ESR Group Limited Annual Report 2022 Independent Auditor’s Report 117 Key audit matter How our audit addressed the key audit matter Accounting for business combination During the year ended 31 December 2022, the Group completed an acquisition that has resulted in the Company acquiring controlling interest in ARA Asset Management Limited and its subsidiaries (“ARA Group”). We identified the audit of accounting for this acquisition as a key audit matter because this is significant transaction during the year which requires significant management judgement regarding the allocation of the purchase price to the assets and liabilities acquired and adjustments made to align accounting policies of the newly acquired entities with those of the Group. This exercise also requires management to determine the fair value of the assets and liabilities acquired and to identify intangible assets acquired in the acquisition. Further disclosure on the Group’s business combination is in notes 34 to the consolidated financial statements. We read the sales and purchase agreements and the circulars issued to the shareholders in relation to this acquisition to obtain an understanding of the transaction and the key terms. We assessed whether the appropriate accounting treatment has been applied to this transaction. We assessed the valuation for the considerations paid and traced share issuance to the share register. We tested the identification and fair value of the acquired assets including intangible assets acquired based on our discussion with management and understanding of the business of ARA Group. We involved our internal valuation specialists to evaluate the valuation methodologies and the key assumptions used by management and their independent professional valuer, such as discount rate, terminal growth rate. We evaluated the independent professional valuer’s competence, capabilities and objectivity. We also assessed the Group’s disclosure regarding this business combination. STRATEGIC REPORT FINANCIAL STATEMENT CORPORATE GOVERNANCE
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