REA GROUP LTD — Interim / Quarterly Report 2021

Feb 4, 2021

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Appendix 4D

for the half-year ended 31 December 2020

REA Group Ltd

ABN 54 068 349 066

RESULTS FOR ANNOUNCEMENT TO THE MARKET

For the half-year ended 31 December 2020 ( “ current period ” )

	31 Dec 2020 A$’000 % Change from 6 months ended 31 Dec 2019 31 Dec 2019 A$’000
Revenue1 Down Net Profitfor the period attributable to members Up Net Profitfrom core operations Up Net Profitfor the period attributable to members of parent (before non-controlling interest) Up Dividend information	430,350 -2% 440,337 173,485 17% 147,711 172,123 13% 152,883 173,374 17% 147,597
2020 interim dividend per share (paid 24 March 2020) 2020 final dividend per share (paid 17 September 2020) 2021 interim dividend per share (to be paid 23 March 2021) 2021 interim dividend dates	Amount per share (cents) Franked amount per share(cents) Tax rate for franking credit
	55.0 55.0 30% 55.0 55.0 30% 59.0 59.0 30%
Ex-dividend date Record date Payment date	8 March 2021 9 March 2021 23 March 2021
Net tangible assetsper security2	31 Dec 2020 30 Jun 2020 Cents Cents 167.0 162.6

1 Revenue is defined as revenue from property and online advertising and revenue from financial services less expenses from franchisee commissions, as disclosed in the Condensed Consolidated Interim Financial Statements as operating income.

2 Net tangible assets is calculated based on net assets excluding intangible assets and including right-of-use assets.

REA Group Ltd – Appendix 4D

Details of entities over which control was obtained during theperiod
Name of entity	Elara Technologies Pte. Ltd
Date ofgain of control	17 December 2020
Ownershipinterest acquired	59.65%
Contribution to REA GroupLtd netprofit	-

Details of associates and joint venture entities

	% Interest	% Interest
	31 Dec 2020	30 Jun 2020
99 Group	27.0%	27.0%
Move Inc.	20.0%	20.0%
Managed Platforms	27.7%	27.8%
Realtair	17.9%	0%
Elara Technologies	0%	13.5%

Details of contributions to net profit are disclosed in Note 9 of the half-year financial statements.

Additional Appendix 4D disclosure requirements can be found in the notes to the Consolidated Interim Financial Report and the Directors’ Report for the half-year ended 31 December 2020. Information should be read in conjunction with REA Group Ltd’s 2020 Annual Report and the attached Interim Financial Report.

This report is based on the Consolidated Interim Financial Report for the half-year ended 31 December 2020 which has been reviewed by Ernst & Young with the Independent Auditor’s Review Report included in the Interim Financial Report.

REA Group Ltd – Appendix 4D

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REA Group Ltd – Appendix 4D

REA Group Ltd ABN 54 068 349 066

Interim Financial Report for the half-year ended 31 December 2020

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Index

Corporate Information ..................................................................................................................................... 3 Directors’ Report .............................................................................................................................................. 4 Auditor’s Independence Declaration ............................................................................................................. 12 Table of Contents ........................................................................................................................................... 13 Condensed Consolidated Income Statement .................................................................................................. 14 Condensed Consolidated Statement of Comprehensive Income .................................................................... 15 Condensed Consolidated Statement of Financial Position .............................................................................. 16 Condensed Consolidated Statement of Changes in Equity .............................................................................. 17 Condensed Consolidated Statement of Cash Flows ........................................................................................ 18 Notes to the Condensed Consolidated Interim Financial Statements ............................................................. 19 Directors’ Declaration .................................................................................................................................... 32 Auditor's Report on the Interim Financial Report ........................................................................................... 33

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Corporate Information

REA Group Ltd

Corporate Information

Corporate Information
Directors	Hamish McLennan (Chairman) Owen Wilson (Chief Executive Officer) Roger Amos (retired 17 November 2020) Kathleen Conlon Nick Dowling Tracey Fellows Richard Freudenstein Michael Miller Jennifer Lambert (appointed 1 December 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	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 Australia Ph: 1300 554 474 (within Australia) +61 1300 554 474 (outside Australia) Fax: 02 9287 0303
Auditor	EY 8 Exhibition Street Melbourne, VIC 3000 Australia
Bankers	National Australia Bank Limited
Securities Exchange Listing	REA Group shares are listed on the Australian Securities Exchange (ASX:REA)
Website	www.rea-group.com

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Directors’ Report

REA Group Ltd

Directors’ Report

The Directors present their report together with the Interim Financial Statements of the consolidated entity (‘the Group’ or ‘REA’), being REA Group Ltd (the ‘Company’) and its controlled entities, for the half-year ended 31 December 2020 and the Independent Auditor’s Report thereon.

Directors

The names of Directors of the Group in office during the half-year and up to the date of the report, unless stated otherwise, are as follows:

• Hamish McLennan (Chairman)

REA’s growth strategy is centred around four core objectives. Firstly, providing our customers with access to the largest and most engaged audience of property seekers. Secondly, delivering unparalleled customer value. Thirdly, providing the richest content, data and insights to empower our customers and consumers throughout their property journey. And finally, 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.

Operating and financial review

• Owen Wilson (Chief Executive Officer)

• Roger Amos (retired 17 November 2020)

Reconciliation of results from core operations

• Kathleen Conlon

• Nick Dowling

• Tracey Fellows

• Richard Freudenstein

A summary of financial results from core operations for the half-year ended 31 December 2020 is set out below.

• Michael Miller

• Jennifer Lambert (appointed 1 December 2020)

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 calls those who use these services ‘consumers’.

• Helping real estate agents, developers, property-related businesses and advertisers promote their services. REA calls those who use these services ‘customers’.

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

A reconciliation of results from core operations and non-IFRS (International Financial Reporting Standards) measures compared with the reported results in the Interim Financial Statements on page 14 is set out below. The following non-IFRS measures have not been audited but have been extracted from the financial statements.

A$'000(unless stated) 2017 HY	2018 HY 2019 HY	2020 HY 2021 HY	Growth
Operating income from core operations 337,326 EBITDA1from core operations2 200,053 EBITDA margin 59% Net profit from core operations2 121,771 Dividend (cents per share) 40.0 Earnings per share from core operations2 (cents) 92.5	406,779 469,234 242,787 289,084 60% 62% 147,255 176,583 47.0 55.0 111.8 134.1	440,337 430,350 267,198 290,159 61% 67% 152,883 172,123 55.0 59.0 116.1 130.7	(2%) 9% 13% 7% 13%

1 The Directors believe the EBITDA measures to be relevant and useful in measuring the financial performance of the Group. EBITDA is defined as Earnings Before Interest, Tax, Depreciation and Amortisation. Comparatives have not been restated following the adoption of AASB 16 from 1 July 2019.

2 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.

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REA Group Ltd

Reconciliation of results from core operations continued

Reconciliation of results from core operations continued
Core and reported results 2021 HY $'000	2020 HY $'000 Growth
Reported operating income 430,350	440,337 (2%)
EBITDA from core operations (excluding share of losses of associates and joint ventures) 284,552*	272,095 5% (3,838) >100% (1,059) n/a
Share of gains / (losses) of associates and joint ventures 5,607
Gain/(loss) on acquisitions and disposals and business combination transaction costs -
EBITDA from core operations 290,159*	267,198 9% (4,082) n/a (1,315) >100% - n/a
Restructure costs -
Gain/(loss) on acquisitions and disposals and business combination transaction costs 3,128
Historic tax provision (3,091)
Reported EBITDA 290,196*	261,801 11%
Net profit from core operations 172,123	152,883 13% (2,857) n/a (2,315) >100% - n/a
Restructure costs, net of tax -
Gain/(loss) on acquisitions and disposals and business combination transaction costs, net of tax 3,526
Historic tax provision, net of tax (2,164)
Reported net profit 173,485	147,711 17%

• 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 declined by 2% to $430.4 million. The Group delivered a strong result despite the volatile market conditions experienced as a result of the pandemic. The results reflect the diverse effects of the COVID19 pandemic across Australia and the Group’s international businesses.

In Australia, the residential property market showed continued signs of recovery with National residential listings increasing 4% and Sydney listings increasing 19% for the half year period. In contrast, the COVID-19 hard lockdown measures in Melbourne caused significant short-term weakness with listings declining 44% in the first quarter. Following the removal of these restrictions, the Melbourne market rebounded, resulting in an overall 11% decrease in listings for the half year period. This resulted in an increase in Australian residential revenue which was more than offset by declines across all other lines of business.

The Group’s EBITDA from core operations increased 9% to $290.2 million and net profit from core operations increased 13% to $172.1 million. Strong cost management resulted in a 13% reduction in total core operating expenses with decreases across all cost categories due to a combination of ongoing

cost management initiatives, COVID-19 related savings and the deferral of marketing spend into the second half.

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 personalised consumer experiences.

Strong operating cashflows were offset by the continued investment in Elara, additional funding provided to 99 Group and shareholder returns in the form of dividends, resulting in a cash balance of $179.9 million at 31 December 2020. The Group had net current liabilities of $80.0 million as at 31 December 2020. The NAB revolving facility of $70m matures in April 2021 and the syndicated loan facility of $170 million (sub facility A) matures in December 2021. Both loan facilities have been classified as current liabilities as at 31 December 2020, refer to Note 11 for further details. The Group generated positive operating cashflows and traded profitably for the period. The Directors expect this to continue for the foreseeable future.

In Australia, realestate.com.au has maintained its leadership position with the largest and most

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Directors’ Report

REA Group Ltd

engaged audience of property seekers[1] . During the half the site received 3.26 times more visits on all platforms compared to the nearest competitor[2] .

Dividends

Dividends paid or declared by the Company during, and since, the end of the year are set out in Note 13 to the interim financial statements and below:

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

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

Performance by region

Half-year ended 31 December 2020	Australia	Australia	Asia1	North	Corporate	Total
				America
	Property &	Financial
	Online
		Services
	Advertising
	$’000	$’000	$’000	$’000	$’000	$’000
Segment operating income Total segment operating income Inter-segment operating income*			17,416 (442)		- -
	402,648	11,669		-		431,733
	(941)	-		-		(1,383)
Operating income*	401,707	11,669	16,974	-	-	430,350
Results Segment EBITDA from core operations (excluding share of losses of associates and joint ventures) Share of gains / (losses) of associates and joint ventures			1,690 (3,580)		(10,100) -
	288,557	4,405		-		284,552
	(166)	-		9,353		5,607
Segment EBITDA from core operations	288,391	4,405	(1,890)	9,353	(10,100)	290,159
Gain/(loss) on acquisitions and disposals and business combination transaction Historic tax provision2	-	-	- -	-	3,128 (3,091)	3,128
	-	-		-		(3,091)
EBITDA	288,391	4,405	(1,890)	9,353	(10,063)	290,196

• This represents revenue less commissions for financial services

1 Inclusive of Elara Technologies Pte. Ltd. (‘Elara’) as an investment in associate for the six-month period ending 31 December 2020.

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

1 Nielsen Digital Content Ratings (Monthly Tagged), Jul 20–Dec 20, P2+,Digital (C/M), text, Real Estate/Apartments subcategory, unique audience and average time spent

2 Source: Nielsen Digital Content Ratings (Monthly Tagged), Jul 20 – Dec 20, P2+, Digital (C/M), text, realestate.com.au and vs Domain, Total Sessions.

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Directors’ Report

REA Group Ltd

Half-year ended 31 December 2019 Australia Property & Online Advertising Financial Services $’000 $’000	Half-year ended 31 December 2019 Australia Property & Online Advertising Financial Services $’000 $’000	Asia North America $’000 $’000	Corporate Total $’000 $’000
	Financial
	Services
	$’000
Segment operating income Total segment operating income 400,874 Inter-segment operating income* (394)		27,691 - (481) -	- 441,212 - (875)
	12,647
	-
Operatingincome* 400,480	12,647	27,210 -	- 440,337
Results Segment EBITDA from core operations (excluding share of losses of associates and joint ventures) 271,451 Share of losses from associates and joint ventures (64) Business combination transaction costs - acquisition by associate -		6,285 - (3,182) (1,470) - -	(9,988) 272,095 1,059 (3,838) (1,059) (1,059)
	4,347
	(181)
	-
Segment EBITDA from core operations 271,387	4,166	3,103 (1,470)	(9,988) 267,198
Restructure costs - Gain/(loss) on acquisitions and disposals and business combination transaction costs -	-	- - - -	(4,082) (4,082) (1,315) (1,315)
	-
EBITDA 271,387	4,166	3,103 (1,470)	(15,385) 261,801

• This represents revenue less commissions for financial services

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Directors’ Report

REA Group Ltd

Performance by region (continued)

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 was flat at $413.4 million for the half with an increase in the Residential business offset by declines across all other lines of business.

realestate.com.au continues to be the number one property portal in Australia[3] , attracting more than 115 million visits each month on all platforms[6] , increasing 36% YoY[6] . Over 12 million people visited the site each month on average[7] , up 39% YoY[7] , with a new record of 13 million[8] in November, or 65% of Australia’s 18+ population[9] . 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 now using the realestate.com.au app than ever before. Average monthly launches of the realestate.com.au app increased 46% YoY[10] to 50.9 million[10] while consumers are spending almost 4 times longer on the realestate.com.au app than the nearest competitor[11] . This demonstrates a highly engaged audience who remain passionate and invested in the property market.

Property and Online Advertising

Property and Online Advertising total revenue was flat at $401.7 million.

Australia’s residential revenue increased 4% to $295.6 million, reflecting the increase in buy listings, stronger Premiere penetration and

3 Source: Nielsen Digital Content Ratings (Monthly Tagged), Jul 20 – Dec 20, P2+, Digital (C/M), text, Real Estate/Apartments subcategory, Unique Audience.

4 Source: Nielsen Digital Content Ratings (Monthly Tagged), Jul 20 – Dec 20 (average), P2+, Digital (C/M), text, realcommercial.com.au vs commercialrealestate.com.au, Unique Audience.

5 Source: Similarweb, visits to flatmates.com.au vs flatmatefinders.com.au, Jul

20 – Dec 20.

6 Source: Nielsen Digital Content Ratings (Monthly Tagged), Jul 20 – Dec 20 vs Jul 19 – Dec 19 (average), P2+, Digital (C/M), text, realestate.com.au, Total Sessions.

7 Source: Nielsen Digital Content Ratings (Monthly Tagged), Jul 20 – Dec 20 vs Jul 19 – Dec 19 (average), P2+, Digital (C/M), text, realestate.com.au, Unique Audience.

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 continue to be negatively impacted by lack of migration and restrictions on tenant evictions.

During the half, there was a reduction in listings syndicated to MyFun due to COVID-19 related issues resulting in some listings not being translated during the listing period. There was no overall impact to group revenues, with a one-off increase to Australian residential revenue, and a corresponding decrease to the Asian segment.

Commercial and Developer revenue declined 7%. Commercial revenues were negatively impacted by a 26% decline in listings, which continue to be affected by the COVID-19 related moratorium on tenant evictions. This was partially offset by improved depth penetration. Developer benefited from an 8% YoY increase in project launches, assisted by the government stimulus. The stimulus has driven an increase in smaller, lower yielding projects, which has had a negative overall impact on average yield. realcommercial.com.au continues to be the number one commercial property app in Australia, with 9.7 times more app launches than the nearest competitor.[12]

Media, Data and other revenue declined 12%, driven by a reduction in Developer display advertising due to the increasing proportion of smaller project launches and lower developer display spend due to COVID-19. This was partially offset by continued growth from the data business.

Flatmates.com.au is the number one dedicated site[5] in share accommodation with almost 2.5 million average monthly visits.[13] The Group is well placed to strengthen this leadership position through the sharing of technology, expertise and marketing.

8 Source: Nielsen Digital Content Ratings (Monthly Tagged), Nov 20, P2+, Digital (C/M), text, realestate.com.au, Unique Audience.

9 Source: Nielsen Digital Content Ratings (Monthly Tagged), Nov 20, P18+, Digital (C/M), text, realestate.com.au, Active Reach %.

10 Source: Nielsen Digital Content Ratings (Monthly Tagged), Jul 20 – Dec 20 vs Jul 19 – Dec 19 (average), P2+, Digital (C/M), text, realestate.com.au App Launches.

11 Source: Nielsen Digital Content Ratings (Monthly Tagged), text, Jul 20 – Dec 20 (average), P2+, Mobile (App), text, realestate.com.au vs Domain, Time Spent. 12 Source: Nielsen Digital Content Ratings (Monthly Tagged), Jul 20 – Dec 20 (average), P2+, Digital (C/M), text, realcommercial.com.au vs commercialrealestate.com.au, App Launches. 13 Source: Google Analytics average monthly visits for the flatmates.com.au site (Jul 20 – Dec 20).

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Directors’ Report

REA Group Ltd

Rental applications received by the Group’s online application tool for renters grew 86% to more than 2.9 million applications[14] . Tenant Verification, which provides identity checks on potential tenants, and provides early visibility of consumers who are planning to move, continues to perform well. More than 150,000 verifications have been purchased since launch in 2018[15] .

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.

On 1 December 2020, REA Group acquired a 17.9% interest in Realtair Pty Limited (‘Realtair’) and subsequently increased its holding on 27 January 2021 to 19.9% for an aggregate investment of $7.3 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.

On 4 February 2021, the Group entered into a binding agreement to acquire 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 to the residential real estate market.

The combination of Realtair and CampaignAgent with our existing agent promotion products, allows us to 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 income increased 12% driven by higher settlements, and improved broker productivity. This was more than offset by a noncash valuation adjustment to reflect the expected future trail commission, which reduced due to faster loan run-off rates in the current low interest

14 Source: REA internal data Jul 20 – Dec 20 compared to Jul-19 – Dec-19.

15 Source: REA internal data as at Dec 20.

16 Source: SimilarWeb, monthly visits for iproperty.com.my site compared to the nearest competitor (Jul 20 – Dec 20). Excludes app.

environment. There was also a reduction in partnership revenue as the current NAB agreement performance payments have reached maturity.

Asia

The Group’s Asian operations comprise the leading property portal in Malaysia[16] , and prominent portals in Hong Kong and Thailand, as well as Chinese site, myfun.com.

The Asian business revenue was negatively impacted by renewed COVID-related lockdowns, cancellation of events across all markets, adverse FX movements and the one-off COVID-related reduction in syndicated MyFun listings. 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.

In Malaysia, iProperty.com.my remains the country’s number one property site in terms of market share[17] , growing site visits by 35% YoY[18] . Despite the challenging market conditions, penetration of the iProperty Pro depth offering continued to increase for the period.

Asia’s result during the half included the equity accounted contribution from its 13.5% stake in Elara Technologies (Elara), prior to the Group taking a controlling ownership interest.

In December 2020, REA Group moved to a controlling position in Elara, increasing its shareholding from 13.5% to 59.65%, with the right to appoint 5 out of 9 Elara board seats. News Corp, the parent of REA Group majority shareholder News Corp Australia, owns 39.01% in Elara.

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 license with the National Association of Realtors[®] , the largest trade organisation in the USA.

17 Source: SimilarWeb, Oct 20 – Dec 20, a comparison with iProperty.com.my and propertyguru.com.my. 18 Source: Google Analytics, Total sessions, Jul 20 – Dec 20 vs Jul 19 – Dec 19.

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Directors’ Report

REA Group Ltd

realtor.com[®] is a leading property portal in the United States, the world’s largest real estate market. Reported revenue growth of 20% to US$293 million[19] was due to the continued strength in the referral model and recovery in the traditional lead generation product, both benefiting from improved average monthly lead and transaction volumes. The result also benefitted from lower costs including the deferral of marketing costs. The Group’s share of Move, Inc. for the half-year resulted in a $9.4 million gain from core operations.

Average monthly unique users of realtor.com[®] ’s web and mobile sites for the second quarter increased 37% on the prior corresponding period to approximately 80 million[20] .

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 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. 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 business 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.

The Group also recognises the value mortgage brokers bring to people looking to finance their next property. Through its ownership of Smartline, the Group now has more than 400 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 realise, and achieve, their property dreams.

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

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 journey.

And for customers, it’s about giving them the insights into market and consumer data, so we can deliver quality leads and unparalleled value.

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 Condensed Consolidated Interim Financial Statements have been rounded off in accordance with that Instrument to the nearest thousand dollars, except where otherwise indicated.

20 Source: NewsCorp’s Earnings Release in US Dollars (4 February 2021) for the six-month period ended 31 December 2020: Average monthly unique users for Q2 FY21 and compared to the same period Q2 FY20.

19 Source: NewsCorp’s Form 10-Q stated in US Dollars for the six-month period ended 31 December 2020.

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Directors’ Report

REA Group Ltd

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 12.

Declaration

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

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Hamish McLennan

Chairman

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Owen Wilson

Chief Executive Officer

Melbourne

5 February 2021

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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 review of the half-year financial report of REA Group Ltd for the half-year ended 31 December 2020, 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 review; and

• b) No contraventions of any applicable code of professional conduct in relation to the review.

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

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Ernst & Young

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David McGregor Partner 5 February 2021

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

Condensed Consolidated Interim Financial Statements for the half-year ended 31 December 2020

REA Group Ltd

Table of Contents

Condensed Consolidated Income Statement .................................................................................................. 14	Condensed Consolidated Income Statement .................................................................................................. 14
Condensed Consolidated Statement of Comprehensive Income .................................................................... 15
Condensed Consolidated Statement of Financial Position .............................................................................. 16
Condensed Consolidated Statement of Changes in Equity .............................................................................. 17
Condensed Consolidated Statement of Cash Flows ........................................................................................ 18
Notes to the Condensed Consolidated Interim Financial Statements ............................................................. 19
Basis of preparation .......................................................................................................................................... 19
1.	Corporate information ............................................................................................................................. 19
2.	Segment information ............................................................................................................................... 20
3.	Revenue from contracts with customers ................................................................................................. 22
4.	Expenses .................................................................................................................................................. 23
5.	Income tax expense ................................................................................................................................. 24
6.	Business combination .............................................................................................................................. 24
7.	Cash and cash equivalents ....................................................................................................................... 27
8.	Intangible assets and impairment ............................................................................................................ 27
9.	Investment in associates and joint ventures ........................................................................................... 28
10.	Commissions ............................................................................................................................................ 28
11.	Interest bearing loans and borrowings .................................................................................................... 29
12.	Contributed equity ................................................................................................................................... 30
13.	Dividends ................................................................................................................................................. 31
14.	Commitments and contingencies ............................................................................................................ 31
15.	Events after the balance sheet date ........................................................................................................ 31

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Condensed Consolidated Income Statement for the half-year ended 31 December 2020

REA Group Ltd

Condensed Consolidated Income Statement

for the half-year ended 31 December 2020

Notes	2020	2019
	$'000	$'000
Revenue from property and online advertising 3	418,681	427,690
Revenue from financial services 3 Expense from franchisee commissions 3	47,549	42,996 (30,349)
	(35,880)
Revenue from financial services after franchisee commissions	11,669	12,647
Total operating income Employee benefits expenses 4 Consultant and contractor expenses Marketing related expenses Technology and other expenses Operations and administration expense Share of gains / (losses) of associates and joint ventures 9 Gain / (loss) on acquisition of subsidiary 6	430,350
	(92,478)
	(3,711)
	(21,856)
	(18,830)
	(12,014)
	5,607
	3,128
Earnings before interest, tax, depreciation and amortisation (EBITDA) Depreciation and amortisation expense 4	290,196	261,801 (36,726)
	(39,260)
Profit before interest and tax (EBIT) Net finance expense 4	250,936	225,075 (3,579)
	(2,119)
Profit before income tax Income tax expense 5	248,817	~~(~~ ~~)~~ 221,496 (73,785)
	(75,332)
Profit for the half-year	173,485	~~(~~ ~~)~~ 147,711
Profit for the half-year is attributable to: Non-controlling interest Owners of the parent	111 114 173,374 147,597
	111
	173,374
	173,485	147,711
Earnings per share attributable to the ordinary equity holders of REA Basic earnings per share Diluted earnings per share
	131.6 112.1 131.6 112.1
	131.6
	131.6

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

14

Condensed Consolidated Statement of Comprehensive Income for the half-year ended 31 December 2020

REA Group Ltd

Condensed Consolidated Statement of Comprehensive Income

for the half-year ended 31 December 2020

2020 $'000	2019 $'000
Profit for the half-year 173,485 Other comprehensive income Items that may be reclassified subsequently to the Condensed Consolidated Income Statement Exchange differences on translation of foreign operations, net of tax (32,717)	147,711 10,489
Other comprehensive income for the half-year, net of tax (32,717)	10,489
Total comprehensive income for the half-year 140,768	158,200
Total comprehensive income for the half-year is attributable to: Non-controlling interest 111 Owners of theparent 140,657	114 158,086
140,768	158,200

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

15

Condensed Consolidated Statement of Financial Position as at 31 December 2020

REA Group Ltd

Condensed Consolidated Statement of Financial Position as at 31 December 2020

Condensed Consolidated Statement of Financial Position as at 31 December 2020
31 Dec 2020 Notes $'000	30 Jun 2020 $'000
ASSETS Current assets Cash and cash equivalents 7 179,850 Trade and other receivables 108,860 Contract assets - Commission contract assets 10 46,458	222,845 99,391 5,552 45,356
Total current assets 335,168	373,144
Non-current assets Property, plant and equipment 95,103 Intangible assets 851,589 Deferred tax assets 11,452 Other non-current assets 13,603 Investment in associates and joint ventures 9 280,334 Commission contract assets 10 145,241	101,577 650,365 11,086 1,585 304,910 147,856
Total non-current assets 1,397,322	1,217,379
Total assets 1,732,490	1,590,523
LIABILITIES Current liabilities Trade and other payables 53,114 Current tax liabilities 14,400 Provisions 9,698 Contract liabilities 53,865 Interest bearing loans and borrowings 11 247,197 Commission liabilities 10 36,859	78,478 58,600 7,870 60,755 76,470 35,603
Total current liabilities 415,133	317,776
Non-current liabilities Contract liabilities - Other non-current payables 1,254 Deferred tax liabilities 45,621 Provisions 6,722 Interest bearing loans and borrowings 11 76,866 Commission liabilities 10 114,683	739 - 36,335 4,605 250,682 115,893
Total non-current liabilities 245,146	408,254
Total liabilities 660,279	726,030
Net assets 1,072,211	864,493
EQUITY Contributed equity 12 150,314 Reserves 35,005 Retained earnings 805,193	92,050 67,805 704,262
Parent interest 990,512 Non-controllinginterest 81,699	864,117 376
Total equity 1,072,211	864,493

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

16

Condensed Consolidated Statement of Changes in Equity for the half-year ended 31 December 2020

REA Group Ltd

Condensed Consolidated Statement of Changes in Equity

for the half-year ended 31 December 2020

Contributed equity Reserves Retained earnings Parent interest Notes $’000 $’000 $’000 $’000	Contributed equity Reserves Retained earnings Parent interest Notes $’000 $’000 $’000 $’000	Non- controlling interest Total equity $’000 $’000	Non- controlling interest Total equity $’000 $’000
Balance at 1 July 2020 92,050 67,805 704,262 864,117		376 864,493
Profit for the half-year - - 173,374 173,374 Other comprehensive income - (32,717) - (32,717)		111 173,485 - (32,717)
Total comprehensive income for the half-year - (32,717) 173,374 140,657		111 140,768
Transactions with owners in their capacity as owners
Share-based payment expense 4 - 2,051 - 2,051 Acquisition of treasury shares (3,721) - - (3,721) Settlement of vested performance rights 2,134 (2,134) - - Issue of new shares 12 59,851 - - 59,851 Acquired minority interest 6 - - - - Dividendspaid 13 - - (72,443) (72,443)		- 2,051 - (3,721) - - - 59,851 81,335 81,335 (123) (72,566)
Balance at 31 December 2020 150,314 35,005 805,193	~~(~~ ~~)~~ 990,512	81,699	1,072,211
Contributed equity Reserves Retained earnings Parent interest Notes $’000 $’000 $’000 $’000		Non- controlling interest Total equity $’000 $’000
Balance at 1 July2019 89,544 68,120 747,312 904,976		459 905,435
Profit for the half-year - - 147,597 147,597 Other comprehensive income - 10,489 - 10,489		114 147,711 - 10,489
Total comprehensive income for the half-year - 10,489 147,597 158,086		114 158,200
Transactions with owners in their capacity as owners
Share-based payment expense 4 - 53 - 53 Acquisition of treasury shares (344) - - (344) Settlement of vested performance rights (2,669) (3,784) - (1,115) Dividendspaid 13 - - (82,980) (82,980)		- 43 - (344) - (1,115) (175) (83,155)
Balance at 31 December 2019 91,869 74,878 811,929	978,676	398	979,074

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

17

Condensed Consolidated Statement of Cash Flows for the half-year ended 31 December 2020

REA Group Ltd

Condensed Consolidated Statement of Cash Flows

for the half-year ended 31 December 2020

2020 Notes $'000	2019 $'000
Cash flows from operating activities Receipts from customers (inclusive of GST) 464,676 Payments to suppliers and employees(inclusive of GST) (218,985)	494,556 (239,199)
245,691 Interest received 1,489 Interest paid (3,215) Income taxes paid (119,088) Share-basedpayment on settlement of incentiveplans -	255,357 1,496 (4,096) (88,806) (1,406)
Net cash inflow from operating activities 124,877	162,545
Cash flows from investing activities (Payment)/receipt for acquisition of subsidiary 6 (39,432) (Payment)/receipt for investment in associates and joint ventures 9 (5,412) Payment for property, plant and equipment (1,296) Payment for intangible assets (29,898) Payment for convertible note receivable 9 (11,814)	(15,867) (2,000) (1,882) (32,595) -
Net cash outflow from investing activities (87,852)	(52,344)
Cash flows from financing activities Dividends paid to company's shareholders 13 (72,443) Dividends paid to non-controlling interests in subsidiaries (123) Payment for acquisition of treasury shares 12 (3,721) Proceeds from borrowings - Repayment of borrowings and leases 11 (3,101)	(82,980) (661) (344) 169,525 (243,194)
Net cash outflow from financing activities (79,388)	(157,654)
Net decrease in cash and cash equivalents (42,363) Cash and cash equivalents at the beginning of the year 222,845 Effects of exchange rate changes on cash and cash equivalents (632)	(47,453) 137,897 511
Cash and cash equivalents at end of the half-year 7 179,850	90,955

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

18

Notes to the Condensed Consolidated Interim Financial Statements 31 December 2020

REA Group Ltd

Notes to the Condensed Consolidated Interim Financial Statements

Basis of preparation

The Condensed Consolidated Interim Financial Statements for the half-year ended 31 December 2020 have been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001 .

The Condensed Consolidated Interim Financial Statements do not include all the information and disclosures required in annual Financial Statements, and should be read in conjunction with the Group’s annual Consolidated Financial Statements as at 30 June 2020.

The accounting policies adopted in the preparation of the half-year financial report are consistent with those followed in the preparation of the Group’s annual report for the year ended 30 June 2020. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

In preparing these interim financial statements, management has made judgements and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements.

The Group has net current liabilities of $80.0 million as at 31 December 2020. The NAB revolving facility of $70 million matures in April 2021 and the syndicated loan facility of $170 million (sub facility A) matures in December 2021, both loan facilities have been classified as current liabilities as at 31 December 2020, refer to Note 11 for further details. The Group expects to repay the loan facilities through a combination of debt refinancing and cash reserves. The Group generated positive operating cash flows and traded profitably for the year. The Directors expect this to continue into the foreseeable future.

(a) New standards, interpretations and amendments adopted by the Group

A number of new or amended accounting standards and interpretations are effective for the Group from 1 July 2020. 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.

(b) New standards, interpretations and amendments not yet adopted by the Group

New accounting standards, interpretations and amendments 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.

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 Condensed Consolidated Interim Financial Statements of the Company as at and for the half-year ended 31 December 2020 comprise the Company and its subsidiaries (together referred to as the ‘Group’) and the Group’s interests in associates and equity-accounted investments.

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

19

Notes to the Condensed Consolidated Interim Financial Statements 31 December 2020

REA Group Ltd

2. Segment information

The following tables present operating income and results by operating segments for the half-years ended 31 December 2020 and 2019.

Half-year ended 31 December 2020 Australia Property & Online Advertising Financial Services $’000 $’000	Half-year ended 31 December 2020 Australia Property & Online Advertising Financial Services $’000 $’000	Asia2	North	Corporate	Total
			America
	Financial
	Services
	$’000	$’000	$’000	$’000	$’000
Segment operating income1 Total segment operating income1 402,648 Inter-segment operating income (941)		17,416 (442)		- 431,733 - (1,383)
	11,669		-
	-		-
Operating income1 401,707	11,669	16,974	-	- 430,350
Results Segment EBITDA from core operations (excluding share of losses of associates and joint ventures) 288,557 Share of losses of associates and joint ventures (166)		1,690 (3,580)		(10,100) 284,552 - 5,607
	4,405		-
	-		9,353
Segment EBITDA from core operations 288,391	4,405	(1,890)	9,353	(10,100) 290,159
Gain/(loss) on acquisitions and disposals and business combination transaction costs - Historic taxprovision3 -	-	- -	-	3,128 3,128 (3,091) (3,091)
	-		-
EBITDA 288,391 4,405 Depreciation and amortisation	4,405	(1,890)	9,353	(10,063) 290,196 (39,260)
EBIT				250,936
Net finance expense				(2,119)
Profit before income tax				248,817

1 This represents revenue less commissions for financial services

2 Inclusive of Elara Technologies (‘Elara’) as an investment in associate for the six month period ending 31 December 2020.

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

20

Notes to the Condensed Consolidated Interim Financial Statements 31 December 2020

REA Group Ltd

2. Segment information (continued)

2. Segment information (continued)	2. Segment information (continued)
Half-year ended 31 December 2019 Australia Property & Online Advertising Financial Services $’000 $’000		Asia $’000	North	Corporate $’000	Total
			America
	Financial
	Services
	$’000		$’000		$’000
Segment operating income1 Total segment operating income1 400,874 Inter-segment operating income (394)		27,691 (481)		- -
	12,647		-		441,212
	-		-		(875)
Operatingincome1 400,480	12,647	27,210	-	-	440,337
Results Segment EBITDA from core operations (excluding share of losses of associates and joint ventures) 271,451 Share of losses from associates and joint ventures (64) (Gain)/loss on acquisitions and disposals and business combination transaction costs -		6,285 (3,182) -		(9,988) 1,059 (1,059)
	4,347		-		272,095
	(181)		(1,470)		(3,838)
	-		-		(1,059)
Segment EBITDA from core operations 271,387	4,166	3,103	(1,470)	(9,988)	267,198
Restructure costs - Gain/(loss) on acquisitions and disposals and business combination transaction costs -	-	- -	-	(4,082) (1,315)	(4,082)
	-		-		(1,315)
EBITDA 271,387 4,166 Depreciation and amortisation	4,166	3,103	(1,470)	(15,385)	261,801
				(36,726)
EBIT				225,075
Net finance expense				(3,579)
Profit before income tax				221,496

1 This represents revenue less commissions for financial services

21

Notes to the Condensed Consolidated Interim Financial Statements 31 December 2020

REA Group Ltd

3. Revenue from contracts with customers

• (a) Revenue from contracts with customers reconciliation

		Consolidated for the	Consolidated for the
	half-year ended 31 December 2020
	Property &
Total revenue for the Group:	Online	Financial
Type of services	Advertising	Services	Asia	Total
	$'000	$'000	$'000	$'000
Revenue from property & online advertising	401,707	-	16,974	418,681
Revenue from financial services	-	47,549	-	47,549
Total revenue	401,707	47,549	16,974	466,230
		Consolidated for the
	half-year ended 31 December 2020
Total revenue for the Group:	Property & Online	Financial
Timing of revenue	Advertising	Services	Asia	Total
	$'000	$'000	$'000	$'000
Services transferred at a point in time	6,745	47,549	15	54,309
Services transferred over time	394,962	-	16,959	411,921
Total revenue	401,707	47,549	16,974	466,230
		Consolidated for the
	half-year ended 31 December 2019
	Property &
Total revenue for the Group:	Online	Financial
Type of services	Advertising	Services	Asia	Total
	$'000	$'000	$'000	$'000
Revenue from property & online advertising	400,480	-	27,210	427,690
Revenue from financial services	-	42,996	-	42,996
Total revenue	400,480	42,996	27,210	470,686
		Consolidated for the
	half-year ended 31 December 2019
Total revenue for the Group:	Property & Online	Financial
Timing of revenue	Advertising	Services	Asia	Total
	$'000	$'000	$'000	$'000
Services transferred at a point in time	6,777	42,996	33	49,806
Services transferred over time	393,703	-	27,177	420,880
Total revenue	400,480	42,996	27,210	470,686

22

Notes to the Condensed Consolidated Interim Financial Statements 31 December 2020

REA Group Ltd

3. Revenue from contracts with customers (continued)

Reconciliation of operating income:

31 Dec 2020 $’000	31 Dec 2019 $’000
Total revenue 466,230 Expense from franchisee commissions (35,880)	470,686 (30,349)
Total operating income 430,350	440,337

(b) Contract liabilities

As of 1 July 2020, contract liabilities amounted to $61.5 million, of which $49.2 million was recognised during the six months ending 31 December 2020.

4. Expenses

4. Expenses
31 Dec 2020 $'000	31 Dec 2019 $'000
Profit before income tax includes the following specific expenses: Employee benefits Salary costs 82,354 Defined contribution superannuation expense 8,073 Share basedpayments expense 2,051	86,448 8,027 53
Total employee benefits expenses 92,478	94,528
Finance (income)/expense Interest income (1,496) Interest expense 3,356 Foreign exchange loss - financing 259	(1,437) 4,312 704
Total finance expense 2,119	3,579
Depreciation of property, plant and equipment 8,460 Amortisation of intangibles 30,800	8,535 28,191
Total depreciation and amortisation expense 39,260	36,726
Advertising placement costs 5,354 Net foreign exchange loss / (gain) 1,630	5,081 (852)

23

Notes to the Condensed Consolidated Interim Financial Statements 31 December 2020

REA Group Ltd

5. Income tax expense

The Group calculates the half-year income tax expense using the tax rate that would be applicable to expected total annual earnings. The major components of income tax expense in the Condensed Consolidated Income Statement are:

31 Dec 2020 $'000	31 Dec 2019 $'000
Current income tax expense 76,696 Deferred income tax expense related to origination and reversal of deferred taxes (1,364)	72,295 1,490
Total income tax expense reported in the Condensed Consolidated Income Statement 75,332	73,785

6. Business combination

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. Following the acquisition, the Group holds a 59.65% shareholding in Elara at 31 December 2020.

(a) Purchase consideration

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

	$’000
Cash paid / payable	49,091
Shares issued	56,588
Total purchase consideration	105,679

Cash consideration paid was $48.9 million (US$34.5 million) on 17 December 2020 with a further $0.2 million payable as at the reporting date. 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 a subsequent issue of 84,195 shares on 30 December 2020. The fair value of the REA shares issued were based on the listed share price of the Company at 17 December 2020 and 30 December 2020.

(b) 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, Elara’s debt facility has been repaid.

News Corp holds a non-controlling interest in Elara at 39.01% and minority interests held the remaining 1.34%. The non-controlling interest was calculated using the proportionate 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 at 31 December 2020.

24

Notes to the Condensed Consolidated Interim Financial Statements 31 December 2020

REA Group Ltd

6. Business combination (continued)

(b) Fair value of Elara (continued)

(b) Fair value of Elara (continued)
	$’000
Purchase consideration (a)	105,679
Fair value of previously held equity interest (f)	10,854
Non-controlling interest	81,335
Fair value of Elara	197,868

(c) Goodwill on acquisition

(c) Goodwill on acquisition
	$’000
Fair value of Elara (b)	197,868
Less: Net identifiable assets and liabilities acquired (d)	(32,488)
Goodwill	165,380

The Goodwill acquired is attributable to Elara’s 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 provisionally identified intangible assets including software and brands that have been provisionally separated from goodwill, net of deferred taxes.

25

Notes to the Condensed Consolidated Interim Financial Statements 31 December 2020

REA Group Ltd

6. Business combination (continued)

(d) Details of 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:

and is detailed below:
	Fair value recognised
	on acquisition
	$’000
Current assets
Cash and cash equivalents	9,498
Trade and other receivables	6,375
Total current assets	15,873
Non-current assets
Property, plant and equipment	1,081
Intangible assets	38,008
Other non-current assets	864
Total non-current assets	39,953
Current liabilities
Trade and other payables	6,243
Provisions	497
Contract liabilities	4,950
Total current liabilities	11,870
Non-current liabilities
Deferred tax liability	9,380
Provisions and other liabilities	2,088
Total non-current liabilities	11,468
Net identifiable assets acquired	32,488
Add: goodwill (c)	165,380
Net assets acquired	197,868

The fair value of trade and other receivables is $6.4 million and includes trade receivables with a fair value of $5.1 million. The gross contractual amount of trade receivables due is $5.1 million. A provision of $2.5 million has been recognised for contractual cash flows not expected to be collected.

(e) Cash flows on acquisition

(e) Cash flows on acquisition
Cash consideration paid	48,930
Less: cash acquired	(9,498)
Outflow of cash	39,432

26

Notes to the Condensed Consolidated Interim Financial Statements 31 December 2020

REA Group Ltd

6. Business combination (continued)

(f) 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.

(g) Revenue and profit before tax from continuing operations

As the transaction completed effective 31 December 2020, there is no revenue or profit contributions arising from the Elara acquisition included in the continuing operations of the Group for the half year ended 31 December 2020. Revenue and profit contributions will be included in the continuing operations of the Group from 1 January 2021.

(h) Commitments

REA has agreed to provide ongoing funding to Elara for a minimum of 18 months of operations on terms consistent with the revolving credit facility (‘RCF’) previously held by Elara. Funding will be provided in any combination of equity and debt as may be determined at REA’s discretion to be utilised by Elara for business operations.

As at the reporting date, the Group had no other commitments.

7. Cash and cash equivalents

Cash and cash equivalents are comprised of the following:

31 Dec 2020 $'000	30 Jun 2020 $'000
Cash at bank and in hand 179,388 Short-term deposits 462	222,407 438
Total cash and short-term deposits 179,850	222,845

8. Intangible assets and impairment

AASB 136 Impairment of Assets requires assets to be assessed for impairment indicators at the end of each reporting period. If any such indicators exist, the recoverable amount of the asset is estimated. No such indicators were identified for the Group’s CGUs or segments for the half-year ended 31 December 2020. Following the impairment charges recognised in June 2020, the recoverable amount of the Asian CGU and the Financial Services Segment was equal to their carrying amount. Therefore, any adverse change in certain key assumptions for the Asian CGU and the Financial Services Segment could, in isolation, result in a material impairment.

27

Notes to the Condensed Consolidated Interim Financial Statements 31 December 2020

REA Group Ltd

9. Investment in associates and joint ventures

On 17 December 2020, the Group acquired a controlling share in Elara Technologies Pte. Ltd. (‘Elara’). On completion, the Group ceased to equity account for its investment in associate and recognised Elara as a fully consolidated subsidiary of the Group. Details of the transaction is disclosed in note 6.

On 1 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 1 December 2022. 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.

The Group holds a 27% interest in 99 Group, which is equity accounted. 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 in three years. The convertible note receivable is classified as a financial asset at fair value through profit and loss (‘FVTPL’) and is reported in non-current assets in the Consolidated Statement of Financial Position.

The Group holds a 20% interest in Move, Inc. (‘Move’), which is equity-accounted. The remaining 80% interest in Move is held by News Corp.

A reconciliation of the carrying amounts of investments in associates and joint ventures is provided below:

	Move	Move	Elara			Other
	31 Dec	30 Jun	31 Dec	30 Jun	31 Dec		30 Jun
	2020	2020	2020	2019	2019		2020
	$'000	$'000	$'000	$'000	$'000		$'000
Carryingamount of the investment	261,091	279,425	-	10,095	19,243		15,390

A reconciliation of the share of (gains) /losses in associates and joint ventures is provided below:

	Move	Move	Elara		Other	Other
	31 Dec	31 Dec	31 Dec	31 Dec	31 Dec		31 Dec
	2020	2019	2020	2019	2020		2019
	$'000	$'000	$'000	$'000	$'000		$'000
Share of (gain)/losses of associate/joint venture	(9,353)	411	2,446	3,182	1,300		245

10. Commissions

The key assumptions underlying the carrying value of trailing commissions assets and the corresponding liabilities to franchisees at balance date are detailed in the table below:

31 Dec 2020	30 Jun 2020
Weighted average loan life 4.3 years Weighted average discount rate 5.0% Percentage of commissions received paid to franchisees (10-year average) 80.0%	4.3 years 5.0% 80.2%

28

Notes to the Condensed Consolidated Interim Financial Statements 31 December 2020

REA Group Ltd

10. Commissions (continued)

The carrying amounts of upfront trail commission contract assets and commission liabilities carried at reporting date are detailed below:

31 Dec 2020 $’000	30 Jun 2020 $’000
Future trailing commission contract assets – current 38,704 Upfront commission contract assets - current 7,754	38,317 7,039
Total current commission contract assets 46,458 Future trailing commission contract assets – non-current 145,241 Future trailing commission liabilities - current 30,500 Upfront commission liabilities – current 6,359	45,356 147,856 29,988 5,615
Total current commission liabilities 36,859 Future trailing commission liabilities – non-current 114,683	35,603 115,893

11. Interest bearing loans and borrowings

Facility1 Interest rate	Maturity 31 Dec 2020 $'000	30 Jun 2020 $'000
Unsecured syndicated revolving loan facility2,5 Sub Facility A6 BBSY +0.85% - 2.00%4 Sub Facility B3 BBSY +2.00% - 2.75%4 Unsecured NAB revolving loan facility5,6 BBSY +0.85% - 2.75%4 Unsecured NAB overdraft facility3 NAB benchmark rate -4.22%	December 2021 170,000 December 2021 - April 2021 70,000 On demand -	170,000 - 70,000 -

1 The carrying value of the debt approximates fair value.

2 The loan facility is provided by a syndicate comprising Australia and New Zealand Bank, National Australia Bank and HSBC.

3 Facility was not drawn as at 31 December 2020 and 30 June 2020.

4 Interest rate margin is dependent on the Group's net leverage ratio. As of 31 December 2020, the interest rate margin was between 0.85% and 2.00%, at a weighted average interest rate of 0.97%.

5 On 8 October 2020, the existing facility agreements for the unsecured syndicated revolving loan facility and the unsecured NAB revolving loan facility were amended to change the covenant requirements. As of 31 December 2020, the Group is required to maintain a net leverage ratio of not more than 3.5 to 1.0. The Group has complied with the financial covenants of its borrowing facilities during the period.

6 Both facilities are fully drawn as at 31 December 2020 and 30 June 2020.

29

Notes to the Condensed Consolidated Interim Financial Statements 31 December 2020

REA Group Ltd

11. Interest bearing loans and borrowings (continued)

Reconciliation of liabilities arising from financing activities:

Reconciliation of liabilities arising from financing activities:
Balance at 1 July 2020 $'000 Additions $'000 Principal Payments $'000 Other $'000	Balance at 31
	December
	2020
	$'000
Loans – current 69,456 - - 170,055 Lease liabilities – current 7,014 - (3,101) 3,773	239,511
	7,686
Total interest bearing loans and borrowings - current 76,470 - (3,101) 173,828	247,197
Loans – non-current 169,777 - - (169,777) Lease liabilities – non-current 80,905 - - (4,039)	-
	76,866
Total interest bearing loans and borrowings - non-current 250,682 - - (173,816)	76,866

12. Contributed equity

At 31 December 2020 the Group had 132,117,217 ordinary shares on issue. As detailed in note 6, 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.

	Contributed equity	Other contributed equity	Total
	$’000	$'000	$'000
Balance at 1 July 2019	102,616	(13,072)	89,544
Acquisition of treasury shares	-	(344)	(344)
Settlement of vestedperformance rights	-	2,850	2,850
Balance at 30 June 2020	102,616	(10,566)	92,050
Acquisition of treasury shares	-	(3,721)	(3,721)
Issue of new shares	59,851	-	59,851
Settlement of vestedperformance rights	-	2,134	2,134
Balance 31 December 2020	162,467	(12,153)	150,314

The Group’s own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in share-based payments reserve.

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Notes to the Condensed Consolidated Interim Financial Statements 31 December 2020

REA Group Ltd

13. Dividends

The following dividends were declared or paid by the Group:

31 Dec 2020 $’000	31 Dec 2019 $’000
Declared and paid during the period (fully-franked @ 30%) Final dividend for 2020 55.0 cents (2019: 63.0 cents) 72,443	82,980
Proposed and unrecognised as a liability (fully-franked at 30%) Interim dividend for 2021: 59.0 cents (2020: 55.0 cents). Proposed dividend is expected to be paid on 23 March 2021 out of retained earnings at 31 December 2020 but is not recognised as a liability at half-year end 77,949	72,443

14. Commitments and contingencies

(a) Claims

Various claims, including tax matters, arise in the ordinary course of business against the Group and its subsidiaries. The amount of the liability (if any) at 31 December 2020 cannot be ascertained, and any resulting liability would not materially affect the financial position of the Group.

(b) Guarantees

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.

As at the reporting date, the Group had no guarantees outstanding.

15. Events after the balance sheet date

On 4 February 2021, the Group entered into a binding agreement to acquire 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 to the residential real estate market.

Excluding the above, from the end of the reporting period to the date of this report, no other 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.

31

Directors’ Declaration

REA Group Ltd

Directors’ Declaration

For the half-year ended 31 December 2020:

In the Directors' opinion:

• (a) the Condensed Consolidated Interim Financial Statements and notes of the consolidated entity set out on pages 14 to 31 are in accordance with the Corporations Act 2001 , including:

giving a true and fair view of the Group’s financial position as at 31 December 2020 and of its performance for the half-year ended on that date; and

complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

• (b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Directors.

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Hamish McLennan

Chairman

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Owen Wilson

Chief Executive Officer

Melbourne

5 February 2021

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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 review report to the members of REA Group Ltd

Report on the half-year financial report

Conclusion

We have reviewed the accompanying half year financial report of REA Group Ltd and its subsidiaries (collectively the Group), which comprises the condensed consolidated statement of financial position as at 31 December 2020, the condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration.

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the half-year financial report of the Group is not 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 31 December 2020 and of its consolidated financial performance for the half-year ended on that date; and

• b. Complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

Directors’ responsibility for the half-year financial report

The directors of the Company are responsible for the preparation of the half-year 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 half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, anything has come to our attention that causes us to believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group’s consolidated financial position as at 31 December 2020 and its consolidated financial performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of the Group, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

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A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

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Ernst & Young

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David McGregor Partner Melbourne 5 February 2021

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