107 Cloudberry Annual report 2022 Financial statements Note 5 Business combinations Accounting principle Business combinations are accounted for using the acquisition method. The acquisition cost is measured at fair value of the consideration transferred at the acquisition date. The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. The acquisition date is the date when control is transferred to the Group, acquired businesses are included in the financial statements from the transaction date. Comparable figures are not adjusted for acquired, sold, or liquidated businesses. When the Group acquires a business, a purchase price allocation is carried out, and assets and liabilities are valued at fair value at the time of the acquisition. If the acquisition cost (including any non-controlling interests) exceeds the fair value of identifiable net assets acquired, this is recognised as goodwill. If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit or loss. In accordance with IFRS 3, the estimation of fair value and goodwill may be adjusted up to 12 months after the takeover date if new information has emerged about the facts and circumstances that existed at the time of takeover. Acquisition related costs, except costs related to issue of debt or equity securities, are booked to operating expenses. Estimates and judgements Significant management judgement is required in the assessment of a business combination. This includes determining if an acquisition is a business combination or an asset acquisition, determining an acquiring part and determining the allocation of fair value of assets and liabilities acquired. A specific assessment is made for each acquisition to decide weather it is a business combination or an asset acquisition. If regarded as a business combination IFRS 3 Business combinations will be applied, while if an asset, it will be either IAS 2 inventory, IAS 38 Intangible assets or IAS 16 Property plant and equipment that will be applied. The latter relates to the type of assets being acquired. For acquisitions that consist of a single development project, single power plant ready to construct or assets that do not have any clearly defined input or output, the acquisition will often be accounted for as an asset acquisition. Acquisitions that consist of producing assets, projects organized with key employees, business processes in place and defined inputs and outputs from the processes, the acquisition will often be accounted for as business combination. However, the specific assessment will be needed to conclude on the treatment for each acquisition. The purchase price allocation is by nature judgemental as it includes allocation of the purchase price to the underlying assets and liabilities on their underlying estimated fair value. Significant management judgement is applied about valuation method, estimates and assumptions. There is an inherent uncertainty related to managements estimates of significant assumptions such as discount rate, cash flow estimates and useful life which impact the split of the allocated fair value of the estimates. Business combinations in 2022 Acquisition Operations Acquisition of 60% of Captiva Digital Services AS “The Captiva Group” On 7 January 2022 Cloudberry Clean Energy ASA entered a share purchase agreement for the acquisition of 60% of the shares in Captiva Digital Services AS from Captiva Capital Partner AS. Captiva Digital Services AS with subsidiaries “The Captiva Group” is a data-driven operator, manager and developer of renewable energy in the Nordics. The Captiva Group comprise of the following business areas with respective subsidiaries and associated companies: Captiva Asset Management AS with subsidiaries, delivers management services within operations and maintenance, development and construction,
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