INDEPENDENT AUDITOR’S REPORT Key audit matter How our audit addressed the key audit matter Impairment consideration of goodwill and the other intangible asset with indefinite useful life The goodwill of US$542,636,000 and the trust management rights intangible asset with indefinite useful life of US$74,095,000, are subject to an impairment review at least annually. There was no impairment recognised in current financial year. We identified impairment assessment of goodwill and the other intangible asset with indefinite useful life as a key audit matter because the impairment test and assessment were largely based on management’s expectation and estimation of future results of the respective cash-generating units. The assumptions used in impairment test were based on management’s estimates of variables including cash flow forecast, discount rate and terminal growth rate. Further disclosures on the Group’s goodwill and the other intangible asset with indefinite useful life are in notes 19 and 20 to the consolidated financial statements. We performed an understanding of the Group’s process to perform the annual impairment test of goodwill and trust management rights intangible asset with indefinite useful life. We performed an understanding, and assessment of the assumptions and methodologies used by the Group in the value in use model. We involved our internal valuation specialists to evaluate the valuation methodologies and the key assumptions used by management and their independent professional valuers, such as discount rate, terminal growth rate. We assessed the reasonableness of cash flows projection and related assumptions such as the budgeted gross fee income and future management fee rates. We also assessed the Group’s disclosure regarding the impairment of goodwill and the other intangible asset with indefinite useful life. Valuation of investment properties held either directly or through joint ventures and the financial assets at fair value through profit or loss The Group’s investments in property assets include investment properties held either directly or through joint ventures and the financial assets at fair value through profit or loss (“FVTPL”), which were subject to fair value revaluation at the end of the year. The fair value as at 31 December 2021 was assessed by independent professional valuers. We identified the valuation of investment properties as a key audit matter because of the significance of total fair value of these investment properties to the consolidated financial statements and the significant judgement and estimations involved in determination of the fair value. The key assumptions included, among others, adopted term yield, reversionary yield and market unit rent for warehouse properties. Further disclosures on the Group’s investment properties are in notes 15, 16, 18 and 45 to the consolidated financial statements. We performed an understanding of the Group’s process regarding the valuation of investment properties. We evaluated the independent professional valuers’ competence, capabilities and objectivity. We involved our internal valuation specialists to evaluate the valuationmethodologies and assess the reasonableness of the key assumptions used by management and their independent professional valuers, such as the adopted term yield, reversionary yield and market unit rent by benchmarking the rates against specific property data, comparables and prior year’s inputs. We also assessed the disclosures relating to the valuation techniques and key inputs applied by the professional valuers. E S R C A Y M A N L I M I T E D A N N U A L R E P O R T 2 0 2 1 125
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