GENERAL BUSINESS INFORMATION AND BACKGROUND:

South African Golden Brewers (Pty) Ltd was founded in 1895 as Imbizo Brewers to serve a

growing market of miners and prospectors in and around Johannesburg. Two years after its

formation, it became the first company of its kind to list on the Johannesburg Stock Exchange

(JSE). The company operates 7 breweries and 42 depots in South Africa with an annual

brewing capacity of 3.1 billion litres. Its portfolio of beer brands meets the needs of a wide

range of consumers and includes brands rich in heritage such as Tembisa Gold, Alexander

Pilsner and Carling Green Label.

Additional Taxation information

Ms Kgomotso Moswane is one of the company's executive directors. She has requested a

meeting with you for 3 September 2021 in order to assist her with her individual tax return.

You have cleared a three-hour timeslot in your diary for her and informed her that you will

send her a list of questions and requests for personal details before that meeting. At the followup meeting (scheduled for 15 September) you will finalise her tax submission.

Additional Financial Management information

You are the Chief Financial Officer of South African Golden Brewers (Pty) Ltd. You recently

attended a board meeting in which the concept of risk and return was discussed. The extract

from the minutes of the meeting are presented below.

Extract information from the minutes of Mid-year Board meeting.

Minutes of meeting

Date: 10 July 2021

Time 09:00

Chairperson: Joy Modiba

1. Welcome

Joy Modiba welcomed all the board members.

2. Apologies

No apologies were received.

3. Minutes of previous meeting

Matters from prior meeting were discussed and changes to the minutes are to be

communicated accordingly.

4. Matters arising from previous meeting

No matters arising.

5. Investment matters

5.1 Project Risk and Returns

Joy Modiba stated that the current economic conditions pose a serious risk to the company's

returns. The board should consider diversifying its investments in order to mitigate the

overall company risk. Members of the board are therefore encouraged to seek an

understanding of the concept of risk, returns and diversification in order to preserve and

eventually maximize shareholder's value.

Nthabiseng Sono (The Social and Ethics Chairperson) said she doesn't understand why

risk should be mitigated as she is of the opinion that the project with the highest risk will

always generate the highest returns. Shareholder value is only maximized when high risk

projects are taken. Beta is a measure of risk. The fact that beta is included in the calculation

of the cost of capital, means that risk cannot be eliminated.

6. Closing: Next 10 October 2021

Additional Accounting information

Please see the required for Accounting below.

Additional Governance information

Part A:

Below you will find a summary from the minutes of meetings for the third board meeting of

Imbizo Brewers for this financial year:

Imbizo Brewers (Pty) Ltd Board meeting

21 August 2021 at 14:00

Boardroom D Ring 621

Johannesburg

Attendees: All governing body members were present.

Matters discussed at the meeting:

1. Audit vs Independent review of Amanzi Amtoti;

The Chief Executive Officer (hereafter CEO) informed all the directors present at the

meeting that according to the Companies Act not all companies are subject to an audit

and have a choice whether the company should be audited or independently reviewed.

The CEO also mentioned that independent reviews are much less onerous and more

cost effective compared to audits. All the directors voted in favour of Imbizo Brewers

being independently reviewed for the 2021 financial year to save on the audit fees.

2. Appointment of an auditor:

The CEO informed the directors that since they have decided that Imbizo Brewers will

be subject to an independent reviewed it is not necessary for them to appoint an auditor.

All the directors voted in favour of this decision.

Closure

After all matters were discussed the meeting was adjourned.

For a detailed copy of the minutes of the meeting for the first board meeting, please contact

Ms Pariksha Naidoo (company secretary of Imbizo Brewers).

Part B:

Imbizo Brewers have tried their best to ensure they apply the King IV Report on Corporate

Governance for South Africa 2016 (hereafter King IV), seeing that they are listed on the JSE.

The CEO mentioned to you that he was not sure if Imbizo Brewers is applying the correct

principles in terms of King IV. The CEO mentioned that Ms Pariksha Naidoo has compiled a

report on the governance practices for Imbizo Brewers.

Company Secretary Report

A - Detailed description of the matters that were discussed at the first board meeting:

The CEO presented the governing body with the following information for the 2021 financial

year:

Imbizo Brewers had a turnover of R200.2 million for the financial year;

Imbizo Brewers currently have 6 directors;

The employees at the beginning of the financial year was 140 and at the end of the

financial year the employees went down to 60;

The amount Imbizo Brewers owed to third parties at the end of the financial year

was R15.25 million;

All the individuals with a direct and indirect interest in Imbizo Brewers at the end of

the financial year was 40;

The CEO informed the directors that Imbizo Brewers would be able to save even

more on the costs, as their in house accountant who is currently registered with the

South Africa Institute of Business Accountants (hereafter SAIBA) will be able to

perform the independent review for Imbizo Brewers.

B - Report on governance practices for Imbizo Brewers in terms of King IV:

The following governance practices has been implemented by Imbizo Brewers:

The governing body decided the following:

o That it would not be necessary for Imbizo Brewers to implement ethical

policies as they have never had a problem with employees not being ethical;

and;

o That they would not disclose anything in relation to their corporate citizenship

as they are corporate citizens and do not have to prove it to anyone, and as

a result of this they will not issue an integrated report either.

In terms of the composition of the governing body, Imbizo Brewers has implemented

the following:

o The governing body would be made up with only male non-executive

directors with the exception of the CEO; and

o The members that serve on the governing body would not be subject to

rotation as Imbizo Brewers feel it's better to have the same individuals on the

governing body to ensure that they are familiar with Imbizo Brewers;

All the members on the governing body was elected by the Chairman based on his

relationship with each individual;

The following board committees has been appointed:

o Audit committee (it was decided that the audit and risk committee will be

combined);

o Nomination committee; and

o Remuneration committee.

The composition of the board committees are as follows:

o The audit committee has two members both of which are independent nonexecutive directors. One of the directors is an advisor to the governing body

in terms of financial matters so it was a perfect fit for him to serve on the audit

committee.

o The nomination committee has four members, which consists of a mix of

executive members and non-executive members.

o Both the nomination and remuneration committee is chaired by the chairman

of the governing body.

The performance evaluations for the governing body and the board committees only

be done in 5 years, as everyone is working from home, and will probably work from

home for some time, due to COVID. So the evaluations are difficult at this point in

time.

The implementation of a remuneration report will only be dealt with in the next

financial year.

Questions:

I need help please to write a report to the directors of Imbizo Brewers to address the following:

Discuss the contraventions in terms of the

Companies Act 71 of 2008 and provide suitable

recommendations for the contraventions. Your

recommendations must include specific guidance

from relevant sections of the Companies Act 71 of

2008.

Explain whether you agree with the director's

decision for Imbizo Brewers to be independently

reviewed. In your answer, provide an explanation

on who will be eligible to perform the audit or the

independent review.

Based on Ms Pariskha Naidoo report on the

governance practices that Imbizo Brewers have

implemented, identify and explain any concerns in

terms of the relevant principles in terms of King IV

and provide recommendations on how they can

improve these principles.