Governance for a sustainable business

Ethical leadership

At Bidvest, we like to think of corporate governance as 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. Corporate governance entails the accountable and transparent governance of the Group’s structures and systems within an ethical framework that will promote responsible consideration of all stakeholders.

Bidvest is committed to applying good corporate governance principles in a way that complements its entrepreneurial flair. This commitment involves leading the business with integrity and best practice compliance while taking cognisance of the value systems of the countries and communities in which it operates. Entrepreneurship, incentivisation, decentralised management and communication are the keys to delivering excellence and innovation in all our business dealings.

Bidvest prizes simplicity. Focus makes it easier to manage your business and is the key to achieving optimum governance. Bidvest South Africa has 11 independent divisions, each headed by a divisional chief executive supported by their respective financial directors. Bidvest Foodservice divisions are geographically grouped businesses, led by a divisional chief executive and financial director. Bidvest Namibia is independently listed and headed by an independent chief executive supported by a financial director.

Each division within this group structure has a central assurance team. Oversight of each division is achieved through a federal corporate governance structure comprising quarterly divisional audit committees (independently chaired) and divisional risk committees. Each divisional committee includes key pre-agreed agenda items and reports outcomes to the respective Group committee, directly ensuring adequate focus and coverage across the Group.

A governance, risk and compliance framework enables Bidvest to manage the challenge of good corporate governance in a decentralised environment. The framework is supported by four basic pillars: governance, internal audit, risk management and regulatory compliance.

Code of ethics

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 board annually reviews the code of ethics and ensures continued alignment of this code with Bidvest values. The code demands the highest standards of integrity, ethics and behaviour; non-discriminatory employment and promotion practices; training and development support for employees to help them realise their full potential; and proactive engagement on environmental, social and sustainability matters.

Communication is a vital tool in ensuring the Bidvest code of ethics is understood, adhered to and enforced within the decentralised structure. To facilitate this Group-wide communication process Bidvest has a Group web-based intranet. Accessible from all internet points, employees of the Group can securely access a web portal to the Group governance, compliance, risk and other internal communications.

Whistle-blowing

To demonstrate Bidvest’s commitment to ethical practices and behaviour, in line with Bidvest values, the board continues to support the process of confidential reporting of ethical lapses and other risks.

This outsourced, independent and confidential “whistle-blowing” system enables stakeholders to report unethical, dishonest or improper behaviour, non-compliance with Company policies, corruption, theft and fraud. All reported incidents are investigated by management. Action is taken where appropriate. Usage of the facility has remained in line with previous years, logging approximately 150 calls during this financial year, of which more than half required management corrective action such as reinforcing Company policies, redesigning internal control procedures and in 25 instances termination of employment for a variety of transgressions. In line with legislation, our well-communicated commitment not to victimise whistle-blowers ensures transparency and promotes ethical conduct. The identity of whistle-blowers is protected by the service provider.

Regulatory compliance

Given its decentralised structure, Bidvest recognises that managing the risk of non-compliance with legislation depends on the ability of each decentralised business to monitor and address regulatory impacts. Each business is required to implement practical steps to ensure compliance within its environment and report progress through divisional risk committees.

Compliance risk remains a core focus of the board, which is ultimately responsible for ensuring the Group identifies and complies with applicable laws. The Bidvest board has delegated the task of managing an effective compliance process, reporting through divisional risk committee structure, to management. The board keeps abreast of significant legislative developments in all jurisdictions in which it operates.

Bidvest is listed on the Johannesburg Stock Exchange. Bidvest Namibia is listed on the Namibian Stock Exchange. Annually Bidvest confirms that the Company complies with all Listings Requirements.

Enterprise risk management

Effective risk management is critical in successfully managing a diverse, decentralised group such as Bidvest. This process aims to ensure business-specific operational, strategic and emerging risks are adequately and timeously identified and mitigated. Risk management and internal control is a core focus of every business within the Group.

The Bidvest board has ultimate responsibility for risk management and the evaluation of its effectiveness. Management is accountable to the board for designing, implementing and monitoring the processes of risk management and integrating them into day-to-day activities. The Group risk committee undertakes the role of reviewing the aggregated key areas of risk facing each divisional management team and ensuring appropriate and effective mitigations have been put in place.

Within the mandate of the Group risk committee, the Bidvest IT Forum was established during the current financial year to promote and coordinate the decentralised and autonomous management of IT within the Group. The objective being to strengthen the divisional IT teams through providing a platform to share information, services, infrastructure and/or technologies. There is a synergistic relationship between internal audit (specifically relating to IT) and the IT forum.

The overall risk profile of the Group has not changed materially in the year under review. The key material issues facing Bidvest, as well as management’s response are covered on pages 8 and 9 and in the risk report on page 75.

Audit services

The Bidvest internal audit vision is to provide an iconic, progressive and responsive service that objectively evaluates the business processes and internal controls so as to appropriately support management’s efforts in creating a strong control environment to achieve operational excellence.

A quality assurance review of the internal audit function revealed the need for an overhaul of the audit work delivered and an investment in training and skills injection of the internal audit team. The establishment of the Bidvest Training Academy partnership with CEB Audit Director Roundtable and recruitment of highly qualified and experienced chartered accountants with strong business acumen and commercial sense has been a core focus and success story in the year.

The purpose, authority and responsibility of the internal audit function is 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. A risk-based internal audit methodology has been applied, with input from divisional management and aligned to the organisation’s risk management processes. The risk-based internal audit plans are presented annually to both the divisional and Group audit committees for approval. The audit committees consider the objectives and rationale that drives the plan in order to achieve the objectives of internal audit processes. Quarterly the audit committee monitors progress against these risk-based internal audit plans.

Internal audit has fully embraced an integrated risk-based internal audit plan which has increased the relevance of the function and allowed it to be more strategically aligned to the businesses and management’s focus. Given the increasing dependencies of businesses on information technology (IT), specialised IT auditing and consulting skills were introduced to the internal audit team. Involvement of such skills is now sought after by management across Bidvest on all major IT projects, in both an assurance and consulting capacity.

Internal audit continues to function independently and objectively throughout the Group. The internal audit manager within each division, as well as at Group level, reports functionally to the chairman of the respective audit committee. The function is a value-adding and high-performing team that operates efficiently and effectively with integrity and independence. This function has become a platform for the development and growth of talent to springboard into managerial positions within the Bidvest Group.

Corporate governance compliance

Bidvest is fully committed to the four values underpinning corporate governance – responsibility, accountability, fairness and transparency. The Group is committed to implementing the King III principles and best practice recommendations.

The board confirms that during the financial period ending June 2014 Bidvest has, in all material respects, voluntarily applied and complied with the King III code and JSE Listings Requirements. Bidvest utilised the Institute of Directors Southern Africa (IoDSA) Governance Assessment Instrument (GAI) as a self-assessment tool to assess the extent of application of the King III recommended principles and practices. The following table represents the high-level King III application register.

King III governance register at: June 30 2014

	The Bidvest Group Limited – 1946/021180/06		IoDSA GAI score		Applied/partially applied/ not applied
	Chapter 1: Ethical leadership and corporate citizenship		AAA		Applied
	Chapter 2: Boards and directors		AAA		Applied
	Chapter 3: Audit committees		AAA		Applied
	Chapter 4: The governance of risk		AAA		Applied
	Chapter 5: The governance of information technology		AAA		Applied
	Chapter 6: Compliance with laws, rules, codes and standards		AAA		Applied
	Chapter 7: Internal audit		AAA		Applied
	Chapter 8: Governing stakeholder relationships		AAA		Applied
	Chapter 9: Integrated reporting and disclosure		AAA		Applied
	Overall score		AAA

For The Bidvest Group Limited’s detailed King III Governance Register, please follow this link:

	Detailed King III Governance Register.

The Group corporate governance manual lists the charters, codes, policies and documents that have to be formulated by divisional governing bodies. In line with Bidvest’s decentralised structure, divisional management has established additional policies and procedures that are specific to their governing structures. The Group applies King III governance principles and continues to entrench and strengthen recommended practices throughout our governance structures, processes and procedures.

As changes take place within the Group structure the board monitors continued application of and reviews any potential gap analysis between Bidvest’s governance structure and King III. This analysis identifies actions to ensure the application of governance principles and those principles requiring ongoing attention and action. The analysis also identifies areas for improvement and enhancement.