INDEPENDENT
AUDITOR’S REPORT
The determination of the fair value of assets acquired, historically held at cost in the separate financial statements of the KLK group, is a
complex process subject to significant judgements being applied as a result of the absence of extensive, recent market transactions for
similar properties, and therefore we used valuation specialists.
We have determined this to be a key audit matter due to the complexity of calculating the consideration paid and the significant management
judgment and estimates applied in the PPA in identifying the acquired assets and their fair values, particularly property, plant
and equipment.
Our audit procedures involved, amongst others, the following:
l We read the purchase agreements to obtain an understanding of the transactions and the key terms.
l
We evaluated the accounting treatment of the business combination by performing the following key procedures:
w We tested the purchase consideration, which was paid through a combination of the issue of Senwes shares and cash, by testing the
cash payments to the bank statements and the consideration paid in shares to the share register and ZARX.
w We held robust discussions with management regarding the potential intangible assets considered in the PPA, as well as the value
determined for these;
w We tested management’s identification of identifiable assets by comparing the assets identified to the at-acquisition financial
information of KLK and testing the fair value adjustments processed as part of the PPA;
w We involved our valuation specialists in assisting us in reviewing management’s valuation methodologies on property, plant and
equipment;
w With the assistance of our valuation specialists, we assessed the key assumptions and inputs in the fair value calculation of property,
plant and equipment.
w Net annual income per property was agreed to available external sources and actual results achieved.
w The capitalisation rate applied was evaluated against property valuation best practice.
Other Information
The directors are responsible for the other information. The other information comprises the information included in the 104-page document
titled “Senwesbel 2020 Annual Financial Statements”, which includes the Directors’ Report, the Audit Committee’s Report and the
Company Secretary’s Certificate as required by the Companies Act of South Africa. The other information does not include the consolidated
or the separate financial statements and our auditor’s report thereon.
Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express an audit
opinion or any form of assurance conclusion thereon.
In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements
or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
Responsibilities of the Directors for the Consolidated and Separate Financial Statements
The directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance
with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal
control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, the directors are responsible for assessing the group and company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group and company or to cease operations, or have no realistic alternative
but to do so.
Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material
Senwesbel Limited Reg no: 1996/017629/06 SENWESBEL ANNUAL FINANCIAL STATEMENTS 2020 6