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ANNUAL REPORT
2016
d) Acquisition of a subsidiary
During the year ended 31 December 2016, The Parent Company has acquired an additional 50%
equity interest in its existing joint venture i.e. Ritim Istanbul (“Ritim”) – an entity incorporated
in Turkey.
The Group completed the purchase price allocation (in which identifiable assets and liabilities
assumed were recognised at fair value) including the Group’s previously held equity interest. The
fair value of the identifiable assets acquired and liabilities assumed in a business combination
is different from their carrying amounts in the acquired statement of financial position, which
gave rise to fair value adjustments. Management, assisted by its external valuation specialists,
determined the fair value of Ritim’s identifiable assets and liabilities. Since the majority
of the identifiable assets acquired comprises of real estate properties, thus the fair value of
assets acquired is mainly dependent on the valuations of these properties. Furthermore, the
acquisition involve certain pre-existing relationships between the Parent Company and Ritim.
As, the determination of fair value of assets acquired and liabilities assumed requires significant
judgement and due to the complexity involved in accounting for business combination, we have
considered this as a key audit matter.
As part of our audit procedures, amongst other procedures, we analysed of the fair value of the
identifiable assets acquired and liabilities assumed supporting the purchase price allocation. We
considered the objectivity, independence and expertise of the external appraisers. Our internal
valuation specialists were part of our audit team to assist us in assessing the external valuation,
including the assumptions and estimates used. Furthermore, we assessed the impact of the
accounting for acquisition of a subsidiary on the consolidated financial statements of the Group
for the year ended 31 December 2016.
The disclosures relating to the acquisition of Ritim are detailed in Note 6 of the consolidated
financial statements.
Other information included in the Group’s 2016 Annual report
Management is responsible for the other information. Other information consists of the
information included in the Group’s 2016 Annual Report, other than the consolidated financial
statements and our auditors’ report thereon. We obtained the report of the Parent Company’s
Board of Directors, prior to the date of our auditor’s report, and we expect to obtain the remaining
sections of the Annual Report after the date of our auditor’s report.
Our opinion on the consolidated financial statements does not cover the other information and
we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read
the other information identified above and, in doing so, consider whether the other information
is materially inconsistent with the consolidated financial statements or our knowledge obtained
during the audit, or otherwise appears to be materially misstated. If, based on the work we have
performed, on the other information we obtained prior to the date of the auditors report, we
conclude that there is a material misstatement of other information; we are required to report
that fact. We have nothing to report in this regard.
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