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INDEPENDENT AUDITORS’ REPORT
REPORTS
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Valuation of investment properties
(Refer to Note 5 to the financial statements)
The key audit matter
The Stapled Group has hotel properties in Singapore, New Zealand, Australia and Maldives which are classified as
investment properties with a carrying value of $2.2 billion as at 31 December 2016. Investment properties represent the
most significant asset item on the statement of financial position.
The Stapled Group’s accounting policy is to state investment properties at fair value which are based on independent
external valuations. The valuation process involves significant judgement in determining the valuation method to be
used and estimating the underlying assumptions to be applied. The valuation are sensitive to key assumptions applied,
including those relating to the discount, terminal yield and capitalisation rates, i.e. a change in the assumptions may have
a significant impact to the valuation.
How the matter was addressed in our audit
We considered the valuation methodologies used against those applied for similar property types by other valuers.
We assessed the reasonableness of the key assumptions used in the valuations which included a comparison of the
discount rates, terminal yields and capitalisation rates, against historical rates and available industry data, taking into
consideration comparability and market factors. We also assessed whether the disclosures in the financial statements
appropriately described the judgements inherent in the valuations.
Our findings
The valuation methods and key assumptions used by the valuers, were comparable to the methods and assumptions
used for similar property types by other valuers and available industry data. We found the disclosures in the financial
statements to be appropriate in their description of the judgement inherent in the key assumptions used in the valuations,
including the inter-relationship between the key unobservable inputs and the fair values.
Impairment of property, plant and equipment and prepaid land lease
(Refer to Notes 6 and 7 to the financial statements)
The key audit matter
The Stapled Group has hotels in Japan, Maldives and the United Kingdom classified as property, plant and equipment and
prepaid land lease with a total carrying value of $251.2 million as at 31 December 2016. Property, plant and equipment
and prepaid land lease represent significant asset items on the statement of financial position.
The Stapled Group’s accounting policy is to state property, plant and equipment and prepaid land lease at cost less
accumulated depreciation and accumulated impairment losses. Jumeirah Dhevanafushi, a property in Maldives,
was impaired in 2015 and any further decline in performance would result in further impairment being recorded.
Where indicators of impairment are identified, the recoverable amount of the property is estimated based on an
independent external valuation. The valuation process involves significant judgement in determining the valuation
method to be used and estimating the underlying assumptions to be applied. The recoverable amount is sensitive to key
assumptions applied, including those relating to the discount and terminal yield rates, i.e. a change in the assumptions
may have a significant impact to the recoverable amount.
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