Audit, risk and compliance committee's report

The Audit, Risk and Compliance Committee (ARCC) is pleased to present its report for the financial year ended 31 May 2025.

The ARCC is an independent statutory committee appointed by the shareholders of the Company. In addition to its statutory duties, the Board has delegated further duties to the Committee. This report covers both these sets of duties and responsibilities.

MANDATE AND TERMS OF REFERENCE

The Committee has adopted comprehensive and formal terms of reference which have been approved by the Board and reviewed annually. The responsibilities of the ARCC include:

• examining and reviewing the Group's financial statements and reporting of interim and final results;
• monitor performance against the budget approved by the Board;
• overseeing integrated reporting;
• overseeing the IRCC function;
• overseeing the function of the Group Compliance Officer;
• ensuring that Blu Label implements an effective policy and plan for risk management that has been disseminated throughout the organisation and integrated within day-to-day activities to enhance the Company’s ability to achieve its strategic objectives;
• ensuring that the disclosure regarding risk is comprehensive, timely and relevant;
• ensuring that a combined/integrated assurance model is applied to provide a co-ordinated approach to all assurance activities and appropriately address all the significant risks facing Blu Label;
• reviewing and satisfying itself of the expertise, resources, and experience of the Blu Label finance function;
• overseeing the Group internal audit function; establishing, implementing, and maintaining a compliance function with adequate policies and procedures to ensure compliance with rules, regulations, statutes and procedures applicable to Blu Label;
• overseeing the compliance function to ensure compliance with regulations, statutes, policies and procedures applicable to Blu Label;
• reporting annually to the Board and shareholders describing the Committee's composition, responsibilities, and how they were discharged, as well as any other information required by rule or by law, including the approval of non-audit services;
• resolving any disagreements between management and the auditor regarding financial reporting;
• retaining independent counsel, accountants, or others to advise the Committee or assist in the conduct of an investigation;
• seeking any information it requires from employees – all of whom are directed to co-operate with the Committee's requests – or external parties; and
• meeting with the organisation's officers, external auditors, internal auditors, or outside counsel as necessary.

MEMBERSHIP AND MEETINGS HELD

In accordance with the requirements of the Companies Act, No 71 of 2008 (the Companies Act), Mr JS Mthimunye, Ms NP Mnxasana, Ms LE Mthimunye and Mr SJ Vilakazi were appointed to the Committee by shareholders at the AGM held on 28 November 2024 in the following positions:

• JS Mthimunye (Independent Non-Executive Chairman);
• NP Mnxasana (Independent Non-Executive Director);
• LE Mthimunye (Independent Non-Executive Director); and
• SJ Vilakazi (Independent Non-Executive Director).

The Committee members collectively have experience in auditing, accounting, commerce, economics, law, corporate governance and the general industry. All the members of the ARCC are Independent Non-Executive Directors.

The Committee meets quarterly and the quorum for each meeting is three members present throughout the meeting.

The Joint Chief Executive Officers and the Financial Director of Blu Label are mandatory attendees at the meetings. The external audit partner from SizweNtsalubaGobodo Grant Thornton Inc. (SNGGT) and a director from Deloitte, to whom Blu Label outsources its internal audit function, are also attendees. Internal and external auditors are allowed to address the meeting and have unlimited access to the Committee. During the year, the Committee met with the external and internal auditors, respectively, without the presence of management. The internal audit function reports directly to the ARCC and is also responsible to the Financial Director on day-to-day administrative matters.

Subsequent to the financial year end, JS Mthimunye resigned from the Board of Directors of Blu Label effective 29 August 2025. The Remuneration and Nomination Committee recommended LE Mthimunye to assume the role of Independent Non-Executive Chairman and she accepted the role on 29 August 2025.

STATUTORY DUTIES DISCHARGED

In execution of its statutory duties during the year under review, the Committee:

• nominated and recommended to shareholders the reappointment of SNGGT as independent external auditors, with Mr Alex Philippou, the audit partner, as the registered independent auditor;
• approved the fees to be paid to SNGGT and other external auditors, where applicable, and approved the terms of engagement;
• maintained a non-audit services policy which determines the nature and extent of any non-audit services that SNGGT may provide to the Group;
• discharged those statutory duties as prescribed by section 94 of the Companies Act, acting in its capacity as the appointed Audit Committee of the subsidiary companies of Blu Label;
• considered the Committee's report describing how duties have been discharged; and
• submitted matters to the Board concerning the Company's accounting policies, financial controls, records and reporting, and key risks identified in the ERM process, as appropriate.

OTHER DUTIES TO DISCHARGE

Financial statements and reporting

The Committee:

• monitored compliance with accounting standards and legal requirements and ensured that all regulatory compliance matters had been considered in the preparation of the financial statements;
• reviewed feedback from the JSE proactive monitoring panel and included additional disclosure where relevant;
• reviewed and confirmed compliance with the JSE regulations relating to the sign-off by the CEOs and FD on the internal financial controls;
• reviewed the external auditor's report to the Committee and management's responses thereto and made appropriate recommendations to the Board of Directors regarding actions to be taken;
• reviewed and commented on the annual financial statements, interim reports, paid advertisements, announcements and the accounting policies and recommended these to the Board for approval;
• reviewed and recommended to the Board for adoption the consolidated budget for the ensuing financial year; and
• considered the going concern status of the Company and Group based on 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 in the Directors' report.

External audit and non-audit services

The ARCC has satisfied itself as to the independence of the external auditor, SNGGT, as set out in section 94(7) of the Companies Act, which includes consideration of compliance with criteria relating to independence or conflicts of interest as prescribed by the Independent Regulatory Board for Auditors, including tenure of the audit firm and rotation of the designated individual partner. Requisite assurance was sought from and provided by SNGGT that internal governance processes within the firm support and demonstrate its claim to independence. SNGGT has been the Company's auditor for three years.

To assess the effectiveness of the external auditors, the Committee considered the quality, delivery and execution of the agreed audit plan and variations from the plan, as well as the robustness and perceptiveness of SNGGT in its handling of key accounting treatments and disclosures. The ARCC has been informed of the most recent results of SNGGT's regulatory and firm inspection and is satisfied with the results thereof.

The Committee, in consultation with executive management, agreed to the engagement letter, terms, audit plan and budgeted audit fees for the 2025 financial year.

Any non-audit services to be provided by the external auditors are governed by a formal written policy which incorporates a monetary delegation of authority in terms of non-audit services to be provided.

The ARCC has nominated the reappointment of SNGGT as registered auditors for the 2026 financial year for approval at the AGM. The Committee also satisfied itself in terms of paragraph 3.84(g)(ii) of the JSE Listings Requirements that SNGGT and the designated individual partner are suitable for appointment.

Internal audit and internal controls

Blu Label's internal audit was outsourced to Deloitte for the year and the role of the Chief Audit Executive is fulfilled by the Engagement Director. The ARCC concludes that the Chief Audit Executive and internal audit arrangements are effective and independent.

The Committee:

• reviewed the co-operation and co-ordination between the internal and external audit functions to avoid duplication of work and to work towards an effective and efficient combined/integrated assurance approach;
• examined and reviewed the progress made by internal audit against the approved 2024/25 audit plan;
• considered the combined/integrated assurance arrangements for the 2024/25 financial year;
• approved the risk-based internal audit plan for the 2024/25 financial year;
• considered the effectiveness of internal audit;
• considered internal audit findings and corrective actions taken in response to such findings; and
• reviewed the annual statement from internal audit on the effectiveness of the organisation's governance, risk management and internal control processes.

The ARCC concluded that appropriate financial reporting procedures were established and operating, as contemplated in paragraph 3.84(g)(ii) of the JSE Listings Requirements, which includes consideration of all the entities in the consolidated annual financial statements.

In carrying out its responsibility of ensuring appropriate financial reporting procedures are in place, the ARCC has had oversight of the procedures performed by management to ensure that internal financial controls are adequate in design and operating effectiveness, and has considered all deficiencies reported by management to the ARCC and external auditors together with steps taken to remedy such deficiencies.

The ARCC concludes that the combined assurance arrangement is effective and will continue to evolve as the Group grows.

Risk management and compliance

In relation to the governance of risk, the Committee:

• reviewed the integrity of the risk control systems and ensured that the risk policies and strategies of the Company are effectively managed;
• made recommendations to the Board concerning the levels of risk tolerance and appetite, and monitored the management of risk exposures against these levels;
• reviewed and recommended to the Board the approval of the Integrated Risk Assurance Policy and Framework;
• monitored bi-annual risk assessments and reviewed the consolidated strategic risk profile to evaluate and ensure all material risks had been identified as they pertain to the triple context of Blu Label, and are being managed appropriately;
• provided feedback to the Board on significant risks, including emerging risks, and substantial changes to the Company's risk profile;
• ensured that management considered and implemented appropriate risk responses to significant risks;
• considered the relevance and effectiveness of information and technology governance systems, processes and mechanisms to manage technology-related risks;
• reviewed and recommended to the Board risk information for disclosure, in accordance with King IV principles;
• reviewed legal matters that could have a material impact on the Group in conjunction with Blu Label's legal adviser; and
• reviewed developments in corporate governance and best practice and considered their impact and implications across the Group with particular reference to the principles of King IV.

The ARCC is satisfied that it has dedicated sufficient time to its responsibility towards the governance of risk.

The Committee is satisfied that it has exercised sufficient, ongoing oversight of compliance through:

• the continued appointment of a dedicated Compliance Officer for the Group;
• the approval of the compliance strategy;
• the approval of the regulatory compliance policy and the compliance process;
• annual review of the Company's regulatory universe in order to prioritise regulatory compliance efforts;
• ongoing development and review of compliance risk management plans;
• continuous monitoring of the regulatory environment to ensure that the Group keeps abreast of matters affecting its regulatory environment; and
• identification and monitoring of key compliance risks across the Group.

EXPERTISE AND EXPERIENCE OF THE FINANCIAL DIRECTOR AND FINANCE FUNCTION

The Committee considered the appropriateness of the expertise and experience of the Financial Director and finance function in accordance with the JSE Listings Requirements and governance best practice and has satisfied itself in terms of JSE Listings Requirement 3.84(g)(i) that the Group Financial Director has appropriate expertise and experience.

The ARCC concluded that the finance function is adequately resourced with technically competent individuals and is effective. The Committee confirms that it is satisfied that Mr Dean Suntup possesses the appropriate expertise and experience to discharge his responsibilities as Financial Director. The Committee is also satisfied that appropriate financial reporting procedures have been established and that those procedures are operating effectively.

ANNUAL FINANCIAL STATEMENTS

The Committee has reviewed the accounting policies and financial statements of the Company and the Group and is satisfied that they are appropriate and comply with IFRS Accounting Standards, the JSE Listings Requirements, and the requirements of the Companies Act of South Africa.

The Committee has evaluated the Group annual financial statements of Blu Label Telecoms Limited for the year ended 31 May 2025 and based on the information provided to the Committee, the Committee recommends the adoption of the annual financial statements by the Board.

The significant audit matters considered by the Committee were the reversal of impairment of investment in Cell C Limited and the change of economic interest in Cell C.

These matters were addressed as follows:

Reversal of impairment of investment in Cell C Limited

For the year ended 31 May 2025, management reviewed the carrying value of the Group's investment in Cell C in accordance with the requirements of IAS 36, due to an indication of reversal of the previous impairment as a result of the performance of Cell C. The investment was fully impaired in prior years, with a portion of the impairment being reversed in the 2023 financial year.

The review was performed as follows:

• assessing the recoverable amount as being value-in-use, as Cell C is held-for-trading and not for sale;
• calculating the value-in-use of Cell C using a discounted cash flow model;
• carefully considering the inputs used in deriving the appropriate discount rate and projected cash flows used in the calculation; and
• performing a sensitivity analysis over the value-in-use calculation, by varying the assumptions used (growth rates, terminal growth rate and WACC, i.e. discount rate) to assess the impact of any changes on the valuation performed.

Based on the work performed, management concluded that the balance of the impairment loss in Cell C, recognised in prior years, was no longer observable and could be reversed. The sensitivities were stress tested at year-end and no further adjustments were required.

Change of economic interest in Cell C Limited

Management performed a detailed assessment of the accounting treatment of the effects of the two transactions that gave rise to a net increase in Blu Label's economic interest in Cell C Limited during the 2025 financial year.

The divestment of a portion of TPC's compelling economic interest in Cell C Limited through the SPV1 shares that were held as security, and the recognition of the additional 10% interest in Cell C via SPV5 were considered in terms of IFRS Accounting Standards. The effects of these transactions on Blu Label's control of Cell C were also assessed in terms of IFRS 10 and it was evaluated that the Group still did not have control of Cell C.

INTEGRATED ANNUAL REPORT

The Committee considered the integrated annual report, incorporating the annual financial statements for the year ended 31 May 2025. The Committee considered the sustainability information as disclosed in the integrated annual report and assessed its consistency with operational and other information known to its members. The Committee recommended the approval of the integrated annual report to the Board. The ARCC is satisfied that it has complied with its legal, regulatory and other responsibilities as per its terms of reference and that it has executed its duties in terms of paragraph 3.84(g)(ii) of the JSE Listings Requirements in its assessment of the suitability of the auditor. The Committee members approved the contents of the ARCC report on 30 September 2025.

On behalf of the Audit, Risk and Compliance Committee

LE MTHIMUNYE

Chairlady

30 September 2025