Independent Auditors’ Report
To Members of Hafnia Limited
Report on the Audit of the Financial Statements
We have audited the financial statements of Hafnia Limited (the “Company”) and its subsidiaries (the “Group”). The financial statements comprise:
- The balance sheet of the Company as at 31 December 2022, the statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, comprising significant accounting policies and other explanatory information; and
- The consolidated balance sheet of the Group as at 31 December 2022, the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements comprising significant accounting policies and other explanatory information
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company and the Group as at 31 December 2022, and their financial performance, changes in equity and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).
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 Auditors’ responsibilities for the audit of the financial statements section of our report. We are independent of the Company and the Group in accordance with the International Ethics Standards Board for Accountants, The International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code), the Singapore Accounting and Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (ACRA Code), together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements, the IESBA Code and the ACRA Code. 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 judgment, were of most significance in our audit of the 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 the matter was addressed in our audit|
|Impairment assessment of vessels and right-of-use vessels
Refer to Notes2.3(b) and 9 of the Group’s financial statementsAs at 31 December 2022, the carrying value of the Group’s vessels – owned and leased, including dry docking, amounted to USD 2,875.4 million, which is material to the GroupThe Group’s vessels are measured at cost less accumulated depreciation and impairment loss
The Group organises the commercial management of the fleet of vessels into individual commercial pools. Each commercial pool constitutes a separate cash-generating unit (“CGU”). Other vessels on individual time-charter contracts are individual CGUs
The Group regularly reviews whether CGUs have indicators of impairment following its stated policy as set out in Note 2.3(b)and performs CGU impairment tests as according to policy stated in Note 2.10. As part of this assessment, the Group obtained independent third-party valuation reports for individual vessels, which makes reference to comparable transactions prices of similar vessels, to assess whether there were indicators of impairment of vessels as at 31 December 2022. The operating and financial performance and near-term outlook of each CGU, alongside with prevailing market conditions affecting the tankers industry in the foreseeable future were also reviewed
|We have performed the following audit procedures:
No significant matters were noted from our procedures
|The Group concluded, as further aided by market valuation reports of individual vessels, that there were no impairment indicators across all the CGUs operating at the reporting date.
Such an assessment involves high degree of management judgement; and market valuation of vessels is susceptible to fluctuation, as freight rates fluctuate in response to imbalance in demand and supply, and changing market conditions.
|Acquisition of Chemical Tankers Inc. and its subsidiaries (“CTI”)
Refer to Note 3 of the Group’s financial statements.
In January 2022, the Group completed the acquisition of 100% of equity interest in Chemical Tankers Inc. and its subsidiaries (“CTI”), in exchange for the Company’s equity instrument issued. At date of acquisition, CTI held a fleet of 32 chemical tankers.
The Group adopted the optional asset concentration test as permitted under IFRS 3 Business Combinations to deal with this acquisition accounting (also, the “assets acquisition”). The Group had satisfied that substantially all of the fair values of the gross assets of CTI acquired were concentrated in similarly identifiable assets, namely the fleet of chemical tankers.
Accordingly, CTI’s assets and liabilities were consolidated onto the Group’s balance sheet at their fair values at the acquisition date, with no consequential goodwill arising.
|We have performed the following audit procedures:
No significant matters were noted from our procedures
|Valuation of shares issuance as consideration
Hafnia Limited issued 92,112,691 ordinary shares in relation to this assets acquisition. The Group applied IFRS 2 Share-based Payment, and considered the fair value of own shares issued to be equal the fair value of the net assets acquired. The fair value method was used to complete the purchase price allocation
The acquisition accounting applied involves a high degree of judgement. The fair values of identifiable assets acquired and liabilities assumed also involves management’s use of estimates, that was primarily aided by an external market valuation performed for the 32 chemical tankers acquired
Management is responsible for the other information. Other information is defined as all information in the annual report, other than the financial statements and our auditors’ report thereon.
We have obtained all other information prior to the date of this auditors’ report.
Our opinion on the 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 financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the 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 Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s and the Group’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 management either intends to liquidate the Company or the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s and the Group’s financial reporting process.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ 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 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 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 controls 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 Company’s or the Group’s internal controls.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management’s 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 Company’s or the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the 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 auditors’ report. However, future events or conditions may cause the Company or the Group to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the 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 those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal controls that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and 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 those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ 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
Report on compliance with Regulation on European Single Electronic Format (ESEF)
As part of the audit of the financial statements of Hafnia Limited we have performed an assurance engagement to obtain reasonable assurance about whether the financial statements included in the annual report, with the file name “5493001KCFT0S-CGJ2647-2022-12-31-en” (the “ESEF file”), have been prepared, in all material respects, in compliance with the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (“ESEF Regulation”) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the annual report in XHTML format, and iXBRL tagging of the consolidated financial statements.
In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in compliance with ESEF regulation.
Management is responsible for the preparation of the annual report in compliance with the ESEF regulation. This responsibility comprises an adequate process and such internal control as management determines is necessary.
Our responsibility, based on audit evidence obtained, is to express an opinion on whether, in all material respects, the financial statements included in the annual report have been prepared in compliance with ESEF. We conducted our work in compliance with the International Standard on Assurance Engagements (ISAE) 3000 – “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information”. The standard requires us to plan and perform procedures to obtain reasonable assurance about whether the financial statements included in the annual report have been prepared in compliance with the ESEF Regulation.
As part of our work, we have performed procedures to obtain an understanding of the Company’s processes for preparing the financial statements in compliance with the ESEF Regulation. We examine whether the financial statements are presented in XHTML-format. We evaluate the completeness and accuracy of the iXBRL tagging of the consolidated financial statements and assess management’s use of judgement. Our procedures include reconciliation of the iXBRL tagged data with the audited financial statements in human-readable format. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
The engagement partner on the audit resulting in this independent auditors’ report is Kenny Tan Choon Wah.
Public Accountants and
30 March 2023