Audit and Risk Committee report
We operate in a complex evolving business landscape that demands an agile, proactive, but cautious approach in managing risk. The Committee plays a vital role in assisting management in assessing and maintaining an appropriate balance between risk and reward to preserve and create value for all stakeholders.
Busisiwe Mathe
Chairman
Attendance and composition
Members
- BS Mathe* (Chairman) (4/4)
- CH Boulle** (4/4)
- TF Mosololi (4/4)
- F Petersen-Cook (4/4)
Invitees
- CEO
- Group Financial Director
- Chairman of the Board
- N Halamandaris
- Group Risk Executive
- Internal Audit Manager
- Company Secretary
- Representatives from KPMG Inc. (external auditors)
Relevant skills of members
Committee members are highly skilled in finance, accounting, audit and risk.
* Appointed as Chairman in July 2024
** Resigned as Chairman and committee member in July 2024
Focus areas for 2025
Financial statements, accounting practices and other financial matters
- Reviewed the assessment prepared by management of the Group's going concern status and made recommendations to the Board. The Committee concurred that the adoption of the going concern is appropriate for the preparation of the annual financial statements and interim financial statements.
- Reviewed the financial covenants applicable to the Group based on the lending and capital structure, which were found to have been appropriate and complied with.
- Considered matters raised relating to financial reporting and accounting practices, internal audit, contents of the Group's and the Company's financial statements, internal financial controls and any related matters.
- Reviewed and recommended the consolidated and company financial statements and Integrated Annual Report to the Board for approval.
- Reviewed the processes for reporting matters relating to financial reporting and accounting practices, internal audit, contents of the Group’s and the Company’s AFS, the Integrated Annual Report, internal financial controls and any related matters and agreed on matters that required improvement. The Committee can confirm that there were no matters of concern noted.
- Reviewed and recommended the short-form announcements, interim results and AFS to the Board for approval.
- Considered accounting treatments, significant unusual transactions and key accounting judgements.
- Considered the reports of the internal auditors on the Group’s systems of internal control, including financial controls, business risk management and maintenance of an effective internal control system.
- Received assurance from management that proper and adequate accounting records were maintained and the systems safeguard the assets against unauthorised use or disposal.
- Reviewed the Group tax report.
- Considered the JSE Proactive Monitoring Report dated 7 November 2024 and assessed how the issues raised impact the Group’s financial statements.
- Reviewed and recommended to the Board the Group’s 2026 budget.
- Reviewed and recommended to the Board management’s submission for the dividend declaration.
The Committee is of the opinion that there were no material breakdowns in internal controls, including financial controls, business risk management and the maintenance of effective material control systems.
External audit
- Considered the quality controls and processes of the external auditor, specifically audit quality reviews conducted over the designated auditor, including those performed by the Independent Regulatory Board for Auditors (IRBA) as part of its routine review process in terms of the Auditing Profession Act.
- Considered the appropriateness of the other auditors engaged to perform audits within the Group, being D.R.E & Co. Chartered Accountants in the UK and PKF Botswana and deemed them appropriate.
- Reviewed the external auditors' report on the consolidated and Company AFS and the key audit matter.
- Approved the proposed audit plan for the year under review.
Our external auditor was appointed in 2020, and the Committee is of the opinion that the firm remains independent. Our lead external audit partner was appointed in July 2024. A policy and controls are in place to address the provision of non-audit services from the external auditor. The Committee has executed its responsibilities, conducting the required assessments in terms of section 3.84(g) of the JSE Listings Requirements.
Internal audit and internal financial reporting controls
- Reviewed and approved the internal audit business plan and budget.
- Performed the annual review and approval of the Internal Audit Charter.
- Reviewed the internal audit reports and processes.
- Reviewed the ongoing commitments to ensure that the CEO and Group Financial Director can make a positive statement on the adequacy and effectiveness of internal financial reporting controls.
- Oversaw the ongoing drive to improve internal financial reporting controls, focusing on revenue and payroll.
- Reviewed the readiness assessment performed by management on the new Global Internal Audit Standards.
Risk management
- Evaluated and reported on the effectiveness of risk management controls and governance processes to the Board.
- Reviewed and approved the risk management business plan and budget.
- Performed the annual review and approval of the Risk Management Charter.
- Reviewed the Group risk register, IT governance and the progress made to close insurance gaps.
- Monitored the implementation of the 2025 IT security plan.
- Reviewed and considered changes to legislation and regulations that could have an impact on the Group.
Risk management improvements for 2025
The Committee supports the Board in overseeing our principal risks and monitoring risk mitigation practices while keeping abreast of emerging risks. Our 2025 review and ongoing supervision indicate that the Group's risk management and internal control systems function effectively.
Following decades of relative stability, today's world is marked by increased geopolitical conflicts. Rapid policy decisions in the US heighten volatility and have negative impacts on emerging markets, including South Africa. These could include higher inflation, currency weakness and fluctuations and a decline in business and consumer confidence. On the African continent, several markets face challenges related to social and political unrest, unemployment, inflation and depreciating currencies. In South Africa, while business and markets welcomed the GNU, coalitions can be fragile, leading to government instability.
New uncertainties in our environment necessitate a cautious yet proactive approach to risk management in South Africa and our key markets. We recognise that every market is different, and we adopt a country-specific approach to risk management. The revised management structure for Africa and the Middle East, implemented in September 2023, read more here, has provided increased transparency and focus for risk
Going concern
The Committee supported management in monitoring the Group's budget on a monthly basis. This included reviewing actual results versus the budget and acting as a sounding board for management on where to reduce expenses or defer spending. The Committee considered management-prepared going concern assessment and the Group's outlook for trading conditions, which are expected to persist for the foreseeable future. We evaluated the based on various scenarios.
They include the impact of anticipated geopolitical volatility, poor economic conditions in several markets, our loan service and covenant requirements, and working capital requirements. The Committee is satisfied that the Group is a going concern for the foreseeable future based on the information available at the time of approval of the Group AFS.
Priorities for 2026
Our focus areas for 2026 are as follows:
- Providing ongoing guidance on the annual budget to ensure costs are contained, given anticipated economic pressures.
- Reviewing measures to enhance the internal control environment as the Group becomes increasingly tech-enabled.
- Monitoring the ever-evolving risk landscape, including climate and ESG-related risks.
- Overseeing the implementation of the 2026 IT security plan, including measures to improve cybersecurity maturity in key markets outside of South Africa.
- Gaining an understanding of the financial modelling, accounting and auditing implications of IFRS S1 and S2.
- Monitoring regulatory and reporting requirements, including those related to the Companies Act Amendments and King IV.
