ESR AR 2019 EN

Notes to the Consolidated Financial Statements 31 December 2019 209 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ESR Annual Report 2019 34. BUSINESS COMBINATION (a) On 20 March 2019, the Group has, through its wholly-owned subsidiary ESR Real Estate (Australia) Pty Ltd., completed the acquisition of an additional 80.1% interest in Propertylink (Holdings) Limited Group (the “PLG Group”). The Group previously held 19.9% interest in PLG Group and accounted as financial assets at fair value through other comprehensive income. Upon acquisition of the additional 80.1% interest, PLG Group became a subsidiary of the Group. The acquisition of PLG Group was identified as a business combination by the management. PLG is a fully operational company as at the acquisition date and its principal activity is management services in Australia. The fair values of the identifiable assets and liabilities of PLG Group as at the date of acquisition were as follows: Fair value recognised on acquisition date Note USD’000 Property, plant and equipment 212 Right-of-use assets 2,095 Other intangible assets 4,039 Investment properties 608,680 Investments in joint ventures 72,262 Deferred tax assets 4,852 Financial assets at fair value through other comprehensive income 95,822 Prepayments, other receivables and other assets 8,127 Cash and bank balances 4,012 Trade payables, accruals and other payables (6,237) Bank and other borrowings (325,368) Lease liabilities (12,615) Total identifiable net assets at fair value 455,881 Goodwill on acquisition 20 41,291 497,172 Satisfied by: Cash 398,285 Financial asset at fair value through other comprehensive income 98,887 497,172 None of the goodwill recognised is expected to be deductible for income tax purposes. An analysis of the cash flows in respect of the acquisition of a subsidiary is as follows: USD’000 Cash consideration (398,285) Cash and bank balances acquired 4,012 Net outflow of cash and cash equivalents included in cash flows used in investing activities (394,273) Since the acquisition, PLG Group contributed USD41,276,000 to the Group’s revenue and USD16,328,000 profit to the consolidated profit for the period ended 31 December 2019. Had the combination taken place at the beginning of the period, the revenue from continuing operations of the Group and the profit of the Group for the year would have been USD371,708,000 and USD281,804,000, respectively.