Board composition, structure and report back

GOVERNANCE STRUCTURE

The board maintains full and effective control over the company and is accountable and responsible for its performance and compliance. The board reviews the strategic priorities of the group, determines the investment policies and delegates to management the detailed planning and implementation of the objectives and policies in accordance with appropriate risk parameters. The board monitors compliance with policies and achievement against objectives by holding management accountable for its activities through quarterly performance reporting and budget updates.

The board charter codifies the board's composition, appointment, authorities, responsibilities and processes and sets out the fiduciary duties of the directors of the company. It provides the board with a mandate to exercise leadership, determine the group's vision and strategy and monitors operational performance.

The board governs through clearly mandated board committees. Each committee has specific written terms of reference approved by the board and adopted by the committee. All committee chairmen report orally on the proceedings of their committees at the board meetings. The board retains accountability and is satisfied that it has fulfilled its responsibilities in accordance with the board charter during the year.

During the year there were six board meetings and one independent board meeting relating to the Gameco transaction. The divisional chief operating officers and the group Human Resources Director attend board meetings, enabling the board to explore specific issues and developments in greater detail. Individual directors' attendance at the board and board committee meetings and at the Annual General Meeting ('AGM') is set out in the table below:

      Board     Audit and risk committee Remuneration committee Social and ethics committee AGM  
Executive directors                    
Marcel von Aulock(1)     2/2            
Jacques Booysen(1)     4/4            
Rob Huddy     6/6              
Non-executive directors                    
Chairman                    
John Copelyn     6/6       2/2    
Lead independent                    
Busi Mabuza     6/6     3/3 2/2 2/2  
Independent                    
Mac Gani     6/6     3/3 2/2 2/2  
Marcel Golding     5/6              
Jabu Ngcobo     6/6     3/3 2/2 2/2    
Non-independent                    
Elias Mphande     6/6              
Yunis Shaik     4/6       1/2 1/2    

(1) Marcel von Aulock was replaced as a director by Jacques Booysen on 1 June 2017

BOARD COMPOSITION

The composition of the board and of the audit and risk, remuneration and the social and ethics committees is determined by the majority shareholder. The board exercised its prerogative to appoint John Copelyn as the Chairman. As a compensating control, a lead independent director was appointed. The lead independent director is Busi Mabuza who serves on all of the committees of the board, and is therefore well placed to influence the governance of the company and meet her obligations. The only independent director who has served for more than nine years is Marcel Golding who has served for 14 years and the average length of service of independent directors is seven years. The board considers a director independent where they have had no other executive role within the group for a period of three years. One-third of the non-executive directors retire by rotation each year in line with the memorandum of incorporation ('MOI'). Self-evaluation of the board is entrenched in the board charter and terms of reference and is carried out annually. Refer to board effectiveness on page 77.

The remuneration committee reviews and assesses board composition on behalf of the board and recommends the appointment of new directors. All board appointments are made on merit, in the context of skills, experience, independence and knowledge, which the board as a whole requires to be effective. Factors that are taken into consideration are differences in skills, regional and industry experience, background, race and gender. The board considers that there is an appropriate balance of skills, experience, independence and knowledge among the independent directors. The board has approved a diversity policy incorporating race and gender. No specific targets have been set in relation to the board diversity policy but, while 67% of the board members are black, the board recognises that it does not have an adequate representation of female members at 11%.

The roles of the Chairman and the CEO are separate, with responsibilities divided between them to ensure a balance of power and authority. The Chairman is responsible for providing overall leadership of the board and ensuring that the board performs effectively. The CEO is responsible for the execution of the strategic direction, which is approved by the board, through the delegation of authority.

The CEO's employment contract includes a three-month notice period unless varied by agreement and there are no specific contractual conditions related to termination. The CEO has no other external professional commitments. Succession planning is not formalised but executive director appointments have historically been internal.

BOARD PROFILE

EXECUTIVE DIRECTORS

J Booysen

J BOOYSEN (58)

CA(SA)

Executive Director – Chief Executive Officer

Date appointed: 1 June 2017

  • Jacques Booysen was a partner at PricewaterhouseCoopers Inc. prior to working at the Gauteng Gambling Board for 12 years, where he held the position of Chief Executive Officer. He joined Tsogo Sun in 2007 and served in the roles of Director – New Business Development, Director – Gaming Operations, Financial Director – Gaming and Managing Director – Gaming prior to his appointment as the Chief Executive Officer on 1 July 2017.

RB HUDDY

RB HUDDY (49)

CA(SA)

Executive Director – Chief Financial Officer

Date appointed: 31 October 2011

  • Rob Huddy served his articles at PwC and joined Tsogo Sun in 1997. He held various management positions prior to being appointed Financial Director – Hotels Offshore in 2006 and Financial Director – Hotels South Africa in 2009. On 30 September 2011 he assumed the role of Chief Financial Officer.


NON-EXECUTIVE DIRECTORS

JA Copelyn

JA COPELYN (68)

BA (Hons), BProc

Non-executive Chairman

Date appointed: 13 August 2003(1)

  • John Copelyn joined HCI as Chief Executive Officer in 1997. He was previously General Secretary of the Southern African Clothing and Textile Workers Union from 1974 before becoming a member of parliament in 1994.

    He currently holds various directorships in companies within the HCI group.


VE MPHANDE

VE MPHANDE (60)

Elec Eng (Dip)

Non-executive Director

Date appointed: 3 February 2005(1)

  • Elias Mphande has served as the National Organising Secretary of the Southern African Clothing and Textile Workers Union, Marketing Director of Viamax Fleet Solutions, Chief Executive Officer of AUTA and the Vukani Group and Chairman of Golden Arrow Bus Services. He was appointed to the HCI board in 2010 as a non-executive director and as non-executive Chairman in 2015 and serves on the board of e.tv.

NDUMI MEDUPE

Y SHAIK (60)

BA (Law), BProc
Non-executive Director
Date appointed: 15 June 2011

  • Yunis Shaik is an admitted attorney of the High Court of South Africa. He is a former Deputy General Secretary of the Southern African Clothing and Textile Workers Union and a director of Workers’ College. He has served as a Senior Commissioner to the KwaZulu-Natal CCMA. He is an executive director of HCI.


INDEPENDENT NON-EXECUTIVE DIRECTORS

JG NGCOBO

JG NGCOBO (67)

Independent Non-executive Director

Date appointed: 24 February 2011

  • Jabu Ngcobo held the positions of General Secretary of the Southern African Clothing and Textile Workers Union from 1994 to 1999 and the Regional Secretary for Africa of the International Textile Garment and Leather Workers Federation from 1999 to 2006. He was appointed to the board of HCI in 2004 and serves as a director of HCI Coal and Niveus.

BA Mabuza

BA MABUZA 54

BA (MBA)

Lead Independent Non-executive Director

Date appointed: 1 June 2014

  • Busi Mabuza has held various positions in the financial services and energy sectors and is currently a non-executive director at Development Bank of Southern Africa, Nehawu Investment Holdings and the non-executive chairperson of the Industrial Development Corporation.

MSI GANI

MSI GANI (65)

CA(SA)

Independent Non-executive Director

Date appointed: 11 August 2016

  • Mac Gani is a Chartered Accountant with over 30 years’ experience in the accounting and audit profession. He was a founding partner of MSGM Masuku Jeena Inc., a partner of Saboor Gani & Co and a partner of PwC until 2013. He is a non-executive director on a number of boards including HCI, HPF and Basil Read Holdings Limited and is on the investigating committee of the Independent Regulatory Board of Auditors.

MJA GOLDING

MJA GOLDING (58)

BA (Hons)

Independent Non-executive Director

Date appointed: 30 April 2004(1)

  • Marcel Golding runs a family investment office. Prior to this he was Chairman of HCI and Chief Executive Officer of e.tv. He was a member of parliament and Deputy General Secretary of the National Union of Mineworkers.



(1) Date appointed to the holding company board pre-reverse listing into Gold Reef on 14 February 2011

Non-executive committee key
Audit and risk committee – Chairman: Mac Gani
Social and ethics committee – Chairman: Mac Gani
Remuneration committee – Chairman: Yunis Shaik

SUB-COMMITTEE STRUCTURE AND REPORT BACK

The board remains accountable for all matters where it has delegated responsibility to its sub-committees. All committees and the board are satisfied that the committees fulfilled their responsibilities in accordance with their terms of reference during the year.

Audit and risk committee
Key objective

The provision of effective governance over the appropriateness of the group’s financial and integrated reporting including the adequacy of related disclosures, the performance of both the internal audit function and the external auditor, and the management of the group’s systems of internal control, business risks and related compliance activities.

The committee met three times during the year. The Chief Executive Officer, the Chief Financial Officer, the group’s Director of Risk, the Chief Information Officer and directors from the majority shareholder attend the meetings as permanent invitees, along with external audit and the outsourced internal audit. Other directors and members of management attend as required.

The work of the audit and risk committee during the year focused on:

  • review of the risk landscapes to which the group is exposed in relation to the group’s risk tolerance and risk appetite levels and evaluation of the appropriateness of management’s responses to the risks;
  • review of insurance, treasury and taxation matters;
  • review of operational risk management including fraud and theft, whistle-blowing systems and organisational resilience;
  • oversight of the implementation of the combined assurance framework and plan;
  • review of IT risks in relation to core operational systems, systems projects, information management and security initiatives and governance and regulatory compliance;
  • review of material legal, legislation and regulatory developments;
  • review of prospective accounting standard changes;
  • review of the impact of the application of King IV™;
  • evaluation of the financial reporting procedures;
  • review of and recommendation to the board for approval of the preliminary and annual results announcements and the annual financial statements and integrated annual report;
  • approval of the external audit and internal audit plans;
  • evaluation of the independence and effectiveness as well as the fees and terms of engagement of the external auditors, including the suitability of the firm and designated partner;
  • evaluation of the effectiveness of the chief audit executive and the outsourced internal audit function; and
  • assessment of the internal control environment, particularly in relation to the group’s system on internal financial controls.

Refer to the report of the audit and risk committee on page 03 of the consolidated financial statements for the year ended 31 March 2018.

Remuneration committee
Key objective

The committee is empowered by the board to assess and approve the broad remuneration strategy for the group, the operation of the company’s short-term and long-term incentives for executives and senior management across the group, and sets short-term and long-term remuneration for the executive directors and members of the executive committee.

The committee met twice during the year. The Chief Executive Officer and the group’s Human Resources Director attend the meetings as permanent invitees, except when issues relating to their own compensation are discussed.

The scope of the remuneration committee’s work during the year included the following matters:

  • monitoring executive appointments, terminations and retirements;
  • determining the general policy on remuneration to ensure fair, competitive and responsible reward;
  • determining the specific remuneration packages for the executive directors and other senior executives and management;
  • evaluation of the performance of the Chief Executive Officer;
  • approving the rules, criteria, targets and allocations for performance-related pay schemes; and
  • proposing non-executive director remuneration.

Further details of the group’s remuneration policy and the work of the remuneration committee can be found in the remuneration section on pages 81 to 88.

Social and ethics committee
Key objective

The purpose of the committee is to regularly monitor the company’s activities, having regard to any relevant legislation, other legal requirements or prevailing codes of best practice and, in particular, to monitor the group’s compliance with the applicable requirements of Regulation 43 of the South African Companies Act in relation to matters pertaining to social and economic development, good corporate citizenship, environment, occupational health and public safety, labour and employment and the group’s code of ethics and sustainable business practice.

The committee met twice during the year. The Chief Executive Officer, the Chief Financial Officer, the group’s Director of Risk, the group’s Human Resources Director and directors from the majority shareholders attend the meetings as permanent invitees, along with other directors and members of management who attend as required.

The work of the social and ethics committee during the year focused on:

  • progress in the alignment of the group’s practices to the requirements of the revised BBBEE codes;
  • disputes with government or regulators;
  • compliance with regulations;
  • bribery and corruption;
  • responsible tourism and responsible gaming;
  • preferential procurement, socio-economic development and enterprise and supplier development;
  • environmental management and certification;
  • customer satisfaction, loyalty, health and safety and consumer protection; and
  • job creation, employee health and safety, employee development, management diversity, employment equity and employee engagement.

The matters considered during the year are included in the deliver to our beneficiaries section on pages 45 to 53, the product relevance to customer experience section on pages 55 to 58, the regulatory compliance section on page 59 and the human resources section on pages 60 to 62.

The main area of focus during the year was on the group‘s achievement of a level 1 BBBEE contributor status against the revised codes for 2018 and continued efforts to improve on this result in the future. The committee is satisfied with the group’s progress in the different areas and there were no significant matters of concern raised during the year.

BOARD EFFECTIVENESS

A formal self-evaluation of the performance of the board has been carried out during the 2017 financial year. No significant matters were noted apart from the lack of female representation. A formal self-evaluation of the performance of the board, its committees and the directors retiring by rotation will be carried out during August 2018 with the assistance of the IoDSA, using its online assessment system.

The board is satisfied with the performance of the Chief Executive Officer and with the competence of the Chief Financial Officer as set out in the report of the audit and risk committee on page 03 of the consolidated financial statements for the year ended 31 March 2018.

The Company Secretary ensures that board procedures and relevant regulations are fully adhered to. The Company Secretary is not a director of the company. The directors have unlimited access to the advice and services of the Company Secretary. The board is satisfied that the Company Secretary is competent and has the appropriate qualifications and experience required by the group. The Company Secretary also acts as secretary for the committees of the board.

GROUP EXECUTIVE COMMITTEE

The board delegates responsibility for determining and implementing the group’s strategy and managing the group to the Chief Executive Officer who is supported by the GEC. The committee meets monthly, participates in the determination of the strategy, coordinates operational execution of the strategy, ensures effective internal controls are functioning and that there is an effective risk management process in operation throughout the group. The members of the GEC at 15 August 2018 were: