independent
auditor's report
 |
Deloitte & Touche Registered auditors audit & Assurance – Gauteng |
Buildings 1 and 2 Deloitte Place The Woodlands Woodlands Drive Woodmead Sandton Private Bag X6 Gallo Manor 2052 South Africa Docex 10 Johannesburg Tel: +27 (0)11 806 5000 |
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INDEPENDENT AUDITOR’S REPORT
To the Shareholders of The Bidvest Group Limited
Report on the audit of the Consolidated and Separate Financial Statements
Opinion
We have audited the consolidated and separate financial statements of The Bidvest Group Limited (the Group) set out herein which comprise the statements of financial position as at 30 June 2018, and the income statements, the statements of other comprehensive income, the statements of changes in equity and the statements of cash flows for the year then ended, and notes to the 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 the Group as at 30 June 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") and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
| National Executive: *LL Barn Chief Executive Officer *TMM Jordan Oeputy Chief Executive Officer; Clients & Industries *MJ Jarvis Chief Operating Officer *AF Mackie audit & Assurance *N Sing risk Advisory DP Ndlovu Tax & Legal TP Pillay Consulting *JK Mazzocco Talent & Transformation MG Dicks risk Independence & Legal *KL Hodson Corporate Finance *TJ Brown Chairman of the Board | |
| A full list of partners and directors is available on request | * Partner and Registered auditor |
B-BBEE rating: Level 1 contribution in terms of the DTI Generic Scorecard as per the amended Codes of Good Practice
Associate of Deloitte Africa, a Member of Deloitte Touche Tohmatsu Limited
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
We have determined that there are no key audit matters to communicate in our audit report with regard to the separate financial statements of the Company for the period.
| KEY AUDIT MATTER | HOW THE MATTER WAS ADDRESSED IN THE AUDIT | |
| Accounting for unlisted investments | ||
Included in the Group's investments, is the Group's 6,75% interest in the Indian based Mumbai International Airport Private Limited ("MIAL"). The investment in MIAL is recorded in the consolidated financial statements at a fair value of R988 million (2017: R940 million). Fair value has been determined by the directors, in the absence of an observable market price. The valuation process is described in note 19 to the consolidated financial statements. The valuation is determined in US Dollars and translated to the Group reporting currency Rands, at the official year-end exchange rate. This valuation is a level 3 type valuation in accordance with IFRS 13: Fair Value Measurement, where the fair value is not based on observable market data. The directors believe the recorded fair value to be appropriate within a reasonable range of fair values. In determining the range of values, the directors used historic Earnings Before Interest, Tax, Depreciation and Amortisation ("EBITDA") multiplied by a listed peer median earnings multiple which was discounted to reflect the unlisted nature of MIAL. The directors also considered the value realised in the sale of a similar sized stake in MIAL six years ago. We identified the valuation MIAL as a key audit matter due to the significant judgements associated with determining the fair value of this material unlisted investment. |
We agreed the data used in the directors valuation to external evidence. We agreed the MIAL EBITDA to their audited financial statements for the year ended 31 March 2018 and the median multiple used was agreed to publically available industry data. We performed a sensitivity analysis on the discount rate applied to the earnings multiple (to cater for the discount for lack of marketability) and noted that it was within an acceptable range. Our audit procedures included a comparison between the consideration received for the 6,75% interest disposed of during the 2012 financial year-end, after an adjustment for a market related control premium on that transaction, and the current directors' valuation. We are satisfied that the recorded fair value for MIAL is within a supportable range of fair values and that the valuation utilises the appropriate exchange rate at year-end. Subsequent to the year-end, the directors launched a formal process to sell the Group's stake in MIAL, which has been disclosed as a non-adjusting subsequent event. We interrogated the facts and circumstances surrounding the sale process and considered the directors' subsequent events disclosure in note 43. We found the classification of the investment to be appropriate at 30 June 2018 and the disclosures relevant to the valuation of the investment, to be appropriate in all material respects. |
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| KEY AUDIT MATTER | HOW THE MATTER WAS ADDRESSED IN THE AUDIT | |
| Acquisition of Noonan | ||
During the year, the Group acquired 100% of the shares of Noonan TopCo ("Noonan") with effect from 1 September 2017, as described in notes 12 and 41 to the consolidated financial statements. The directors performed a purchase price allocation ("PPA") in accordance with IFRS 3: Business Combinations ("IFRS 3"), with the assistance of an independent expert appointed by the directors. The PPA resulted in the Group recognising and measuring significant intangible assets. Included in the intangible assets acquired are assets with both finite and indefinite useful lives. The valuation and identification of intangible assets is complex and involves judgement. Goodwill of R891 million and intangible assets of R1 573 million were recognised as a result of the acquisition. This identification, classification and valuation of intangible assets is considered a key audit matter as it has a direct bearing on the amount of goodwill recognised on acquisition by the Group and the quantum of intangible assets amortised annually. |
We confirmed that the effective date of the acquisition was in compliance with IFRS 3 per inspection of the salient terms and conditions of the purchase agreement. We engaged our internal corporate finance valuation experts to perform an independent assessment of the fair values of the identifiable assets acquired and liabilities assumed on the acquisition date specifically relating to the valuation and identification of intangible assets and the resultant goodwill recognised. This independent assessment was evaluated against the directors' expert's assessment by performing the following procedures:
We concur with the directors' IFRS 3 acquisition date accounting treatment including the valuation, identification and conclusions on useful lives of the identified intangible assets and the resultant goodwill. We found that the disclosures required by IFRS 3 were presented appropriately in all material respects. |
Other information
The directors are responsible for the other information. The other information comprises the directors' Report, the audit committee's Report and the Declaration by company secretary as required by the Companies Act of South Africa, which we obtained prior to the date of this report, and the Annual Integrated Report, which is expected to be made available to us after that date. The other information does not include the consolidated and 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 on the other information obtained prior to the date of this auditor's report, 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's and the 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 / or the 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 misstatement when it exists. Misstatements can arise from fraud or error and are 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 consolidated and separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's and the Company's internal control.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
- Conclude on the appropriateness of the directors 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 Group's and 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 consolidated and separate 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 Group and/or the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the audit committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the audit committee, we determine those matters that were of most significance in the audit of the consolidated and separate 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 when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we report that Deloitte & Touche has been the auditor of The Bidvest Group Limited for 11 years.
Deloitte & Touche
The Woodlands
Woodmead, Johannesburg
Registered auditor
Per: Mark Hugh Holme
Partner
31 August 2018