REA Group Ltd Annual Report 2021

Annual Report 2021 | REA Group Ltd 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: $ʼ000 Cash paid 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 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. $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 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. Year in review Directors’ Report Financial Statements Remuneration Report Sustainability Our Leaders 107