REA Group Ltd Annual Report 2021

Annual Report 2021 | REA Group Ltd 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. Year in review Directors’ Report Financial Statements Remuneration Report Sustainability Our Leaders 111