Annual Report 2019

102 CHINA MERCHANTS PORT HOLDINGS COMPANY LIMITED Independent Auditor’s Report KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How our audit addressed the key audit matter Accounting for the Group’s interests in associates and joint ventures We identified the accounting for the Group’s interests in associates and joint ventures as a key audit matter due to the significance of these investments to the Group’s consolidated financial statements as a whole. The Group invested in a number of associates and joint ventures whose principal activities include ports operation, bonded logistics operation and other operations as set out in notes 45 and 46 to the consolidated financial statements. The Group’s share of profits less losses of its associates and joint ventures for the year ended 31 December 2019 was HK$4,295 million in aggregate, representing approximately 46% of the profit for the year of the Group as disclosed in the consolidated statement of profit or loss and the Group’s interests in its associates and joint ventures was HK$67,700 million in aggregate as at 31 December 2019, representing approximately 72% of the net assets of the Group as set out in the consolidated statement of financial position. Our procedures in relation to the accounting for the Group’s interests in associates and joint ventures included: • Identifying the associates and joint ventures which are considered by the management of the Group to be of significance to the Group’s consolidated financial statements as a whole; • Obtaining an understanding of these associates and joint ventures by reading their financial information and discussing with their respective management about the financial performance, significant events occurred in the year and the key areas of judgement made in preparing their financial information to identify and assess the risks that are significant to the audit of the Group’s consolidated financial statements; • Meeting with the respective auditors of these associates and joint ventures to discuss their assessment of risks and identification of areas of audit focus to evaluate the appropriateness of their work; • Assessing the sufficiency and appropriateness of audit evidence obtained from work performed by auditors of these associates and joint ventures of the Group by reviewing their audit documentation where we considered necessary; and • Evaluating the appropriateness of significant consolidation adjustments made by the management of the Group to conform the accounting policies of these associates and joint ventures to those of the Group for like transactions and events in similar circumstances.