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King III Compliance

The Board, its committees and our employees conducts the Group’s business with integrity and transparency through applying sound corporate governance policies and practices.

Application of King III principles

The Board supports the Code of Corporate Practices and Conduct as recommended by the King III Report on Corporate Governance for South Africa 2009 (“King III”). In this report the application of King III within the Group and Company as required by the JSE Listing Requirements, is explained as well as the reasons for not applying certain principles set forth in King III. The Board endorses the fundamental principles of good financial, social, ethical and environmental practise as set out in King III.

The Board continues to consider the recommendations of King III with reference to the Group and Company’s size and stages of development. An analysis of the application of the 75 corporate governance principles as recommended in King III is set out below.

 

King III principle

Status

 

Chapter 1 : Ethical leadership and corporate citizenship

 

1.1

The board should provide effective leadership based on an ethical foundation

Applied

1.2

The board should ensure that the company is and is seen to be a responsible corporate citizen

Applied

1.3

The board should ensure that the company’s ethics are managed effectively

Applied

 

 

 

 

Chapter 2 : Board and directors

 

2.1

The board should act as the focal point for and custodian of corporate governance

Applied

2.2

The board should appreciate that strategy, risk, performance and sustainability are inseparable

Applied

2.3

The board should provide effective leadership based on an ethical foundation

Applied

2.4

The board should ensure that the company is and is seen to be a responsible corporate citizen

Applied

2.5

The board should ensure that the company’s ethics are managed effectively

Applied

2.6

The board should ensure that the company has an effective and independent audit committee

Applied

2.7

The board should be responsible for the governance of risk

Applied

2.8

The board should be responsible for information technology (IT) governance

Note 1

2.9

The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards

Applied

2.10

The board should ensure that there is an effective risk-based internal audit

Applied

2.11

The board should appreciate that stakeholders’ perceptions affect the company’s reputation

Applied

2.12

The board should ensure the integrity of the company’s integrated report

Applied

2.13

The board should report on the effectiveness of the company’s system of internal controls

Applied

2.14

The board and its directors should act in the best interests of the company

Applied

2.15

The board should consider business rescue proceedings or other turnaround mechanisms as soon as the company is financially distressed as defined in the Act

Not Applicable

2.16

The board should elect a chairman of the board who is an independent non-executive director. The CEO of the company should not also fulfill the role of chairman of the board.

Applied

2.17

The board should appoint the chief executive officer and establish a framework for the delegation of authority

Applied

2.18

The board should comprise a balance of power, with a majority of non-executive directors. The majority of non-executive directors should be independent

Applied

2.19

Directors should be appointed through a formal process

Applied

2.20

The induction of and ongoing training and development of directors should be conducted through formal processes

Applied

2.21

The board should be assisted by a competent, suitably qualified and experienced company secretary

Applied

2.22

The evaluation of the board, its committees and the individual directors should be performed every year

Note 2

2.23

The board should delegate certain functions to well-structured committees but without abdicating its own responsibilities

Applied

2.24

A governance framework should be agreed between the group and its subsidiary boards

Applied

2.25

Companies should remunerate directors and executives fairly and responsibly

Applied

2.26

Companies should disclose the remuneration of each individual director and certain senior executives

Applied

2.27

Shareholders should approve the company’s remuneration policy

Applied

 

 

 

 

Chapter 3: Audit Committee

 

3.1

The board should ensure that the company has an effective and independent audit committee

Applied

3.2

Audit committee members should be suitably skilled and experienced independent non-executive directors

Applied

3.3

The audit committee should be chaired by an independent non-executive director

Applied

3.4

The audit committee should oversee integrated reporting

Applied

3.5

The audit committee should ensure that a combined assurance model is applied to provide a coordinated approach to all assurance activities

Applied

3.6

The audit committee should satisfy itself of the expertise, resources and experience of the company’s finance function

Applied

3.7

The audit committee should be responsible for overseeing of internal audit

Applied

3.8

The audit committee should be an integral component of the risk management process

Applied

3.9

The audit committee is responsible for recommending the appointment of the external auditor and overseeing the external audit process

Applied

3.10

The audit committee should report to the board and shareholders on how it has discharged its duties

Applied

 

 

 

 

Chapter 4: The governance of risk

 

4.1

The board should be responsible for the governance of risk.

Applied

4.2

The board should determine the levels of risk tolerance

Applied

4.3

The risk committee or audit committee should assist the board in carrying out its risk responsibilities

Applied

4.4

The board should delegate to management the responsibility to design, implement and monitor the risk management plan

Applied

4.5

The board should ensure that risk assessments are performed on a continual basis

Applied

4.6

The board should ensure that frameworks and methodologies are implemented to increase the probability of anticipating unpredictable risks

Applied

4.7

The board should ensure that management considers and implements appropriate risk responses

Applied

4.8

The board should ensure continual risk monitoring by management

Applied

4.9

The board should receive assurance regarding the effectiveness of the risk management process

Applied

4.10

The board should ensure that there are processes in place enabling complete, timely, relevant, accurate and accessible risk disclosure to stakeholders

Applied

 

 

 

 

Chapter 5: The governance of information technology (IT)

 

5.1

The board should be responsible for information technology (IT) governance

Note 1

5.2

IT should be aligned with the performance and sustainability objectives of the company

Applied

5.3

The board should delegate to management the responsibility for the implementation of an IT governance framework

Applied

5.4

The board should monitor and evaluate significant IT investments and expenditure

Applied

5.5

IT should form an integral part of the company’s risk management

Applied

5.6

The board should ensure that information assets are managed effectively

Applied

5.7

A risk committee and audit committee should assist the board in carrying out its IT responsibilities

Applied

 

Chapter 6: Compliance with laws, codes, rules and standards

 

6.1

The board should ensure that the company complies with applicable laws and considers adherence to nonbinding rules codes and standards

Applied

6.2

The board and each individual director should have a working understanding of the effect of the applicable laws, rules, codes and standards on the company and its business

Applied

6.3

Compliance risk should form an integral part of the company’s risk management process

Applied

6.4

The board should delegate to management the implementation of an effective compliance framework and processes

Note 3

 

 

 

 

Chapter 7: Internal Audit

 

7.1

The board should ensure that there is an effective risk based internal audit

Applied

7.2

Internal audit should follow a risk based approach to its plan

Applied

7.3

Internal audit should provide a written assessment of the effectiveness of the company’s system of internal controls and risk management

Applied

7.4

The audit committee should be responsible for overseeing internal audit

Applied

7.5

Internal audit should be strategically positioned to achieve its objectives

Applied

 

 

 

 

Chapter 8: Governing stakeholder relationships

 

8.1

The board should appreciate that stakeholders’ perceptions affect a company’s reputation

Applied

8.2

The board should delegate to management to proactively deal with stakeholder relationships

Applied

8.3

The board should strive to achieve the appropriate balance between its various stakeholder groupings, in the best interests of the company

Applied

8.4

Companies should ensure the equitable treatment of shareholders

Applied

8.5

Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence

Applied

8.6

The board should ensure that disputes are resolved as effectively, efficiently and expeditiously as possible

Applied

 

 

 

 

Chapter 9: Integrated reporting and disclosure

 

9.1

The board should ensure the integrity of the company’s integrated report

Applied

9.2

Sustainability reporting and disclosure should be integrated with the company’s financial reporting

Applied

9.3

Sustainability reporting and disclosure should be independently assured

Note 4

 Notes:

  1. Whilst the Board has implemented an IT governance framework, it is completing the remediation of processes identified as requiring improvement by the independent assurance process.
  2. The annual evaluation for the under review was delayed given the changes made to the Board.  The evaluation will be conducted within the next three months.
  3. Compliance with laws and regulations is addressed within the Group risk management framework.  The Board will look into establishing a separate compliance framework following due consideration of the Group’s compliance risk.
  4. The Board will seek to obtain the required assurance for its sustainability reporting for the year ending 28 February 2017.

Compliance Statement

The Board is satisfied with the extent of the Group’s compliance with King III and The JSE Listing Requirements.