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CapitaLand Limited
Annual Report 2015
Overview
Sustainability
Business
Review
Portfolio
Details
Corporate
Governance &
Transparency
Financials &
Additional
Information
Independent Auditors’ Report
To the members of CapitaLand Limited
Opinion
We have audited the accompanying financial statements of CapitaLand Limited (the Company) and its subsidiaries
(the Group), which comprise the balance sheets of the Group and the Company as at 31 December 2015, the income
statements, statements of comprehensive income and statements of changes in equity of the Group and the Company and
the statement of cash flows of the Group for the year then ended, and notes to the financial statements, including a summary
of significant accounting policies and other explanatory information, as set out on pages 110 to 222.
In our opinion, the accompanying consolidated financial statements of the Group and the balance sheet, income statement,
statement of comprehensive income and statement of changes in equity of the Company are properly drawn up in accordance
with the provisions of the Companies Act, Chapter 50 and the Singapore Financial Reporting Standards (FRSs) to give a true
and fair view of the financial position of the Group and the Company as at 31 December 2015 and the financial performance
and changes in equity of the Group and the Company, and the cash flows of the Group for the year ended on that date.
Basis for opinion
We conducted our audit in accordance with Singapore Standards on Auditing (SSAs). Our responsibilities under those standards
are further described in the
Auditors’ responsibilities for the audit of the financial statements
section of our report. We are
independent of the Group in accordance with the Accounting and Corporate Regulatory Authority (ACRA)
Code of Professional
Conduct and Ethics for Public Accountants and Accounting Entities
(ACRA Code), together with the ethical requirements
that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in
accordance with the ACRA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
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 development properties for sale
(Refer to Note 11 to the financial statements)
Risk:
The Group has significant residential development properties held for sale in its core markets – Singapore and China.
Development properties for sale are stated at the lower of their cost and their net realisable values. The determination of the
estimated net realisable value of these development properties is critically dependent upon the Group’s expectations of future
selling prices.
Weak demand and the consequential oversupply of residential units, arising from government policies in Singapore and a
slowdown in economic activity in China, might exert downward pressure on transaction volumes and residential property
prices in both of these core markets. This could lead to future trends in these markets departing from known trends based
on past experience. There is therefore a risk that the estimates of net realisable values exceed future selling prices, resulting
in more losses when properties are sold.
Our response:
We challenged the Group’s forecast selling prices by comparing the forecast selling price to, where available, recently transacted
prices and prices of comparable properties located in the same vicinity as the development project. We focused our work on
development projects with slower-than-expected sales or with low or negative margins. For projects which are expected to
sell below cost, we checked the computations of the foreseeable losses. We also considered the adequacy of the disclosures
in respect of the allowance for foreseeable losses presented in the financial statements for these development properties.
Our findings:
In making its estimates of future selling prices, the Group takes into account macroeconomic and real estate price trend
information. Senior management has applied its knowledge of the business in its regular review of these estimates.
We found that cautious estimates were made in the determination of net realisable values and allowance for foreseeable losses.
We also found the disclosures to be appropriate in describing the allowance for foreseeable losses made for development
properties held for sale.
