CORPORATE GOVERNANCE

HomeChoice targets sustainable growth based upon adherence to its core values and accountability to its stakeholders. The group remains fully committed to best corporate governance practices and risk management to safeguard the interests of all stakeholders.

Governance framework

  • The directors acknowledge that the board should provide effective leadership based on an ethical foundation and act as the focal point for and custodian of corporate governance.
  • The group endorses the principles incorporated in the King Code of Governance for South Africa 2009 (King III) and it forms the basis upon which the group’s commitment to sound corporate governance is pursued. King III, which became effective in South Africa on 1 March 2010, was first applicable to the group from January 2011.
  • A significant governance development during the year was the replacement of the Companies Act No. 61 of 1973 with the Companies Act No. 71 of 2008, which came into effect on 1 May 2011.

Board of directors

The HomeChoice Holdings Limited board is ultimately accountable and responsible for the performance and affairs of the group. Its primary responsibility is setting the strategic direction of the group and monitoring investment decisions, considering significant financial matters and reviewing the performance of executive management.

  • The group maintains an appropriate ratio of executive to non-executive directors given the size, nature and risk of the business, with a majority of non-executive directors on the board.
  • As the chairman of the board is an executive director, the board has appointed a lead independent director as recommended by King III.
  • The board meets at least quarterly and all meetings are convened by formal notice.
  • Decisions taken at board meetings are decided by a majority of votes, with all directors having one vote.
  • The board has regular interaction with executive management and board meetings include presentations by management on selected topics to enhance board members’ understanding of the business of the group.

Conflicts of interest

  • All board members are required to disclose their shareholdings in HomeChoice, other directorships and any potential conflicts of interest. Directors and employees are prohibited from dealing in the group’s shares during two formal closed periods which commence one month prior to the interim (June) and annual (December) reporting periods, ending after the publication of the respective results.
  • Restrictions are also placed on share dealings at other times if directors and employees have access to price-sensitive information.

Board performance appraisal and independent assessment

  • An annual evaluation process is conducted to assess the contributions of individual directors and the effectiveness of the board and each sub-committee.
  • This is undertaken by means of a questionnaire completed by all directors. An assessment of the independence of the non-executive directors is also conducted and the board is satisfied that the non-executive directors are independent.

Committees

The main board of directors has delegated specific responsibilities to board committees to assist the board in meeting its oversight responsibilities. The committees are governed by formal charters, meet independently and formally report back to the board.

Audit and risk committee

  • Chaired by an independent non-executive director and comprises three non-executive directors. Meetings are also attended by invitees, including the executive chairman, the chief financial officer, the operating finance director, group finance manager, head of internal audit and external auditors.
  • Committee members have unlimited access to all information, documents and explanations required in the discharge of their duties.
  • The external auditors are invited to all meetings and at least annually meet with the committee without senior management being present.
  • The audit and risk committee is governed by a formal charter, setting out its responsibilities.

Remuneration, nomination and talent committee

  • Chaired by an independent non-executive director and comprises two non-executive directors, and is also attended by invitees including the executive chairman, retail chief executive officer and retail chief operating officer, who are recused when matters relating to their own remuneration are discussed.
  • The key mandate of the committee is to ensure that the remuneration of executive directors and senior management is competitive and appropriate to the levels of responsibility carried, with particular attention to retention and performance.
  • The committee also performs the functions of nominations committee and assists the board with the appointment of directors.
  • The committee meets at least four times per year.

Operating board of directors

  • The operating board is responsible for management of all aspects of the operations of the trading companies within the group and reports regularly to the board.

Risk

The board is accountable for the process of risk management, establishing appropriate risk and control policies and communicating these throughout the company. Management is responsible for designing, implementing and monitoring the system and process of risk management and integrating it into the day-to-day activities of the group.

Risk management process

  • The group has a comprehensive reporting system, monitored and reviewed monthly by management and directors. The system facilitates budgetary control, provides reasonable assurance as to the accuracy of financial statements and safeguards the group’s assets.
  • Senior executives and management also undertake an annual enterprise-wide risk assessment process.
  • This process is undertaken within each division of the group’s trading subsidiary companies and serves to instil risk awareness and accountability throughout the group.
  • The board has established an IT governance charter and the operational IT director assumes the responsibilities of the chief information officer. During 2011 the group also established a data security project team to review and enhance controls over the security and processing of data in the group.
  • The group has established an internal audit function and the directors also utilise the services of independent audit firms to assist as and when required.
  • The group’s business philosophy is premised upon our vision and values. Arising from our commitment to these values, an employee code of ethics has been established.
  • An anonymous tip-off facility is in place for the reporting of suspected fraudulent or unethical behaviour via an outsourced toll-free hotline. 

*The major risks facing the group, the Audit and Risk Report, and the Remuneration Report can be found in the 2011 annual report.