In our opinion, the consolidated and separate financial statements give a true and fair view of the financial position of CIEL Limited (the “Company”) and its subsidiaries (together the “Group”) and of the Company standing alone as at 30 June 2022, and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards and in compliance with the Mauritian Companies Act 2001.
What we have audited
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (the “IESBA Code”). We have fulfilled our other ethical responsibilities in accordance with the IESBA Code.
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 financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
KEY AUDIT MATTER |
HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER |
COMPANY |
|
Valuation of investments in subsidiaries, joint ventures, associates and other financial assets. |
For the more judgemental valuations, which may depend on unobservable inputs, we evaluated the assumptions, methodologies and models used by the Company. We performed an independent valuation of a sample of positions, in order to assess whether management’s valuations were within a reasonable range of outcomes in the context of the inherent uncertainties disclosed in the financial statements. We also involved our valuation experts to review the appropriateness of the methodologies used in the context of the relevant investment securities held. |
GROUP |
|
Determination of the expected credit loss on loans and advances carried at amortised cost. The Group applied IFRS 9 ‘Financial Instruments’ which requires the recognition of Expected Credit Losses (‘ECL’) on its financial instruments. As explained in note 45 of the financial statements, the ECL impairment model required the use of complex models and significant assumptions about future economic conditions and credit behaviour, particularly for the Group’s banking segment, which mainly consists of BNI Madagascar SA – the Bank. The Directors exercised significant judgement in respect of: (a) Accounting interpretations, modelling assumptions and data used to build the ECL model. (b) Allocation of assets to stages 1, 2 and 3 using criteria in accordance with IFRS 9, including the triggers for an asset moving between stages. (c) Identification of instruments that have experienced a significant increase in credit risk. (d) Assumptions used in the ECL model to estimate the probability of default (‘‘PD’’), exposure at default (‘‘EAD’’) and loss given default (‘‘LGD’’). (e) Appropriateness of the economic scenarios determined by management, the probability weights assigned to each, and the inputs and assumptions used to estimate their impact. (f) Incorporation of forward-looking information of reflecting potential future economic events in the ECL model. It should be highlighted that additional subjectivity has been introduced into the measurement of ECL due to the heightened uncertainty associated with the current economic outlook and the path of recovery of the economy from the COVID-19 pandemic. Due to the significance of the portfolio of financial instruments and the significant estimates and judgement applied in the determination of expected credit losses, this was considered to be a key audit area. | With the assistance of our internal experts:
(a) We obtained an understanding and tested the relevant controls relating to the approval of credit facilities, subsequent monitoring and remediation of exposures and key system reconciliations. (b) We critically assessed the methodology applied to determine the PD, LGD and EAD used to compute the ECL against the prerequisites of IFRS 9 and the Bank’s internal policies. (c) We challenged the appropriateness of the parameters and significant assumptions, including forward-looking information, incorporated into the ECL model, by benchmarking these against independent external sources. (d) We analysed the assets of the Bank in stages 1, 2 and 3, on a sample basis, to assess if they were allocated to the appropriate stage in line with the Bank’s set criteria. (e) We agreed a sample of critical data elements used as input to determine the PD, LGD and EAD to relevant source documentation. (f) We performed risk-based substantive testing of the ECL model by independently re-building certain assumptions and comparing the ECL output of the Bank to our own calculated expectations as determined by applying the Bank’s model methodology to the underlying data. (g) We assessed the adequacy of the financial statement disclosures against the requirements of IFRS 9 to ensure that these appropriately reflect the Bank’s credit risk exposures |
GROUP |
|
Impairment of goodwill.
As disclosed in note 11 of the financial statements, the Group has goodwill amounting to MUR 1.3Bn (2021: MUR 1.3Bn) for which it has concluded that no impairment exists as of 30 June 2022 (2021: Nil). The Directors assessed the recoverable amount of the goodwill using a discounted cash flow model to determine the recoverable amount of the cash generating unit (CGU) to which the goodwill relates. This requires the use of a number of key assumptions and judgements, including the estimated future cash flows, long-term growth rates, profitability levels and discount rates applied. This was an area of focus considering the significance of the amounts involved and the level of judgement and estimation required from the Directors. |
As part of our planning procedures, we obtained an understanding
of the key controls relating to the review process. We also
obtained the Directors’ assessment of the recoverable amounts
of the different CGUs.
We assessed the validity of the assumptions used in the cash flow models by comparing these assumptions to our independently derived expectations, based on independent external market data and forecasts. This included specific consideration to the expected rate of recovery of passenger numbers subsequent to the lifting of travel restrictions in the recent months. In order to address management bias in the forecasted cash flows, the budgeted figures of the CGUs that were used in the previous year were back tested to the actual experience. We also considered the reasonably possible changes in key assumptions, including making allowance for the near-term weaker trading for the impact of Covid-19, specifically for the Hotels & Resorts segment. Terminal growth rates have been assessed for reasonableness based on market expected long-term growth rates. In order to determine the reasonableness of the discount rates, the rates used in the cash flow models (on a sample basis) were compared to a range of discount rates independently calculated by us, with the support of our internal valuation experts, based on the markets in which the CGU operate and taking into account the nature of the CGUs. We also verified the mathematical accuracy of the models. We assessed whether appropriate disclosures were made by the Directors in the financial statements. |
GROUP |
|
Valuation of land and buildings (See note 9(a) of the financial statements) As at 30 June 2022, the Group had land and buildings amounting to MUR 22Bn (2021: MUR 20Bn) included as part of its property, plant and equipment in the consolidated statement of financial position of which MUR 16Bn (2021: MUR 14Bn) related to the Hotels & Resorts segment. The fair value gain recorded in the current financial period amounts to MUR 2.5Bn (2021: MUR 1.2Bn) which includes an amount of MUR 2.1Bn (2021: MUR 946m) for the Hotels & Resorts segment. It is the Group’s policy that land and buildings are stated at fair value based on periodic valuations, conducted by an independent external valuer, less subsequent depreciation and impairment for buildings. The fair value was determined in line with IFRS 13 to which certain valuation methods are subscribed to determine the fair value. The fair values are computed by an external valuer using the factual information and professional judgement concerning market conditions and factors impacting the individual properties. The valuation of land and buildings for the Hotels & Resorts segment was considered to be a key audit matter due to its significance on the consolidated financial position and also due to the fact that it is inherently subjective as it involves a number of significant estimates and judgement which might materially affect the carrying value of the revalued assets. Please refer to note 2.2 of the financial statements for details on these estimates and judgements. |
We evaluated the design effectiveness of the Group’s key controls to address the risk over the valuation of land and buildings. We assessed the competence, experience, independence and integrity of the external valuation experts. We assessed the appropriateness of the valuation methodology used by the external valuers for determining the fair value of land and buildings of the Group by comparing it to similar valuations in the market. We discussed and challenged key inputs and assumptions used by the external valuers, paying particular attention to the level of judgement applied as a result of Covid-19. With the assistance of our valuation experts, we assessed the reasonableness of the fair values attributed to the different properties of the Group and the significant assumptions used by the external independent valuer in this exercise by benchmarking against relevant available industry data related to the increase in construction costs and inflation. We evaluated whether disclosures in the financial statements relating to the fair value of land and buildings were in accordance with International Financial Reporting Standards. |
The directors are responsible for the other information. The other information comprises the corporate governance report, the other statutory disclosures (section 221 of the Mauritius Companies Act 2001), the statement of compliance, the statement of directors’ responsibilities in respect of the preparation of the financial statements, the certificate from the company secretary and the risk report but does not include the consolidated and separate financial statements and our auditor’s report thereon, which we obtained prior to the date of this auditor’s report and other reports, which are expected to be made available to us after that date.
Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express 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 identified above 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, 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.
When we read the other reports not yet received, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.
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 in compliance with the Mauritian Companies Act 2001, 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.
The directors are responsible for overseeing the Group’s and Company’s financial reporting process.
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:
We communicate with the directors 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 directors 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, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, 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.
The Mauritian Companies Act 2001 requires that in carrying out our audit we consider and report to you on the following matters. We confirm that:
(a) we have no relationship with or interests in the Company or any of its subsidiaries other than in our capacity as auditor and tax advisor of the Company and some of its subsidiaries;
(b) we have obtained all the information and explanations we have required; and
(c) in our opinion, proper accounting records have been kept by the Company as far as appears from our examination of those records.
PricewaterhouseCoopers
Robert Coutet
licensed by FRC
29 September 2022
BRAND ONLINE BY NOVA INTERACTION LTD