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Axiata Group Berhad | Annual Report 2016
FINANCIAL STATEMENTS
252
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)
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 Group and
of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
There are no key audit matters in relation to the Financial Statements of the Company.
Key audit matter
How our audit addressed the key audit matter
Significant acquisitions during the year
Refer to Note 3(a)(i) - Significant Accounting Policies - Subsidiaries and Note
5(a) - Incorporations, acquisitions, dissolutions and dilutions of interests
during the financial year
The Group completed the acquisition of Reynolds Holdings Limited
(“Reynolds”) on 11 April 2016 and the acquisition of Airtel Bangladesh
Limited's (“Airtel”) business on 16 November 2016.
Management performed a Purchase Price Allocation (“PPA”) exercise for
each of the acquisition to determine the fair values of identifiable assets
acquired and liabilities assumed.
Provisional goodwill of RM2,960.3 million for the acquisition of Reynolds and
RM20.6 million for the acquisition of Airtel’s business has been recognised in
the financial statements on dates of acquisition.
We focused on the PPA exercises performed because of the significant
management judgement involved in the identification of intangible assets
acquired and the valuation of the assets and liabilities acquired as it involved
the use of estimated future cash flows.
We performed the following procedures:
•
Management’s identification of intangible assets acquired was
checked by way of understanding the rationale of the acquisitions and
benchmarking to other telecommunication acquisition transactions.
•
We read Share Purchase Agreement for Reynolds acquisition,
Merger Agreement for Airtel’s business and board minutes to agree
the purchase consideration and corroborate the identifiable assets
acquired and liabilities assumed.
•
We used our valuation expert to independently check the valuations
prepared by management.
•
We tested the valuation of the identifiable assets acquired and
liabilities assumed as follows:
-
Assessed the appropriateness of the methodology adopted by
management for calculating the fair values in relation to the
PPA in accordance with MFRS 13 “Fair Value Measurement”;
-
Assessed the discount rate, Earnings Before Interest, Tax,
Depreciation and Amortisation (“EBITDA”) margin and revenue
growth rate by reference to the comparable companies and
the industries in the respective territories.
Based on the procedures performed, we found the methodology used
to be acceptable and the assumptions not materially different from our
expectations based on comparable industry data.
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF AXIATA GROUP BERHAD
(INCORPORATED IN MALAYSIA)
(COMPANY NO. 242188-H)