|Corporate governance is managed and monitored
by Distell’s board of directors and several of its
committees. The directors are committed to the
principles of good governance and consider themselves
fully accountable to stakeholders in applying the
necessary disciplines to maintain the highest standards
of professionalism, integrity, independence, fairness
and social responsibility.
Transparency in the management process gives shareholders and other interest groups the assurance that the Group is managed within the boundaries of prudently determined risk parameters and in accordance with ethical norms and international best practice.
The company is subject to the Listings Requirements of the JSE Limited, the guidelines in the 2009 King Code and Report on Corporate Governance for South Africa (King III), as well as legislation applying to publicly listed companies in South Africa.
The Group uses independent external advisers to monitor regulatory developments, locally and internationally, to enable management to make recommendations to the board on matters of corporate governance.
Compliance with both the JSE and King III is monitored by the audit and risk committee of the board.
King III on Corporate Governance
|In terms of the Listings Requirements of the JSE, reporting against King III applies to all financial years ending after 1 March 2010. Distell supports the recommendations and principles incorporated in King III. In line with the overriding principle of King III of ‘apply or explain’, the board, to the best of its knowledge, has applied or is embedding processes in support of the relevant principles of King III.|
|Distell’s ultimate governing objective is to maximise
value for shareholders and other key stakeholders, while
also contributing to national prosperity. In achieving
this objective, Distell is always cognisant of the impact
its business activities might have on society and the
environment. At the same time the Group follows a
formal process to identify and assess the major risks that
may threaten the sustainability of its operations.
The annual corporate planning cycle, including strategic planning, target setting, business plans, budgeting and performance management, is conducted through a formal process known as the Distell Management Operating System (DMOS). Key risks facing the Group are identified in these work sessions and risk mitigating responses are formulated as part of the company’s business plans. The formal risk register, a result of this process, is presented to the board for its assessment and approval. During the year continuous monitoring and reporting on risk management follows at appropriate forums.
In line with 2011, the sustainability report has been prepared using the guidelines of the Global Reporting Initiative (GRI) (G3) and the recommendations of King III.
A structured approach has been developed, in terms of which information contained in the sustainability report is audited. In terms of this approach, internal audit further extended the validation of the report. Although not fully validated, internal control systems and processes are in place to ensure that the information contained in the sustainability report does not contradict the financial aspects of the integrated report.
Our material sustainability issues are summarised in the corporate responsibility section of this report and Distell has met the GRI (G3) reporting requirements self-declared at Level C. Our GRI index can be found in the GRI content index section.
Compliance with applicable laws and regulations
|The Group company secretary and Group legal counsel
are responsible for guiding the board in discharging
its regulatory responsibilities. They have established a
legal compliance framework which involves preparing
and maintaining inventories of material laws and
regulations impacting on our business. It also entails
the establishment of processes and procedures to
supervise and monitor compliance and to mitigate risks.
We make use of external specialists where necessary and we conduct compliance-specific training and education to reinforce ethical behaviour across the Group. Management then accepts the responsibility to implement the suggested controls designed to ensure compliance with both our company’s values and the legal environment.
The Companies Act, Act 71 of 2008 (hereafter referred to as the ‘new Companies Act’):
|The new Companies Act (the Act) came into effect on 1 May 2011. During this financial year, Distell has progressed in its compliance with the Act, focussing on the following:|
Business ethics and organisational integrity
|Distell is committed to complying fully with the law. We
are committed to conduct our business with integrity
and with proper regard for ethical business practices.
The company expects all directors and employees
to comply with these principles and to act in the best
interest of the company at all times. In particular,
all directors and employees are to avoid conflicts
of interest and to refrain from insider trading, illegal
anticompetitive activities and bribery and corruption.
Management has formulated policies and procedures that address key ethical risks, such as conflict of interest, accepting inappropriate gifts, and unacceptable business conduct.
Distell’s code of ethics and conduct is designed around a set of values.
The code also covers areas such as compliance with laws and regulations as well as principles for ethical conduct. It also provides for an administrative process for communication and compliance.
Transparency and accountability through the ethics line
|In upholding our company’s values, we encourage all staff members to remain vigilant and blow the whistle on fraud, theft and corruption by reporting it to the toll-free ethics line. The line is operated by an independent third party, 24 hours a day every day, where unethical behaviour and irregularities can be reported anonymously and confidentially.|
Board of directors
Board structure and composition
|The board is chaired by independent, non-executive director David Nurek and comprises 13 non-executive directors (of whom 10 are independent) and two executive directors, including the managing director. The roles of the chairperson and managing director are separated, with responsibilities divided between them. The chairperson has no executive functions. Board member profiles are set out in the directorate section of this report.|
Board role and responsibilities
|The board has adopted a charter setting out its
responsibilities. The board evaluates and reviews
the Group’s strategic direction, agrees on key
performance indicators, and identifies key risk areas
and responses. Executive management is then
charged with the detailed planning and implementation
of these strategies in accordance with appropriate
risk parameters. The board holds management
accountable for its activities, monitored and controlled
through regular reports and discussions.
The main responsibilities of the board in terms of its charter are to:
|Non-executive directors, appointed for their knowledge
and experience of a wide range of businesses and
business sectors, augment the skills and experience
of the executive directors and management and
contribute independent viewpoints to matters under
All directors have the appropriate expertise to fulfil their duties and enjoy significant influence at meetings. This ensures a balance of authority and precludes any one director from exercising excessive power in terms of decision-making.
Appointment, orientation and development
|Procedures for appointments to the board are formal
and transparent and a matter for the full board’s
consideration. The board is always mindful of the
need to maintain an infusion of fresh thinking and a
relevant mix of skills and experience. The effectiveness
of the board composition and the performance of all
its directors, including the chairperson, are assessed
It is the role of the Group company secretary to ensure the board remains cognisant of its duties and responsibilities. He oversees the induction programme for new members of the board and key committees, including subsidiary company directors. Directors receive ongoing training and are kept abreast of relevant changes in legislation and governance best practice. All directors may seek the advice and services of the Group company secretary.
Generally, non-executive directors have no fixed term of appointment but retire by rotation. At each annual general meeting of the company, at least a third of the directors (those longest in office since their last election) retire and, if available, are considered for reappointment.
Conflict of interest and director share trading
|It is incumbent on directors to act in the best interests of the company at all times. All board members are required to disclose the extent of their shareholdings in Distell, other directorships and any potential conflict of interest between their obligations to the company and their personal interests. Where a potential conflict of interest does exist, they must recuse themselves from relevant discussions and decisions. Directors and the company secretary are required to advise the chairperson and obtain his clearance before dealing in Distell shares. Directors of subsidiary companies are required to advise the managing director and obtain his clearance, while other employees require the approval and clearance of the company secretary before dealing in Distell shares. Clearance is withheld during any closed period or where unpublished, price-sensitive information in relation to the company shares exists.|
|Individual directors may seek independent professional advice, at the expense of the company, in appropriate circumstances, to enable them to discharge their responsibilities as directors.|
Board meetings and attendance
|The board meets at least every two months to review
a formal schedule of matters for which its members
are fully briefed in advance. Effective chairing and a
formal agenda ensure all issues requiring attention
are raised and addressed. This enables directors to
discharge their responsibilities by determining whether
prescribed functions have been carried out according
to set standards within the boundaries of prudent,
predetermined risk levels and in line with international
The company secretary attends all meetings of the board and its committees.
The board held six meetings during the past financial year and details regarding attendance are set out below:
|While the board remains accountable for the
performance and affairs of the company, it delegates
specific responsibilities to Committees and
management to assist in discharging its duties. Each
committee acts within agreed written terms of reference
derived from charters, annually approved by the board.
Committee charters comply with the requirements of
the new Companies Act. All chairs of committees report
orally on the proceedings of their committees at the
subsequent board meeting and minutes of committee
meetings are provided to the board.
The board, its committees, and the internal and external auditors have unlimited access to whatever information they require in discharging their responsibilities effectively.
The established board committees are detailed below:
The audit and risk committee
|The audit and risk committee reviews the Group’s
financial position and makes recommendations to the
board on all financial matters. It regularly evaluates
the Group’s exposure and responses to significant
business, strategic, statutory and financial risks. The committee also ensures effective communication
between directors, management and internal and
Audit and risk committee members, as well as the internal and external auditors, have unlimited access to whatever information they require in discharging their responsibilities. Moreover, the internal and external auditors have unlimited access to the chairperson.
The audit and risk committee charter, approved by the board, sets out its responsibilities which are the following:
|External audit matters|
|Internal audit matters|
Members and attendance at meetings
|The committee is chaired by an independent,
non-executive director. The present incumbent is
Catharina Sevillano-Barredo. All members are financially
literate and have business and financial acumen.
The JSE has granted permission for the chairperson of the board to remain a member of the audit and risk committee in the meantime in order to lend stability to the committee in view of the death of MH Visser and to give sufficient time to find a suitably qualified candidate to replace the chairperson as member of the audit and risk committee.
In accordance with its charter, the committee held four meetings during the past financial year. The internal and external auditors, the managing director, the financial director and the company secretary are in attendance at each meeting, while other members of the management team attend as required. When issues are raised with the external auditors in which executive attendees have a vested interest, the latter are required to recuse themselves.
Both internal and external auditors, who report on their findings to the committee, have unrestricted access to the committee through the chairperson.
Details on attendance are provided below:
Independence of external auditor
|The Group’s policy on non-audit services provides
guidelines on dealing with audit, audit-related tax and
other non-audit services that may be provided by its
independent auditor. It also sets out services that may
not be performed by the independent auditor. The
committee pre-approves audit and non-audit services
to ensure that neither the independence nor objectivity
of the auditors is impaired in the conduct of the audit.
The committee monitored compliance with the policy
The independence of the auditors and availability of alternative non-audit service providers are key factors in considering approval. The analysis of audit fees and fees for non-audit services is provided in note 19 to the annual financial statements.
Expertise of the financial director and the finance function
|As required by the JSE Listings Requirements, the audit and risk committee has considered and satisfied itself regarding the experience and expertise of the financial director and is satisfied that it is appropriate. In addition, the committee satisfied itself that the composition, experience and skills set of the function met the Group’s requirements.|
Discharge of responsibilities
|The committee determined that during the financial
year under review, it has discharged its legal and
other responsibilities in terms of its charter. The board
concurs with this assessment. The interim and year-end
financial statements and integrated annual report were
reviewed and recommended to the board for approval.
The information contained in the sustainability report has been partially validated. In this regard combined assurance has been obtained from external and internal assurance providers. We are committed to develop Group reporting standards and systems further in order to improve accurate measurement and verification.
|The board bi-annually reviews the Group’s current financial position, budgets and cash flow projections and concludes that it has adequate resources to continue with operations in the foreseeable future.|
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