Source: https://asmifrs2015uk.core-cms.eu/2014/statutoryannualreport/annual-accounts/annual-accounts-asm-international-nv/independent-auditor-s-report
Timestamp: 2019-05-22 02:48:07
Document Index: 551125122

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Annual accounts>Annual accounts ASM International NV>Independent auditor's report
To: The Shareholders and Supervisory Board of ASM International NV
We have audited the accompanying financial statements 2014 of ASM International NV ("the Company"), based in Almere. The financial statements include the consolidated financial statements and the Company financial statements.
The consolidated financial statements give a true and fair view of the financial position of ASM International NV as at December 31, 2014, and of its result and its cash flows in the year 2014 in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and with Part 9 of Book 2 of the Dutch Civil Code.
The Company financial statements give a true and fair view of the financial position of ASM International NV as at December 31, 2014 and of its result for the year 2014 in accordance with Part 9 of Book 2 of the Dutch Civil Code.
the following statements for 2014: consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of total equity and consolidated statements of cash flows for the year then ended; and
the statements of operations for the year 2014; and
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the "Our responsibilities for the audit of the financial statements" section as included in the appendix to our report.
We are independent of ASM International NV in accordance with the Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO) and other relevant independence regulations in the Netherlands. Furthermore we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA).
Misstatements can arise from fraud or error and will be considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.
Based on our professional judgement we determined the materiality for the financial statements as a whole at EUR 5 million. The materiality is based on 7.5% of the average of normalized profit before tax for the years 2011-2014. We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the financial statements for qualitative reasons. We established a lower materiality for certain account balances and disclosures based on qualitative reasons.
ASM International NV is at the head of a group of entities. The financial information of this group is included in the consolidated financial statements of ASM International NV.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive were the size and/or risk profile of the group entities or operations. On this basis, we selected group entities for which an audit or review had to be carried out on the complete set of financial statements or specific items.
The group audit mainly focused on significant group entities in the Netherlands, United States, Singapore, Japan, and Korea, as well as on the associate ASM Pacific Technology. For the group entities that are consolidated, we have performed most of the audit procedures ourselves. We used component auditors in Japan, Korea, and Singapore to support us with specified audit procedures. The audit of ASMPT was performed by a group audit team from Deloitte Hong Kong. At the other (less significant) group entities we have performed review procedures or specific audit procedures.
By implementing the procedures mentioned above at group entities, together with additional procedures at group level, we have been able to obtain sufficient and appropriate audit evidence about the group's financial information to provide an opinion about the consolidated financial statements.
These matters were addressed in the context of our audit on the financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters.
Total revenue for the year 2014 amounts to EUR 546 million. ASM International's revenue often consists of multiple elements. For revenue recognition purposes, the consideration received from customers is allocated to the various products and services contracted based on the relative selling price of these elements (multiple element arrangement accounting). This revenue allocation requires significant judgment and determines the timing and amount of revenue recognized in each reporting period. Focus areas mainly relate to multiple element arrangements, cut-off and delivery conditions, and installation services and the relation with final acceptances.
Our audit procedures included, amongst others, the review of significant contracts to assess the identification of all relevant products and services sold. We also focused on the allocation of revenue to the various elements in the contracts, as well as, the timing of the revenue recognized.
Inventory excess & obsolete inventory
The total inventory and related excess and obsolete provision as of December 31, 2014 amounts to EUR 126 million and EUR 19 million, respectively. The excess and obsolete provision mainly relates to raw materials and spare parts because finished products (and related work in process) are usually manufactured only when a client order is received.
We focused on this area because the gross inventory and related provision are material to the financial statements, involve a high level of judgment and are subject to uncertainty due to rapid technological changes. We evaluated, amongst others, the analyses and assessments made by management with respect to slow moving and obsolete stock and the expected demand and market value related to raw materials and spare parts.
Valuation of associate ASMPT
The associate book value of ASM Pacific Technology Limited ("ASMPT") as per December 31, 2014 amounts to EUR 1,093 million, including goodwill and other intangibles for an amount of EUR 747 million.
Under IFRS-EU, the Company is required to annually test goodwill for impairment and intangible fixed assets not yet available for use. For other intangible fixed assets with finite useful lives, the Company is required to assess whether impairment indicators exists.
We focused on this area because of the materiality of the investment, the valuation of which involves complex and subjective judgements made by management about near and long term prospects of the business of ASMPT. The impairment test uses the fair value of the listed shares of ASMPT as a starting point to assess whether any severe and other than temporary decline in value exists. Our audit procedures included assessing the reasonableness of the analysis' made by management as well as evaluating any qualitative factors that might be of influence on the business of the investment.
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS-EU and Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the management board report in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, management is responsible for assessing the Company's ability to continue as a going concern. Based on the financial reporting frameworks mentioned, management should prepare the financial statements using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Management should disclose events and circumstances that may cast significant doubt on the Company's ability to continue as a going concern in the financial statements.
The Supervisory Board is responsible for overseeing the Company's financial reporting process.
For our responsibilities we refer to the appendix.
we have no deficiencies to report as a result of our examination whether the management board report, to the extent we can assess, has been prepared in accordance with Part 9 of Book 2 of the Dutch Civil Code, and whether the information as required by Part 9 of Book 2 of the Dutch Civil Code has been annexed;
We were appointed as auditor of ASM International NV by the shareholders meeting as of the audit for year 1969 and have operated as statutory auditor ever since that date.
Amsterdam, April 9, 2015
P.J.M.A. van de Goor
Enclosure: Appendix to the independent auditors report: Our responsibilities for the audit of the financial statements
Appendix to the independent auditor's report: Our responsibilities for the audit of the financial statements
Concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company ceasing to continue as a going concern;
From the matters communicated with the Supervisory Board, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or, in extremely rare circumstances, when non-mentioning is in the public interest.