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 (cont’d) Negative goodwill Negative goodwill arising from the acquisition of Shenzhen Tusincere has been recognised as follows: Total $’000 Consideration transferred 174,384 Non-controlling interests, based on their proportionate interest in the recognised amounts of the assets and liabilities of the acquiree 173,951 Fair value of identifiable net assets (383,888) Negative goodwill (35,553) The negative goodwill arising from the acquisition of Shenzhen Tusincere has been recognised in “other income” in the Group’s profit or loss. The negative goodwill was attributed to the competitive pricing negotiated with the joint venture party which was trying to improve its overall liquidity, and two other third parties. (II) Loss of control in subsidiaries 2022 (a) On 26 May 2022, following the Group’s distribution in specie of part of the CDLHT units that it held, to the Company’s ordinary shareholders (note 36), which reduced the Group’s interest in CDLHT from 38.89% to 27.21%, the Group lost control over CDLHT (note 44). CDLHT was deconsolidated on that date and became an associate of the Group. (b) On 7 March 2022, the Group, through its wholly-owned subsidiary, Singapura Developments (Private) Limited, disposed of its 100% equity interest in Bloomsville Investments Pte. Ltd. (Bloomsville) for a sale consideration (net of transaction costs) of $80.8 million. The Group recognised a total gain on the above transactions of approximately $501.7 million. 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 (cont’d) Recognised amounts $’000 Cash flows relating to the acquisition Consideration for equity interest 174,384 Shareholder loans assumed 172,969 Total consideration 347,353 Less: Cash acquired (5,564) Add: Consideration not yet paid (42) Total net cash outflow 341,747 Measurement of fair values The valuation techniques used for measuring the fair value of material assets acquired and liabilities assumed as part of business combinations were as follows: Assets acquired Valuation technique Property, plant and equipment and investment properties Direct comparison, income capitalisation, standardised land value adjustment and residual methods: The direct comparison method involved the analysis of comparable sales of similar assets and adjusting the sale prices to that reflective of the properties. The income capitalisation method capitalises an income stream into a present value using revenue multipliers or single-year capitalisation rates. The standardised land value adjustment method considers the price of standard land in the current situation of development and utilisation, under normal market conditions within legal maximum use term as at a specific date, that is assessed and approved by the local government. The residual method involves deducting estimated costs to complete as of valuation date and other relevant costs from gross development value of the proposed development assuming satisfactory completion and accounting for developer profit. Development properties Direct comparison, standardised land value adjustment and residual methods: The direct comparison method involves the analysis of comparable sales of similar assets and adjusting the sale prices to that reflective of the properties. The standardised land value adjustment method considers the price of standard land in the current situation of development and utilisation, under normal market conditions within legal maximum use term as at a specific date, that is assessed and approved by the local government. The residual method involves deducting the estimated costs to complete as of valuation date and other relevant costs from gross development value of the proposed development assuming satisfactory completion and accounting for developer profit. Interest-bearing borrowings The fair value of borrowings is estimated as the present value of future principal and interest cash flows, discounted at market rate of interest at the acquisition date. CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2022 FINANCIALS 212 213
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