CapitaLand Integrated Commercial Trust - Annual Report 2021

Notes to the Financial Statements YEAR ENDED 31 DECEMBER 2021 32 ACQUISITION OF SUBSIDIARY The Group acquires subsidiaries that own real estate. At the time of acquisition, the Group considers whether each acquisition represents the acquisition of a business or the acquisition of an asset. The Group accounts for an acquisition as a business combination where an integrated set of activities is acquired in addition to the property. Typically, the Group assesses the acquisition as a purchase of business when the strategic management function and the associated processes were purchased along with the underlying property. In 2020, the Group had the following significant business combination: Acquisition of subsidiary On 21 October 2020, the Group acquired 100.0% of the units and voting interests in CCT by way of a trust scheme arrangement (“Trust scheme”), effected in accordance with the Singapore Code on Take-overs and Mergers. Following the acquisition, CCT became a wholly owned subsidiary of the Trust. Included in the identifiable assets and liabilities acquired at the date of acquisition of CCT are inputs, processes and an organised workforce. The Group has determined that together the acquired inputs and processes significantly contribute to the ability to create revenue. The Group has concluded that the acquired set is a business. With the acquisition of CCT, the Group’s aggregate equity interests in RCS Trust increased from 40.0% to 100.0%. As a result, the Group also consolidated RCS Trust. Prior to the acquisition of CCT, RCS Trust was equity accounted for as joint venture by the Group. The acquisition is part of the Group’s ongoing business development and is in line with the Group’s strategy to invest in income producing real estate which are used or substantially used for commercial purposes to achieve an attractive level of return from rental income and for long-term capital growth. From the date of acquisition to 31 December 2020, CCT, RCS Trust and MSO Trust contributed revenue of $101.5 million and total loss of $56.7 million to the Group’s results. If the acquisition had occurred on 1 January 2020, the Manager estimates that consolidated revenue would have been $1,215.6 million and consolidated total loss for the year would have been $946.6 million. In determining these amounts, the Manager has assumed that the fair value adjustments determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had occurred on 1 January 2020. Purchase consideration The consideration for the acquisition was $6,311.1 million and was settled as follows: (i) $1,000.2 million in cash, being 15.8% of the consideration; and (ii) Allotted and issued 2,780,549,536 units amounting to $5,310.9 million, being the remaining 84.2% of the consideration. The Group has performed purchase price allocation exercise (“PPA”) for the acquisition of CCT Group. Based on the PPA performed, a gain relating to negative goodwill arising from the Merger of $430.0 million was recognised in the Statement of Total Return, as a result of the difference between consideration transferred and the fair value of the assets acquired and liabilities assumed. Annual Report 2021 313