Integrated Reports Senwesbel Consolidated Financial Statements 2018 - Page 5

INDEPENDENT AUDITOR’S REPORT To the shareholders of Senwesbel Limited Report on the audit of the consolidated and separate financial statements Opinion We have audited the consolidated and separate financial statements of Senwesbel Limited and its subsidiaries, joint ventures and associates (the group) set out on pages 10 to 79, which comprise the consolidated and separate statements of financial position as at 30 April 2018, and the consolidated and sepa- rate statements of comprehensive income, the consolidated and separate statements of changes in equity and the consolidated and separate statements of cash flows for the year then ended, and notes to the consolidated and separate financial statements, including a summary of significant accounting policies. In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Senwesbel and the group as at 30 April 2018, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report. We are independent of the group in accordance with the Independent Regulatory Board for Auditors Code of Professional Conduct for Registered Auditors (IRBA Code), the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (IESBA code) and other independence requirements applicable to performing the audit of Senwesbel Limited. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code, IESBA Code, and in accordance with other ethical requirements applicable to performing the audit of Senwesbel Limited. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements. Provision for impairment of trade receivables and mortgage loans (Consolidated financial statements) As disclosed in note 8.5 to the financial statements, the group have significant specific and portfolio provisions amounting to R94 million for impairment of trade receivables and mortgage loans. The determination as to whether trade receivables and mortgage loans are collectable involves significant management judgement and estimates, the most significant of which include, for the portfolio provision: • Crop estimates and yields specific to the customers’ region and commodity; • The number of hectares planted; • The expected realisation price, which is the SAFEX price adjusted by grade differences and transport differentials which is determined by customer region and commodity; • The input costs specific to the customers’ region and commodity; and • The quality and expected realisation of securities held for customers; Management uses this information to determine a probability of default of the portfolio (PD) and loss given default (LGD) both of which have a significant impact on the determination of the portfolio impairment recognised against the trade debtors and mortgage loan amounts. Customers that have been handed over to legal or are on the “watch list” are specifically provided for based on the exposure and the estimation of the quality and expected realisation of securities held for the specific customers. The record harvest in 2017 and the decrease in commodity prices in the current year impacted the estimates and judgements required for this calculation which therefore again required significant auditor attention, Senwesbel Limited Reg no: 1996/017629/06 SENWESBEL ANNUAL FINANCIAL STATEMENTS 2018 4