Singapore Airlines 2016 Annual Report Download - page 101

Acquisition of the remaining shares in Tiger Airways Holdings Limited
Refer to note 2(d) ‘Basis of consolidation’, note 2(e) ‘Subsidiary, associated and joint venture companies’ and note 23(g) ‘Changes in ownership interests
in subsidiary companies’ for the relevant accounting policy and a discussion of significant accounting estimates.
The key audit matter How the matter was addressed in our audit
On 17 October 2014, Singapore Airlines increased its stake in Tiger Airways
Holdings Limited (Tiger Airways) to 52.0%. It was determined that control
was obtained on that date.
On 6 November 2015, Singapore Airlines made an oer to acquire the
remaining shares in Tiger Airways. On 4 March 2016, Singapore Airlines
announced the close of the oer reaching the level of ownership required
to enact a compulsory acquisition of the remaining shares.
Singapore Airlines has determined that the two phases of the acquisition
in 2014 and 2015 respectively are not part of a single plan, but are separate
acquisitions made in response to circumstances at dierent times. Accordingly,
the Company has determined that it acquired control of Tiger Airways
on 17 October 2014, and that subsequent acquisitions of Tiger Airways
shares do not result in the revision of their purchase consideration or the
fair values of the assets acquired at the date that Singapore Airlines took
control of Tiger Airways.
If on the other hand, it was determined that there was a single plan for
the dierent phases of the acquisition, a higher amount of goodwill would
have been recorded and other assets and liabilities acquired would have
been estimated at dierent values.
Assessment of the date of control requires an assessment of the Company’s
underlying intentions, evidence of which cannot be reliably gathered from
representations made to us and are not normally the subject of contracts
with external parties, and hence is a key area of focus for our audit.
We reviewed Singapore Airlines’ Board papers which outlined the intention
of each transaction undertaken by Singapore Airlines to increase its stake
in Tiger Airways in October 2014 and November 2015.
We interviewed key management personnel to understand the commercial
substance of the transactions.
We reviewed the terms of each oer and the associated shareholder and
regulatory approvals required.
Findings
We found that the assessment of the date Singapore Airlines obtained control of Tiger Airways, and the assessment that the 2015 acquisition was not
part of the 2014 acquisition plans, were supported by the commercial substance of the transactions and the relevant company public announcements.
Annual Report FY2015/16 99