King III application register


 
Chapter 1: Ethical leadership and corporate citizenship
      
   
Principles
  
 
Compliance
  
  1.1 The board should provide effective leadership based on an ethical foundation.     In accordance with its charter, the board is the guardian of the values and ethics of the group.  
  1.2 The board should ensure that the company is and is seen to be a responsible corporate citizen.     The social, ethics and transformation committee, which reports to the board and shareholders, embodies and effects Tiger Brands’ commitment to responsible corporate citizenship. In addition to compliance with King III, the group has also adopted the principles of the Global Reporting Initiative (GRI) which guide its corporate responsibility.  
  1.3 The board should ensure that the company’s ethics are managed effectively.     Tiger Brands has a Code of Ethics (the Code), to which all members of the board, management and employees are required to adhere. The Code promotes and enforces ethical business practices. Commitment to ethical management is reflected in the group status as a founder member of the Ethics Institute of South Africa. Enforcement of the group’s Code of Ethics complements risk management activities.  
 
Chapter 2: Boards and directors
      
   
Principles
  
 
Compliance
  
  2.1 The board should act as the focal point for and custodian of corporate governance.     In line with the board charter, the board is committed to the highest standards of corporate governance.  
  2.2 The board should appreciate that strategy, risk, performance and sustainability are inseparable.     The board, in accordance with its charter, is responsible for aligning the strategic objectives, vision and mission with performance and sustainability considerations. The group’s formalised risk management process takes into account the full range of risks including strategic and operational risk encompassing performance and sustainability.  
  2.3 The board should provide effective leadership based on an ethical foundation.     Refer to chapter 1.1 above.  
  2.4 The board should ensure that the company is and is seen to be a responsible corporate citizen.     Refer to chapter 1.2 above.  
  2.5 The board should ensure that the company’s ethics are managed effectively.     Refer to chapter 1.3 above.  
  2.6 The board should ensure that the company has an effective and independent audit committee.     Refer to chapter 3 below.  
  2.7 The board should be responsible for the governance of risk.     Refer to chapter 4 below.  
  2.8 The board should be responsible for information technology (IT) governance.     Refer to chapter 5 below.  
  2.9 The board should ensure that the company complies with applicable laws and considers adhering to non-binding rules, codes and standards.     Refer to chapter 6 below.  
  2.10 The board should ensure that there is an effective risk-based internal audit.     Refer to chapter 7 below.  
  2.11 The board should appreciate that stakeholders’ perceptions affect the company’s reputation.     Refer to chapter 8 below.  
  2.12 The board should ensure the integrity of the company’s integrated annual report.     Refer to chapter 9 below.  
  2.13 The board should report on the effectiveness of the company’s system of internal controls.     Refer to chapter 7 and 9 below.  
  2.14 The board and its directors should act in the best interests of the company.     The board acknowledges its role as a trustee on behalf of shareholders and is required to act at all times in the company’s best interests.  
  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.     Business rescue has not been required.  
  2.16 The board should elect a chairman who is an independent non-executive director. The chief executive officer of the company should not also fulfil the role of chairman of the board.    

The chairman of the board, Mr AC Parker, is an independent non-executive director. He also acts as chairman of the nominations committee.  

The roles of the CEO and chairman are separate.

  
  2.17 The board should appoint the chief executive officer and establish a framework for the delegation of authority.     The board appointed Mr PB Matlare as chief executive officer and the current delegation of authority is under review and to be finalised shortly.  
  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.     Tiger Brands has a unitary board of 14 directors. There are ten independent non-executive directors and four executive directors.  
  2.19 Directors should be appointed through a formal process.     A formal appointment process is in place. The appointment of directors is a function of the board, based on the recommendations made by the nominations committee.  
  2.20 The induction of and ongoing training and development of directors should be conducted through formal processes.     Newly appointed board members are formally informed of their fiduciary duties by the company secretary. Upon appointment, new directors receive an induction pack which includes relevant information such as minutes of previous meetings, sub-committees, annual financial statements, the integrated report and all board charters and the company’s code of conduct. It is the intent that the information pack provides a background for them to understand risk in the context of the company and its affiliates across the continent.

New directors also attend induction meetings with executive directors and management executives.

New directors also visit certain of the manufacturing operations throughout the country and the trade visit programme designed and led by the sales executive provides them with further insight on the customer and consumer side of the business.

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

The board annually reviews the competence, qualifications and experience of the company secretary.  

Ms Rosh Naidoo was appointed company secretary in May 2015.

  
  2.22 The evaluation of the board, its committees and individual directors should be performed every year.     The board evaluations are conducted annually. An internal evaluation was performed in 2015.  
  2.23 The board should delegate certain functions to well-structured committees but without abdicating its own responsibilities.     The board has appointed the following committees without abdicating its own responsibilities:
  • Audit committee
  • Risk and sustainability committee
  • Remuneration committee
  • Nominations committee
  • Social, ethics and transformation committee
  • Investment committee.
  All committees operate under board-approved terms of reference, which are updated from time to time.		  
  2.24 A governance framework should be agreed between the group and its subsidiary boards.    

In conformity with the primary South African corporate governance framework, the King Report on Corporate Governance for South Africa 2009 (King III), the group is satisfied that it has applied the key principles in all material respects other than where indicated to the contrary in this integrated annual report.  

Tiger Brands has also adopted the principles of the GRI and the principal policies and practical applications of corporate governance as outlined by the Public Investment Corporation.  

In addition to this framework, Tiger Brands is committed to complying with all relevant legislation, regulations and best practices in all countries in which it operates.

  
  2.25 Companies should remunerate directors and executives fairly and responsibly.     The group’s remuneration committee determines the remuneration policy on executive and senior remuneration in line with the group’s remuneration philosophy and strategy. The total remuneration packages of executive directors and senior management are subject to annual review and benchmarked against external market data, taking into account the size of the company, its market sector and business complexity. A detailed remuneration report appears in the integrated annual report on pages 78 to 92.  
  2.26 Companies should disclose the remuneration of each director and prescribed officer.     This is fully disclosed in the remuneration report.  
  2.27 Shareholders should approve the company’s remuneration policy.    

A resolution is put to shareholders at the annual general meeting for a non-binding advisory vote on the remuneration policy.  

This is set out in the notice of annual general meeting.

  
 
Chapter 3: Audit committees
      
   
Principles
  
 
Compliance
  
  3.1 The board should ensure the company has an effective and independent audit committee.     The group has an audit committee comprising three independent non-executive directors.  
  3.2 Audit committee members should be suitably skilled and experienced independent non-executive directors.     All members of this committee are suitably skilled and experienced independent non-executive directors.  
  3.3 The audit committee should be chaired by an independent non-executive director.     The audit committee chairman, Mr RD Nisbet, is an independent non-executive director.  
  3.4 The audit committee should oversee integrated reporting.     This forms part of the audit committee mandate.  
  3.5 The audit committee should ensure that a combined assurance model is applied to provide a coordinated approach to all assurance activities.     The audit committee oversees the assurance activities to ensure that they are constructed in a coordinated manner.  
  3.6 The audit committee should satisfy itself of the expertise, resources and experience of the company’s finance function.     The audit committee considered the expertise, resources and experience of the chief financial officer and the finance function and concluded these were appropriate.  
  3.7 The audit committee should be responsible for overseeing internal audit.     The audit committee reviews and approves the internal audit plan submitted by the outsourced revenue providers, KPMG Services Proprietary Limited.  
  3.8 The audit committee should be an integral component of the risk management process.     This forms part of the audit committee’s terms of reference.  
  3.9 The audit committee is responsible for recommending the appointment of the external auditor and overseeing the external audit process.     This is part of the audit committee’s terms of reference.  
  3.10 The audit committee should report to the board and shareholders on how it has discharged its duties.     The audit committee formally reports to the board after each meeting and the report on the activities of the audit committee is on page 74 of this integrated annual report.  
 
Chapter 4: The governance of risk
      
   
Principles
  
 
Compliance
  
  4.1 The board should be responsible for the governance of risk.     The board is the ultimate custodian of risk governance.  
  4.2 The board should determine the levels of risk tolerance.     The risk and sustainability committee assesses the levels of risk tolerance and limits of risk appetite for the group and makes recommendations to the board.  
  4.3 The risk committee or audit committee should assist the board in carrying out its risk responsibilities.     The board has appointed the audit committee and risk and sustainability committee to assist with its risk responsibilities.  
  4.4 The board should delegate to management the responsibility to design, implement and monitor the risk management plan.     The board has delegated the day-to-day responsibility for risk management to management.  
  4.5 The board should ensure risk assessments are performed on a continual basis.     The risk and sustainability committee actively monitors the group’s key risks as part of its standard agenda.  
  4.6 The board should ensure frameworks and methodologies are implemented to increase the probability of anticipating unpredictable risks.     All risks are identified and steps to mitigate these are outlined, including reasonably unpredictable risks.  
  4.7 The board should ensure management considers and implements appropriate risk responses.     The risk and sustainability committee ensures that the executive committee has in place appropriate responses to perceived risks.  
  4.8 The board should ensure continual risk monitoring by management.     Responsibility for identified risks is assigned to an appropriate member of the group’s senior management team, who is required to report to the executive committee on the steps being taken to manage or mitigate such risks.  
  4.9 The board should receive assurance regarding the effectiveness of the risk management process.     The risk and sustainability committee is provided with the assurance on the effectiveness of the risk management process from the internal audit service providers, KPMG Services Proprietary Limited.  
  4.10 The board should ensure that there are processes in place enabling complete, timely, relevant, accurate and accessible risk disclosure to stakeholders.     The group’s integrated annual report provides a detailed outline of the risk management process to its stakeholders.  
 
Chapter 5: The governance of information technology
      
 
 
Principles
  
 
Compliance
  
  5.1 The board should be responsible for information technology (IT) governance.    

Item 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, 5.7.  

The board understands the importance, relevance and inherent risks in IT and has delegated the management thereof to management. The risk and sustainability and audit committees assist in ensuring appropriate compliance structures are in place.  

The chief financial officer has taken direct responsibility for the introduction of a standardised and consistent platform across the group which is necessary to align the IT infrastructure with the strategy of the group, as well as the performance and sustainability objectives of the group. As this is a long-term project, regular updates on the progress of this initiative are presented to the audit committee. This update includes the business case for the proposed IT spend, as well as the status of the implementation of the overall project and overall IT governance.

  
  5.2 IT should be aligned with the performance and sustainability objectives of the company.  
  5.3 The board should delegate to management the responsibility for the implementation of an IT governance framework.  
  5.4 The board should monitor and evaluate significant IT investments and expenditure.  
  5.5 IT should form an integral part of the company’s risk management.  
  5.6 The board should ensure that information assets are managed effectively.  
  5.7 A risk committee and audit committee should assist the board in carrying out its IT responsibilities.  
 
Chapter 6: Compliance with laws, codes, rules and standards
      
 
 
Principles
  
 
Compliance
  
  6.1 The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards.     The risk and sustainability committee and the company secretary review the adequacy and effectiveness of the group’s procedures to ensure compliance with legal and regulatory responsibilities. The group compliance officer assists in this role.  
  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.     The directors and the board understand the appropriate applicable laws, rules, codes of standards required by the company and its business.  
  6.3 Compliance risk should form an integral part of the company’s risk management process.     Compliance is an identified significant risk and addressed as part of the risk management process.  
  6.4 The board should delegate to management the implementation of an effective compliance framework and process.     This has been done and a group compliance officer has been appointed to manage and implement the framework and processes throughout the group.  
 
Chapter 7: Internal audit
      
   
Principles
    
Compliance
  
  7.1 The board should ensure there is an effective risk-based internal audit.     A risk-based internal audit is in place.  
  7.2 Internal review should follow a risk-based approach to its plan.     A risk-based approach is followed by internal audit.  
  7.3 Internal audit should provide a written assessment of the effectiveness of the company’s system of internal control and risk management.     A written assessment of the effectiveness of the company’s system of internal control and risk management is provided.  
  7.4 The audit committee should be responsible for overseeing internal audit.     The audit committee is responsible for overseeing the internal audit.  
  7.5 Internal audit should be strategically positioned to achieve its objectives.     Internal audit is independent, with no material breakdowns, enabling it to achieve its objectives.  
 
Chapter 8: Governing stakeholder relationships
      
   
Principles
  
 
Compliance
  
  8.1 The board should appreciate that stakeholders’ perceptions affect a company’s reputation.     Tiger Brands recognises that developing and nurturing positive relationships with its significant stakeholders are key drivers of success that inform business strategy and enable the group to better understand and address the impact of its activities on society.  
  8.2 The board should delegate to management to proactively deal with stakeholder relationships.     The group executive – corporate affairs has responsibility for the management and implementation of the stakeholder framework.  
  8.3 The board should strive to achieve the appropriate balance between its various stakeholder groupings, in the best interests of the company.     The appropriate balance is assessed on a continuous basis.  
  8.4 Companies should ensure the equitable treatment of shareholders.     The board ensures the equitable treatment of shareholders.  
  8.5 Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence.     The company has a comprehensive stakeholder engagement process in place and communicates with stakeholders in a variety of ways, detailed on page 51.  
  8.6 The board should ensure disputes are resolved as effectively, efficiently and expeditiously as possible.     The board ensures that disputes are resolved as effectively as possible.  
 
Chapter 9: Integrated reporting and disclosure
      
   
Principles
  
 
Compliance
  
  9.1 The board should ensure the integrity of the company’s integrated report.     The board is responsible for the integrity of the integrated annual report.  
  9.2 Sustainability reporting and disclosure should be integrated with the company’s financial reporting.     The company’s vision and mission statements, strategic objectives and value system are integrated into all policies, procedures, decision-making and operations, with sustainability as the ultimate objective.  
  9.3 Sustainability reporting and disclosure should be independently assured.     At present the company does not obtain independent assurance of its sustainability reporting.