REA Group Ltd Annual Report 2021

Notes to the Consolidated Financial Statements for the year ended 30 June 2021 REA Group Ltd | Annual Report 2021 9. Financial risk management The financial risks arising from the Group’s operations comprise market, credit and liquidity risk. The Group seeks to manage risks in ways that will generate and protect shareholder value. Management of risk is a continual process and an integral part of business management and corporate governance. The Group’s risk management strategy is aligned with the corporate strategy and company vision to ensure that the risk management strategy contributes to corporate goals and objectives. The Board determines the Group’s tolerance for risk, after taking into account the strategic objectives, shareholder expectations, financial and reporting requirements and the financial position, organisational culture and the experience or demonstrated capacity in managing risks. Management is required to analyse its business risk in the context of Board expectations, specific business objectives and the organisation’s risk tolerance. One of the key areas of the Group’s risk management focus is on financial risk management of financial instruments, used to raise and distribute funds for the Group’s operations and opportunities. Borrowings are made at variable interest rates. Cash and cash equivalents draw interest at variable interest rates. All other financial assets and liabilities are non-interest-bearing. The Group holds the following financial instruments: Notes 2021 $’000 2020 $’000 Current financial assets/(liabilities) not measured at fair value 1 Cash and cash equivalents 8 168,869 222,845 Trade and other receivables 147,886 104,943 Current commission contract assets 2 11 148,692 45,356 Trade and other payables 15 (95,673) (78,478) Current commission liabilities 11 (113,899) (35,603) Interest bearing loans and borrowings (8,822) (76,470) Financial guarantees – (1,844) Total current net financial assets 247,053 180,749 Non-current financial assets/(liabilities) not measured at fair value 1 Other non-current assets 14 5,013 1,585 Non-current commission contract assets 2 11 431,342 147,856 Non-current commission liabilities 11 (324,990) (115,893) Interest bearing loans and borrowings (486,781) (250,682) Financial guarantees – (167) Total non-current net financial liabilities (375,416) (217,301) 1 Measurement consistently applied to assets and liabilities presented as held for sale as at 30 June 2021, except for the convertible note receivable which is measured at fair value, refer to Note 20 for details. 2 Commission contract assets are accounted for in accordance with AASB 15, with an ECL measured in accordance with AASB 9. Refer to Note 11 for further details. The Group assessed that the fair values of cash and cash equivalents, trade receivables and other assets, and trade and other payables approximate their carrying amounts largely due to the short-term maturities of these instruments. Refer to section (c) for measurement details on borrowings. 84 Financial Statements