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 Bidcorp autonomy.
Bidcorp managers are independent-minded, thoroughly schooled in their market and business, and noted for their ability to maximise trading opportunities. They do not require “hand-holding” from the centre.
Criteria for staff selection and development are atypical. Enthusiasm, the ability to deliver and aptitude take precedence over academic qualifications.
Bidcorp people and our business model are flexible and adaptable. Economic conditions change, so does the business cycle, while changing customer tastes and preferences can impact demand. Bidcorp therefore expects all operations to be responsive and nimble.
Our competitive position has strengthened in numerous markets irrespective of market dynamics – positive or otherwise. Growth is driven by independent decision making by autonomous teams, local knowledge, early identification of opportunities for expansion and our relentless quest for quality service at pace.
Bidcorp embraces rigorous 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. Clearer focus facilitates both good management and good governance.
Structures that capture the talent and energy needed for continued growth provide a firm basis for robust governance. The key features of this geographically diversified framework are four divisions, supported by a South Africa-based corporate office and listing on South Africa’s JSE Limited.
Each division is governed by an independently chaired divisional audit and risk committee. These committees convene each quarter. They collate information and report into the group structure, ensuring accountability within each division while providing Bidcorp’s board with timely information. 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 rigorous application of a framework that integrates four basic pillars: governance, assurance, compliance and risk management. This framework ensures respect for legislated requirements and regulations yet is flexible enough to accommodate change and innovation.
Our autonomous teams habitually share best practice. This is not mandated. It is a function of robust communication between managers in the same industry who face similar challenges. Our people are pragmatists with the knowledge and experience to recognise scope for improvement and implement necessary change – whether the concepts are independently developed or spring from shared experience. These considerations apply in business and the sphere of corporate governance.
Group company secretary
Key governance compliance summary
1 Bidcorp commits fully 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 specific areas, the board delegates 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 group guidance. Review of mandatory functions is conducted 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, risk oversight, diversity, employment equity and standards of conduct. They also contribute to strategy formulation and decision making.
The following changes were made to the Bidcorp board during the period under review: Mrs Dolly Doreen Mokgatle (October 4 2016) and Mr Stephen Koseff (August 16 2017) were appointed and Mrs Lorato Phalatse (November 9 2016) retired. The board believes its current mix of knowledge, skill and experience meets the requirement for effective leadership.
The board is chaired by Mr Brian Joffe, a non-executive director with many years of experience in leading our organisation. Mr Doug Band is the lead independent non-executive director to ensure good governance principles are embraced. A further five independent non-executive directors and two executive directors sit on the board. No executive directors have a fixed-term contract.
Key governance compliance summary
The board has a rigorous and transparent procedure for considering new director appointments. The selection process in line with the newly adopted diversity policy, considers the required balance of skills and experience and the ongoing task 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 were 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 IV’s independence recommendations. Assessments of each non-executive director considered salient factors and each individual’s unique qualities and circumstances. The board is satisfied that the majority of the 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 the business are differentiated. Mr Brian Joffe is the board’s non-executive chairman and Mr Bernard Berson, an executive director, is chief executive. The roles are separate and clearly defined. In view of the chairman’s non-independent role, the board has a lead independent director, Mr Doug Band, appointed to ensure adherence to good governance principles.|
|In view of our wide geographic spread, the nature of the business and the group’s decentralised structure, the directors concluded that no prescribed officers of the company be appointed at this time.|
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 and no contracts were entered into in which directors and officers of the company had an interest and which significantly affected group business. The directors had no interest in any third party or company responsible for managing any of the group’s business activities.|
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 conflict-of-interest disclosure and avoidance. Directors are required to declare their interests annually and at each board meeting.|
|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 directors’ general powers 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.
|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 JSE Listings Requirements extend obligations on transactions in the company’s securities to 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.|
|Ms Ashley Biggs is the group company secretary, appointed by the board in accordance with the Companies Act. The secretariat provides a central source of guidance and advice on business ethics and good governance while fostering the highest standard of compliance with statutory and regulatory requirements.|
Under the company’s MoI, the directors scheduled to retire by rotation at the next annual general meeting are Mr Paul Baloyi and Mrs Helen Wiseman.
The board functions in accordance with the Companies Act, the recommendations of King IV, the JSE Listings Requirements and other applicable laws, rules and codes. The board is responsible for, among other things, the governance of risk and information technology and has ensured the company has an effective, independent audit and risk committee and an effective risk-based 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 audit and risk committee report and the internal auditor’s written assessment, the board is satisfied with the effectiveness of the internal control system.
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 remuneration philosophy and aligns business strategy and objectives with the overall goal of creating stakeholder value. Fair and responsible remuneration practice is a key focus area. The objective is to maintain a balance between employee and shareholder interests while fostering Bidcorp’s entrepreneurial drive.
The board carries ultimate responsibility for remuneration policy and the remuneration committee follows 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 remuneration committee’s recommendations.
2 Bidcorp has developed a robust, independent, risk-based internal audit function that applies a risk-based internal audit methodology, 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 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. The committee also considers the plan’s objectives and rationale.
Bidcorp’s 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 continually developed within the internal audit team.
The internal audit function’s purpose, authority and responsibility are defined in a board-approved charter that is consistent with the Institute of Internal Auditors’ definition of internal auditing and King IV principles.
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 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 took place between divisional internal audit managers and the chairman of the audit and risk committee.
3 Bidcorp recognises that geographical diversity creates potential vulnerability to the risk of statutory and regulatory non-compliance. Legislative impacts on each business differ from jurisdiction to jurisdiction. Each entity is therefore required to identify the requirements that apply to its specific operating environment and the information that must be held in terms of this legislation.
The board annually confirms that Bidcorp complies with JSE Listings Requirements and 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 economic, environmental and social issues, the company follows Global Reporting Initiatives (GRI G3.1) sustainability reporting guidelines. The board has a social and ethics committee and placed compliance with social and ethics standards – groupwide, industry-wide and across regions – on the audit and risk committee agenda.
Bidcorp performs an annual review to monitor continued alignment with King IV principles and best practice recommendations. This analysis identifies the steps taken to ensure the application of governance principles and those principles requiring ongoing attention and action.
Ensuring an ethical environment
It is a prime duty of our board (its committees, directors and officers) and group management to ensure our code of ethics is honoured.
The board reviews the code 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.
In support of this code and Bidcorp values, the board supports the confidential reporting of fraud, theft, corruption, breach of ethics and improper behaviour. This outsourced and independent “whistle-blowing” system enables stakeholders to report suspect behaviour, including non-compliance with company policies. All reported incidents are investigated by management and, where appropriate, action is taken. In line with legislation, our pledge not to victimise whistle-blowers ensures transparency and promotes ethical conduct. The service provider protects the identity of whistleblowers.
ISS QualityScore for
Bid Corporation Limited
As of July 1 2017
Scores indicate decile rank relative to index or region. A decile score of 1 indicates lower governance risk, while a 10 indicates higher governance risk.
ISS Governance QualityScore is an independent quantitatively-driven scoring solution designed to rank governance risk. Scores are used by global investors to identify and manage portfolio risk.
4 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 identification and risk processes focus management on critical issues at a business and industry level. These issues are reported to the group audit and risk committee for consideration at board level.
Applicable King IV recommendations are integrated into the risk management function. These recommendations and 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.
King IV application register summary
Leadership, ethics and corporate citizenship
1. Ethical leadership
|The directors hold one another accountable for decision-making based on integrity, competence, responsibility, fairness and transparency through their commitment to lead the company based on the King IV principles. The chairman and lead independent director oversee this process on an ongoing basis.|
Performance and reporting
4. Strategy and performance
|This annual integrated report demonstrates how performance is achieved through the strategic initiatives. Bidcorp sets and achieves its strategic initiatives with reference to its risks and opportunities. The board assesses the outcomes from its business model continuously and adapts it as required.|
Governing structures and delegation
6. Role of the governing body
|The board serves as the focal point and custodian of governance. Its role and responsibilities and execution of duties are set out in the board charter. The board is satisfied with the current board composition bringing the optimal mix of knowledge, skills, experience, diversity and independence. The board delegates responsibility to board subcommittees and divisional committees. The performance of the board is to be annually appraised via the nominations committee.|
Governance functional areas
11. Risk and opportunity governance
|The board, recognises the importance of risk management as it is linked to the strategy, performance and sustainability of the company. Delegated by the board, the audit and risk committee delegates to management the implementation of processes to ensure that the risks are identified and managed within acceptable parameters. The board carries ultimate responsibility for the remuneration policy, referring some matters for shareholder approval, and delegating the remuneration policy rollout to the remuneration committee.|
|The board is responsible for the management of stakeholder relationships; delegated to the management of each business to achieve effective stakeholder relationships with material stakeholders and to balance their legitimate and reasonable needs, interests and expectations. Management proactively encourages shareholder engagements.|
Nature of relationship
- Local management engages with customers of their business
- Call centres
- Independent complaints channels
- Tip-offs ethics line (firstname.lastname@example.org)
- Bidcorp admin email address (email@example.com)
- Bidcorp website (www.bidcorpgroup.com)
- Compliance with social, environmental and human rights standards
- Compliance with consumer protection legislation in all Bidcorp jurisdictions
- Support of our customer-centric ethos
- Customers increasingly expect “smart green solutions” across all products and geographies
- Continuous monitoring of call lines and email addresses
- Staff training on new legislation
- Customer service improvements identified and actioned
- Engagement in new electronic media initiatives, including blogs, social and mobile media communications
investors and analysts
Nature of relationship
- Investor meetings
- Online updates/communications
- Need to communicate group strategy, group performance and significant non-financial issues
- Inclusion of non-financial issues in annual integrated report
- Assessment of non-financial data collection for reporting
Nature of relationship
- Commitment to reduce environment impacts
- Group-wide focus, with reporting to board level to ensure this remains a top priority
- Need to cut energy, fuel, water and paper usage
- Recycling opportunities
- Identification of industry-specific environmental and sustainability initiatives
- Cost reduction, elimination of duplication and reduced water usage included in business strategies
- Capex spend includes a commitment to improve energy efficiencies
- Quarterly reporting metrics increased and closely monitored
- Staff awareness of sustainability issues heightened and maintained
Nature of relationship
- Proactive interaction and communication at each business
- Group level engagement on overarching issues such as taxation
- Interaction with business associates
- Need to meet requirements of national authorities and regulators
- Taxation issues
- Employment equity plans (in South Africa)
- Crime and fraud prevention
- Proactive consultations
- Engagement with industry-specific SETAs (in South Africa) to train and potentially hire qualified candidates
Nature of relationship
- Ongoing communication by local management with suppliers on trends and changing customer requirements
- Need for clear communication channels providing accurate, timely information to all parties
- Joint pursuit of efficiencies
- Long-term sustainable support of small and/or black suppliers (in South Africa)
- Need to support local sourcing
- New electronic media initiatives
- Supportive relationships with small and/or black business to ensure their sustainability
- Continued efforts to streamline logistics chain
Nature of relationship
- Employee surveys
- Health and safety interaction
- Customer visits; feedback from sales representatives and drivers
- Close involvement of local managers with local teams
- Employment equity forums (South Africa)
- Trade union engagement
- Market-related remuneration
- Group policy to ensure good employee relationship
- Moving from awareness of employee issues to action on these issues
- Health and safety
- Reporting on fatalities
- Reporting on lost-time injuries, resignation and fatalities statistics
- Retention of a well-trained and equipped workforce
- Stepped-up health and safety training
- Effective mobile communication tools identified and introduced
- Focus on reduction of work-related injuries
- Career pathing and training initiatives across each division
- Graduate recruitment programmes
Nature of relationship
- Interaction to explore community employment opportunities
- Support of community projects
- Direct local business engagement with communities (a benefit of Bidcorp’s decentralised structure)
- Employment opportunities
- Social and educational upliftment
- Healthy eating campaigns
- Disaster management
- Senior citizen support
- Alignment of businesses with the communities they serve
- Continual reinforcement and implementation of a two-tier CSI strategy:
- Corporate supports a number of overarching worthy causes
- Individual businesses support community-based projects
Partners and potential partners
Nature of relationship
- International, regional and industry contacts
- Need to scrutinise prospects for entry into new markets
- Potential to better serve customers by forming relationships, enabling us to anticipate and address evolving needs
- Communication with brand principals, industry leaders and entrepreneurs
- Constant evaluation of market developments, new technologies and solutions