Report of the audit committee

The MTN Group audit committee (the committee) presents its report in terms of section 94(7)(f ) of the Companies Act and as recommended by King III for the financial year ended 31 December 2013.

TERMS OF REFERENCE

The committee has adopted comprehensive and formal terms of reference which have been approved by the board and which are reviewed on an annual basis.

MEMBERSHIP, MEETING ATTENDANCE AND EVALUATION

Members of the committee are formally nominated by the board for re-election by shareholders. The individuals satisfy the requirements to serve as members of an audit committee as provided in section 94 of the Companies Act and ensure that the committee has adequate knowledge and experience. The composition of the committee and the attendance at meetings by its members are set out below:

Members	Attendance
AF van Biljon (Chairman)	4/4
NP Mageza	4/4
MJN Njeke	4/4
J van Rooyen	4/4

The biographical details of members are set out on pages 22 and 23 of the integrated report. The committee meets at least four times a year and members’ fees are included in the table of directors’ emoluments and related payments on page 112.

The Group president and chief executive officer, the Group chief financial officer, the Group chief business risk officer, joint external auditors and other assurance providers attend committee meetings by invitation. The committee also meets separately with the joint external auditors, internal auditors and senior management before or after every meeting.

The effectiveness of the audit committee as a whole and its individual members are assessed on an annual basis.

EXECUTION OF FUNCTIONS OF THE AUDIT COMMITTEE

the Companies Act and King III. To the extent that the King III recommendations have not been applied, an explanation is provided in the corporate governance highlights as contained on page 32 of the integrated report.

The committee discharged the following responsibilities during the year under review:

EXTERNAL AUDITORS

•	Considered and satisfied itself with the independence and objectivity of the joint external auditors and designated registered auditors and ensured that the scope of non-audit services rendered did not impair their independence.
•	Approved the non-audit-related services performed by the joint external auditors in the year in accordance with the policy established and approved by the board.
•	Determined the joint external auditors’ terms of engagement and fees for 2013.
•	Pre-approved all agreements for the provision of non- audit services, through the chairman of the committee to whom this authority has been delegated.
•	Satisfied itself that the joint external auditors and the designated registered auditors are accredited on the JSE list of auditors and advisers. The committee recommends the reappointment of the joint external auditors and the appointment of the designated auditors at the next annual general meeting.

FINANCIAL STATEMENTS AND ACCOUNTING PRACTICES

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Reviewed the accounting policies and the annual financial statements of the Group for the year ended 31 December 2013, and based on the information provided to it, the committee considers that, in all material respects, they are appropriate and comply with the provisions of the Companies Act, IFRS, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, financial pronouncements as issued by the Financial Reporting Standards Council (FRSC), and the Listings Requirements of the JSE.

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Reviewed the processes in place for the reporting of concerns and complaints relating to reporting and accounting practices, internal audit, contents of the Group’s financial statements, internal financial controls and any related matters. The committee can confirm that there were no such complaints of substance during the year under review.

INTERNAL FINANCIAL CONTROLS

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Reviewed the process in terms of which internal audit performed a written assessment of the effectiveness of the Group’s system of internal control (including internal financial controls). This written assessment by internal audit formed the basis of the committee’s recommendation in this regard to the board in order for the board to report thereon. The board’s report on the effectiveness of the system of internal controls, which the committee fully supports, is included in the directors’ report on page 8.

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Reviewed the reports of both internal and external auditors detailing their concerns arising from their audits and considered appropriate responses from management.

INTEGRATED REPORTING AND COMBINED ASSURANCE

•	Reviewed the disclosure of the Group’s sustainability information as disclosed in the integrated report. Nothing has come to the attention of the committee to indicate that the information is in any way in conflict with the information in the annual financial statements.
•	Discussed the sustainability information with the chairmen of the risk management, compliance and corporate governance committee (risk committee) and the social and ethics committee. The committee is satisfied that assurance coverage as indicated was obtained from internal and external assurance providers. The Group’s external assurance provider’s independent assurance report is set out in the Group’s integrated report on pages 72 to 74. In the light of this, the committee has no reason to believe that the information on sustainability as contained in the integrated report is not reliable to the extent of the reported assurance.
•	Considered and recommended the integrated report for adoption and approval by the board.

GOING CONCERN STATUS

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Considered the going concern status of the Company and the Group on the basis of review of the annual financial statements and the information available to the committee and recommended such going concern status for adoption by the board. The board statement on the going concern status of the Group and Company is contained on page 5 in the directors’ report.

INTERNAL AUDIT

•	Considered the effectiveness of the internal audit function and monitored adherence to the annual internal audit plan.
•	Reviewed the performance of the chief business risk officer, Mr SA Fakie and was satisfied that he has the necessary expertise and experience to fulfil his role and that he has performed appropriately during the year under review.

FINANCE DIRECTOR AND FINANCE FUNCTION

•	Reviewed the performance of the Group chief financial officers, Mr NI Patel (1 January 2013 to 21 July 2013) and Mr BD Goschen (22 July 2013 to date) and was satisfied that they had/have the necessary expertise and experience to fulfil this role and that they have performed appropriately during the year under review.
•	Considered, and has satisfied itself of the appropriateness of the expertise and experience of the finance function and adequacy of resources employed in this function.

SOLVENCY AND LIQUIDITY REVIEW

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The committee is satisfied that the board has performed a solvency and liquidity test on the Company in terms of section 46 of the Companies Act and has concluded that the Company will satisfy the test after payment of the final dividend.

The committee also considered guarantees issued on behalf of subsidiaries.

Three members of the audit committee are also members of the risk committee. The chairman of the audit committee, who is not a member of the risk committee, does attend meetings of the risk committee.

The Group’s joint external auditors are Pricewaterhouse- Coopers Inc. and SizweNtsalubaGobodo Inc. Fees paid to the auditors for the year under review are disclosed in note 6 of the annual financial statements on page 33.

AF van Biljon
Audit committee chairman

4 March 2014