Material issues

Background

Based on the Group's approach to managing a sustainable business, its strategic objectives, stakeholder engagement and risk management, the Group has identified material risks or issues that could potentially affect the business. The Risk Committee is responsible for the overall monitoring, assessing and mitigating of risks within Super Group. In addition, the Group ensures that sufficient insurance is in place.

The risk categories

Super Group classifies the risks that have a material impact on the Group into six strategic categories: Strategic, Human Resources, Financial, Operations, Compliance and IT.

The risk categories can be described as follows:

Material issues

The risk identification process

Each division is responsible for identifying, assessing and recording risks and monitoring procedures aimed at mitigating them. The Group Audit and Risk Officer facilitates risk sessions with each division and ensures that the risks identified have been correctly assessed. Risks are assessed based on the potential impact on the business, financial position and reputation. A scale of 1 to 5 is used where 1 is "Minor" and 5 "Catastrophic". Risks are also assessed on the likelihood of the risk occurring after taking into account controls in place to mitigate them. A scale of 1 to 5 is used, where 1 is "Rare" and 5 is "Almost certain". A risk rated 5 means the controls in place will not prevent the risk from occurring due to factors outside the Group's control.

The GRMC sets out the risk policy detailing the objectives, scope, approach and roles and responsibilities. The GRMC meets three times a year and is chaired by a non-executive director. The membership of this Committee comprises two non-executive directors, the CEO and CFO. The Group Audit and Risk Officer, the Group Legal Manager and the CIO are invited to the meeting.

The Board reviews the list of strategic and critical risks regularly as required by King IV and also approves the risk tolerance of the Group.

Management and mitigation of major risks to the Group 

Land Rover

Risk       Context   Mitigating factors
             
Multinational relationships and a highly competitive local market hinder growth in Supply Chain   Low   Multinational companies operating in South Africa use suppliers of services who are contracted on a global basis.   Continuous focus on customer service and service delivery at all levels.
  Low   The continual requirement from customers to cut costs.   Expanding the competitive product offerings to the market.
      Acquisition of businesses operating in targeted areas of the market that complement the Group's existing offerings.

African socio-economic environment, including commodity cycles

    

 

Understanding the commodity and capital investment cycles.

   Management in Zimbabwe closely monitors trends and cycles.
Drive costs and revenue initiatives to support the achievement of financial targets.
Changing regulatory environment     Medium     Compliance with a wide range of regulatory requirements including licensing, consumer protection, new legislation and AARTO regulations.   The development of new revenue models.
  Specialist regulatory and Government relations consultants that understand the legislative and regulatory environment.
  The Group Company Secretary, who is also the Group's Compliance Officer, is responsible for monitoring all changes to the legal and governance framework.
B-BBEE Code changes and requirements   Low   The B-BBEE Code changes and requirements in respect of procurement make the attainment of the Procurement Score very difficult in cases where a large portion of procurement is from multinationals, especially OEM's.   The Group is engaging with other companies who are similarly impacted to explore solutions to this problem.
Customer concentration   Medium   The Group faces intensive competition in all the markets in which it operates.   Continued efforts to achieve new business.
  Medium  

 

The ability to compete depends on the Group's network, quality of service and the use of market leading technologies.   A wide range of services at competitive prices.
    Continued efforts to offer more value to customers.
    Continual development of IT-based logistics solutions to improve control and monitoring of the Supply Chain by its customers.
General political, economic and industry   Low   Current economic conditions remain uncertain, different sectors of the economy are experiencing varying fortunes.   Where possible, the Group passes the cost of fuel price, toll fee and wage increases to the customers through generally accepted escalation arrangements.
  Low   Infrastructure projects in Southern Africa are not moving to the development stage as quickly as expected.   The Group maintains a conservative Statement of Financial Position and preserves its resources to meet the challenges of the economy and the industry.
   Low   Impact of labour unrest on the logistics industry and industries serviced by the Group.   The Group has a Human Resources function that manages labour force challenges.
Retention of critical management
and skills
   Medium    The skills shortage in South Africa makes it imperative for the Group to retain and develop key management and specialist skills.    The Group focuses on career development, fair reward and education and training to develop its people.
The Group looks to promote from within and ensures that succession planning is implemented in all the business units.
The long-term effect of Brexit on the UK and Eurozone economies Low The uncertainty regarding the Brexit vote as to the timing of implementation and the renegotiation of trade agreements between the UK and Eurozone countries. The Group continues to monitor developments closely.

Risk indicators