Key audit matter How our audit addressed the key audit matter impairment of Myer’s intangibles was identified. including forecast average EBITDA margins, discount We considered this a key audit matter due to the overall rate and long term growth rates. impairment indicators applicable to the Group, the Considered the allocation of the impairment charge to significant judgement applied in estimating the future Myer assets. trading cash flows of the CGUs and external evidence thatWe considered the disclosures made in note C2, including indicated material impairment could exist. those regarding the key assumptions and sensitivities to changes in such assumptions, in light of the requirements of Australian Accounting Standards. Accounting estimates and disclosures relating to strategic decisions (Refer to note A3 and C3) During FY2018 the Group’s strategic decisions involved To assess the Group’s accounting policies for calculating the the closure of stores, changes to store sizes following strategic decision related provisions we performed the various landlord negotiations, redundancies and cost following procedures amongst others: reductions within the Group’s support office in Considered with reference to Australian Accounting Melbourne. Standards the judgements and assumptions applied by These decisions resulted in restructuring, redundancy, the Group to determine the recognition of provisions and store exit costs of $17 million recognised in the based on the status of committed and Board approved period to 28 July 2018 in accordance with Australian strategic action plans. Accounting Standards. The restructuring activity was Compared the Group’s judgements and assumptions incomplete at period end, with further judgements and assumptions regarding these strategic decision made by used to calculate the strategic decision provision to: the Group regarding the nature and quantum of - Board minutes restructuring activity in future periods; this activity landlord agreements required the recognition of estimated provisions of $10 - million at 28 July 2018. - historic data, including prior store closures and We considered this a key audit matter because of the restructuring experience judgements and assumptions applied by the Group in - other supporting audit evidence. estimating the level of provisioning required to be We assessed whether there were other provisions which met recognised at 28 July 2018. the Group’s recognition criteria, and if they had been recognised at 28 July 2018, by making inquiries of management responsible for strategic decisions and by reading minutes of Board meetings for the full financial period. We considered the disclosures made in note A3 and C3, in light of the requirements of Australian Accounting Standards. Inventory valuation and provisions (Refer to note B2) The Group held inventory of $367 million (2017: $372 To assess the Group’s judgements and assumptions applied million) at 28 July 2018. As described in note B2 to the in calculating the value of inventory provisions, we financial statements, inventories are valued at the lower performed the following procedures, amongst others: of cost and net realisable value. The Group recognises a provision where it expects the net 90 Myer Annual Report 2018