MISC Annual Report 2017

315 Financial Statements Key audit matters (cont'd.) KEY AUDIT MATTERS HOWWE ADDRESSED THE KEY AUDIT MATTERS Impairment of goodwill - 5HIHU WR 1RWH ,QWDQJLEOH DVVHWV WR WKH ƓQDQFLDO VWDWHPHQWV 7KH *URXS LV UHTXLUHG WR SHUIRUP DQQXDO LPSDLUPHQW WHVW RI FDVK JHQHUDWLQJ XQLWV &*8V RU JURXSV RI &*8V WR ZKLFK JRRGZLOO KDV EHHQ DOORFDWHG 7KH *URXS HVWLPDWHG WKH UHFRYHUDEOH DPRXQW RI LWV &*8V RU JURXSV RI &*8V WR ZKLFK WKH JRRGZLOO LV DOORFDWHG EDVHG RQ YDOXH LQ XVH 9,8 (VWLPDWLQJ WKH 9,8 RI &*8V RU JURXSV RI &*8V LQYROYHV HVWLPDWLQJ WKH IXWXUH FDVK LQŴRZV DQG RXWŴRZV DQG GLVFRXQWLQJ WKHP DW DQ DSSURSULDWH UDWH ,QFOXGHG LQ WKH *URXSōV JRRGZLOO DV DW 'HFHPEHU RI 50 PLOOLRQ LV JRRGZLOO UHODWLQJ WR WKH 3HWUROHXP VHJPHQW We focused on the impairment review of the goodwill relating WR WKLV VHJPHQW DV LW UHSUHVHQWV PRUH WKDQ RI WKH *URXSōV JRRGZLOO DV DW 'HFHPEHU DQG VLJQLƓFDQW MXGJHPHQWV were involved in the terminal value and growth rate of the H[SHFWHG FDVK ŴRZV DV ZHOO DV WKH GHWHUPLQDWLRQ RI DQ appropriate discount rate, which may cause possible variations LQ WKH UHFRYHUDEOH DPRXQW RI WKH &*8 WR ZKLFK WKH JRRGZLOO KDV EHHQ DOORFDWHG Our audit procedures included, among others evaluating the DVVXPSWLRQV DQG PHWKRGRORJLHV XVHG E\ WKH *URXS LQ SDUWLFXODU WKH DVVXPSWLRQV WR ZKLFK WKH UHFRYHUDEOH DPRXQW RI WKH &*8V are most sensitive such as the terminal value of the expected cash ŴRZV WKH JURZWK UDWH DV ZHOO DV WKH GLVFRXQW UDWH XVHG We have assessed and tested the key assumptions used by PDQDJHPHQW WR HVWLPDWH WKH SURMHFWHG FDVK ŴRZV IRU WKH &*8V as follows: (a) evaluated the discount rate used to determine the present YDOXH RI WKH FDVK ŴRZV DQG ZKHWKHU WKH UDWH XVHG UHŴHFWV WKH current market assessments of the time value of money and WKH ULVNV VSHFLƓF WR WKH DVVHW (b) evaluated the terminal value and growth rate of the expected FDVK ŴRZV DQG (c) assessed the sensitivity of the goodwill balance to changes in the discount rate, terminal value and growth rate of cash ŴRZV In addition, we also evaluated the adequacy of the disclosures RI HDFK NH\ DVVXPSWLRQ RQ ZKLFK WKH *URXS KDV EDVHG LWV FDVK ŴRZ SURMHFWLRQV DQG WR ZKLFK WKH UHFRYHUDEOH DPRXQW LV PRVW VHQVLWLYH DV GLVFORVHG LQ 1RWH WR WKH ƓQDQFLDO VWDWHPHQWV INDEPENDENT AUDITORS ’ REPORT 72 7+( 0(0%(56 2) 0,6& %(5+$'

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