INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SINGAPORE TECHNOLOGIES ENGINEERING LTD Our Audit Approach (continued) Key Audit Matter How our audit addressed the Key Audit Matter Purchase price allocation (“PPA”) relating to acquisition of TransCore During the year, the Group completed its business acquisition of TransCore Partners, LLC and TLP Holdings, LLC (collectively “TransCore”) in the United States, requiring the purchase price to be allocated to the fair value of the identifiable assets (including intangible assets) acquired and liabilities assumed. Management had engaged an external professional firm to perform a purchase price allocation exercise. The total identifiable intangible assets acquired included customer relationships and commercial and intellectual property rights of $886,281,000 and $144,781,000 respectively. Goodwill recognised on acquisition amounted to $2,321,424,000. Significant judgement is applied in assessing the fair values of assets and liabilities acquired, as this directly impacts the amount of goodwill recognised on acquisition. Our audit procedures included the following: • evaluated the independence, competency and objectivity of the external professional valuer engaged by management. • held discussions with management and the external professional firm to understand the purchase price allocation exercise. • reviewed the PPA exercise performed by management and assessed the appropriateness of the valuation methodology and key assumptions used to determine the fair valuation of the identifiable assets and liabilities assumed on acquisition date. • with the assistance of our internal valuation specialists, assessed the appropriateness of the valuation methodology and key assumptions used to determine the fair valuation of the identifiable assets and liabilities assumed on acquisition date. Based on the audit procedures performed above, we found estimates used in management’s assessment of the fair value of the assets and liabilities acquired and the resultant goodwill recognised from the acquisition to be reasonable. Other Information Management is responsible for the other information. The other information comprises the Corporate Overview, Performance Review, Sustainability, Corporate Governance, Directors’ Statement, SGX Listing Rules Requirement and Corporate Information (but does not include the financial statements and our auditor’s report thereon), which we obtained prior to the date of this auditor’s report, and the other sections of the annual report (“the Other Sections”), which are expected to be made available to us after that date. Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection with our audit of the 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 financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the Other Sections, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and take appropriate actions in accordance with SSAs. 128 ST ENGINEERING ANNUAL REPORT 2022
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