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STARHILL global reit ANNUAL REPORT FY 2016/17
independent
auditors’ report
Report on the financial statements
Opinion
We have audited the financial statements of Starhill Global Real Estate Investment Trust (the “Trust”) and its subsidiaries
(collectively, the “Group”), which comprise the balance sheet and investment properties portfolio statement of the Group and
the balance sheet of the Trust as at 30 June 2017, and the statements of total return, distribution statements, statements of
movements in unitholders’ funds of the Group and the Trust, and the cash flow statement of the Group for the year ended, and
notes to the financial statements, including a summary of significant accounting policies, as set out on pages 95 to 136.
In our opinion, the accompanying consolidated financial statements of the Group and the financial statements of the Trust
present fairly, in all material respects, the financial position and portfolio holdings of the Group and financial position of the
Trust as at 30 June 2017, and the total return, distributable income and movements in unitholders’ funds of the Group and the
Trust, and the cash flow of the Group for the year ended on that date in accordance with the recommendations of
Statement
of Recommended Accounting Practice 7
“
Reporting Framework for Unit Trusts
” (“RAP 7”) issued by the Institute of Singapore
Chartered Accountants.
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
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 investment properties
(Refer to Note 4 to the financial statements)
Risk:
As at 30 June 2017, the Group’s investment properties portfolio comprises 11 properties which are retail and office assets in prime
locations. These investment properties amounted to $3,136 million (2016: $3,137 million) which represented 97% (2016: 97%) of the
Group’s total assets.
The fair values of the investment properties were determined by external valuers using valuation techniques such as the
capitalisation approach and/or discounted cash flow method.
The valuation process involves significant judgement in determining the appropriate valuation methodology to be used, and in
estimating the underlying assumptions to be applied. The valuations are highly sensitive to key assumptions applied in deriving
the capitalisation, discount and terminal yield rates i.e. a small change in the assumptions may have a significant impact to the
valuation.
Our response:
We assessed the Group’s processes for the selection of the external valuers, the determination of the scope of work of the
valuers, and the review and acceptance of the valuations reported by the external valuers. We also assessed the competency,
capability and objectivity of these valuers.
We considered the valuation methodologies used against those applied by other valuers for similar property type. We held
discussions with the valuers and challenged the key assumptions applied, including capitalisation, discount and terminal yield
rates, by comparing them to market comparables, historical data and available industry data.
Our findings:
The Group has a process for appointing and instructing valuers, and in reviewing, challenging and accepting their valuations.
The valuers are members of generally-recognised professional bodies for valuers and have considered their own independence
in carrying out their work.
Based on our assessment of the valuation methodologies and key assumptions applied, the valuation of investment properties
were within an acceptable range of outcome.
Unitholders of Starhill Global
Real Estate Investment Trust
(Constituted in the Republic of
Singapore pursuant to a Trust Deed
dated 8 August 2005 (as amended))