ESR Group Limited Annual Report 2023 121 Independent Auditor’s Report Key audit matter How our audit addressed the key audit matter Accounting for business combination During the year ended 31 December 2023, the Group completed an acquisition that has resulted in the Company acquiring controlling interest in ARA Europe REIT Manager Limited (“ARAE Manager’). 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 note 34 to the consolidated financial statements. We read the sales and purchase agreements 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 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 ARAE Manager. We involved our internal valuation specialists to evaluate the valuation methodologies and the key assumptions used by management, such as discount rate, terminal growth rate. We also assessed the Group’s disclosure regarding this business combination. CORPORATE GOVERNANCE FINANCIAL STATEMENTS STRATEGIC REPORTS
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