Significant matters How the AC reviewed these matters Impairment assessment of non-financial assets – goodwill The AC reviewed the reasonableness of cash flow forecasts, the long-term growth rates and discount rates used in the valuation models in goodwill impairment assessments, as well as how the impact of COVID-19 has been considered in the cash flow forecasts. The AC also reviewed the stress testing of the valuation and its sensitivity to changes in key assumptions used in the valuation model. Revenue recognition based on stage of completion The AC reviewed the various controls that were designed and applied by the Group in the recognition of revenue and profit from contracts with customers to ensure that the estimates used in determining the amount of revenue and costs recognised for the performance obligations were appropriate. The AC concluded that Management’s accounting treatment and estimates were appropriate for the above significant matters. All the key audit matters (KAMs) that were raised by the external auditors for the financial year ended 31 December 2021 have been addressed by the AC and discussed in the above commentary. The KAMs in the audit report for the financial year ended 31 December 2021 can be found on pages 139 to 140 of this Annual Report. The AC was kept updated on relevant changes in accounting standards and their implications on the financial statements. Whistleblowing Policy The AC has reviewed the ST Engineering Whistleblowing Policy and is satisfied with the procedures through which the employees and other stakeholders may, in confidence, raise concerns about possible improprieties in business conduct, financial report or other matters without the fear of reprisals. No form of retaliation to the informant (internal or external) is tolerated for any report made in good faith. ST Engineering is committed to conducting business with integrity and adopts a zero-tolerance attitude towards any malpractice, impropriety, statutory non-compliance and/or any wrongdoing by board members, employees and any other parties with a business relationship with the Group. The Whistleblowing Committee - with the assistance of the Group Head, IA – reviews and deliberates over the contents of the incident raised and determines the subsequent measures to adopt, including making enquiries and pursuing investigations (internal or external). The AC reviews the adequacy of every investigation instituted with their corresponding outcomes. Under these procedures, arrangements are in place for independent investigation of reported concerns and for appropriate follow-up actions to be taken. Harassment or victimisation of the whistleblower is not tolerated. Reasonable and appropriate actions, subject to applicable laws, are taken to protect all whistleblowers who raise a concern in good faith. Appropriate disciplinary action may be taken against employees who retaliate against the whistleblower. During the year, the AC held five meetings, including a joint meeting with the RSC to review significant risks of the Company and related key controls. The AC also met with the external auditors, and with the internal auditors, in each case without the presence of Management. The AC reviewed the financial statements of the Group before the announcement of the Group’s half-yearly and full-year results. In the light of the COVID-19 pandemic impacting the Group’s businesses, the AC reviewed the areas of financial statements affected by the pandemic. Amongst the matters discussed with Management and the external auditors, the following significant matters impacted the financial statements, and were reviewed by the AC in relation to their materiality and appropriateness in approach, methodology and assessment: 115 CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT GOVERNANCE → Corporate Governance Report 74 ST ENGINEERING SUSTAINABILITY REPORT 2021 OVERVIEW OUR SUSTAINABILITY APPROACH ENVIRONMENTAL SOCIAL GOVERNANCE AWARDS INDEX
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