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 (continued) (d) Market risk – foreign exchange Nature of risk Risk management Material arrangements Exposure Foreign currency risk arises when future transactions or financial assets and liabilities are denominated in a currency other than the entity’s functional currency. The Group operates internationally and is therefore exposed to foreign exchange risk, relating to the US Dollar (USD), Singapore Dollar (SGD), Hong Kong Dollar (HKD), Malaysian Ringgit (MYR), Thai Baht (THB), Indian Rupee (INR) and Chinese Yuan (CNY). The Group manages foreign currency risk by evaluating its exposure to fluctuations and entering forward foreign currency contracts, where appropriate. The Group also holds foreign currency cash balances in order to fund significant transactions denominated in non-functional currencies. At the reporting date, cash and cash equivalents included the AUD equivalent of $14.8 million (2020: $9.2 million) in MYR, THB, SGD, HKD, USD, INR and CNY. At reporting date, no forward or foreign currency contracts were in place. The Group’s exposure to foreign currency changes for all other currencies is not considered material. Sensitivity analysis was performed to illustrate the impact of movements in each foreign currency with all other variables held constant and utilising a range of +5% to -5%: Cash and cash equivalents: the impact to the profit and loss would be between ($0.7 million) and $0.7 million. (e) Market risk – cash flow interest rate Nature of risk Risk management Material arrangements Exposure The Group is exposed to variable interest rate risk on its interest bearing financial assets and liabilities due to the possibility that changes in interest rates will affect future cash flows. As at 30 June 2021, the Group’s primary exposure to interest rate risk arises from interest bearing loans and borrowings (excluding lease liabilities) and cash and cash equivalents. Cash and cash equivalents consist primarily of cash and short-term deposits, which are predominately interest bearing accounts. Funds that are excess to short- term liquidity requirements are generally invested in short-term deposits. The Group is primarily exposed to domestic interest rate movements, therefore exposure and impact to foreign interest change is considered immaterial. The Group manages interest rate risk by evaluating its exposure to interest rate changes and entering contracts where appropriate. As at 30 June 2021, the Group held cash and cash equivalents of $168.9 million (2020: $222.8 million), of which $0.5 million (2020: $0.4 million) was held in short-term deposits. As at 30 June 2021, the Group held interest bearing loans and borrowings (excluding lease liabilities) of $413.4 million (2020: $240.0 million) which are exposed to interest rate movements. See further details in section (c) on the Group’s borrowing facilities. Sensitivity analyses were performed to illustrate the impact of movements in interest rates, with all other variables held constant. Borrowings: the weighted average interest rate for the year ended 30 June 2021 was 0.49% (2020: 1.89%). If the interest rate were to increase or decrease by 1%, the impact to the interest expense would be between $0.1 million and ($0.1 million). Cash and cash equivalents: if cash and cash equivalents were to increase or decrease by 1%, based on historic interest rates, the impact to interest income would be between $0.1 million and ($0.1 million). (f) Market risk – price The Group does not have any listed equity securities that are susceptible to market price risk arising from uncertainties about future values of the investment securities at 30 June 2021 (2020: nil). 88 Financial Statements