AFRICAN DAWN ANNUAL REPORT 2019 Independent Auditor’s Report To the shareholders of African Dawn Capital Limited continued 31 Impairment of Investments in subsidiaries (Note 1.3 and Note 6) As per IAS 36 Impairment of Assets, the Company is required to annually test the carrying value of the investment in subsidiaries for impairment when there is an indicator of impairment. This is performed using discounted cash flow models for the various investments. Due to the value of the investment in subsidiaries representing more than 50% of the total assets as at 28 February 2019 as well as the significant judgement used in the inputs into the discounted cash flow models, this has been considered to be a key audit matter. Based on the impairment testing performed by management no impairment were required relevant to the Investments in subsidiaries. In evaluating the recoverable amount of investments in subsidiaries we performed various procedures including the following: • Utilised an auditors expert in assessing the reasonability of the discounted cash flow model used for the value in use calculator as well as the key inputs into the model such as the pre-tax discounted rate, revenue growth rates and terminal growth rate against external market data; • Tested the mathematical accuracy of the discounted cash flow model used; • Performed a sensitivity analysis on the key assumptions applied; • Considered the reasonableness of the assumptions used, including managements’ growth forecast and WACC; We evaluated the relevant disclosure of the Company for compliance with IFRS. Other Information The directors are responsible for the other information. The other information comprises the Directors’ Report, the Audit and Risk Committee’s Report, the Group Company Secretary’s Certificate as required by the Companies Act of South Africa which we obtained prior to the date of this report and the Annual Report which is expected to be made available to us after the date of this report. 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.
AFDAWN AR FINAL 2019
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