|Introduction to integrated governance
We are steadily absorbing into our culture the concept of sustainable development. In creating business value for the long term, Bidvest integrates evolving financial, social and environmental needs and expectations. We encourage our entrepreneurs to think about the “sustainable development” of their businesses. They are expected to run their businesses in ways that will not compromise their ability to generate future returns.
Our decentralised, entrepreneurial approach to business is embedded in our cultural DNA and is integral to our success. However, the approach does pose challenges for governance reporting at Group level. The balance between the decentralised approach and the need to report as a Group is delicate and difficult. Reporting coherently as a Group, assessing stakeholder concerns, identifying risks, establishing non-financial materiality, consolidating performance measures, conducting conformance checks are examples of some of these challenges.
In this report, we discuss how we govern our business and what sustainable development issues we consider important. Under the “how we govern our business” section, we deal with:
- The King III and GRI frames of reference
- Ethical leadership
- Decision making in the best interests of the Group
- Risk management
- social issues and ethics
- operating risk
- governance of information technology
- Monitoring and reporting
- Stakeholder engagement
QUICK LINK: Divisional sustainability reports
Material issues are categorised according to the GRI G3 framework. Many issues are material at divisional and operational rather than Group level. This governance report focuses on issues that are aggregated to Group level.
Group-level issues are:
- Economic performance – distribution of value and opportunity, focusing on broad-based black economic empowerment (BBBEE)
- Environmental performance – the impact of climate change, Bidvest’s carbon footprint and other impacts
- Labour practices and decent work – engagement, scarcity of skills, training, career development, health and safety
- Human rights – internally and in the supply chain
- Society – impact of operations on communities, corruption and anti-competitive behaviour
- Product responsibility – customer satisfaction and complaints, customer health, fair advertising and labelling, customer privacy and data security
King III and Global Reporting
Initiative frames of reference
We endorse the King III precept that the full universe of economic, societal and environmental aspects should be integrated into strategic governance in a manner enabling long-term value creation.
The board has not completed nor formally assessed and considered each element of the King III code. On completion we will report on which principles have been applied, which are in process and give reasons for not applying the remainder. King III application is a continuing process that takes place over time and is not a once-off event. The results of our review will be documented in the Group governance manual, with a specific focus on IT standards, remuneration and will contain a formal risk and control framework.
In the normal course of business Bidvest substantially applies King III principles and practices. In a self assessment, using the GRI G3 guidelines and tables of disclosure Bidvest achieved a B+ level of compliance.
QUICK LINK: GRI tables and self assessment
Deloitte & Touche were engaged to conduct an independent assurance on selected sustainable development performance data. On the basis of their reasonable assurance procedures, Deloitte & Touche concluded that the selected sustainable development data was compiled in accordance with corporate policies and procedures and was free from material misstatements
QUICK LINK: Independent assurance
The board ensures the Group complies with JSE listing requirements, the Companies Act, Act No 51 of 1973, the Corporate Law Amendment Act, Act 24 of 2006 in South Africa and relevant legislation in other jurisdictions.
At Bidvest, corporate governance is a way of life rather than a set of rules. Stakeholders can only derive full, sustained value from a business founded on honesty, integrity, accountability and transparency. Bidvest is committed to applying good corporate governance principles in a manner that complements its entrepreneurial flair.
Code of conduct
A prime duty of the board, its committees, directors, officers of the Group and managers is to ensure our code of conduct is honoured.
The code demands:
- the highest standards of integrity and behaviour in dealings with stakeholders and wider society;
- business conduct based on fair commercial practice;
- that we deal only with business partners that follow ethical practice;
- non-discriminatory employment practices and promotion;
- corporate governance of employees to realise their potential through training and development; and
- proactive engagement on environmental, social and sustainability matters.
Code of ethics
Our code fosters Group-wide business practice and requires:
- regular and formal identification of ethical risk areas;
- development and strengthening of monitoring and compliance policies, procedures and systems;
- easily accessible, confidential and non-discriminatory reporting (whistle-blowing);
- alignment of the Group’s disciplinary code with its code of ethics;
- integration of integrity assessment with selection and promotion;
- induction of new appointees;
- training in ethical principles, standards and decision making;
- regular internal audit monitoring of compliance with ethical principles and standards;
- reporting to stakeholders on compliance; and
- independent verification of conformance to our principles and ethical behaviour.
Our value system promotes:
- Accountability to employees and shareholders
- Business growth
- Entrepreneurship and innovation
- Non-discrimination and equal opportunity
- Fairness and honesty in stakeholder interaction
- Respect for human dignity, human rights, social justice and environment
- Service excellence, creating an exceptional place in which to work and do business
- Transparency and open lines of communications
Specific business ethical issues (corruption, fraud, theft and anti-competitive behaviour) are reported on under the “society” section within “Group-wide material issues”.
Decision making in the best interests of the Company
Board of directors
The board comprises nine independent non-executive directors, five non-executive directors, 10 executive directors and one alternate independent, non-executive director.
The roles of chairman and chief executive are distinct.
Decentralised decision making, the emphasis on independence and the character of individual directors foster open and robust governance. Decentralisation is also a mechanism to ensure continuity while capturing the experience of successful entrepreneurs who remain committed to the businesses they helped to build. In addition to divisional chief executives, key operational executives either sit on the board or attend by invitation.
Executive directors implement strategies and operational decisions.
Non-executive directors provide an independent perspective and complement the skills and experience of executive directors. They objectively assess strategy, budgets, performance, resources, transformation, diversity, employment equity and standards of conduct. They also contribute to strategy formulation and decision making.
The board acts in the best interests of the Group at all times. It gives strategic direction, appoints the chief executive and non-executive chairman and ensures succession planning. Non-executive directors ensure the chair encourages proper deliberation of all matters requiring board attention.
QUICK LINK: Board committees
Board functions are governed by charters that require annual self-assessment by the chairman and directors. The board has a duty to ensure the business remains a going concern and thrives. The board must retain full and effective control of the Group, manage risk and implement plans through a structured approach to reporting and accountability.
An attendance register is included in the directors’ report of the annual report.
The board is assisted by board committees, to which specific responsibilities are delegated, as documented in the board committee charters.
Board charters guide the:
- Board of directors
- Executive committee
- Audit committee
- Nomination committee
- Remuneration committee
- Acquisition committee
- Risk and sustainability committee
- Transformation committee
The board and its committees are supplied with complete, relevant and timely information in order to discharge their duties effectively. Directors have unrestricted access to Group information, records and documents. Non-executive directors have access to and are encouraged to meet management. All directors may seek the advice and services of the Group secretariat. An agreed procedure enables directors to obtain independent professional advice at Group expense, as necessary. Group policy, in line with the Insider Trading Act, prohibits directors, officers and selected employees from dealing in securities for a designated period preceding the announcement of the Group’s financial results or any period of corporate activity. The policy extends these prohibitions to trading in securities where the Group has a material interest in another publically listed entity.
The board defines levels of materiality, reserving specific powers and delegating other matters with the necessary written authority to management. These matters are monitored and evaluated regularly.
The Group secretariat provides the board and individual directors with detailed guidance on the proper discharge of their responsibilities.
The board ensures the Group has the necessary mechanisms in place to ensure it complies with relevant laws, regulations and codes of business practice and that communication with shareholders and stakeholders is open and prompt and that substance prevails over form.
The board identifies the Group’s key risk areas and key performance indicators.
Through the audit and risk and sustainability committees, the board regularly reviews processes and procedures to foster effective internal systems of control, enhance its decision making and ensure reporting accuracy. The board identifies and monitors non-financial factors relevant to our business and reviews appropriate non-financial information.
Qualitative performance factors include broader stakeholder concerns.
Our remuneration philosophy promotes the Group’s entrepreneurial culture within a decentralised environment with the aim of achieving sustainable growth within all businesses. Our philosophy emphasises the fundamental value of our people and their role in attaining this objective.
The board defines the remuneration philosophy and aligns business strategy and objectives with the overall goal of creating shareholder value. We seek a balance between employee and shareholder interests while supporting entrepreneurial drive to ensure fair and responsible remuneration practices.
Deliberations of the remuneration committee are informed by performance reviews at absolute and relative levels – from individual, divisional and Group perspectives.
A critical success factor for the Group is its ability to attract, retain and motivate the talent required to achieve strategic and operational objectives. Both short- and long-term incentives are used to this end.
Delivery-specific short-term incentives are viewed as strong drivers of performance. A significant portion of top management’s reward is variable and is determined by the achievement of realistic profit targets together with an individual’s personal contribution to the growth and development of their immediate business and the wider Group.
Long-term incentives align the objectives of management and shareholders for a sustained period.
QUICK LINK: A closer look at the remuneration committee
The directors have ascertained that the Group has sufficient resources to maintain the business for the future and confirm that the business is a going concern. The board has minuted the facts and assumptions used in the assessment of the Group’s going-concern status at the financial year-end.
Auditing and accounting
The board ensures that the auditors observe the highest business and professional ethics and maintain their independence.
The Group uses external auditors in combination with the internal audit function. Management encourages unrestricted consultation between external and internal auditors.
The audit committee reviews interim and final financial statements to ensure they accurately reflect our financial position in line with Group accounting policies and in compliance with International Financial Reporting Standards. The committee then recommends to the board the publication of such results.
The committee also assesses whether significant statutory and financial risks have been identified and are being monitored and managed through internal financial controls, and that appropriate standards of accounting, governance, reporting and compliance are in operation.
The audit committee determines the purpose, authority and responsibility of the internal audit function under the internal audit charter. Most divisional internal audit functions are performed in-house under the guidance and coordination of the Group internal audit manager. The committee reviews the scope and coverage of the internal audit function, making recommendations where necessary.
The audit committee recommends to the board, for its consideration and acceptance by shareholders, the appointment of external auditors. The audit committee also sets out the principles for the performance of non-audit services by the external auditors. The audit committee reviews both the Group and divisional audit committee reports.
The Group has adopted the principle of having one set of auditors per division, and has rationalised down to two (Deloitte & Touche and KPMG Inc).
Deloitte & Touche are the Group’s lead auditors. The committee has reviewed and confirmed the independence and objectivity of the external auditors. Accordingly, Deloitte & Touche are proposed as the Group auditors for the coming financial year.
Each division has its own audit committee, operating under a delegated authority of the Group audit committee. The divisional audit committees report to divisional boards and the Group audit committee. Divisional audit committees have at least one member who is a non-executive to the division. A non-executive presides over the divisional committees.
The audit committee is made up solely of independent non-executive directors.