’ Declaration

In the Directors’ opinion:

a. the Financial Statements and notes of the consolidated entity for the financial year ended 30 June 2021 set out on pages 61 – 124 are in accordance with the Corporations Act 2001, including:
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of its performance for the financial year ended on that date; and
complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
b. The Basis of Preparation note confirms that the Financial Statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board;
c. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;
d. 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 for the financial year ended 30 June 2021; and
e. as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified in Note 24 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.

This declaration is made in accordance with a resolution of the Directors.

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Mr Hamish McLennan Chairman

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Mr Owen Wilson Chief Executive Officer

Melbourne

6 August 2021

Annual Report 2021 | REA Group Ltd 125

Financial Statements

Directors’ ReportIndependent Auditor’s Report continued

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Ernst & Young Tel: +61 3 9288 8000 8 Exhibition Street Fax: +61 3 8650 7777 Melbourne VIC 3000 Australia ey.com/au GPO Box 67 Melbourne VIC 3001

Independent Auditor’s Report to the Members of REA Group Ltd

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of REA Group Ltd (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2021, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001 , including:

a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2021 and of its consolidated financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report.

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126 REA Group Ltd | Annual Report 2021

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Property and online advertising revenue recognition and its reliance on automated processes and controls

Why significant

How our audit addressed the key audit matter

The Group recognised $903.8m in Property and Online
advertising revenue for the year ended 30 June 2021. The
recognition of this revenue was considered a key audit
matter due to the significance of revenue to the financial
report and level of audit effort required, with the associated
disclosures found in Note 3.
The Group’s revenue recognition processes are heavily
reliant on IT systems with automated processes and controls
over the capturing, valuing and recording of transactions.
These processes include a combination of manual and
automated controls. The understanding and testing of the IT
systems and controls that process revenue transactions is a
key part of our audit.

We assessed the effectiveness of relevant controls over the
capture, recording and recognition of revenue transactions,
including the relevant IT systems.
We examined the processes and controls over the capture
and determination of the revenue recognition in line with the
satisfaction of performance obligations and tested a sample
of transactions to supporting evidence.
We tested the Group’s controls over IT systems relevant to
revenue transaction initiation and revenue recognition.
We performed data analysis procedures over the revenue
transactions and the relationship of these transactions
against the contract liability, trade receivables and cash
accounts. We also assessed the timing, aging profile and
nature of the transactions.
We assessed the Group accounting policies set out in Note 3,
for compliance with the revenue recognition requirements of
Australian Accounting Standards.

Why significant

How our audit addressed the key audit matter

Acquisition accounting

Why significant How our audit addressed the key audit matter During the year ended 30 June 2021, the Group made a Our audit procedures involved the following: number of acquisitions as detailed in Note 19. ► Read the sale and purchase agreements to obtain an The most significant acquisitions were 100% of Mortgage understanding of the transaction and key terms; Choice Ltd and a further 47.15% of Elara Technologies Pte ► Assessed whether the appropriate accounting Ltd to reach 60.65% for a total consideration of $243.7m treatment has been applied to these transactions; in and $105.7m respectively. regards to date of control, acquirer and purchase The determination and recognition of the fair value of the consideration intangibles was considered a key audit matter due to the size ► Assessed the valuation for the considerations paid and of the acquisition and the significant judgement required in traced shares issued to the share register. identifying and allocating the purchase price to the fair values of the assets and liabilities acquired. ► Tested the identification and fair valuation of the intangible assets and other assets acquired and liabilities assumed as part of the acquisitions. ► Assessed the competence, qualifications and objectivity of the experts engaged by the Group to assist with the identification and valuation of intangible assets acquired. ► Engaged our internal specialist to assist us in reviewing the valuation methodologies used by management and the external valuation expert in the fair valuation of acquired assets and liabilities. ► Assessed the key assumptions and valuation methodology used by the Group against external market data, which involved the input of our valuation specialists. ► Assessed the adequacy of the Group’s disclosures in the financial report in respect of the acquisitions, including the contingent consideration and the related estimates.

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Annual Report 2021 | REA Group Ltd 127

Financial Statements

Directors’ ReportIndependent Auditor’s Report continued

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Assets held for sale

Why significant On 30 May 2021, the Group signed the share purchase agreement (‘SPA’) for the sale of its Malaysia and Thailand operations (‘the Panama Group’) to PropertyGuru (PG). Completion date is 3 August 2021 and therefore the assets and liabilities of the Panama Group are classified as held for sale at 30 June 2021. Refer to Note 20.

How our audit addressed the key audit matter

On 30 May 2021, the Group signed the share purchase Our audit procedures involved the following: agreement (‘SPA’) for the sale of its Malaysia and Thailand ► Evaluating the Directors’ intent and assessing their operations (‘the Panama Group’) to PropertyGuru (PG). judgements made in classifying the businesses as held Completion date is 3 August 2021 and therefore the assets for sale against the relevant accounting standard. This and liabilities of the Panama Group are classified as held for included assessing whether the disposal was highly sale at 30 June 2021. Refer to Note 20. probable to occur within twelve months and the In connection to the Panama Group sale, the Group has also business was available for immediate sale in its present commenced the process to sell its 27% share in 99.co as a condition. Our evaluation included discussions with condition precedent. The investment in 99.co will be Directors and management as well as a review of classified as held for sale in the financial statements at 30 supporting documentation such as Board minutes and June 2021. signed transaction documents. Due to the significant judgement involved in classifying and ► Agreeing the carrying amounts of the identified assets valuing the assets and liabilities of the disposal group as held and liabilities of the disposal group to underlying for sale, we considered this a key audit matter. accounting records and assessing the methodology used to apportion goodwill to the disposal group. ► We considered the fair value less costs to sell assessment undertaken by the Group, including assessment of key assumptions and transaction documents. ► Assessed the adequacy of the disclosures made in the financial report.

Information Other than the Financial report and Auditor’s Report Thereon

The directors are responsible for the other information. The other information comprises the information included in the Company’s 2021 Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’ Report that is to be included in the Annual Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the Annual Report after the date of this auditor’s report.

Our opinion on the financial report does not cover the other information and we do not and will not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

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128 REA Group Ltd | Annual Report 2021

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In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

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Annual Report 2021 | REA Group Ltd 129

Financial Statements

Directors’ ReportIndependent Auditor’s Report

continued

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We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Audit of the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 44 to 60 of the directors’ report for the year ended 30 June 2021.

In our opinion, the Remuneration Report of REA Group Ltd for the year ended 30 June 2021, complies with section 300A of the Corporations Act 2001 .

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

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Ernst & Young

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David McGregor Partner Melbourne, Australia 6 August 2021

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

130 REA Group Ltd | Annual Report 2021

Historical Results

A$’000(except where indicated) 2021	2020	2019	2018	2017
Consolidated Results: Revenue from continuing operations 927,811	820,269	874,949	807,678	671,206
Profit before interest and tax (EBIT) 473,029	239,256	252,571	390,474	156,379
Profit before income tax 468,360 Profit for the year attributable to owners of the parent 322,677 Earnings per share from continuing operations (cents) 244.6 Return on average shareholders’ equity (% p.a.) 31%	233,694 112,373 85.3 13%	244,954 104,997 79.7 11%	377,697 252,779 191.9 24%	150,687 206,066 36.1 27%
Dividend and distribution 150,392	155,423	154,106	129,070	112,616
Dividend per ordinary share (cents) 131.0	110.0	118.0	109.0	91.0
Dividend franking (% p.a) 100%	100%	100%	100%	100%
Dividend cover (times) 2.08	0.72	0.68	1.96	1.83
Financial Ratios: Net tangible asset backing per share ($) 0.84 Net EBITDA (continuing operations) interest cover (times) 262.36 Gearing (debt / debt and shareholders’ equity) (%) 30%	1.63 68.14 27%	0.93 30.02 26%	(0.01) 37.67 31%	0.39 14.05 38%
Financial Statistics: Income from dividends and interest 2,179	2,878	2,153	4,590	3,727
Depreciation and amortisation provided during the year 82,612	78,620	59,573	48,702	37,816
Net finance expense / (income) 4,669	5,562	7,617	12,777	5,692
Net cash inflow from operating activities 321,451	419,146	364,054	326,345	296,816
Capital expenditure and acquisitions 381,524 Balance Sheet Data as at 30 June: Current assets 687,012 Non-current assets 1,685,274 Total Assets 2,372,286	101,172 373,144 1,217,379 1,590,523	64,736 306,961 1,274,770 1,581,731	372,103 289,601 1,438,496 1,728,097	128,264 458,184 1,120,629 1,578,813
Current liabilities 351,568	317,776	444,930	311,063	379,095
Non-current liabilities 881,497	408,254	231,366	476,265	394,988
Total Liabilities 1,233,065	726,030	676,296	787,328	774,083
Net Assets 1,139,221 Shareholders’ Equity Contributed equity 152,140 Reserves 40,358 Retainedprofits 876,547 Shareholders’ equity attributable to REA 1,069,045 Non-controllinginterests in controlled entities 70,176	864,493 92,050 67,805 704,262 864,117 376	905,435 89,544 68,120 747,312 904,976 459	940,769 91,325 52,517 796,421 940,263 506	804,730 95,215 36,323 672,712 804,250 480
Total Shareholders’ equity 1,139,221	864,493	905,435	940,769	804,730
Other data as at 30 June: Fully paid shares (000’s) 132,117 REA share price: – year’s high ($) 173.11 – year’s low ($) 102.95 – close ($) 169.03 Market capitalisation ($000,000) 22,332 Employee numbers (continuing operations) 2,931	131,715 117.30 62.05 107.88 14,209 1,496	131,715 97.37 69.23 96.04 12,650 1,642	131,715 93.20 62.17 90.87 11,969 1,519	131,715 67.97 47.50 66.40 8,746 1,423
Number of shareholders 20,842	19,155	14,359	12,985	12,324

Annual Report 2021 | REA Group Ltd 131

Shareholder Information

as at 2 September 2021

Listing information

REA Group Ltd is listed, and our issued shares are quoted on the Australian Securities Exchange (ASX) under the code: REA.

Share capital and voting rights

As at 2 September 2021, REA Group Ltd had 132,117,217 fully paid ordinary shares on issue which were held by 23,200 shareholders. The Constitution provides for votes to be cast (a) on a show of hands, one vote for each shareholder; and (b) on a poll, one vote for each fully paid share.

Distribution of shareholders and shareholdings as at 2 September 2021

	Number of	Number	% of issued
Size of holding	shareholders	of Shares	capital
1 to 1,000	21,983	3,374,448	2.55
1,001 to 5,000	1,035	2,106,205	1.59
5,001 to 10,000	84	605,597	0.46
10,001 to 100,000	80	2,453,847	1.86
100,001 and over	18	123,577,120	93.54
Total	23,200	132,117,217	100.00

The number of shareholders holding less than a marketable parcel of shares ($500) was 404 (based on the closing market price on 2 September 2021 of $156.02).

Twenty largest shareholders as at 2 September 2021

		Number	% of issued
Shareholder Name		of Shares	capital
1	News Australia Pty Limited	81,141,397	61.42
2	HSBC Custody Nominees (Australia) Limited	17,763,220	13.45
3	J P Morgan Nominees Australia Pty Limited	8,764,194	6.63
4	Citicorp Nominees Pty Limited	5,995,500	4.54
5	National Nominees Limited	2,057,522	1.56
6	BNP Paribas Nominees Pty Ltd	1,853,410	1.40
7	Citicorp Nominees Pty Limited	1,568,664	1.19
8	BNP Paribas Noms Pty Ltd	1,058,417	0.80
9	HSBC Custody Nominees (Australia) Limited-Gsco Eca	825,586	0.62
10	Australian Foundation Investment Company Limited	552,808	0.42
11	Netwealth Investments Limited	429,419	0.33
12	BNP Paribas Nominees Pty Ltd Six Sis Ltd	319,741	0.24
13	Vintage Crop Pty Ltd	315,087	0.24
14	Mr Vivian Faram Findlow	292,239	0.22
15	HSBC Custody Nominees (Australia) Limited	245,023	0.19
16	Mr Timothy John Twomey Stewart	170,400	0.13
17	BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd	115,729	0.09
18	BNP Paribas Noms(NZ) Ltd	108,764	0.08
19	Marensa Pty Ltd	100,000	0.08
20	Milton Corporation Limited	92,309	0.07
	Total for Top 20	123,769,429	93.68

132 REA Group Ltd | Annual Report 2021

Substantial shareholders as at 2 September 2021

The following organisations have a relevant interest as disclosed in substantial holding notices given to REA.

	Number	% of
Shareholder Name	of Shares	voting power
News Australia Pty Limited	81,141,397	61.42

On-market purchases of REA securities

During the 2021 financial year, 30,170 shares were purchased on-market for the purposes of REA’s employee incentive schemes at an average price per share of $123.0757. There is no current on-market buy-back of the Company’s shares.

Unquoted equity securities

As at 2 September 2021, 92,278 performance rights with 63 holders were on issue pursuant to REA’s employee incentives schemes.

Annual Report 2021 | REA Group Ltd 133

Corporate Directory

Directors

Hamish McLennan (Chairman) Owen Wilson (Chief Executive Officer) Kathleen Conlon Nick Dowling Tracey Fellows Richard J Freudenstein Michael Miller Jennifer Lambert (appointed 1 December 2020) Roger Amos (retired 17 November 2020)

Chief Financial Officer

Janelle Hopkins

Company Secretary

Tamara Kayser (appointed 4 November 2020) Erin Thorne (resigned as Acting Company Secretary on 4 November 2020)

Principal Registered Office in Australia

511 Church Street Richmond, VIC 3121 Australia Ph: +61 3 9897 1121 Fax: +61 3 9897 1114

Share register

Link Market Services Limited

Tower 4, 727 Collins Street Melbourne, VIC 3000 Ph: 1300 554 474 (within Australia) +61 1300 554 474 (outside Australia) Fax: 02 9287 0303

AI assistant

REA GROUP LTD — Annual Report 2021

65679_rns_2021-09-19_1095fd47-85ca-450e-b57a-af7bafbf7b52.pdf

ASX Announcement 20 September 2021

REA Group 2021 Annual Report

-ends-

For further information, please contact:

Changing the way the world experiences property

Contents

Our Purpose

Our Business

Our People

Changing the way the world experiences property

STRATEGIC FOCUS

A values-led organisation with people at the heart of our success

Our values

Our global network

Australia

Year in review

FINANCIAL HIGHLIGHTS

2021 Highlights

12.6m

121.9m

55m

2.6m

50:50

4[th]

Chairman’s message

CEO’s message

Our people and culture

THE HEART OF OUR BUSINESS

A great place to work

Future of work at REA

Investment in our leaders

Focus on career development

Supporting the long-term prosperity of Australia’s property sector

PRIORITISING CUSTOMER NEEDS

Focus on shared objectives

Recognising the benefits of

Advocating for positive change

Ongoing industry collaboration

Australian highlights

STRONG RECOVERY

Residential property market bounces back

Realestate.com.au extends audience leadership

Australian highlights

Highly personalised consumer experiences driving engaged members

Connecting customers with more buyers, sellers and renters

Australian highlights

Providing access to unique data and marketplace intelligence

Building next generation marketplaces

Rental marketplace

Global footprint

KEY MARKETS

Asia financial performance

Creating the most compelling proptech group in Southeast Asia

REA takes controlling position in Elara

Strong Move, Inc. performance

Supporting a sustainable future

BECAUSE WE CARE

Environment

Social

$145,218

$226,500

$43,727

$100,000

Governance

Executive Leadership Team

Henry Ruiz

Val Brown

Board of Directors

Skills and experience:

Board Committee membership:

Skills and experience:

Board Committee membership:

Alternate Director:

Skills and experience:

Directors’ Report

Meetings of directors

Principal activities

REA GROUP LTD Annual Report 2021