Page 40 - Integrated Annual Report

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INTEGRATED ANNUAL REPORT 2021
HOSKEN CONSOLIDATED INVESTMENTS LIMITED
REPORT OF THE AUDIT AND RISK COMMITTEE (CONTINUED)
Reforms which remain relevant to the HCI group:
Policy uncertainty/ regulatory authorities, including:
• changing B-BBEE regulations;
• finalisation of digital migration;
• SA mining rights - Department of Mineral Resources
discontinued negotiations on a revised Mineral and
Petroleum Resources Development Act, in 2018; and
• government land expropriation policy.
Societal and business risks relevant to the group:
• robberies and assaults on buses;
• unrest affecting mining operations and bus transport;
• unreliable and costly utilities – load shedding and water
shortages;
• commodity price risk including coal, oil and palladium; and
• cyber and information related risk.
Internal audit:
The group has established an internal audit function at the holding company level. Where appropriate, subsidiaries have their own internal audit departments that perform the internal audit function for the relevant subsidiary in accordance with the subsidiary’s agreed internal audit plan.
HCI has a majority shareholding in GRIPP Advisory Services Proprietary Limited which is responsible for the internal audit function within the group. The internal audit function reports to the chairperson of the Committee, thereby ensuring its independence. The Committee is satisfied that the company’s internal financial controls and the arrangements for internal audit were working effectively during the year under review, and were predominantly adequate and fit for purpose.
IT governance:
As an investment holding company with limited technology needs, HCI has not deemed it necessary to focus on IT at a group level. The company has outsourced its IT operations to a credible service provider via a service level agreement. The committee considers all the reports from the subsidiary companies, as included in the risk report.
To ensure continuous improvements of the cybersecurity posture at HCI and limit the possibility of cyber threats, internal audit carries out 6-monthly vulnerability tests on the company’s IT infrastructure.
Compliance:
The social and ethics committee has oversight of the group’s compliance programme. It is the responsibility of this committee to review the matters that pertain specifically to audit and risk committees, such as tax compliance.
Whistleblowing:
The committee has oversight of the company’s whistleblowing programme. During the period under review, it was satisfied that adequate and appropriate provision was made for whistleblowing. No instances requiring action at a group level were raised or identified during the period under review.
Corporate governance:
HCI is committed to the highest standards of business integrity, ethics and professionalism. The King Report on Corporate GovernanceTM for South Africa 2016 (“King IVTM”), which is applied on an apply-and-explain basis, effective for years starting on or after 1 April 2017. King IVTM advocates an outcomes-based approach and defines corporate governance as the exercise of ethical and effective leadership towards the achievement of the following governance outcomes:
• ethical culture;
• good performance;
• effective control; and • legitimacy.
HCI has reviewed the practices underpinning the principles promoted in King IVTM. Many of these principles are entrenched in the group’s internal controls, policies and procedures governing corporate conduct. The board is satisfied that HCI, in all material aspects, complies with the major recommendations of the King IVTM code to ensure that sound corporate governance and structures are applied within the group.
For the detailed King IVTM application register please visit the company website: www.hci.co.za.
Financial director and finance function:
The company employs a full-time financial director who is also an executive director of the company. Mr JR Nicolella has a CA(SA) qualification and holds extensive executive experience. During the period under review, the committee considered the expertise and experience of the financial director and is satisfied that, in terms of section 3.84(g) of the JSE Listings Requirements, Mr JR Nicolella has the appropriate skills, expertise and experience to meet the responsibilities of the position; and
The committee has also, in terms of King IVTM, assessed the expertise of the finance function and the committee is satisfied that the finance team has the required and adequate skills to perform their duties.