FINANCIAL REPORT
Our portfolio continued to deliver a
resilient set of results despite the impact of a
subdued macroeconomic environment, underpinned
by our strong capital allocation strategy.
This report by the Audit and Risk Committee (the committee), as appointed by the shareholders in respect of the year under review, is prepared in accordance with the principles of the
King IV Report on Corporate Governance for South Africa (2016) (King IV) and the requirements of the Companies Act (No. 71 of 2008), as amended (Companies Act), and describes how the committee has discharged its statutory duties in terms of the Companies Act and its additional duties assigned to it by the Board in respect of the financial year ended 30 June 2021.
The committee comprises four independent non-executive directors (as set out in the table below) and is chaired by Ms S E N De Bruyn. All the committee members are suitably skilled and experienced. In terms of the committee’s mandate, at least four meetings should be held annually.
| Committee member* | Number of meetings held |
Number of meetings attended |
| S E N De Bruyn (Chairman) | 4 | 4 |
|---|---|---|
| N P Mageza | 4 | 4 |
| P J Moleketi | 4 | 4 |
| F Robertson | 4 | 4 |
| * | Abridged curriculum vitae of all the directors of the Company are set out here in the Integrated Annual Report. |
The Chief Executive Officer, Chief Financial Officer (CFO), head of internal audit, other members of senior management and representatives of the external auditors of the Company attend the committee meetings by invitation. Committee agendas provide for confidential meetings between committee members and the internal and external auditors, as well as management.
The committee’s role and responsibilities include its statutory duties as per the Companies Act, as well as the responsibilities assigned to it by the Board. The responsibilities of the Audit and Risk Committee are codified in a formal terms of reference, which is reviewed at least annually. During the year under review, the Board reviewed the terms of reference of the Audit and Risk Committee, in light of the principles and recommended practices of King IV.
The committee is satisfied that it has fulfilled all of its duties during the financial year under review, as further detailed below.
The committee has also satisfied itself that there are effective boards and audit committees (where applicable) functioning at Remgro’s significant operating subsidiaries (RCL Foods Limited (RCL Foods), Distell Group Holdings Limited (Distell), Siqalo Foods Proprietary Limited (Siqalo Foods) and Wispeco Holdings Proprietary Limited (Wispeco)), associates and joint ventures, whose minutes of meetings held are also included in the committee’s agenda.
More information about the functioning of the committee and the matters dealt with in this report can be found in the Corporate Governance Report and Risk and Opportunities Management Report.
In its execution of its mandate, the committee has performed the following statutory duties:
The committee is satisfied that the Company’s external auditor, PwC, is independent of the Company and is therefore able to conduct its audit functions without any influence from the Company. The designated external audit partner rotates every five years.
PwC has been the auditor of the Company for 53 years. The business of the Company was previously transacted through Rembrandt Group Limited of which, based on available statutory records, PwC and its predecessor firms have been the external auditor for 73 years. The committee is satisfied with PwC’s independence from the Company, notwithstanding its tenure as external auditor.
PwC has confirmed its compliance with the ethical requirements regarding independence and is considered independent with respect to the Group as required by the codes endorsed and administered by the Independent Regulatory Board for Auditors (IRBA), the South African Institute of Chartered Accountants and the International Federation of Accountants. As required by section 3.84(g)(iii) of the JSE Listings Requirements, the committee obtained the information listed in paragraph 22.15(h) of the JSE Listings Requirements and satisfied itself that the external auditor and audit partner, Mr Anton Wentzel, have the necessary accreditation and are suitable for re-appointment. The committee nominated, for approval at the Annual General Meeting (AGM) on 25 November 2021, PwC as external auditor for the 2022 financial year. The committee is also satisfied that the designated partner is not on the JSE’s list of disqualified individuals.
In terms of the requirements of the IRBA, the Company is obliged to rotate its external auditor for the 2024 financial year. Following a comprehensive tender process, the Audit and Risk Committee recommended to appoint Ernst & Young Inc. (EY) as the new external auditor of Remgro, with effect from the financial year ending 30 June 2024. An indicative non-binding advisory vote to appoint EY, with effect from the 2024 financial year, will be put forward at the Company’s 2021 AGM. The ordinary resolution to affect the statutory appointment would only serve at the Company’s 2023 AGM (see Ordinary Resolution Number 14 in the Notice to shareholders here). Subject to the passing of the relevant ordinary resolutions at the Company’s 2021 and 2022 AGMs, the incumbent external auditor of the Company, PwC, will continue to act as external auditor of the Company for the financial years ending 30 June 2022 and 30 June 2023, respectively.
A formal policy governs the process whereby the external auditor of the Company is considered for non-audit services. In terms of the policy, the committee is responsible for determining the nature and extent of any non-audit services that the external auditor may provide and to pre-approve any proposed contract with the external auditor for the provision of non-audit services. For the year under review, non-audit services related mainly to normal tax services. The extent of these services was within the committee’s pre-approved amount.
The committee is responsible for assessing the systems of internal financial controls and accounting systems of the Company and its wholly owned subsidiaries administered by RMS. In this regard the committee has evaluated reports on the effectiveness of the systems of internal financial controls conducted by the internal audit function, considered information provided by management and held discussions with the external auditor on the results of their audit. The committee is of the opinion that the systems of internal financial controls are effective and form a basis for the preparation of reliable financial statements. In support of the aforementioned, the committee also received reports from the internal audit function regarding the effectiveness of the combined assurance process and anti-corruption, fraud prevention and detection measures in place.
The Remgro executives serving on the boards of investee companies (RCL Foods, Distell, Siqalo Foods, Wispeco and associates and joint ventures) are responsible for executing the Company’s influence to ensure that effective internal controls are implemented and complied with.
The committee has considered and satisfied itself of the appropriateness of the expertise and experience of the CFO, Mr Neville Williams, whose curriculum vitae appears here in the Integrated Annual Report.
The committee has furthermore considered and satisfied itself of the appropriateness of the expertise and adequacy of resources of the Company’s finance function, and the experience of the senior members of management responsible for the financial function.
The committee has reviewed the standalone and consolidated financial statements of the Company, and is satisfied that they comply with International Financial Reporting Standards (IFRS) and the Companies Act, and that the accounting policies used are appropriate. In particular, the committee considered the following significant issues, identified by the management team and the external auditors, and is satisfied that these issues have been appropriately accounted for in the Annual Financial Statements:
The committee has assigned oversight of the risk and opportunities management function to the Risk, Opportunities, Technology and Information Governance Operational Subcommittee (the ROTIG Committee), which is a subcommittee of the committee. The mandate of the ROTIG Committee includes the maintenance of the Risk Management and Opportunities Policy and plan, establishment of an operational Risk and Opportunities Register, technology and information risk management, legal compliance and occupational health and safety. The ROTIG Committee is chaired by the CFO and the 15 other members are all senior managers of the Company. The chairman of the committee attends the ROTIG Committee meetings as an ex officio member to ensure the effective functioning of the ROTIG Committee and that appropriate risk information is shared with the committee.
During the year under review the ROTIG Committee, through the legal compliance function, embarked on a Protection of Personal Information project to:
Through this process various Remgro policies were identified that required amendment in line with POPIA and also a number of new policies that needed to be drafted. These include a POPIA framework, consisting of an overarching Internal Privacy Policy, External Privacy Policy, Information Sharing and Data Access Request Policy and Security Compromises Policy. Compliance with POPIA is enforced through an ongoing training programme. The head of legal, Mr Luche Joubert, was appointed as the Information Officer.
The Company’s internal audit division is an effective, independent appraisal function and forms an integral part of the Enterprise-wide Risk and Opportunities Management system that provides assurance on the effectiveness of the Company’s system of internal control. The committee has appointed Mr Deon Annandale as Remgro’s Chief Audit Executive (CAE). The committee is satisfied with the attributes, objectivity and independence of the CAE, and that the CAE has the necessary gravitas and competence. The internal audit division of the Company is staffed by qualified and experienced personnel and services all of Remgro’s wholly owned subsidiaries administered by RMS, as well as Wispeco. In addition, the internal audit division also performs independent, internal audit work for other investee companies such as CIVH, RMB Holdings Limited, Rand Merchant Investment Holdings Limited, SEACOM Capital Limited and Business Partners Limited.
During the year under review the committee considered and recommended the internal audit charter for approval by the Board. The committee further considered the internal audit quality assurance plan and the performance of the internal audit function, and is satisfied that the internal audit function conforms to a recognised industry code of ethics. Further details on the Group’s internal audit functions are provided in the Risk and Opportunities Management Report here.
The committee is responsible for reviewing any major breach of relevant legal and regulatory requirements. The committee is satisfied that there has been no material non-compliance with laws and regulations during the year under review.
The committee is also satisfied that it has complied with all its legal, regulatory and other responsibilities during the year under review.
The committee has reviewed and considered the Integrated Annual Report, including the comprehensive Annual Financial Statements and Sustainable Development Report and has recommended it for approval by the Board.
 |
| Sonja De Bruyn Chairman of the Audit and Risk Committee Stellenbosch 21 September 2021 |
The 2021 Annual General Meeting of Remgro will be held by way of electronic participation only (refer to the Notice to Shareholders regarding the electronic participation process).