Annual Integrated Report 2019

Risk management The committee: • • reviewed the group’s policies and approach to risk management and found them to be sound; • • considered all material risks to which the group is exposed, ensuring that the requisite risk management culture, policies and systems are progressively implemented and functioning effectively; • • management is accountable to the board for implementing and monitoring the processes of risk management and integrating this into day-to-day activities. These processes are confirmed on an ongoing basis through the completion of the quarterly Bidcorp management representation letter signed and submitted to the audit and risk committee; • • performs ongoing monitoring of the enterprise-wide risk assessment process to ensure risks and opportunities are adequately identified, evaluated and managed at the appropriate level in each business, and that the individual and joint impact of risks identified on the group was considered; • • reviewed legal matters that could have a material impact on the group, as well as considering the adequacy and effectiveness of the group’s procedures to ensure compliance with legal and regulatory responsibilities; and • • considered reports provided by management, internal assurance providers and the independent auditors regarding compliance with legal and regulatory requirements and found Bidcorp’s processes to be sound and effective. Combined assurance The committee reviewed the plans and reports of the external and internal auditors, as well as other assurance providers including management; and concluded that these were adequate to address all significant financial risks facing the business. Chief financial officer (CFO) The committee: • • considered the appropriateness of the experience and expertise of the CFO and concluded that this is appropriate; • • considered the expertise, resources and experience of the finance function and concluded that these are appropriate; and • • concluded that it is satisfied the appropriate reporting procedures are in place and operating effectively. Consolidated and separate financial statements The committee reviewed the consolidated and separate annual financial statements of Bidcorp for the year ended June 30 2019, and the committee is of the view that, in all material respects, it complies with the relevant provisions of the Companies Act and IFRS, and fairly presents the financial position at that date and the results of its operations and cash flows for the year then ended. Comments on key audit matters, addressed by PwC in its external auditor’s report The committee is satisfied with the conduct, quality and independence of PwC in carrying out its external audit of the Bidcorp annual financial statements for the year ended June 30 2019. In order to provide stakeholders with further insights into its activities and considerations around key audit matters as reported by the external auditors, the committee wishes to elaborate as follows: Key audit matter – goodwill impairment assessment The committee received from management the results of the group’s annual goodwill impairment testing. The committee challenged the methodologies and assumptions used to assess the carrying value of goodwill, including the achievability of business plans and forecasts. Sensitivity analysis on the key inputs such as discount rates and working capital movements were performed and considered in determining any potential impairment. The external auditor’s reporting on impairment testing was also reviewed. The committee was satisfied with the conclusions reached by management and the goodwill-related disclosures in the consolidated annual financial statements (refer to notes 3 and 8.3 to the consolidated financial statements). Key audit matter – assessment of agent versus principal and the impact on revenue recognition The committee also considered the appropriate application of the agent versus principal accounting treatment in recognising revenue. The committee reviewed management’s assessment of arrangements involving the direct delivery of goods from suppliers to clients, the performance obligations governing the supply and delivery of those goods, the party which holds the inventory risk, and the extent of any discretion in establishing prices for the goods. Based on the assessment performed, it was concluded that Bidfood Netherlands is acting as an agent instead of as a principal in relation to certain chilled deliveries. The comparative period revenue and cost of revenue were restated to reflect this (refer to notes 3 and 4.1 to the consolidated financial statements). There was no impact on the comparative profit for the year, nor on the reported comparative assets, liabilities or net cash flows from operating activities. Conclusion Following the review by the committee for the year ended June 30 2019, the committee is of the view that, in all material respects, it has complied with the relevant requirements. Having achieved its objectives for the financial year, the committee recommended the consolidated and separate financial statements for the year ended June 30 2019 for approval to the board. Signed on behalf of the audit and risk committee by: Helen Wiseman Chairman Bid Corporation Limited Annual integrated report 2019 / 75