Bidcorp: a world class international foodservice presence.

ESG review

Governance

1. Governance

Bidcorp commits fully to the four values that underpin good governance: responsibility, accountability, fairness and transparency. Our board charter, compliant with legislative, regulatory and governance guidelines, expresses the board's promise to fulfil its responsibilities and make itself accountable for all activities. In specific areas, the board delegates responsibility to standing committees 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 Bidfood management under group guidance through the divisional audit and risk committees' approval of relevant charters, codes, policies and frameworks. In line with Bidcorp's decentralised structure, operational management develops business specific 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.

There were no resignations or appointments to the Bidcorp board during the period under review. During the year Mr B Joffe retired from the Bidcorp chairmanship on March 31 2018, in line with the announced transition arrangement. The board was pleased to announce Mr S Koseff, an independent non-executive director, accepted the invitation to assume the role of chairman. Mr B Joffe will continue as a non-executive member of the board. The board believes its current mix of knowledge, skill and experience meets the requirement for effective leadership.

The board comprises of an independent non-executive chairman, lead independent non-executive director and a further four independent non-executive directors,
one non-executive director and two executive directors.

Under the company's MoI, the directors scheduled to retire by rotation at the next annual general meeting are Mr DDB Band, Mr BL Berson and Mr NG Payne.

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 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 board carries ultimate responsibility for the remuneration policy and the remuneration committee follows a board-approved mandate. The board refers new and amended share-based incentive schemes and non-executive directors' fees for shareholder approval. During the year, the board accepted the remuneration committee's recommendations.

2. Assurance

Bidcorp has developed a robust, independent, risk-based internal audit function that applies a risk-based internal audit methodology, with input from divisional management. 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 key risks assurance coverage.

An annually prepared internal audit plan embracing the principles of combined assurance is presented to the audit and risk committee for consideration and approval.

Bidcorp's internal audit structure provides an independent and proactive service that objectively evaluates business processes and internal controls. It supports management efforts to foster a strong control environment focused on operational excellence. In light of growing reliance on information technology (IT), our internal audit team have embraced new artificial intelligence technologies, and even robotics, to provide assurance in this environment.

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. Internal audit functions 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. The internal audit function has unrestricted access to members of the audit and risk committee and executives of the organisation. Regular meetings take place between the internal audit managers and the chairman of the audit and risk committee.

3. Compliance

Bidcorp recognises that geographical diversity creates potential vulnerability to the risk of statutory and regulatory non-compliance. As the impacts differ in the various jurisdictions, each entity is required to identify the requirements which 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 the JSE Listings Requirements and places strong emphasis on the highest standards of financial management, accounting and reporting. On economic, environmental and social issues, the company follows Global Reporting Initiatives sustainability reporting guidelines. The board has a social and ethics committee and ensure quarterly compliance reporting with social and ethics standards – group-wide, industry-wide and across our geographics – 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

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.

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 and proactive engagement on environmental, social and sustainability matters.

In support of this code and Bidcorp's values, the board supports the confidential reporting of fraud, theft, corruption, breach of ethics and improper behaviour. This outsourced and independent "whistleblowing" system enables stakeholders to anonymously 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 whistleblowers ensures transparency and promotes ethical conduct.

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.

Risk identification and risk processes focus management on critical issues at a business and industry level. These issues are reported to the 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. Risks and opportunities are identified, evaluated and managed at the appropriate level in each business. Consolidating the individual business risks to consider the joint impact on the group is reviewed against the group-wide defined risk appetite and tolerance.

King IV and governance compliance summary

Bidcorp has applied its collective mind to the principles of King IV and has detailed the journey to date in the online King IV report. The table below summarises the key principles of King IV and includes the relevant JSE Listings Requirements disclosures as related to the governance processes in place. The table below is not an exhaustive list of the processes in place, but rather highlights those specific disclosures required.

1. Leadership, ethics and corporate citizenship
The Bidcorp 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.
✓ Appointment, induction and    ongoing training of directors	There were no new appointments to the board during the year under review. The board has a rigorous and transparent procedure for considering new director appointments when necessary, to ensure that the board composition is aligned with the diversity policy and 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.
✓ Conflicts 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 declare their interests at each board meeting.
✓ Insider trading	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 determined by the board. Dealings in the company's securities by directors and officers are listed and circulated at every board meeting for noting. Directors or officers of the company's major subsidiaries, and the company secretary are also included in the list of directors.

2. Performance and reporting
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.
✓ Annual integrated report	It is the board’s responsibility to ensure the integrity of the AIR. The audit and risk committee and social and ethics committee perform a key oversight role in the drafting of the AIR. The board is ultimately responsible for the sign-off and publication of the AIR, ensuring all material issues have been appropriately addressed and that the AIR overall fairly presents the integrated performance of the organisation and its social and environmental impacts.
✓ Materiality	The board has considered the legitimate interests of all our key stakeholders in determining reporting materiality. The material issues are monitored by management on an ongoing basis and are reported to the board on a quarterly basis, or as required. Materiality has been communicated through the delegation of authority policy at group level, and rolled down into each business.
✓ 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. Following the appointment of the new chairman, it was decided that the formal board performance appraisal will be completed in the coming financial year. The board and board committees are functioning effectively and efficiently.

3. Governing structures and delegation
The board serves as the focal point and custodian of governance. Its role and responsibilities are set out in the board charter compliant with the requirements of King IV, JSE Listings Requirements and Companies Act. 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 standing committees and divisional committees.
✓ Independence of 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 S Koseff is the board’s independent chairman and Mr BL Berson, an executive director, is chief executive. The roles are separate and clearly defined.
✓ 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 directors’ general powers are set out in the company’s MoI.
✓ Company secretary	Ms AK 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.

4. Governance functional areas
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.
✓ Remuneration reporting	The remuneration committee presents the remuneration report for the year ended June 30 2018. No material changes were made to the policy or its implementation. Likewise no material future changes are envisaged. The remuneration committee considered the King IV recommendations on remuneration which has further enhanced disclosure.
✓ Risk & IT governance	An IT governance framework has been approved by the board, intended to serve as a group-wide baseline for the establishment of minimum standards across the group. Through quarterly reporting the performance and outcomes of business efforts to ensure a robust and sound IT environment is confirmed to the board. Similarly risk management process is driven at the local level, reported to group and assessed against group materiality on an ongoing basis.
✓ Internal audit & combined assurance	Annual review and approval of internal audit, evaluating the independence, effectiveness and performance of the internal audit function provides the board assurance regarding the group’s systems of internal control. Embracing the wider spectrum of skills offered in the adoption of a combined assurance model, informs the board to be able to conclude that material breakdowns in control and associated risks are being addressed.

5. Stakeholder relationships
Bidcorp's strategy and implementation thereof through our business model is derived from ongoing engagement with its stakeholder community. Bidcorp sets and achieves its strategic initiatives with reference to its risks and opportunities. Ongoing engagement, communication and pre-emptive market knowledge, informed by our stakeholder engagement, guides the performance success. The board assesses the strategy adequacy and positive outcomes from its business model continuously, adapting as required.
✓ Shareholder engagement	In addition to the AGM which is an important part of the governance and investor engagement process, the board uses a range of formal and informal communication channels to understand shareholders’ views. This ensures the board represents shareholders in governing Bidcorp. We regularly engage with institutional shareholders and investor representative organisations across the globe.
✓ Stakeholder engagement	Bidcorp's board has embraced a stakeholder-inclusive approach, across the decentralised structure. Ongoing, proactive engagement with all stakeholders identified is vital to ensure the sustainability of the group. Stakeholder relationships are owned at the local level, where the relationships are grown interpersonally and reported up to the group level for board review.

	The detailed King IV application register can be found on the company’s website
	See: www.bidcorpgroup.com/charters.php See: Remuneration report 2018