REA Group Ltd Annual Report 2021

Directors’ Report continued REA Group Ltd | Annual Report 2021 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. 36 Directors’ Report