Governance and Remuneration: Audit and Risk Committee Report
Desmond Smith
Chairman of the Audit and Risk Committee

Dear Shareholder,

As Chairman of the Audit and Risk Committee (the “Committee”), it is my pleasure to report on the Committee’s activities for the year ended 31 March 2018.

This report provides an overview of the functioning of the Committee and the significant matters it addressed during the year, together with its priorities for 2018/19. The Committee’s terms of reference are available in the governance section of the Company’s website and are summarised in the Corporate Governance Statement.

COMMITTEE COMPOSITION AND MEETING ATTENDANCE

The composition of the Committee complies with the UK Corporate Governance Code (the “Code”), which provides that all members should be independent non-executive directors. The Board regards each member of the Committee as having recent and relevant financial experience for the purposes of the Code and the Financial Reporting Council’s (“FRC”) Guidance on Audit Committees. The Board is satisfied that the Committee, as a whole, has the required sector-specific competence and that the combined knowledge and experience of its members enables the Committee to exercise its duties in an effective, informed and responsible manner. Figure 1 sets out the Committee’s composition and meeting attendance during the period under review.

Figure 1: Committee composition and meeting attendance

1 The composition of the Committee is shown as at 31 March 2018.
2 The attendance reflects the number of scheduled meetings held during the financial year. One additional ad hoc Committee meeting was held during the financial year and two Committee meetings were held between the Company’s financial year-end and the Last Practicable Date; all these meetings were attended by all Committee members.

The Company Secretary is secretary to the Committee and attends all meetings, as does Mr Jurgens Myburgh (CFO). Other attendees differ from time to time and may include Mr Danie Meintjes (CEO), Dr Edwin Hertzog (Company Chairman), Mr Pieter Uys (alternate to Mr Jannie Durand), Mr Gert Hattingh (Chief Corporate Services Officer) and other relevant management members. Representatives from the internal auditors (Remgro Internal Audit) and external auditors (PricewaterhouseCoopers LLP and PricewaterhouseCoopers Inc.) are invited to attend all meetings. Dr Ronnie van der Merwe (Chief Clinical Officer and CEO Designate) was also invited to attend Committee meetings held from 1 January 2018 onwards, as part of the transition to his appointment as CEO.

KEY AREAS OF ACTIVITY

The Committee continued to provide appropriate oversight and challenge around the Company’s financial, accounting, risk management, internal controls and assurance processes. Its key areas of focus during the year ended 31 March 2018 are set out below.

Financial reporting

The Committee considered the following key topics relating to financial reporting during the year:

May 2017:

  • Reviewed the external auditor’s 2017 year-end audit report and opinion
  • Reviewed the financial performance of the Group and each division, including debt covenants
  • Reviewed the significant accounting policies, key accounting items, areas of significant judgements and any material assumptions or estimates
  • Reviewed and confirmed the going concern status, the long-term viability assessment and the supporting stress testing analysis and recommended them for approval by the Board
  • Reviewed the final dividend proposal and recommended it to the Board for approval by the shareholders
  • Approved the Audit and Risk Committee Report for inclusion in the 2017 Annual Report
  • Reviewed the 2017 Annual Report and Financial Statements, including the confirmation of fair, balanced and understandable reporting and recommended them for approval by the Board
  • Reviewed the use of adjusted measures by the Group and ensured their appropriateness (including the items of income or cost included or excluded from their calculation)
  • Reviewed the preliminary results announcement and investor presentation and recommended them for approval by the Board
  • Reviewed the 2017 Notice of Annual General Meeting and recommended it for approval by the Board
  • Reviewed the Group’s tax report and the Group Tax Strategy and recommended the Group Tax Strategy for approval by the Board
  • Continued to monitor the integration of the Al Noor business into the Middle East division

September 2017:

  • Reviewed the Group’s tax report
  • Reviewed the external auditor’s interim review plan
  • Reviewed the FRC’s summary of key developments for 2017/18 annual reports

November 2017:

  • Reviewed the external auditor’s half-year review findings
  • Reviewed the financial performance of the Group and each division, including debt covenants
  • Reviewed the significant accounting policies, key accounting items, areas of significant judgement and any material assumptions or estimates
  • Reviewed the key tax considerations across the Group
  • Reviewed and confirmed the going concern status and recommended its adoption for approval by the Board
  • Reviewed the interim dividend and recommended it for approval by the Board
  • Reviewed the interim financial statements and results announcement, including the confirmation of fair and balanced reporting
  • Reviewed the use of adjusted measures by the Group and ensured their appropriateness (including the items of income or cost included or excluded from their calculation)

March 2018:

  • Reviewed the external auditor’s pre-year-end report on accounting and auditing issues
  • Reviewed the significant accounting policies
  • Reviewed the preliminary going concern and long-term viability assessment, together with the supporting stress testing analysis
  • Reviewed the key tax considerations across the Group
  • Conducted an annual review of the finance function

April 2018:

  • Consideration of Hirslanden impairments

May 2018:

  • Reviewed the external auditor’s 2018 year-end audit report and opinion
  • Reviewed the financial performance of the Group and each division, including debt covenants
  • Reviewed the significant accounting policies, key accounting items, areas of significant judgements, and any material assumptions or estimates
  • Reviewed and confirmed the going concern status, the long-term viability assessment and the supporting stress testing analysis and recommended them for approval by the Board
  • Reviewed the final dividend proposal and recommended it to the Board for approval by the shareholders
  • Approved the Audit and Risk Committee Report for inclusion in the 2018 Annual Report
  • Reviewed the 2018 Annual Report and Financial Statements, including the confirmation of fair, balanced and understandable reporting and recommended them for approval by the Board
  • Reviewed the use of adjusted measures by the Group and ensured their appropriateness (including the items of income or cost included or excluded from their calculation)
  • Reviewed the preliminary results announcement and investor presentation and recommended them for approval by the Board
  • Reviewed the 2018 Notice of Annual General Meeting and recommended it for approval by the Board
  • Reviewed the Group’s tax report

The Committee maintained a strong focus on the financial performance of the Group’s operating divisions and the Group as a whole, as well as the integrity of the Group’s financial reporting, including annual and half-year financial statements, announcements and investor presentations. The Committee, with management and the external auditor, also considered the impact of reporting recommendations published by the FRC, as well as the new accounting and reporting requirements introduced by IFRS 9 Financial Instruments, IFRS 15 Revenue and IFRS 16 Leases and their impact on the Group’s financial statements for the year ended 31 March 2018 and the year ending 31 March 2019.

The Committee received regular reports on tax matters for the Group, providing details of outstanding tax matters, any tax risks and assurances received from the Company’s tax advisers as part of the year-end audit. During the year, the Committee reviewed and recommended the Group Tax Strategy to the Board for approval. The strategy is published on Mediclinic’s website and a summary is available in Financial Review. The Committee monitored progress on compiling the country-by-country tax report.

Significant accounting judgements and policies

The Committee follows a process for monitoring the integrity of the financial information provided in the annual and interim reports, which includes the review of significant accounting policies, key accounting items and areas of significant judgement, together with any material assumptions and estimates adopted by management and confirmed that these were appropriate.

The Committee considered the following significant issues identified by the management team and the external auditors in relation to the Annual Report.

Fair, balanced and understandable reporting

The annual, interim and other price-sensitive reports published by the Company, are required to be fair, balanced and understandable; and provide the information necessary for shareholders to assess the Group’s position, performance, business model and strategy.

Throughout the year, the Committee (or in certain instances, the Board or the Disclosure Committee) reviewed the interim results and other price-sensitive announcements published by the Company and confirmed that they met the above requirements. The Committee also reviewed the use of adjusted measures by the Group and ensured their appropriateness in aiding users of the Group’s financial statements to better understand its performance year on year (including the items of income or cost included or excluded from their calculation).

The Committee considered a summary of management’s approach to the preparation of the narrative sections and financial statements; reviewed the 2018 Annual Report as a whole, and recommended to the Board that, in its opinion, the 2018 Annual Report, taken as a whole, meets the aforementioned requirements.

Internal control system and risk management processes

The Committee considered the following key topics relating to internal controls and risk management during the year:

May 2017:

  • Reviewed and approved the Committee’s report on internal control system and risk management processes in the 2017 Annual Report
  • Reviewed the principal risks and uncertainties and recommended them for approval by the Board
  • Reviewed the fraud and ethics report
  • Reviewed cybersecurity risks and monitoring

September 2017:

  • Reviewed the Enterprise-wide Risk Management (“ERM”) framework and progress against risk management plans
  • Conducted an in-depth review of IT-related risks, including the governance and status of key IT projects
  • Reviewed the fraud and ethics report
  • Reviewed the Group compliance programme report (including the GDPR)

November 2017:

  • Reviewed the principal risks and uncertainties, including the impact of Brexit, and recommended them for approval by the Board
  • Reviewed the Level 2 and 3 assurance processes conducted or planned for the year and the next steps regarding any open findings
  • Reviewed the update on Level 2 and 3 assurance processes regarding major IT projects
  • Reviewed risks and obligations under data protection legislation
  • Reviewed fraud and ethics report
  • Reviewed and approved the Treasury Policy and Procedures

January 2018:

  • Reviewed the combined assurance model
  • Reviewed the new risk management and assurance reporting dashboard

March 2018:

  • Reviewed the Group tax risks
  • Conducted a review of the Group’s risk management systems and principal risks and uncertainties, including: the ERM framework, ERM Policy and risk appetite statement; top risks; other topical risk areas; Group compliance policy and programme; and ERM plan for FY19
  • Reviewed the preliminary going concern and long-term viability assessment, together with the supporting stress testing analysis
  • Reviewed the Fraud Risk Management Policy and fraud and ethics report
  • Reviewed the Treasury Policy and Procedures
  • Reviewed the Group’s key insurance policies

April 2018:

  • Reviewed progress on implementation of data privacy project (including GDPR)

May 2018:

  • Reviewed the report on internal control systems and risk management processes included in the 2018 Annual Report and recommended it for approval by the Board
  • Reviewed the principal risks and uncertainties and recommended them for approval by the Board
  • Reviewed the fraud and ethics report
  • Reviewed cybersecurity risks and monitoring
  • Reviewed progress on implementation of data privacy project (including GDPR)

The Board is ultimately responsible for overseeing the effective internal control systems and risk management processes, which facilitate the delivery of and sustain the Group’s financial, operational and strategic objectives. In accordance with its terms of reference, the Committee monitors these processes on a regular basis; reviews their effectiveness; and makes appropriate recommendations to the Board.

During the year, the Committee reviewed the ERM Policy, framework and processes, including the Group’s risk appetite, combined assurance model and action plans designed to mitigate risks in line with the Group’s risk appetite statement. The Committee concentrated in particular on actions regarding certain areas highlighted by management:

  • centralising and standardising business processes in the Hirslanden operating division;
  • integrating Al Noor into the business, operating practices and finance, and accounting and internal control systems of the Middle East operating segment;
  • implementing SAP and supporting policies and procedures;
  • implementing a standardised financial consolidation and reporting tool; and
  • enhancing the assurance processes across the Group, including ICT governance and compliance.

The Committee continued to monitor the standardisation of the internal controls and risk framework across the Group, processes, risk registers and reporting. The Committee focused on integrating the reports received on financial, operational and compliance internal controls and risk management systems, corresponding key performance indicators, internal and external assurances, mitigating action plans, and progress on the delivery of these plans. The Committee and management discussed areas for further improvement and these were raised in the Committee’s feedback to the Board.

Information and communications technology (“ICT”) risks continued to be a key area of focus for the Committee. The top five risks identified were cybersecurity, project delivery, information protection, architecture and quality of IT systems, and application control and change risks. Senior management held regular presentations to the Committee on these risks and their management and mitigation. The presentations included an in-depth review of the governance arrangements and status of the most complex IT projects delivered within the Group.

The Group introduced an enhanced programme to track the Group’s compliance with key legislation in the jurisdictions in which it operates. The Committee received regular updates on progress regarding the development of the compliance programme and considered the implications of forthcoming legislation, such as the EU General Data Protection Regulation, effective in the UK from 25 May 2018; data protection legislation being introduced in Switzerland and South Africa; and new VAT legislation in the UAE. The Committee examined the Group’s plans to address the new requirements and monitored progress on their implementation.

The Committee considered the Group’s hedging arrangements in respect of interest rate movements and supported management’s decision to discontinue hedging the debt associated with the Hirslanden operating division for the time being. Management maintained the decision under review and presented regular reports to the Committee.

The Committee’s overall conclusion and recommendation to the Board was that the internal control and risk management environment was effective in ensuring the consistent achievement of key control objectives and no significant failings or weaknesses had been identified.

The long-term viability statement is underpinned by the Committee’s work on the Group’s financial reporting, internal controls and risk management systems. Further details on the Group’s internal controls system and risk monitoring are provided in Risk Management and Principal Risks.

Internal audit

The Committee considered the following key topics relating to internal audit during the year:

May 2017:

  • Reviewed the FY17 internal audit report including annual review of the effectiveness of the Group’s internal controls and risk management processes
  • Considered an external report on the internal auditor’s quality assurance processes and reviewed the effectiveness of the internal auditor
  • Conducted a separate meeting between the Committee members and the internal auditor, without the management team, and between the Committee members and management, without the internal auditor

November 2017:

  • Reviewed internal audit report and findings, with particular focus on procurement
  • Reviewed progress on appointment of Head of Internal Audit

January 2018:

  • Reviewed internal audit processes, including overview of mandate and approved work plan for FY18
  • Considered outcome of process to appoint Head of Internal Audit

March 2018:

  • Reviewed the internal audit report, internal audit mandate and internal audit function
  • Conducted a separate meeting between the Committee members and the internal auditor, without the management team, and between the Committee members and management, without the internal auditor

May 2018:

  • Reviewed the internal audit report for FY18 including annual review of the effectiveness of the Group’s internal controls and risk management processes
  • Conducted a separate meeting between the Committee members and management, without the external auditor, and between the Committee members and the external auditor, without management

Remgro Internal Audit ("RIA") continued to undertake the Group’s internal audit function during the year. RIA regularly attends Committee meetings and reports on the findings of its internal audit reviews. RIA is responsible for evaluating the Group’s governance processes; assessing the effectiveness of the internal financial control framework and risk management processes; analysing and evaluating key business processes and associated controls; and providing information on identified instances of fraud, corruption, unethical behaviour and irregularities. RIA’s responsibilities include conducting an annual documented review of the key financial reporting controls in identified financial systems and processes, and providing an annual written assessment of the effectiveness of the system of internal controls and risk management to the Board.

During the year, the Committee regularly received and considered internal audit reports from RIA, which focused particularly on procurement, finance and governance processes, and included their annual written assessment of the effectiveness of the Group’s internal controls and risk management processes. As part of this process, the Committee reviewed the effectiveness of the internal audit function based on discussions with RIA and key members of management, supplemented by an external assessment of RIA’s quality assurance process. The Committee confirmed its satisfaction with the effectiveness and efficiency of the function, reliability of financial reporting, and compliance with applicable laws and regulations.

The Committee reviewed the internal audit function and approved the internal audit plan for the year ending 31 March 2019. The plan is set on a three-year rolling basis, and the areas of focus are determined and updated in line with:

  • the internal audit mandate;
  • the Group’s risk register;
  • strategic and operational initiatives aimed at growing and preserving value;
  • the results of previous internal audits and reviews of the effectiveness of internal controls and risk management systems;
  • significant changes in the business, operations, ICT programmes, systems and controls;
  • requests from management and the Committee;
  • new developments in organisational governance; and
  • emerging risks and trends.

During FY19, internal audit will focus on the human resources and payroll cycle, key controls affected by major transformation initiatives and projects and the internal financial control process within each division, as well as governance and risk processes.

As reported in the 2017 Annual Report, the Company is in the process of establishing an in-house internal audit function and transition away from the current outsourcing arrangements with RIA. As part of this plan, the Company appointed a Head of Internal Audit with effect from 1 July 2018. Plans to ensure a gradual and smooth transfer of responsibilities from RIA to the new in-house function will be developed further during FY19.

External audit

The Committee considered the following key topics relating to the external audit during the year:

May 2017:

  • Reviewed the external auditor’s year-end audit report and opinion
  • Evaluated the external auditor’s performance, with a focus on their independence, and the objectivity and effectiveness of the external audit process
  • Considered and recommended the external auditor’s re-appointment
  • Reviewed the non-audit services expenditure for FY17
  • Reviewed and approved the non-audit services thresholds for FY18
  • Conducted a separate meeting between the Committee members and the external auditors, without the management team, and between the Committee members and management, without the external auditor

September 2017:

  • Reviewed the external auditor’s interim review plan update

November 2017:

  • Reviewed the external auditor’s half-year review report
  • Reviewed and approved the external audit plan for FY18, and the corresponding engagement letter and fees
  • Reviewed and approved the revised non-audit services thresholds for FY18
  • Held a separate meeting between the Committee members and the external auditors, without the management team

March 2018:

  • Reviewed the external auditor’s pre-year-end report on accounting and auditing issues
  • Reviewed and approved the policy on the external auditor’s independence and non-audit services
  • Reviewed the non-audit services expenditure for FY18 to date
  • Reviewed the non-audit services thresholds for FY19
  • Conducted a separate meeting between the Committee members and the external auditors, without the management team, and between the Committee members and management, without the external auditor

May 2018:

  • Reviewed the external auditor’s year-end audit report and opinion
  • Evaluated the external auditor’s performance, focusing on their independence, and the objectivity and effectiveness of the external audit process
  • Considered and recommended the external auditor’s re-appointment
  • Reviewed the non-audit services expenditure for FY18
  • Reviewed and approved the non-audit services thresholds for FY19
  • Conducted a separate meeting between the Committee members and the external auditors, without the management team, and between the Committee members and management, without the external auditor

PricewaterhouseCoopers LLP (“PwC”) has been the Company’s external auditor since February 2016, as approved by the Company’s shareholders in December 2015. The lead audit engagement partner is Giles Hannam, who was appointed in February 2016.

The external auditor is invited to all Committee meetings and receives copies of all relevant Committee papers and minutes of all Committee meetings.

External audit plan

During the year, the Committee reviewed and approved the FY18 external audit plan, including the proposed materiality threshold, the scope of the audit, the significant audit risks and fees.

Effectiveness and independence

The Committee is committed to ensuring the Group receives a high-quality and effective statutory audit. It is responsible for monitoring the performance, objectivity and independence of the external auditors and undertakes an annual formal evaluation process.

On completion of the FY18 year-end external audit, all members of the Committee, key members of the senior management team, and those who regularly provide input to the Committee or have regular contact with the external auditors, were asked to complete a questionnaire to assess the performance of the external auditor, with a strong focus on their independence and objectivity. The questionnaire focused on four key performance areas, namely: robustness of the audit process, quality of delivery, quality of reporting, and quality of people and service. As part of the assessment, separate meetings were held between the Committee members and the external auditor without management, and between the Committee members and management without the external auditor. The feedback from the questionnaire and the meetings with the external auditor and management was discussed by the Committee at the meeting held in May 2018. The Committee was very satisfied with the overall feedback on PwC and the external audit process.

Under the FRC’s Revised Ethical Standard for Auditors, PwC must inform the Company about any significant facts and matters that may reasonably be thought to bear on its independence or on the objectivity of the lead partner and the audit team. The quality review partner, who reviews the judgements of the audit team, rotates every seven years and the lead partner and key audit partners at each operating division every five years. The external auditor’s independence is safeguarded by the non-audit services policy discussed below.

Non-audit services

The Committee believes that it may be appropriate in certain circumstances for the Company to engage its external auditors to provide non-audit services. A policy governing the provision of such services is in place to ensure non-audit services provided by the auditor do not impair, and are not perceived to impair, the external auditor’s independence or objectivity. The policy was last reviewed and approved by the Committee in March 2018.

With effect from 1 April 2017, the policy was amended to, inter alia, exclude the provision of tax services by the external auditor, previously provided by PwC. Deloitte LLP was appointed to provide tax advice to the Company and its Southern African operations, and KPMG was appointed to provide tax advice to the Company’s Swiss and Middle Eastern operations.

The Committee determines the pre-approved monetary thresholds for each category of non-audit services by the external auditor at the beginning of each financial year. The nature of the non-audit services, the individual fee levels of each category and the aggregate fee amount relative to the external audit fee, are taken into account in determining these thresholds. From 1 April 2017, any individual assignment with a fee exceeding £50 000 requires the Committee’s prior approval.

To help maintain the independence and objectivity of the external auditor, the policy requires that a different partner is appointed to lead any non-audit services.

Fees

The fees paid to PwC in respect of non-audit services amounted to approximately £588 000, or 26% of the statutory audit fees. Approximately £350 000 of the non-audit services fees were in respect of reviews conducted in relation to the financial statements for the six months to 30 September 2017. Therefore, excluding the half-year reviews, non-audit service fees as a percentage of statutory audit fees amounted to 11%.

Refer to note 22 to the consolidated financial statements for detail on the fees paid to the Group’s auditors for audit and non-audit services during the year.

Re-appointment

The Committee concluded that the services provided by the external auditor were of a high quality, that the external audit process in respect of the 2018 financial statements was effective, and that the auditor remains objective and independent. Accordingly, it recommended to the Board that the re-appointment of PwC as the Company’s external auditors is proposed to shareholders at the Company’s annual general meeting on 25 July 2018.

Audit tender

As a result of the UK’s implementation of the EU’s mandatory audit firm rotation requirements, and in accordance with the Committee’s terms of reference, the Company is required to ensure that the external auditor’s contract is put out to tender at least every 10 years, with the proviso that no single firm may serve as the Company’s external auditor for a period exceeding 20 years. PwC was appointed as the Company’s auditor with effect from February 2016, as approved by the Company’s shareholders in December 2015. It is intended that the external audit will be put out to tender no later than for the financial year commencing 1 April 2023, which is 10 years after the Company’s initial listing.

Competition and Markets Authority Statutory Audit Services Order 2014 (“CMA Order”)

As disclosed above, during the financial year under review, the Company complied with the mandatory audit processes and the Committee complied with the responsibility provisions set out in the CMA Order relating to (a) putting the audit services engagement on tender every 10 years; and (b) strengthening the accountability of the external auditor to the Committee, including requiring that only the Committee is permitted to agree to the external auditor’s fees and scope of services; influence the appointment of the audit engagement partner; make recommendations regarding the appointment of auditors; and authorise the auditors to carry out non-audit services.

Ethical conduct, governance and compliance

The Committee considered the following key topics relating to governance and compliance during the year:

May 2017:

  • Harmonised operating practices across Mediclinic Middle East
  • Reviewed the fraud and ethics report
  • Considered relevant statutory, regulatory and good practice developments
  • Reviewed the non-audit services expenditure for FY17
  • Reviewed and approved non-audit services thresholds for FY18
  • Reviewed the Group tax report
  • Reviewed and approved the Group Tax Strategy and recommended it for approval by the Board

September 2017:

  • Reviewed the fraud and ethics report
  • Reviewed Group compliance programme report (including the EU General Data Protection Regulation)

November 2017:

  • Reviewed the fraud and ethics report
  • Reviewed the Group tax report
  • Reviewed and approved the revised non-audit services thresholds for FY18
  • Considered relevant statutory, regulatory and good practice developments

March 2018:

  • Conducted the annual review of policies and procedures: Terms of Reference of the Committee; Internal Audit Mandate; Policy in respect of the Independence and the provision of non-audit services by the External Auditors; ERM Policy and Fraud Risk Management Policy
  • Reviewed the fraud and ethics report
  • Considered relevant statutory, regulatory and good practice developments

May 2018:

  • Reviewed the Regulatory Compliance Policy
  • Reviewed the non-audit services expenditure for FY18
  • Reviewed and approved non-audit services thresholds for FY19
  • Reviewed the Group tax report
  • Reviewed and approved the Group Tax Strategy and recommended it for approval by the Board
  • Reviewed the fraud and ethics report
  • Considered relevant statutory, regulatory and good practice developments

The Group is focused on conducting its business in an honest, fair and ethical manner, a principle endorsed by the Board and management. The Committee oversees the Group’s processes for handling breaches of the Group’s Code of Business Conduct and Ethics and Anti-bribery Policy. During the year, the Committee received regular feedback from the Group General Manager: Risk Management on all material cases and incidents reported on the ethics lines, how these were managed and the effectiveness of the lines. The Committee adopted a Fraud Risk Management Policy, which facilitates developing controls for the prevention of fraud and corruption.

The Committee is responsible for ensuring Group-wide compliance with relevant laws and regulations. During 2017, a compliance consultant was appointed to assist the Group with implementing a standardised risk-based compliance monitoring process across all business units. Under the consultant’s guidance, the Group established an enhanced programme to track the Group’s compliance with key legislation in the jurisdictions in which it operates. The Committee regularly received updates on progress regarding the development of the compliance programme and considered the implications of forthcoming legislation, such as the EU General Data Protection Regulation, data protection legislation being introduced in Switzerland and South Africa, and new VAT legislation in the UAE. The Committee examined the Group’s plans to address the new requirements and monitored progress on their implementation.

The Clinical Performance and Sustainability Committee is also responsible for assessing the Group’s ethics and compliance. Further details on the Company’s policies in respect of business conduct and ethics, anti-corruption and anti-bribery matters are provided in the Strategic Report. Details of the Clinical Performance and Sustainability Committee are provided in the Corporate Governance Statement.

COMMITTEE EVALUATION

An external evaluation of the Committee’s performance was conducted by Lintstock during the year, focused on the Committee’s composition and time management, processes and support, the work undertaken during the financial year and any priorities for improving its performance over the coming year. The Committee reviewed and discussed the outcomes of the evaluation and certain actions were agreed for implementation, aimed at further enhancing the effectiveness of the Committee. The results were reported to the Board at the March 2018 meeting. The Committee will monitor progress on the agreed actions and their outcomes, and these will be incorporated into the following performance evaluation.

PROGRESS ON KEY PRIORITIES FOR THE COMMITTEE IN FY18

KEY PRIORITIES FOR THE COMMITTEE IN 2018/19

  • Monitor establishment of in-house internal audit function
  • Monitor progress against the FY19 internal audit plan and overall ERM plan
  • Mature the integration of reporting to the Committee on financial, operational and compliance internal controls and risk management systems
  • Monitor the performance of recently implemented transformational IT projects
  • Monitor the implementation of new IFRS standards
  • Appoint a permanent compliance officer and monitor the entrenchment of compliance management

Approved and signed on behalf of the Audit and Risk Committee.

Mr Desmond Smith
Chairman of the Audit and Risk Committee

23 May 2018