Audit Committee report

This report is made pursuant to the requirements of section 94(7)(f) of the Companies Act.

Terms of Reference and objectives

Illovo’s Audit Committee (“committee”) operates in accordance with formal Terms of Reference and an annual work plan, which comply with the requirements of King III and are approved by the board of directors. The Terms of Reference and work plan are reviewed annually and amended as required.

The main objectives of the committee, in accordance with its Terms of Reference, include the following:

  • promoting the overall effectiveness of corporate governance within the Illovo group;
  • acting as an effective means of communication between the board, and the independent external auditors and the internal auditors;
  • satisfying the board that adequate internal financial controls are in place, and that material financial risks have been identified and are being effectively managed and monitored;
  • assessing the impact of the general control environment on the statutory audit, and reporting to executive management any areas of perceived control weaknesses; and
  • the effective discharge of its statutory and regulatory duties.

Composition of the committee

The committee comprises four independent non-executive directors with the expertise required to enable the committee to discharge its statutory and regulatory duties and functions, as well as to provide the requisite advice and guidance to the board on matters within its mandate.

The members of the committee for the year ended 31 March 2015 were Dr D Konar, Messrs M J Hankinson and T S Munday, and Mrs C W N Molope. The committee chairman is Dr D Konar who attends the annual general meeting in his capacity as such.

The company’s independent external auditors and internal auditors have unrestricted access to the committee and its chairman.

Meetings and attendance

During the year under review, three meetings of the committee were held, attendance at which is reflected in the Corporate Governance Report of this report.

The meetings of the committee are also attended by the independent external auditor, the internal auditors, the Chairman of the board, the Financial Director, a non-executive director nominated by Illovo’s holding company, as well as other members of the company’s executive committee and senior management.

Before each meeting of the committee, the chairman of the committee also holds separate meetings with the company’s Financial Director, the head of internal audit and Mr G Tweedy as the registered auditor responsible for the company’s external audit.

Annual evaluation

In accordance with the provisions of King III, a formal annual evaluation of the Audit Committee was carried out in March 2015. The evaluation indicated that the committee had carried out its duties and responsibilities in an effective and professional manner and that the members of the committee had the requisite skills required to discharge their functions.

In relation to the chairman of the committee, the annual evaluations indicated that he remained independent and continued to bring sound knowledge and expertise to the committee, including in relation to the increasingly complex accounting environment, cyber security and combined assurance, which is invaluable to management.

Compliance with duties

During the year under review, the committee satisfied its responsibilities in compliance with its Terms of Reference, including the following:

  • reviewing and approving the scope of the independent and internal audits;
  • reviewing the level of effectiveness of both the independent and internal auditors;
  • reviewing the internal audit charter, and in conjunction with executive management, assessing the competence of the group internal audit manager, and approval of the performance of the internal audit function;
  • recommending the appointment of the independent external auditors to the board for approval by the shareholders, and approving their remuneration;
  • approving the extent of non-audit services undertaken by the independent external auditors, in accordance with the approved policy;
  • reviewing reports from both the independent and internal auditors, including management’s responses thereto;
  • assessing the effectiveness of internal policies and procedures;
  • ensuring that all material financial risks are identified, assessed, monitored and managed;
  • monitoring that there are no material breakdowns in internal controls;
  • considering the company’s accounting policies and reviewing their compliance with International Financial Reporting Standards and other relevant regulatory requirements;
  • reviewing and recording going concern assumptions;
  • reviewing the company’s interim reports, results announcements, and annual reports;
  • monitoring that management suitably addresses information technology risks and information security;
  • monitoring compliance with the JSE’s Listings Requirements; and
  • receiving and dealing with any complaints relating to accounting practices, independent and internal audits, and the content or auditing of financial statements or any related matter.

Statutory duties

In the execution of its statutory duties, during the year under review, the committee:

  • confirmed the appointment of both Deloitte & Touche as the independent external auditors and Mr G Tweedy as the registered auditor responsible for the audit;
  • satisfied itself that the independent external auditors were independent of the company;
  • agreed the terms of engagement of and determined the fees payable to the independent external auditors;
  • ensured that the appointment of the independent external auditors and the registered auditor complied with the provisions of the Companies Act;
  • pre-approved the non-audit services provided by the independent external auditors, in terms of a policy in this regard previously adopted by the committee;
  • noted that it had not received any complaints, either from within or outside the company, relating to the accounting practices, the independent and internal audits of the company, or to the content or auditing of its financial statements or any related matter; and
  • performed its other functions in accordance with its Terms of Reference.

Risk management

The board has assigned oversight of the company's risk management to the Risk Management Committee. However, the Audit Committee oversees financial reporting risks, internal financial controls, as well as fraud risk and information technology risks as these relate to financial reporting. The chairman of the Audit Committee attends the Risk Management Committee meetings and the chairman of the Risk Management Committee is also a member of the Audit Committee.

Internal audit

The committee has responsibility for overseeing, reviewing and providing assurance on the adequacy of the internal control environment across the group's operations and approves the annual internal audit plan, which follows a risk-based approach. The head of internal audit is responsible for reporting the findings of the internal audit work against the agreed internal audit plan to the committee at each committee meeting. 

The head of internal audit has direct access to the Audit Committee members, through the chairman of the committee, and reports to the committee in relation to any incidents of alleged fraud and corruption as well as any “whistle-blowing” reports. The committee is satisfied that appropriate interventions have been put in place to deal with these.

Legal, regulatory and corporate governance requirements

The committee has reviewed legal matters that could have a material impact on the group and has considered reports provided by management, legal advisors, internal audit and the independent external auditors regarding compliance with legal and regulatory requirements.

Pursuant to the provisions of the JSE’s Listings Requirements, during the past financial year, the committee has monitored compliance with the company’s policy on non-audit services provided by the independent external auditors and has satisfied itself that the appointed independent external auditors and registered auditor were duly accredited as such on the JSE’s list of auditors.

Expertise and experience of Financial Director and finance function

The committee carried out a formal evaluation of the company’s Financial Director (Mr M H Abdool-Samad) and satisfied itself that he has the appropriate expertise and experience contemplated by paragraph 3.84(h) of the JSE Listings Requirements.

Pursuant to King III, and based on specific procedures performed by the independent external auditors, the committee also satisfied itself with the expertise, resources and experience of the senior management responsible for the company’s financial function.

Internal financial controls

Based on the review of the design, implementation and effectiveness of the group's system of internal financial controls conducted by the internal audit function during the year under review, and reports made by the independent external auditors on the results of their audit and management reports, the committee is satisfied that the company’s system of internal financial controls is effective and forms a basis for the preparation of reliable financial statements. No findings have come to the attention of the committee to indicate that any material breakdown in internal controls has occurred during the past financial year.

Annual financial statements

Having reviewed the audited annual financial statements of the group, which are available on the group’s website at, particularly to ensure that disclosure was adequate and that fair presentation had been achieved, the committee recommended the approval of the annual financial statements to the board.

Subsequent events

There have been no material changes in the affairs or financial position of the company and its subsidiaries since 31 March 2015.

Going concern

The committee reviewed management’s assessment of the going concern premise of the company and the group before recommending to the board that the company and the group will be a going concern in the foreseeable future.

Holding company

ABF Overseas Limited is the holding company of Illovo Sugar Limited with a 51.3% interest in its issued share capital. ABF Overseas Limited is a wholly-owned subsidiary of Associated British Foods plc, which is therefore the ultimate holding company of Illovo Sugar Limited. Associated British Foods plc is listed on the London Stock Exchange.

Matters for consideration at annual general meeting

Election of committee members

The audit committee is a statutory committee elected by the shareholders and in terms of section 94(2) of the Companies Act, read with chapter 3 of King III, the shareholders of a public company must elect the members of an audit committee at each annual general meeting. In terms of regulation 42 the Companies Regulations, at least one-third of the members of the company’s audit committee at any particular time must have academic qualifications, or experience in economics, law, corporate governance, finance, accounting, commerce, industry, public affairs or human resource management.

Based on the annual evaluations of the performance of the committee and its members, referred to above, and having evaluated their experience, qualifications and expertise, the Nomination Committee recommends that Dr D Konar (chairman), Mr M J Hankinson, Dr S Kana and Mrs C W N Molope be appointed as members of the Audit Committee, subject to their being appointed as directors of the company at the forthcoming annual general meeting. As Mr T S Munday has been appointed as Chairman of the board with effect from the close of the annual general meeting, he will no longer be eligible for membership of the committee, but will attend committee meetings as an attendee. As evidenced by the curricula vitae of the proposed members, which appear here, they have the relevant experience and expertise required for membership of the committee.

Appointment of independent external auditors

In accordance with section 90(1) read with section 61(8) of the Companies Act (which requires that shareholders approve the appointment of the independent external auditors on an annual basis) the committee has recommended to the board, which in turn has recommended to the shareholders that Deloitte & Touche be appointed as the company’s independent registered auditors for the year ending 31 March 2016 at the forthcoming annual general meeting.

On behalf of the Audit Committee 

Dr D Konar
Audit Committee Chairman

May 2015


Date: Wed, 15 July

Time: 14:00

Venue: Illovo Sugar Park

Notice of AGM


Contact Us

Illovo Sugar Park, 1 Montgomery Drive, Mount Edgecombe, KwaZulu-Natal

Tel: +27 31 508 4300