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Audit and Risk Committee report

The Audit and Risk Committee ("Committee") submits this report in terms of the Companies Act, No 71 of 2008 ("Companies Act").

A formal Audit and Risk Committee Charter ("Charter"), approved by the Board, guides the Committee in terms of its objectives, authority and responsibilities. The Charter is reviewed annually and, if necessary, amended to meet market, regulatory and statutory requirements.

The Committee consists of four independent non-executive directors, namely Ms S M du Toit (Chairman), Ms N V Mtetwa, Mr S G Pretorius and Ms N Medupe.

The Committee meets at least three times a year. The Chief Executive Officer, executive directors, external audit partner, the Head of Internal Audit and the Head of Information Technology attend meetings by invitation. The Company Secretary, Ms E J Willis, attends and minutes all meetings of the Committee.

Name   10 Aug 2017   19 Sept 2017   1 Feb
2018
  4 May 2018  
Ms N V Mtetwa*     A   A    
Ms S M du Toit          
Mr S I Gama#   A        
Mr S G Pretorius          
Ms N Medupe          

✓ Present.
A Apologies.
* Appointed on 15 August 2017.
# Resigned as a member on 15 August 2017.

The role of the Committee is, inter alia, to:

  • review the effectiveness of the Group's systems of internal control, including internal financial control and risk management, and to ensure that effective internal control systems are maintained;
  • oversee the risk management process;
  • review financial statements for proper and complete disclosure of timely, reliable and consistent information and to confirm that the accounting policies used are appropriate;
  • deal with concerns and complaints relating to accounting policies, internal audit, the audit or content of the Integrated Annual Report and internal financial controls;
  • nominate the appointment of the external auditors as the registered independent auditor after satisfying itself through enquiry that the auditors are independent as defined in terms of the Companies Act;
  • determine the fees to be paid to the external auditors and their terms of engagement;
  • ensure that the appointment of the external auditor complies with the Companies Act, as well as the JSE Listings Requirements and any other legislation relating to the appointment of auditors; and
  • approve the scope of non-audit services which the external auditor may provide to the Group and pre-approve any non-audit services to be provided by the external auditors.

Risk management and coordination of assurance activities

The Committee oversees the risk management process. At least one Committee meeting a year is dedicated to the detailed review of the Group risk assessment including information technology risks. The Committee coordinates all assurance activities by means of the Group's combined assurance model.

Internal audit

The internal audit function provides assurance on the adequacy of the internal control environment across the Group's significant operations. The role of internal audit is contained in the internal audit charter which is reviewed annually by the Committee.

The Head of Internal Audit reports to the Executive Director: Commercial and Supply Chain and provides regular reports on work done to the Committee, joining each Committee meeting as an invitee. The Head of Internal Audit has direct and unrestricted access to the Chairman of the Committee and regular meetings are held between both. The Committee is responsible for the appointment and removal of the Head of Internal Audit and the assessment of his performance.

The Committee has considered and is satisfied with the effectiveness of the internal audit function. The Committee has also considered and is satisfied with the expertise and experience of the Head of Internal Audit.

External auditors

During the year under review, the Committee, in consultation with executive management, approved the external audit plan and fee proposal and considered reports from the external auditors on the annual and interim financial statements. The Committee satisfied itself that Ernst & Young Inc. and Ms P Wittstock, the designated auditor, are independent of the Company. The Chairman of the Committee has regular discussions and meetings with the external auditors, independently of management.

The Committee was provided with the information detailed in paragraph 22.15(h) of the JSE Listings Requirements by Ernst & Young Inc. and Ms P Wittstock. The information was used by the Committee to assess audit quality and the suitability for re-appointment of both Ernst & Young Inc. and Ms P Wittstock.

There is a formal procedure that governs the process whereby the external auditor is considered for non-audit services, with the Committee having to approve both terms and scope of such services where related fees are in excess of 30% of the approved audit fee. During the year an amount of R1,3 million was paid to the external auditors in respect of non-audit services.

Whistle-blowing

The independent external whistle-blowing lines operated effectively for the year under review. Instances of whistle-blowing are reported to the Chairman of the Committee.

Financial function

In accordance with the JSE Listings Requirements, the Committee must consider the appropriateness of the expertise and experience of the Financial Director of the Company on an annual basis. The Committee believes that Ms Mhlanga, the Financial Director, possesses the appropriate expertise and experience to meet her responsibilities in that position.

The Committee is satisfied that the financial function of the Group incorporates the necessary expertise, resources and experience to adequately carry out its obligations. The Committee believes that the Group has established appropriate financial reporting procedures and that those procedures are operating effectively.

Internal financial controls

Based on the results of work done by the internal audit function and external auditors on the Group's system of internal financial controls, and considering feedback and information from management, the Committee is of the opinion that the Group's system of internal financial control was effective for the year under review and that it formed a reliable basis for the preparation of the Group financial statements.

Financial statements

The Committee reviewed the financial statements of the Company and the Group, and is satisfied that they comply with International Financial Reporting Standards and that the accounting policies applied are appropriate.

Sustainability reporting

The Committee reviewed and considered the Group's sustainability information as disclosed in the Integrated Annual Report. The Committee discussed the sustainability information with management and is satisfied, based on information and explanations from management, that the sustainability information is reliable.

Recommendation of the Integrated Annual Report

The Committee has noted the external auditors' opinion (including key audit matters) and findings on the Integrated Annual Report and has recommended the approval of the Integrated Annual Report to the Board.

The Committee reports that it has discharged its responsibilities and duties in compliance with its charter.

S M du Toit

Audit and Risk Committee Chairman

20 September 2018