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f
reviewed the effectiveness of the
systems of internal control, including
internal financial control and risk
management.
The ARCC has evaluated the internal
audit function and satisfied itself to
place reliance thereon.
The ARCC concludes that the design
and implementation of internal
controls, including financial controls
and risk management, are effective.
Refer to page 50 for the arrangements
in place for combined assurance. The
ARCC concludes that the combined
assurance arrangement is effective and
will continue to evolve as the Group
grows.
Risk management and
compliance
The Committee:
f
reviewed the integrity of the risk
control systems and ensured that
the risk policies and strategies of the
Company are effectively managed;
f
made recommendations to the
Board concerning the levels of
tolerance and risk appetite;
f
monitored bi-annual risk
assessments;
f
ensured that management
considered and implemented
appropriate risk responses;
f
reviewed legal matters that could
have a material impact on the
Group; and
f
reviewed developments in corporate
governance and best practice and
considered their impact and
implications across the Group with
particular reference to the principles
of King IV.
Expertise and effectiveness of
the Financial Director and
finance function
The Committee considered the
appropriateness of the expertise and
effectiveness of the Financial Director
and finance function in accordance
with the JSE Listings Requirements
and governance best practice.
The Committee confirms that it is
satisfied that Dean Suntup possesses
the appropriate expertise and
experience to effectively discharge his
responsibilities as Financial Director,
and confirms the effectiveness of the
finance function.
Annual financial statements
The Committee has reviewed the
accounting policies and financial
statements of the Company and the
Group and is satisfied that they are
appropriate and comply with
International Financial Reporting
Standards, the JSE Listings
Requirements and the requirements
of the Act.
The Committee has evaluated the
Group and Company financial
statements of Blue Label Telecoms
Limited for the year ended 31 May
2017 and based on the information
provided to the Committee, the
Committee recommends the adoption
of the annual financial statements by
the Board.
The significant audit matters
considered by the Committee were:
1. the impairment assessment of
goodwill arising from business
combinations;
2. the impairment assessment of the
investment in BLM; and
3. the fair value assessment of the
investment in Oxigen, Oxigen
Online and 2DFine.
These matters were addressed as
follows:
The impairment assessment of
goodwill arising from business
combinations
For the year ended 31 May 2017,
management performed an
impairment assessment over the
goodwill balance as follows:
f
assessing the recoverable amount as
being value-in-use, as entities are
held for trading and not for sale;
f
calculating the value-in-use for each
cash-generating unit (CGU) using a
discounted cash flow model; and
f
performing a sensitivity analysis over
the value-in-use calculations, by
varying the assumptions used
(growth rates, terminal growth rate
and WACC, i.e. discount rate) to
assess the impact on the valuations.
Management concluded there was no
need for any impairment.
The impairment assessment of the
investment in BLM
For the year ended 31 May 2017,
management performed an
impairment assessment over the
investment in BLM as follows:
f
assessing the recoverable amount as
being value-in-use, as BLM is held
for trading and not for sale;
f
calculating the value-in-use for BLM
using a discounted cash flow model;
f
performing a sensitivity analysis over
the value-in-use calculations, by
varying the assumptions used
(growth rates, terminal growth rate
and WACC, i.e. discount rate) to
assess the impact on the valuation;
and
f
as a final check, comparing the
carrying value of the Group’s
investment in BLM with the
calculated value-in-use.
Management concluded there was no
need for any impairment.
BLUE LABEL
INTEGRATED ANNUAL REPORT 2017
69
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