Corporate governance

How we govern our business

Bidcorp has a proven way of doing business. Our culture is proactive and entrepreneurial rather than reactive and corporate. At local level, our people are empowered to use their initiative, are held accountable and rewarded accordingly. Our decentralised business model is underpinned by our proven ability to attract, retain and develop self-reliant people who make optimum use of the autonomy Bidcorp provides. Criteria for staff selection and development are atypical. Enthusiasm, the ability to deliver and aptitude for the work take precedence over academic qualifications.

Bidcorp people and our business model are flexible and adaptable. Macro-economic conditions change, so does the business cycle, while the changing tastes and preferences of our customers can have a material impact on demand patterns. Bidcorp therefore expects all operations to be responsive and nimble.

Our competitive position has strengthened and market share gains have been made in numerous markets irrespective of market dynamics – positive or otherwise. Forward momentum is attributable to independent decision making by autonomous teams, depth of local knowledge, early identification of opportunities for expansion of the business base and our relentless quest for quality service at pace.

Bidcorp embraces corporate governance as a way of life rather than a way of putting ticks in the compliance “box”. Stakeholders can only derive full, sustained value if the business is founded on honesty, integrity, accountability and transparency. Bidcorp prizes simplicity. Better focus makes it easier to manage your business and ensure good governance.

A firm basis for robust governance is provided by an appropriate structure that captures the talent and energy needed for continued growth. The key features of this geographically diversified framework are four international regions, supported by a South Africa-based head office and listing on South Africa’s JSE Limited.

Each division is overseen by an independently chaired divisional audit and risk committee. These committees are convened each quarter. They collate information and report into the group structure, ensuring accountability within each division while providing the Bidcorp board with timely information flows. Reporting structures are flat.

How we integrate

Bidcorp recognises the value of an integrated approach to assurance and compliance.

Bidcorp manages the challenge of good governance in a decentralised environment by using a framework that integrates four basic pillars: governance, assurance, risk management and compliance. This framework ensures respect for legislated requirements and regulations yet is flexible enough to accommodate the high level of change and innovation experienced in today’s business environment.

Bidcorp board

 

1. Governance

Bidcorp is fully committed to the four values that underpin good governance: responsibility, accountability, fairness and transparency. Our board charter expresses the board’s promise to fulfil its responsibilities and make itself accountable for all activities. In certain specific, areas the board has delegated responsibility to board subcommittees and divisional committees. These bodies focus on the needs and strategies of the business while meeting the reporting requirements of a listed group.

Mandatory governance requirements are addressed by Bidcorp subsidiaries under the guidance of the Bidcorp group. Review of mandatory functions is carried out by divisional audit and risk committees, which disclose relevant charters, codes, policies and documents. In line with Bidcorp’s decentralised structure, divisional management establishes any additional policies and procedures that may be required.

Role and function of the board

Executive directors implement strategies by taking the necessary operational decisions. Non-executive directors provide an independent perspective and complement the skills and experience of executive directors. Non-executive directors objectively assess strategy, budgets, performance, resources, transformation, diversity, employment equity and standards of conduct. They also contribute to strategy formulation and decision making.

The following directors were appointed to the Bidcorp board on March 10 2016: Messrs PC Baloyi, DDB Band, B Berson, NG Payne, and Mrs CWL Phalatse and H Wiseman. Collectively, the board believes its current mix of knowledge, skill and experience meets the requirement for effective leadership.

The board is chaired by Mr B Joffe, an executive director with many years of experience in leading our organisation. Mr DDB Band has been appointed as our lead independent non-executive director to ensure good governance principles are embraced. In addition, the board comprises a further four independent non-executive directors and two executive directors.

An employment agreement has been put in place for the executive chairman, Mr B Joffe. This contract includes a contract term of three years, normal inflation-related increases and a performance-related bonus. No other executive directors have a fixed-term contract.

In terms of the company’s MoI, the directors scheduled to retire by rotation at the next annual general meeting are Messrs DE Cleasby, B Joffe and Mrs CWL Phalatse.

The board functions in accordance with the Companies Act, the requirements of King III, the Listings Requirements of the JSE Limited and other applicable laws, rules and codes of governance. The board is responsible for, among other things, the governance of risk and information technology and has ensured that the company has an effective, independent audit and risk committee and an effective riskbased internal audit function. On the recommendation of the audit and risk committee, the board has considered and approved the annual integrated report. Based on the report of the audit and risk committee and the written assessment of the internal auditor, the board is satisfied the with the effectiveness of the system of internal control.

Bidcorp’s remuneration philosophy promotes the group’s entrepreneurial culture within a decentralised environment with the aim of achieving sustainable growth at all businesses. The board defines the remuneration philosophy and aligns business strategy and objectives with the overall goal of creating stakeholder value. Fair and responsible remuneration practice is a key area of focus. A key objective is the maintenance of balance between employee and shareholder interests while fostering Bidcorp’s entrepreneurial drive.

The board carries ultimate responsibility for remuneration policy. The remuneration committee operates in accordance with a board approved mandate. The board may refer matters for shareholder approval; for example, new and amended share-based incentive schemes and non-executive directors’ fees. During the year, the board accepted the recommendations made by the remuneration committee.

The board confirms its compliance with specific governance requirements in the disclosures set out below:

Appointment, induction and ongoing training of directors

The board has adopted a rigorous and transparent procedure for considering new director appointments. The selection process considered the required balance of skills and experience and the ongoing process of aligning board composition with group strategy.

The company secretary ensures an appropriate induction programme is available for new directors. The board supports the development of directors. Training is available as required.

Board and board committees’ performance assessment

The performance of the board and board committees is to be annually appraised and considered via the nominations committee. Recent appointments to the board and subcommittees have been favourably received and therefore no formal performance appraisal was performed at this year-end. The board and board committees are functioning effectively and efficiently.

Independence of non-executive directors

The board comprises a majority of independent non-executive directors. The board considered the issue of directorial independence in accordance with the rationale and meaning of King III independence requirements. An assessment of each non-executive director considered salient factors and each individual’s unique qualities and circumstances. The board is satisfied the five non-executive directors are independent.

Chairman and chief executive

No individual has unfettered powers of decision making. Responsibility for running the board and executive responsibility for conducting the business are differentiated. Mr B Joffe is the board’s executive chairman and Mr BL Berson, an executive director, is chief executive. The roles of executive chairman and chief executive are separate and clearly defined.

In view of the chairman’s executive role, a lead independent non-executive director, Mr DDB Band, was appointed to ensure adherence to good governance principles.

Prescribed officers

Due to our wide geographic spread, the nature of the business and the group’s decentralised structure, the directors concluded that there be no prescribed officers of the company appointed at this time.

Directors’ service contracts

B Joffe’s employment agreement includes a contract term of three years, normal inflation-related increases and a performance-related bonus. No other executive directors have a fixed-term contract.

Directors’ and officers’ disclosure of interest in contracts

During the financial year, none of the current directors had any interest in any contract to which the company or any of its subsidiaries was a party. During the financial year, no contracts were entered into in which directors and officers of the company had an interest and which significantly affected the business of the group. The directors had no interest in any third party or company responsible for managing any of the business activities of the group.

Conflict of interest

The board recognises the importance of acting in the company’s best interest and protecting the legitimate interests and expectations of stakeholders. The board consistently applies the provisions of the Companies Act on disclosing and avoiding conflicts of interest. Directors are required to declare their interests annually and, more specifically, at each meeting of the board.

Statutory powers

Section 66(1) of the Companies Act provides that the business and affairs of a company be managed by or be under the direction of its board, which has the authority to exercise all the powers and perform all the functions of the company, except to the extent that the Companies Act or the company’s MoI provides otherwise.

The general powers of the directors are set out in the company’s MoI. The directors have further unspecified powers and authority for matters that may be exercised and dealt with by the company, which are not expressly reserved to shareholders of the company in general meeting.

Insider trading

Through appropriate procedures and communication, the board ensures no director, manager, employee or nominees or members of their immediate family deals directly or indirectly in the securities of the company on the basis of unpublished price-sensitive information nor during any embargo year determined by the board in terms of a formal policy implemented by the company secretary. A list of people who are restricted for this purpose has been approved by the board and is revised from time to time. Dealings in the company’s securities by directors and officers are listed and circulated at every board meeting for noting. The Listings Requirements of the JSE Limited extend obligations on transactions in the company’s securities to include those of any major subsidiary. Directors or officers of the company’s major subsidiaries, whether wholly or partially owned, are also included in the list of directors, company secretary and other officers.

Company secretary

Mrs AK Biggs is the group company secretary, duly appointed by the board in accordance with the Companies Act. The secretariat provides a central source of guidance and advice within the company on business ethics and good governance. The secretariat fosters the highest standard of compliance with statutory and regulatory requirements.

2. Assurance

Bidcorp has developed a robust, independent, risk-based internal audit function that delivers real value add to the group. A risk-based internal audit methodology is applied, with input from divisional management. The methodology is aligned with the organisation’s risk management processes. In accordance with the group’s combined assurance model, the internal audit team liaises with the external auditors, the insurance risk analysis team and other assurance providers to maximise efficiencies in the assurance coverage of key risks.

An annually prepared internal audit plan embraces the principle of combined assurance, and is presented to the audit and risk committee for review and approval. To achieve the objectives of the internal audit processes, the audit and risk committee considers the objectives and rationale that drive the plan.

The Bidcorp internal audit structure provides a progressive and responsive service that objectively evaluates business processes and internal controls. It simultaneously supports management efforts to foster a strong control environment focused on operational excellence. In light of growing reliance on information technology (IT), specialised IT auditing and consulting skills are being developed within the internal audit team. This will continue to be a major area of focus and development.

The purpose, authority and responsibility of the internal audit function are defined in a board approved charter that is consistent with the Institute of Internal Auditors’ definition of internal auditing and the principles of King III. Internal audit focuses on the following principal areas, as required by King III:

  • objective assessment of the effectiveness of the risk management process, internal financial control (including an assessment of the adequacy of accounting records) and overall operational internal control;
  • systematic analysis and evaluation of business processes and associated controls;
  • evaluation of the company’s governance processes; and
  • provision of a source of information, as appropriate, in any instances of fraud, corruption or unethical behaviour and in any cases of irregular activity.

In the past year, internal audit continued to function independently and objectively throughout the group. The internal audit manager within each division, and at group level, reports functionally to the chairman of the audit and risk committee. Unrestricted access to members of the audit and risk committee and executives of the organisation is available to the internal audit function. Regular and separate meetings between the divisional internal audit managers and the chairman of the audit and risk committee took place.

3. Compliance

Bidcorp recognises that potential vulnerability to the risk of statutory and regulatory non-compliance is created by the widespread geographies across which the group operates. Legislative impacts on each business differ from jurisdiction to jurisdiction. Each entity is therefore required to identify the legislative and regulatory requirements that apply to its specific operating environment and the information that must be held in terms of this legislation.

Bidcorp is listed on the JSE Limited. As such, the board annually confirms that the company complies with JSE Listings Requirements. The board places strong emphasis on the highest standards of financial management, accounting and reporting. Financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). On non-financial issues, the company follows the Global Reporting Initiatives (GRI G3.1) sustainability reporting guidelines on economic, environmental and social performance. The board has appointed a social and ethics committee. In addition, the board has placed compliance with social and ethics standards – group-wide, industry-wide and across regions – on the agenda of the audit and risk committee.

The group is committed to implementing King III principles and best practice recommendations. Bidcorp performs an annual review to assess the extent to which the group continues to apply King III principles and recommended practices. This analysis identifies the actions taken to ensure application of governance principles and those principles that will require ongoing attention and action.

Bidcorp has made use of the Institute of Directors Southern Africa’s (IoDSA) recommended Governance Assessment Instrument (GAI) as a self-assessment tool to assess the extent of the application of the principles and practices recommended by King III. Results of this review are included in the summary table overleaf (below).

King III governance register at: June 30 2016

Status update

 

Areas of focus

 

GAI score

Chapter 1: Ethical leadership and corporate citizenship

 

Code of ethics has been adopted by the board.

The tip-offs line is operational and managed by an independent third party in support of the values and principles stated in the code of ethics.

 

A group-wide awareness campaign is planned, highlighting the positive role played by the tip-offs line to date and its future benefits.

 

Applied – AAA

Chapter 2: Boards and directors

 

Principles relating to performance assessments have been applied and will be put into practice over coming year.

Remuneration policy, in line with King III principles, has been approved and adopted.

 

Bidcorp intends to perform a board assessment in 2017 allowing the current board sufficient time to settle and understand the business.

 

Applied –
AAA

Chapter 3: Audit committees

 

Bidcorp has reviewed and updated the composition of the audit and risk committee in accordance with King III recommendations. The committee is independently chaired and has direct lines of communication with both internal and external audit teams. This creates a sound, robust platform for engagement with management and assurance providers.

 

Geographically focused divisional audit and risk committees have been constituted, under the single chairmanship of the group audit and risk committee. This creates opportunities for synergistic growth and implementation of best practice while delivering stronger assurance in the internal financial control and risk management areas.

 

Applied –
AAA

Chapter 4: The governance of risk

 

Divisional audit and risk committees have been established. They meet quarterly and are independently chaired by group audit and risk committee chairman.

 

Ongoing reviews of key material risk exposures are performed. Where necessary, interventions are initiated by the board.

 

Applied –
AAA

Chapter 5: The governance of information technology

 

An IT governance framework has been adopted.

 

Internal audit assurance and review teams report through the divisional and group audit and risk committee structures; supported by specialist third-party assurance providers, as required.

 

Applied –
AAA

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

 

Risk management focuses on the identification and management of an increasingly onerous regulatory universe across Bidcorp’s decentralised, geographically diverse structure.

 

Ongoing investment in training and updates for all staff is a focus of each regional management team across all jurisdictions.

Compliance reporting takes place through the divisional audit and risk committee structure.

 

Applied –
AAA

Chapter 7: Internal audit

 

Internal audit provides an opinion to the audit and risk committee on the current state of internal control, internal financial control and risk management.

Internal audit adopts a risk-based audit approach when scrutinising the risk management process throughout the group.

 

Internal audit continuously reviews the audit approach to ensure it is driven by the key risks of the operational environment.

Upskilling, training and alignment with a changing operational environment are key for internal audit to stay relevant and value adding.

 

Applied –
AAA

Chapter 8: Governing stakeholder relationships

 

Management identifies key stakeholder groups and reports continued engagement processes to the social and ethics committee, while focusing on the communication processes that monitor and strengthen these relationships.

 

Bidcorp management continues to identify and enhance stakeholder communication plans and reporting mechanisms.

 

Applied –
AAA

Chapter 9: Integrated reporting and disclosure

 

Bidcorp uses various media for reporting and disclosure. They include printed and soft copy materials and web-based content.

 

Bidcorp seeks feedback from third-party sources while continually developing its annual integrated report in line with best practice.

 

Applied –
AAA

4. Risk management

The board has delegated the responsibility for risk management to the audit and risk committee. This strengthens the board’s ability to recognise all material risks to which the group is exposed while ensuring the requisite risk management culture, policies and systems are progressively implemented and function effectively. Management is accountable to the board for implementing and monitoring the processes of risk management while integrating them into day-to-day activities. Divisionally, risk processes and risk registers actively focus management on critical issues faced at a business and industry level. These issues are reported to the group audit and risk committee for consideration at board level.

We have integrated the applicable King III recommendations into our risk management function. These recommendations, along with identified group requirements, form part of an ongoing enterprise-wide risk assessment process in support of the group’s philosophy. This ensures risks and opportunities are adequately identified, evaluated and managed at the appropriate level in each business, and that their individual and joint impact on the group is considered.

Our commitment to building and sustaining an ethical organisational culture is entrenched in our vision, mission, strategies and operations. The board has ultimate responsibility for the company’s ethical performance, while executive management is responsible for establishing a well-designed and properly implemented ethics management process.

Ensuring an ethical environment

A prime duty of the board (its committees, directors and officers) and group management is to ensure our Code of Ethics is honoured. The board reviews the code of ethics annually and ensures its continued alignment with Bidcorp values. The code requires the highest standards of integrity, ethics and behaviour, non-discriminatory employment and promotion practices, support for employees through training and development, enabling them to reach their full potential, and proactive engagement on environmental, social and sustainability matters.

As an outward measure of support for and protection of this code and Bidcorp values, the board supports a confidential reporting (whistleblowing) of fraud, theft, breach of ethics and other improper behaviour. This outsourced, independent and confidential tip-offs system enables stakeholders to report unethical, dishonest or improper behaviour, including non-compliance with company policies, as well as corruption and fraud. All reported incidents are investigated by management and, where appropriate, action is taken. In line with legislation, our commitment not to victimise whistle-blowers ensures transparency and promotes ethical conduct. The identity of whistle-blowers is protected by the service provider.

Values