ADHERING TO RESPONSIBLE BUSINESS PRACTICES

COMPLIANCE WITH LAWS AND REGULATIONS

We have divisional compliance trackers to assess the status of legal compliance with applicable material legislation in relation to the operational activities at divisional sites. Any potential areas of non-compliance are reported at divisional audit and risk committee meetings and monitored at KAP compliance committee meetings.

We follow a robust process of reporting and mitigating environmental incidents, including any deviations from legal requirements. Our approach is based on an incident classification system, which includes assessing incidents based on their potential to create significant degradation or pollution of the environment. We collaborate with authorities on environmental inspections conducted at our sites. Our responses to findings include key remedial interventions aimed at sustaining compliance.

The group was compliant with all applicable material legislative requirements during the year.

ETHICAL CONDUCT

Our code of ethics

Our business conduct is underpinned by our code of ethics, which is explained to permanent employees during their induction and must be signed as a condition of employment. Our code of ethics deals with the core ethical principles of the group, which include compliance with laws, conflicts of interest, gifts, anti-bribery, political contributions, accurate financial record-keeping, ethical dealings, human rights and labour practices, health and safety, confidential and proprietary information, environmental stewardship and insider trading. Our code of ethics is supported by separate policies, including our human rights policy, ethics line policy, supplier code of conduct and environmental policy. These policies are available on our website and contain further details on what we deem acceptable and ethical behaviour in both our own operations and our supply chain.

The ethics line contact details are available on the landing page of our website and posters are displayed throughout the group, illustrating behaviours that should be reported and encouraging employees to make use of our ethics line.

Every reported incident is logged and investigated by an internal ethics panel. Where incidents are found to be valid, appropriate actions are taken and referred to law enforcement agencies in accordance with the law. The outcomes of the investigations are communicated internally and reported to the sustainability, social and ethics committee, the audit and risk committee and the board.

During the period, 84 ethics line cases were reported, compared with 59 in the prior year. We attribute the increase in cases to increased awareness of the whistle-blowing mechanism and employees wanting to work in an ethical work environment. Investigations have been concluded for 80% of the cases, of which 19% were found to be valid. Investigations into the remaining cases are ongoing. Although our code of ethics stipulates what is deemed ethical behaviour in the group, we have rolled out an ethics training programme across the group to give our employees practical examples.

ENVIRONMENTAL COMPLIANCE AND INCIDENTS

An environmental incident is an event that may cause harm or potential harm to an environmental receptor, such as air, water, land, wildlife or a local ecosystem; or where our operational practices do not comply with applicable environmental legislation, regulations, standards and applicable codes of practice.

We had three environmental incidents during the year:

• PG Bison Mkhondo: Following a fire on site on 27 July 2024, discarded material was deposited in waste pits. Before the pits could be drained and cleaned, a blockage in the plant caused a large volume of effluent to be directed to the treatment plant, which drained into the already full pits, and then into the attenuation pond. This resulted in the discharge of contaminated wastewater from the pond into the downstream wetland. The Inkomati-Usuthu Catchment Management Agency issued a verbal directive to the site. All effluent discharge was immediately stopped and contaminated water was drained and disposed of at the municipal treatment plant. Additional storage tanks were installed to store excess effluent while additional waste ponds are under construction and rehabilitation started with planting of indigenous seedlings in the wetland. Regular compliance inspections are conducted by an independent party.

• Unitrans: Following an accident, a truck’s fuel pipe was damaged, resulting in a diesel spill of approximately 500 litres into a nearby veld. Reporting in terms of section 30 of the National Environmental Management Act was done.

• Vitafoam Durban (part of Sleep Group): A compliance notice in terms of section 31L of the National Environmental Management Act was served relating to the tank farm used to store chemicals for polyurethane foam production. This was replaced by a variation to the notice under which the site is not required to cease operation, but to comply with, among others, a submitted action plan to finalise an environmental impact assessment, and to make a section 24G application under the National Environmental Management Act. This application has been submitted.

We prioritise the investigation of environmental incidents, followed by the implementation of corrective actions and the strengthening of the control environment. Where necessary, we use learnings to drive behavioural changes at an operational level. We treat incidents that are not resolved as ongoing matters, track the incidents in an environmental compliance register and address these at our divisional audit and risk committee meetings.

These incidents are also reported at the KAP compliance committee meetings with a view to ensuring oversight of actions taken.

RESPONSIBLE PROCUREMENT

We recognise the importance of sourcing materials and services responsibly, in line with our commitments to ethical labour practices, human rights and environmental performance. Our sourcing practices are guided by our supplier code of conduct, which sets out our principles and expectations regarding how existing and new suppliers of goods and services are to conduct business with us.

Our divisions include the supplier code of conduct in their suppliers’ contracts and some also include it in tender documentation or as an onboarding requirement.

SOUND TAX PRACTICES

Our tax strategy

Our tax strategy is to pay the correct amount of tax in the correct jurisdiction while remaining fully compliant with all applicable tax laws in each jurisdiction where the group operates. It is based on the following principles, which are set out in our group tax policy:

• Full compliance with all the tax laws applicable in the jurisdictions in which we operate.
• Ensure that tax is considered in all significant business and investment decisions, including consideration of available incentives and exemptions provided by governments.
• Foster constructive and transparent relationships with tax authorities.
• Avoid over- or underpayment of taxes by applying diligent professional care and judgement to ensure all decisions are well considered and documented.

Our tax strategy, as underpinned by our tax policy, is approved by our audit and risk committee.

Our approach to regulatory compliance

We seek to have and maintain professional, courteous, proactive, transparent and constructive relationships with tax authorities to minimise the extent of disputes, to achieve early agreement on disputed issues when they arise and achieve certainty, wherever possible.

We seek to provide quick, clear and reliable responses to queries raised by revenue authorities, creating an open communication channel and a cooperative atmosphere. Any errors in submissions made are addressed and fully disclosed to the revenue authorities as soon as reasonably possible after they are identified, once all facts have been established.

Where disputes cannot be resolved within the applicable dispute resolution framework, or justified from a commercial and economic perspective, we will pursue litigation.

Tax governance and control framework

Our board has ultimate responsibility for overseeing the group’s tax affairs, with operational responsibility delegated to our CFO, assisted by the tax executive. We manage tax in line with our combined assurance framework, following a risk-based approach and considering materiality levels approved by the board.

The centralised group tax function, reporting to our CFO, is responsible for providing operational guidelines aimed at ensuring a robust control environment, implementing risk management initiatives and supporting local management, who are responsible for everyday tax affairs, in all tax matters.

A tax compliance committee actively oversees, monitors and reviews the group’s compliance with the tax policy. The committee also assesses the potential effect that tax matters may have on the group’s profitability, reputation and sustainability.

Based on the combined assurance framework, a tax assurance framework was developed. The purpose of tax risk management is to identify and manage tax risks associated with the industries and territories within which the group operates to provide the board and KAP audit and risk committee with assurance that global tax risks are appropriately identified and managed and that any potential adverse tax consequences are minimised.

We are constantly building a culture of tax awareness within the group resulting in tax risks being identified and mitigating controls being implemented at an early stage. This is achieved through regular meetings between the tax executive and divisional CFOs and finance teams, as well as through regular group-wide tax-specific communication.

Our approach to public policy advocacy on tax

We are actively involved in the legislative process by commenting on new legislation and guidance issued by tax authorities and by lobbying for legislative change where required, either directly or through representative industry bodies.

Tax disclosures

Our tax disclosures are aimed at providing our key stakeholders with sufficient information to understand our approach to tax and the factors impacting the tax paid by the group.

Please refer to the group effective tax rate reconciliation included as note 10 in our FY25 AFS.

Extent of exposure to countries and jurisdictions recognised for their tax non-transparency and tax haven status

We have a presence in sub-Saharan Africa, Australasia and the United Kingdom. We are not present in countries and jurisdictions recognised for their tax non-transparency or tax haven status. Our operating companies are not present in Mauritius or Singapore. However, we own investment holding companies in these countries for expansion into Africa and other territories.

Government incentives

Through external service providers, the group avails itself of tax incentives provided by the South African government through special allowances in terms of the Income Tax Act, No. 58 of 1962 (“the Income Tax Act”).

The group benefited from the following incentives/allowances provided for in the Income Tax Act during the year: