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’ or ‘Senwesbel’) set out on pages 11 to 103, which comprise of the consolidated and separate statements of financial position
as at 30 April 2020, the consolidated and separate statements of comprehensive income, the consolidated and separate statements
of changes in equity, 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 as at 30 April 2020, 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 and company in accordance with the sections 290 and 291 of the Independent Regulatory Board
for Auditors’ Code of Professional Conduct for Registered Auditors (Revised January 2018), parts 1 and 3 of the Independent Regulatory
Board for Auditors’ Code of Professional Conduct for Registered Auditors (Revised November 2018) (together the IRBA Codes) and other
independence requirements applicable to performing audits of financial statements of the group and company and in South Africa. We
have fulfilled our other ethical responsibilities, as applicable, in accordance with the IRBA Codes and in accordance with other ethical
requirements applicable to performing audits of the group and company and in South Africa. The IRBA Codes are consistent with the
corresponding sections of the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA
code) and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including
International Independence Standards) respectively. 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 consolidated and separate 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 consolidated financial statements.
Allowance for expected losses against mortgage loans and other receivables
(Consolidated financial statements)
As disclosed in Note 9 and 11 to the consolidated and separate financial statements, the gross mortgage bonds and other receivables
amounted to R3,6bn for the group. The group have recorded a R111m provision for expected credit losses against mortgage loans and
other receivables.
The determination of the expected credit loss (ECL) allowance on mortgage loans and production and month debt, for customers that
have not been handed over to legal, requires estimation of the probability of default (PD) and the loss given default (LGD). Both factors
are key inputs into the allowance and have a significant impact on the calculation of the allowance for expected credit losses.
When estimating the PD, management uses various inputs which require judgement and estimation, of which the most significant are;
l
l
Crop estimates and yields specific to the customers’ region and commodity;
An estimate of the number of hectares planted;
l The expected commodity future prices, which is the SAFEX price adjusted by grade differences and transport differentials which is
determined by customer region and commodity; and
l
The input costs specific to the customers’ region and commodity
When estimating the LGD, management considers the quality and expected realisation value of securities held for
customers.
Senwesbel Limited Reg no: 1996/017629/06 SENWESBEL ANNUAL FINANCIAL STATEMENTS 2020 4