REA Group Ltd Annual Report 2021

Annual Report 2021 | REA Group Ltd 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 Year in review Directors’ Report Financial Statements Remuneration Report Sustainability Our Leaders 105