NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 40 ACQUISITION OF AND LOSS OF CONTROL IN SUBSIDIARIES, AND CHANGES IN INTERESTS IN SUBSIDIARIES WITHOUT LOSS OF CONTROL (CONT’D) (I) Acquisition of subsidiaries (cont’d) 2021 In February 2021, the Group through its indirect wholly-owned subsidiary, Chenghao (Shanghai) Investment Co., Ltd., acquired 84.6% of the shares and voting interest in Shenzhen Tusincere Technology Park Development Co. Ltd. (“Shenzhen Tusincere”), which holds a 65% equity interest in Shenzhen Longgang District Qidixiexin Science and Technology Development Park Co., Ltd. (“Shenzhen Longgang”), from Sincere Property Group, a then joint venture of the Group, and two third parties, for a consideration of approximately $174.3 million (RMB853.4 million), together with the assumption of proportionate existing shareholder loans of approximately $173 million (RMB847 million). The acquisition provided the Group an opportunity to enhance its property portfolio in China. The acquisition was accounted for as a business combination. From the date of acquisition to 31 December 2021, Shenzhen Tusincere contributed revenue of $222.8 million and profit before tax of $44.0 million to the Group’s results. If the acquisition had occurred on 1 January 2021, management estimated the Group’s revenue for the period would have been $2,654.4 million, with no significant change to the Group’s profit before tax. Identifiable assets acquired and liabilities assumed The following table summarises the recognised amounts of assets acquired and liabilities assumed at the acquisition date. Note Recognised amounts $’000 Property, plant and equipment 4 21,304 Investment properties 5 341,753 Development properties 948,309 Trade and other receivables 17,356 Contract costs 1,003 Cash at bank 5,564 Trade and other payables (145,525) Shareholder loans (297,972) Contract liabilities (166,443) Employee benefits (813) Lease liabilities (2,876) Provision for tax (59,567) Provisions 29 (4,108) Interest-bearing borrowings (194,016) Deferred tax liabilities 30 (80,081) Net identifiable assets acquired 383,888 40 ACQUISITION OF AND LOSS OF CONTROL IN SUBSIDIARIES, AND CHANGES IN INTERESTS IN SUBSIDIARIES WITHOUT LOSS OF CONTROL (CONT’D) (I) Acquisition of subsidiaries (cont’d) 2022 (cont’d) Identifiable assets acquired and liabilities assumed The following table summarises the recognised amounts of assets acquired and liabilities assumed at the acquisition date. Recognised amounts Business combination Acquisition of assets Total $’000 $’000 $’000 Investment properties – 379,407 379,407 Trade and other receivables 17 698 715 Cash and cash equivalents 75 7,960 8,035 Trade and other payables (20) (14,906) (14,926) Lease liabilities – (37,005) (37,005) Provision for taxation – (384) (384) Net identifiable assets acquired 72 335,770 335,842 Cash flows relating to the acquisition Consideration for equity interest –^ 335,770 335,770 Add: Acquisition-related costs – 8,384 8,384 Less: Acquisition-related costs not yet paid – (5,579) (5,579) Less: Cash and cash equivalents acquired (75) (7,960) (8,035) Total net cash outflow (75) 330,615 330,540 ^ Less than $1,000 Negative goodwill Negative goodwill arising from the acquisition of City Nexus has been recognised as follows: Total $’000 Consideration transferred –^ Fair value of the Group’s existing 30% interest in the associate 24 Fair value of identifiable net assets (72) Negative goodwill (48) ^ Less than $1,000 The negative goodwill arising from the acquisition of City Nexus has been recognised in “other income” in the Group’s consolidated profit or loss. The negative goodwill was attributed to the competitive pricing negotiated with the seller. CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2022 FINANCIALS 210 211
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