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AAA |
Highest Application |
AA |
High Application |
BB |
Notable Application |
B |
Moderate Application |
C |
Application to be improved |
L |
Low Application |
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zz_Reunert Limited - 1913/004355/06 |
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Applied / Partially Applied / Not Applied |
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Principle 1.1 |
The Board provides effective leadership based on ethical foundation
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The board is responsible for corporate governance and determining the group’s strategic direction. The directors formally acknowledge, by way of the board charter, that both their personal and professional reputations have a direct and material impact on their involvement with Reunert. Each of the directors undertake, by way of the board charter, to conduct themselves, both professionally and personally, with integrity in accordance with the ethics and values of Reunert and the laws of South Africa.
Ultimately the board is responsible to shareholders for its leadership decisions and the sustainability of the business. Each board member is obliged to resign after a three-year term of office and will only serve for a further term if re-elected by shareholders.
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Principle 1.2 |
The Board ensures that the company is and is seen to be a responsible corporate citizen
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Reunert, through its board (and assisted by the social, ethics and transformation committee), protects, enhances and invests in the wellbeing of the economy, society and the environment. Reunert reports on material aspects of its corporate citizenship in its annual integrated report with regard to each of the elements of the triple bottom line (economic, social and environmental).
Reunert publishes a comprehensive sustainability report on its website with more information of its commitment to being a responsible corporate citizen.
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Principle 1.3 |
The Board ensures that the company ethics are managed effectively
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Qualitative comment:The ethical standards guiding the group’s relationship with stakeholders are governed by the operations’ codes of conduct and the group’s code of ethics (available on the website). Ethical standards of the group are integrated into the group’s strategies and operations. A group-wide electronic learning initiative has been undertaken to enhance the knowledge, understanding of and commitment of employees to the relevant codes of conduct and applicable legislation relating to business conduct.
Reunert has a zero-tolerance policy for unethical business conduct and its employees are required to comply with the Prevention and Combating of Corrupt Activities Act No 12 of 2004. Reunert has a formal anti-corruption and bribery policy as well as a whistle-blowing policy, which was reviewed by the social, ethics and transformation committee in August 2014 (copies of these policies are available on the Reunert website http://www.reunert.co.za/anti-corruption.php and http://www.reunert.co.za/sustainability-whistle-blowing.php). |
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Principle 2.1 |
The board acts as the focal point for and custodian of corporate governance
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Qualitative comment: In addition to the board’s compliance with its governance duties and responsibilities set out in the Companies Act, 2008 and the JSE Listings Requirements, the board also complies with its formal charter which contains specific stipulations in respect of its role, powers and responsibilities for governance, board composition, meeting procedures and work plan. In terms of the board charter, the board considers itself bound to and responsible for the application of the King III principles.
The integrated report contains additional information on the board’s governance role.
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Principle 2.2 |
The Board appreciates that the strategy, risk, performance and sustainability are inseparable
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Qualitative comment: The board is actively involved in the interrogation and formulation of the group’s strategy. In addition to its general involvement and overview, the board holds an annual strategy meeting during which it deliberates on strategic considerations with executive and operationalmanagement exclusively. The most recent annual strategy meeting took place on 11 April 2014. In alternating years, the board’s focus at the strategy session is either towards the formulation of strategy, or alternatively, towards considering the effectiveness of the implementation of strategy. The board is assisted in its understanding of strategy, risk, performance and sustainability by its various committees, each of which reports to the board on the matters within its mandate. This process provides the board with a range of information to facilitate integrated decision-making. |
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Principle 2.3 |
The Board provides for effective leadership based on ethical foundation SAME AS PRINCIPLE 1.1 - CHAPTER 1
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Qualitative comment: The board provides effective leadership based on an ethical foundation of doing business. This ethical foundation is based on the values of responsibility, accountability, fairness and transparency and is set out in the operations’ codes of conduct and the group’s code of ethics. |
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Principle 2.4 |
The Board ensures that the company is and is seen as a responsible corporate citizen SAME AS PRINCIPLE 1.2 - CHAPTER 1
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Qualitative comment: The board ensures that the group is seen to be a responsible corporate citizen.
Various policies are implemented in the group to enhance the group’s implementation of responsible corporate citizenship. These policies include the group’s anti-corruption and bribery, human rights and environmental policies.
Reunert participates on a voluntary basis, in the annual Investors Carbon Disclosure Project and the CDP water project to improve the transparency of its initiatives to remain a responsible corporate citizen.
Also see comments in respect of principle 1.2.
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Principle 2.5 |
The Boards Ensures that the company’s ethics are managed effectively SAME AS PRINCIPLE 1.3 - CHAPTER 1
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Qualitative comment: The management of ethics within the group forms an important aspect of the board’s focus and responsibility. A social, ethics and transformation committee is in place and monitors ethical matters on behalf of the board. In addition, any risks which may affect the reputation of the group are discussed and monitored by the risk committee.
Also see comments in respect of principle 1.3
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Principle 2.6 |
The Board ensures that the company has an effective and independent audit committee SAME AS PRINCIPLE 3.1 - CHAPTER 3
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Qualitative comment: An effective and independent audit committee is in place. The audit committee is appropriately comprised in terms of independence, skills and knowledge. The Companies Act, 2008 outlines its core roles and responsibilities. In the Reunert group, these are amplified by the committee terms of reference. The performance of the audit committee is evaluated annually by the board.
As required in terms of the Companies Act, 2008, membership of the audit committee is subject to shareholders’ election.
Further information on the composition, mandate, number of meetings and other relevant matters is published in the integrated report.
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Principle 2.7 |
The Board is responsible for the governance of risk SAME AS PRINCIPLE 4.1 - CHAPTER 4
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Qualitative comment: The risk committee assists the board in the execution of its responsibility in respect of the governance of risk. The committee is appropriately comprised in terms of skills, expertise and knowledge and operates under specific terms of reference which are reviewed annually. Risk management strategies, frameworks, policies and processes are in place and driven by management. The performance of the committee is evaluated annually.
The audit committee is primarily responsible for the governance of risks relating to financial reporting and the risk committee for all other risks. There is interaction between the audit and risk committees through cross-membership, to improve effectiveness of risk management.
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Principle 2.8 |
The Boards is responsible for information technology (IT) governance SAME AS PRINCIPLE 5.1 - CHAPTER 5
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Qualitative comment:The board takes responsibility for information technology (IT) governance and ensures that an IT framework, which includes relevant structures, processes and mechanisms that will deliver value to the business and mitigate risk, is in place.
The board has delegated IT governance to the audit committee. Management reports all important IT governance issues to the audit committee. In addition, a group information officer is in place and heads up the group’s IT governance function. |
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Principle 2.9 |
The Board ensures that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards. SAME AS PRINCIPLE 6.1 - CHAPTER 6
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Qualitative comment:The board takes responsibility for the group’s compliance with applicable laws and considers adherence to non-binding rules, codes and standards. Each functional head is responsible for compliance in their respective area with access to external advice where particular expertise is required. The group is aware of the applicable laws that are required to be complied with and assurance in terms of the level of compliance is fed back to the board.
In accordance with the provisions of the Companies Act, 2008, the individual who performs the company secretarial role makes the board aware of legislation that is relevant to the company or affects it. |
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Principle 2.10 |
The Board ensures that there is an effective risk-based internal audit SAME AS PRINCIPLE 7.1 - CHAPTER 7
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Qualitative comment:An effective risk-based internal audit function is in place and is monitored by the audit committee (in respect of financial reporting risk) and the risk committee (in respect of other risks). Internal audit’s mandate is regulated by its terms of reference, which is reviewed annually.
The internal audit policy and plan is prepared on a risk basis and reviewed and approved annually by the audit committee. |
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Principle 2.11 |
The Board appreciates that stakeholders’ perceptions affect the company’s reputation SAME AS PRINCIPLE 8.1 - CHAPTER 8
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Qualitative comment: Stakeholders’ perceptions and the potential effect that it may have on the reputation of the group is appreciated and focused on by the board. Specific engagement takes place regularly with updates to shareholders and presentations of the interim and final financial results of the group. There is also a dedicated employee responsible for managing shareholder relations and communications. |
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Principle 2.12 |
The Board ensures the integrity of the company’s integrated report SAME AS PRINCIPLE 9.1 - CHAPTER 9
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Qualitative comment: The board, following recommendation by the audit committee, approves the integrated report after satisfying itself with respect to the accuracy, completeness and integrity of the report. |
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Principle 2.13 |
The Board reports on the effectiveness of the company’s internal controls SAME AS PRINCIPLES OF CHAPTER 7 & 9
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Qualitative comment: The board, through the audit and risk committees, obtains assurance and reports on the effectiveness of the group’s systems of internal control in the integrated report. |
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Principle 2.14 |
The Board and its directors act in the best interests of the company
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Qualitative comment: The board acts in the best interests of the group in accordance with: • the common law principles governing directors’ fiduciary duties and the duty of care and skill; • the Companies Act, 2008 requirements, particularly sections 75 to 78; and • JSE Listings Requirements.
The opportunity to disclose potential conflicts of interests is a standard agenda item for each board meeting. In addition, directors are required to disclose their other directorships, if any, at least annually.
In terms of the board charter, directors are permitted to take independent advice (in accordance with pre-agreed procedures) in connection with their duties or any other matters or decisions affecting the group.
The nomination and governance committee reviews the skills and performance of the board’s committees, chairmen of the committees and all of its directors on an on going basis and, formally, at least once a year. The nomination and governance committee monitors and advises on any questions that arise in respect of potential conflicts of interests.
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Principle 2.15 |
The Board will/has consider/ed business rescue proceedings or other turnaround mechanisms as soon as the company has been/may be financially distressed as defined in the Company’s Act, 71 of 2008
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Qualitative comment: The board (with the assistance of the audit committee) regularly monitors the solvency and liquidity of the company. The financial performance of the group is reported to the board at each board meeting by way of a CFO’s report, which is a standard agenda item. The CFO’s report specifically details the solvency and liquidity position of Reunert. During the 2014 financial year, Reunert did not meet the definition of “financially distressed”.
The board is apprised of the group’s going concern status, which is also independently assured by the external auditors on an annual basis.
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Principle 2.16 |
The Board has elected a chairman of the board who is an independent non executive director. The CEO of the company does not also fulfil the role of chairman of the Board.
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Qualitative comment: The chairman of the board is an experienced independent non-executive director and is not the CEO. The performance and independence of the chairman is formally evaluated by the board each year, with the assistance of the nomination and governance committee. The incumbent chairman does not participate in this process. The board elects (or re-elects) a chairman annually. |
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Principle 2.17 |
The Board has appointed the Chief Executive Officer and has established a framework for the delegation of authority
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Qualitative comment: The board, with the assistance of the nomination and governance committee, has appointed the CEO by way of a formalised process. The performance of the CEO is evaluated annually. Succession planning of the CEO forms part of the nomination and governance committee discussions.
A delegation of authority framework has been reviewed and approved by the board and is applied in the group. The delegation of authority framework is reviewed annually.
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Principle 2.18 |
The Board comprises a balance of power, with a majority of non executive directors. The majority of non executive directors are independent.
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Qualitative comment:The majority of board members are independent non-executive directors. All of the board committees are composed of at least a majority of independent non-executive directors. The audit committee, as required by Section 94 of the Companies Act, 2008, comprises only independent non-executive directors. The principles of a balance of power and authority are documented in the Company’s formal Balance of Power policy and entrenched through the Company’s Memorandum of Incorporation, the board charter and Reunert’s delegation of authority framework. |
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Principle 2.19 |
Directors are appointed through a formal process
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Qualitative comment: Appointment of directors is done in terms of a formal Reunert board appointment policy. The nomination and governance committee identifies suitable candidates who will address the board’s requirements in terms of knowledge, skills and diversity, and makes recommendations to the board on potential appointments. Director appointments are further subject to formal requirements contained in the Companies Act and the Reunert Memorandum of Incorporation. |
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Principle 2.20 |
The induction of and ongoing training, as well as the development of directors are conducted through a formal process
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Qualitative comment: The induction of new directors is the primary responsibility of the chairman and the company secretary and this is largely tailored to the needs of the relevant individual. The Reunert director induction policy is available on the Reunert website.
The continued development requirements of the board are formally assessed each year. There is a standing invitation to all individual directors and all board committees to approach the company secretary at any time, to arrange any training or development required by the individual director or board committee. Engagement between non-executive directors and senior management of the group are facilitated as part of the non-executive directors’ induction programme.
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Principle 2.23 |
The Board delegates certain functions to well-structured committees without abdicating from its own responsibilities.
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Qualitative comment:Audit, risk, remuneration, nomination and governance, social, ethics and transformation and investment committees are in place. Each committee has a formal “Terms of Reference” document which sets out the mandate and authority of each committee and is reviewed annually by both the relevant committee and the board. Feedback is given to the board on the committees’ activities and the minutes of all committees are included in the board packs.
All committees comply with the relevant statutory requirements and are constituted in accordance with King III and the Companies Act, where applicable. |
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Principle 2.24 |
A governance framework has been agreed upon between the group and its subsidiary Boards
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Qualitative comment:A governance framework is agreed between Reunert and its subsidiaries, and deals with: • compliance with respect to the JSE Listings Requirements, where applicable; and • the adoption of the holding company policies or procedures by the subsidiary, where applicable |
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Principle 2.21 |
The Board is assisted by a competent, suitably qualified and experienced company secretary.
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Qualitative comment:Reunert Management Services (Pty) Ltd is the company secretary for the group. The individual primarily responsible for the secretarial role is K Louw.
Compliance with section 3.83(i)&(j) of the JSE Limited Listings Requirements:
? The company secretary, through its employees, provides assistance to the board as contemplated in the JSE Listings Requirements and principle 2.21 of King III. Steps followed to make annual assessment: At its meeting on 26 August 2014, the nomination and governance committee considered: feedback received from the committee members, as well as additional information provided to it in the meeting documents. Thereafter the committee considered the competence, qualification and experience of K Louw. At its meeting on 26 August 2014, the nomination and governance committee considered, amongst others: - Competence: A favourable assessment of the company secretary by members of the executive committee and line management. - Experience: K Louw has 15 years’ post article experience and continues to participate in activities that facilitate continued professional development. - Qualifications: K Louw has the following qualifications: B Com(Law); LL.B; LL.M (Tax); LL.M (Corporate Law) and admitted attorney of the High Court of South Africa. She also holds a professional post-graduate qualification from the Chartered Secretaries of Southern Africa in Company Secretarial and Governance Practice.
In light of the above, the nomination and governance committee recommended to the board that the competence, qualifications and experience of the company secretary are appropriate for the role.
Further at its meeting on 26 August 2014, the nomination and governance committee evaluated whether the company secretary maintained an appropriate arms-length relationship with the board: The nomination and governance committee completed an evaluation questionnaire on the independence of both the company secretary and K Louw. The nomination and governance committee considered, amongst others, the following: Reunert Management Services Proprietary Limited: - Each director of the company is cognisant of and subject to fiduciary duties to act in the best interest of this company and is obliged to abstain from any decision where a potential conflict of interest exists. K Louw: - She is not a director of Reunert. - She has access to all of the board members at any time and is in regular contact with the chairman of the board and the chairmen of the committees. - She has access to and is advised on an on-going basis by Reunert’s sponsors. - The nomination and governance committee is responsible for her performance assessment and her remuneration package is determined by the remuneration committee.
In light of the above, the nomination and governance committee recommended to the board that the company secretary, as well as K Louw, maintained an appr |
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Principle 2.22 |
The evaluation of the Board, its committees and individual directors is performed every year.
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Qualitative comment: The chairman and the board formally perform an annual evaluation of the board, the board committees and individual directors as well as the chairmen of each of the committees. The results of the evaluations are considered by the nomination and governance committee and recommendations are made to the board based on the feedback received. |
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Principle 2.25 |
The company remunerates its directors and executives fairly.
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Qualitative comment: The remuneration committee reviews and advises the board on the remuneration philosophy and policy (which is subject to annual approval by shareholders). Executive employees are remunerated by way of a guaranteed package as well as short-term and long-term incentives. Periodically, the group’s remuneration policy, mechanisms and levels are benchmarked.
Additional information on remuneration in the group is included in the remuneration report of the integrated report.
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Principle 2.26 |
The company has disclosed the remuneration of each individual director and prescribed officer.
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Qualitative comment: Disclosure of director and prescribed officer remuneration is done in the annual financial statements in compliance with the Companies Act. |
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Principle 2.27 |
The shareholders have approved the company’s remuneration policy.
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Qualitative comment:The group’s remuneration policy is proposed to shareholders at the annual general meeting for a binding vote. |
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Principle 3.1 |
The Board has ensured that the company has an effective and independent audit committee
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Qualitative comment:The company has an audit committee comprising at least three independent, non-executive directors who are nominated by the board on recommendation of the nomination and governance committee, and elected at the annual general meeting by shareholders.
The audit committee has clear terms of reference, approved by the board, which inform the audit committee agenda and work plan. The terms of reference are reviewed annually.
The effectiveness of the audit committee is assessed annually. |
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Principle 3.2 |
Audit committee members are suitably skilled and experienced independent non-executive directors
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Qualitative comment: The collective skills of the members of the audit committee are appropriate for the company’s size and circumstances, as well as industry, and are assessed annually. The audit committee has an appropriate understanding of integrated reporting (which includes financial reporting), internal financial controls, the external and internal audit process, corporate law, risk management, sustainability issues, information technology governance and the governance processes within the group. |
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Principle 3.3 |
The audit committee is chaired by an independent non-executive director.
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Qualitative comment: The audit committee is chaired by an independent non-executive director who is not the chairman of the board. The audit committee takes primary responsibility for and has ultimate authority on matters pertaining to its statutory duties. |
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Principle 3.4 |
The audit committee oversees integrated reporting
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Qualitative comment:The audit committee is mandated to review the integrated report and to make recommendations in this regard to the board. In particular, the audit committee is responsible for evaluating the significant judgements and reporting decisions affecting the integrated report, including changes in accounting policy, decisions that require a major element of judgement and the materiality, clarity and completeness of the proposed financial and sustainability disclosures.
The audit committee ensures that the information in the sustainability report is reliable and that no material conflicts or differences arise when compared with the financial results or the integrated report. |
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Principle 3.5 |
The audit committee has ensured that a combined assurance model has been applied which provides a coordinated approach to all assurance activities.
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Qualitative comment: The audit committee provides an effective balance to the executive management and upholds the independence of internal and external assurance providers.
The combined assurance provided by internal and external assurance providers, as well as by management, is sufficient to satisfy the audit committee that significant financial risk areas within the group have been adequately addressed and suitable controls exist to mitigate and reduce these risks.
The audit committee meets with the heads of the internal and external audit teams, without management present, to provide an opportunity to discuss assurance activities and confirm that these individuals are not subjected to undue influence or pressure.
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Principle 3.6 |
The audit committee is satisfied with the expertise, resources and experience of the company’s finance function.
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Qualitative comment: The audit committee annually reviews the appropriateness of the expertise and adequacy of the finance function and the experience of the senior management responsible for the financial function and discloses the results of this review in the integrated report. |
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Principle 3.7 |
The audit committee should be responsible for overseeing internal audit
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Qualitative comment: The group has an internal audit function that is independent from the day-to-day operations of the group, and has the necessary resources, budget, standing and authority within the group to discharge its functions.
The audit committee is responsible for the ratification of the appointment, performance management and dismissal of the head of internal audit.
The audit committee approves the internal audit plan and encourages cooperation between internal and external audit.
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Principle 3.8 |
The audit committee is an integral component of the risk management process.
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Qualitative comment: The board has assigned responsibility for risk management processes to the risk committee. The chairman of the audit committee is also a member of the risk committee.
The audit committee satisfies itself that the following areas have been appropriately addressed: • financial reporting risk; • internal financial controls; • fraud risk as it relates to financial reporting; and • IT risk as it relates to financial reporting.
The audit committee concludes and reports annually to the board on the effectiveness of the company’s internal financial controls.
There is effective interaction between the audit, risk, and social, ethics and transformation committees relating to the reporting and monitoring of risk.
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Principle 3.9 |
The audit committee is responsible for the recommending the appointment of the external auditor and overseeing the external audit process.
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Qualitative comment:The audit committee recommends to the shareholders and informs the board of the appointment, reappointment and removal of the external auditor, based on an assessment of the firm, and the designated auditor’s qualifications, experience, resources, effectiveness and independence. These attributes are assessed annually.
The audit committee approves the external auditor’s terms of engagement and remuneration.
The audit committee regularly reviews and monitors the objectivity and independence of the external auditor and ensures that the engagement partner rotates every five years.
The audit committee defines a policy for board approval addressing the nature, extent and terms under which the external auditor may perform non-audit services, and ensures that all non-audit services rendered are disclosed in the annual financial statements.
The audit committee monitors concerns identified by internal or external audit and ensures that these are appropriately addressed. |
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Principle 3.10 |
The audit committee has reported to the board and the shareholders as to how it has discharged its duties.
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Qualitative comment:The audit committee reports to the shareholders on its statutory duties at the annual general meeting and reports to the board at board meetings. As a minimum, the audit committee reports on: • how its duties were carried out; • whether the committee is satisfied with the independence of the external auditor; and • the annual financial statements, accounting policies and internal financial controls.
An audit committee report, which includes information on how it discharged its duties, is included in the integrated report. |
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Principle 4.9 |
The Board has received assurance regarding the effectiveness of the risk management process.
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Qualitative comment:The board receives assurance from the chairman of the risk committee and CEO that management has implemented, monitored and integrated the risk management plan in the daily activities of the company.
Internal audit provides a written assessment of the effectiveness of the system of internal controls and risk management through the audit and risk committees to the board on an annual basis. |
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Principle 4.1 |
The Board is responsible for the governance of risk.
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Qualitative comment:The board takes responsibility for the governance of risk within the group and this is reflected in the board charter, the terms of reference of the audit and risk committees, and the group risk management policy.
Formal risk management policy, framework and processes developed by management and approved by the board on recommendation of the risk committee, have been implemented and widely distributed throughout the group.
The board, through the risk and audit committees, satisfies itself that risk assessments, responses and interventions are effective and discloses this in the integrated report.
The risk management policy incorporates the risk management framework, standards and methodologies adopted, risk management guidelines and details regarding the assurance and review of the risk management process. The risk committee reviews the risk policy annually.
The audit committee satisfies itself that the following areas have been appropriately addressed: • financial reporting risk; • internal financial controls; • fraud risk as it relates to financial reporting; and • IT risk as it relates to financial reporting. |
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Principle 4.2 |
The Board has determined the levels of risk tolerance
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Qualitative comment: The board, through the risk committee, monitors the significant risks applicable to the group and understands the implications of such risks.
Each year the risk committee sets specific limits on the levels of risk the group is willing to tolerate. The risk committee reviews these limits at each risk committee meeting as well as during periods of increased uncertainty or adverse changes to the business environment.
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Principle 4.3 |
The risk committee and/or audit committee has assisted the Board in carrying out its risk responsibilities.
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Qualitative comment: A risk committee is in place and assists the board in reviewing the risk management process, maturity and effectiveness of risk management activities as well as the key risks facing the group.
The audit committee assists the board with financial reporting risks and risks relating to financial controls.
Formal terms of reference detailing the risk committee’s responsibilities for risk management are in place.
The risk committee complies with the following: • members include executive and independent non-executive directors; • members of senior management are invited to attend meetings where the risk committee deems it expedient; • it has a minimum of three members; • it convenes at least twice per year, and • its performance is monitored annually.
The chairman of the audit committee is a member of the risk committee.
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Principle 4.4 |
The Board has delegated to management the responsibility to design, implement and monitor the risk management plan.
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Qualitative comment: Management is accountable to the board for designing, implementing and monitoring the system and process of risk management and integrating it into in the day-to-day activities of the group. The audit and risk committees assist the board to monitor management in this regard. |
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Principle 4.5 |
The Board has ensured that risk assessments are performed on a continual basis.
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Qualitative comment: An ongoing risk assessment process, consisting of risk identification, quantification and risk evaluation is in place. The board, on the recommendation of the risk committee, considers this process effective.
A top-down approach to conducting risk assessments has been adopted and the risk committee regularly receives and reviews a register of the company’s key risks. The risk committee ensures that particular attention is given to risks that could negatively impact the long-term sustainability of the group. Key risks, together with risk responses, are disclosed in the annual integrated report.
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Principle 4.6 |
The Board has ensured that frameworks and methodologies are implemented to increase the probability of anticipating unpredictable risks.
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Qualitative comment:The group has a risk management policy and framework which outlines the process and methodologies for identifying, monitoring and mitigating risks.
In addition to the formal reports to the audit and risk committees, the risk committee discusses and evaluates, as a standard agenda item, the economic and competitive environment. |
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Principle 4.7 |
The Board has ensured that management has considered and has implemented appropriate risk responses.
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Qualitative comment: Management identifies and notes in the risk register, the risk responses decided upon. Responses include the following options: avoid; treat, reduce or mitigate; transfer; tolerate; exploit; terminate.
These responses are presented to, and interrogated by, the risk committee, and follow up on these responses is monitored as appropriate.
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Principle 4.8 |
The Board has ensured the continual risk monitoring by management.
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Qualitative comment: The group has a risk policy and framework which outlines the process, responsibilities and methodologies for identifying, monitoring and mitigating risks. The group’s progress in managing the risks is reported to the risk committee at least twice a year. |
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Principle 4.10 |
The Board has ensured that there are processes in place which enable complete, timely, relevant, accurate and accessible risk disclosure to stakeholders.
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Qualitative comment: The board discloses any undue, unexpected or unusual risks taken in the pursuit of reward and any material losses and the causes of those losses in the integrated report, if applicable.
The board discloses any current, imminent or envisaged risk that may threaten the long-term sustainability of the company, if applicable, and complies with the relevant JSE Listings Requirements in this regard.
The board discloses its view on the effectiveness of the risk management process in the integrated report.
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Principle 5.1 |
The Board is responsible of information technology (IT) governance.
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Qualitative comment: The board is responsible for IT governance and understands the strategic importance of IT in achieving the group’s strategic objectives. The audit committee’s annual plan has IT governance as a standing item |
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Principle 5.2 |
IT has been aligned with the performance and sustainability objectives of the company.
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Qualitative comment: The IT strategy is aligned with the group’s strategic and business processes. IT is not simply viewed as a service provider to the business, but also as an enabler. When business plans are developed (strategic or operational), IT is involved and integrated into the plan.
A significant amount of work has been done during the financial year in order to address the key IT risks including: -Standardising IT framework policies throughout the group; -Formulating a standard service level agreement to be implemented throughout the group by end of 2015; -Investing in replacing ageing hardware, data networks and legacy software in various operations and -Development of a formal business continuity planning framework which has been distributed throughout the group for implementation during 2015.
The board is confident that the key IT risks have been addressed and whilst there is additional room for improvement, a road map is in place to ensure all IT risks are addressed according to a structured cost-benefit plan.
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Principle 5.3 |
The Board has delegated to management the responsibility for the implementation of an IT governance framework.
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Qualitative comment: Management is responsible for implementing and executing the IT governance framework.
IT frameworks, policies and procedures are implemented to minimise IT risk, deliver value and ensure business continuity efficiently and cost effectively.
Management reports to the audit committee on whether the IT function is achieving its objectives and managing identified risks. The structure of the IT function is defined and there is an IT steering committee chaired by the CFO. The group information officer (GIO) is responsible for IT governance. The GIO is suitably qualified, and communicates through the CFO to the audit committee and executive management on IT governance.
Also see comments in principle 5.2.
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Principle 5.4 |
The Board monitors and evaluates significant IT investments and expenditure.
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Qualitative comment:Appropriate technology, processes and people are utilised to support business and governance requirements. Return on investment is measured and reported on for IT investments and projects. |
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Principle 5.5 |
IT is an integral part of the company’s risk management plan.
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Qualitative comment:IT risks are assessed as part of the group’s normal risk management activities. Applicable IT laws, regulations, standards and leading practices are considered and complied with where applicable.
Also see comments in principle 5.2. |
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Principle 5.6 |
The Board ensured that information assets are managed effectively.
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Qualitative comment: An information management strategy is in place which monitors the management of IT assets. This includes the management of information privacy and security. |
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Principle 5.7 |
A risk committee and audit committee assists the board in carrying out its IT responsibilities.
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Qualitative comment: The risk committee ensures that IT risks are addressed through its risk management, monitoring and assurance processes. The risk committee obtains assurance from management regarding the effectiveness of controls to address IT risk. IT, as it relates to financial reporting and going concern is the responsibility of the audit committee. |
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Principle 6.1 |
The Board ensures that the company complies with applicable laws and considers adherence to non binding rules, codes and standards.
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Qualitative comment: Compliance is an ethical and legal imperative within the group. Legislative and regulatory compliance is monitored by the group company secretarial and compliance manager.
The board monitors the group’s compliance with regard to all material, applicable laws, rules, codes and standards. External professional assistance is obtained where appropriate.
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Principle 6.2 |
The Board and each individual director have a working understanding of the effect of applicable laws, rules, codes and standards on the company and its business.
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Qualitative comment:It is the role of the group company secretarial and compliance manager to keep the board informed of any material changes to legislation which could have an impact on the group. Continued development requirements of the board are formally assessed each year. There is also a standing invitation to all individual directors or board committees to approach the company secretary at any time, to arrange any training or development required by the individual director or board committee. |
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Principle 6.3 |
Compliance risk should form an integral part of the company’s risk management process.
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Qualitative comment: Compliance risk forms an integral part of the group’s risk management process.
The compliance function (as part of the broader management structure) provides assistance to the board and management in complying with applicable laws, rules, codes and standards.
The group legal counsel assists with the interpretation of regulatory requirements where necessary.
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Principle 6.4 |
The Board should delegate to management the implementation of an effective compliance framework and processes.
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Qualitative comment: The group’s procedures and control framework incorporates compliance with relevant laws, rules, codes and standards.
The leadership of the group encourages a culture of compliance; of establishing the appropriate structures, education and training relevant to compliance. Details of any material instances of non-compliance by either the group, or its directors or its prescribed officers are included in the integrated report, if applicable.
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Principle 7.1 |
The Board should ensure that there is an effective risk based internal audit.
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Qualitative comment: An internal audit function is in place and an internal audit charter is defined and approved by the board following recommendation by the audit committee. The charter is reviewed annually. The internal audit function is risk based. The internal audit function adheres to the IIA Standards and code of ethics.
Internal audit performs the following functions: • evaluates the group’s governance processes; • performs an objective assessment of the effectiveness of risk management and the internal control framework; • systematically analyses and evaluates business processes and associated controls; and • provides a source of information as appropriate, regarding instances of fraud, corruption, unethical behaviour and irregularities.
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Principle 7.2 |
Internal Audit should follow a risk based approach to its plan.
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Qualitative comment: The internal audit plan is risk-based and takes into account the strategy and risks of the group. Internal audit is independent from management. Internal audit planning takes the form of an assessment of risks and opportunities facing the group.
Internal audit reporting meets the needs and requirements of management and the audit committee.
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Principle 7.3 |
Internal Audit should provide a written assessment of the effectiveness of the company’s system of internal controls and risk management.
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Qualitative comment: Internal audit forms an integral part of the group’s combined assurance model. Internal audit provides a written assessment of the system of internal controls and the effectiveness of risk management to the audit committee and the board.
The internal audit function possesses the appropriate competencies to focus its attention on risk and internal control.
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Principle 7.4 |
The audit committee should be responsible for overseeing internal audit
SAME AS PRINCIPLE 3.7
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Qualitative comment:The internal audit plan is agreed and approved annually by the audit committee.
Internal audit provides independent and objective assurance to the audit committee that the internal financial controls are adequate and effective.
The head of internal audit reports functionally to the audit committee and attends all audit committee meetings.
The audit committee ensures that the internal audit function is subjected to a quality review, either in line with the IIA standards or as and when the audit committee determines appropriate.
The audit committee reports on the state of the internal financial control environment in the group’s integrated report and audited annual financial statements. |
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Principle 7.5 |
Internal audit should be strategically positioned to achieve its objectives.
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Qualitative comment: The internal audit function is independent and objective and reports functionally to the audit committee. There is sufficient interaction between internal audit and the audit and risk committees to ensure the optimum level of control oversight is maintained.
The internal audit function is appropriately skilled and resourced for the complexity and volume of risk and assurance needs. External assistance is obtained if the relevant skills are not readily available in the internal audit department. The adequacy of skills and resources are assessed annually by the audit committee.
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Principle 8.1 |
The Board should appreciate that stakeholders’ perceptions affect a company’s reputation.
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Qualitative comment: The board is the custodian of the corporate reputation and stakeholder relationship. The Reunert management engages with stakeholders and major issues are reported by the CEO to the board.
The gap between stakeholder perceptions and the performance of the group is monitored, managed and measured by the board and the audit and the risk committees (where appropriate) to enhance or protect the group’s reputation and avoid damage and destruction by the group’s actions.
Also refer to the response to principle 2.11.
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Principle 8.2 |
The Board should delegate to management to proactively deal with stakeholder relationships.
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Qualitative comment: Management has developed a strategy and formulated policies to manage relationships with all stakeholder groups.
The board encourages shareholders to attend the annual general meeting, and the chairman of each board committee is present at the annual general meeting.
The group has a person dedicated to investor and stakeholder relations and communications, who assists the board.
The board discloses in its integrated report the nature of the group’s dealings with stakeholders and the outcomes of these dealings.
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Principle 8.3 |
The Board should strive to achieve the appropriate balance between its various stakeholder groupings, in the best interests of the company.
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Qualitative comment: The group’s CEO and CFO are primarily responsible for balancing the company’s interests and stakeholder interests for sustainable business. These activities are reported to the board.
As a listed entity, the group operates in a highly regulated and visible environment. Stakeholders are taken into account in decision-making, as set out in the sustainability report.
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Principle 8.4 |
Companies should ensure the equitable treatment of shareholders.
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Qualitative comment: Compliance with the JSE Listings Requirements ensures equitable treatment of shareholders. |
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Principle 8.5 |
Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence.
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Qualitative comment:As a listed entity, much of how the group deals with price sensitive information is prescribed. The group provides complete, timely, relevant, accurate, honest and accessible information to its stakeholders, taking into account legal and strategic considerations.
A stakeholder communication programme is in place. The objective of the programme is to ensure that all who have a right to know are properly informed, that effective feedback exists, that the board is alerted to matters that need to be communicated to stakeholders in good time, and that processes exist to deal rapidly with any crisis. |
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Principle 8.6 |
The Board should ensure that disputes are resolved effectively and expeditiously as possible.
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Qualitative comment: Disputes are resolved as effectively, promptly and efficiently as possible. Where possible, out of court settlements are obtained or alternative dispute resolution mechanisms are sought. Dispute resolution is done as cost-effectively as possible.
The group legal advisor reports to the audit and the risk committees on litigation that could materially impact the finances or reputation of the group. The group legal counsel is a permanent invitee to the risk committee.
The investor relations and communications officer assists in formulating appropriate communication to stakeholders in the event of material disputes
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Principle 9.1 |
The Board should ensure the integrity of the company’s integrated report.
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Qualitative comment:The group issues an annual integrated report that is approved by the board, on the recommendation of the audit committee. The board ensures that, to the best of its knowledge and belief, the report provides a truthful and factual representation of material issues, is reliable and that no conflicts or differences arise when the various sections of the report are compared.
A strong correlation exists between the strategic, financial, risk management and sustainability information provided. |
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Principle 9.2 |
Sustainability reporting and disclosure should be integrated with the company’s financial reporting.
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Qualitative comment: The annual integrated report includes commentary on the group’s financial statements. This allows the reader to contextualise the financial results based on the material issues that impact the group, its stakeholders and the communities in which it operates. The full set of annual financial statements is not included in the integrated report, but is available on the Reunert website. The sustainability report follows the guidelines of the Global Reporting Initiative (GRI) and is also available online. |
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Principle 9.3 |
Sustainability reporting and disclosure should be independently assured.
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Qualitative comment: |
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External independent assurance is not provided for the sustainability information. Instead, internal audit has performed appropriate procedures to assess the completeness and accuracy of non-financial information presented in the integrated report.
BBBEE levels for all group operating entities are externally verified by rating agencies.
The board is satisfied that this internal oversight is sufficient to provide the required level of comfort as to the reliability of the information presented. The requirement for external assurance is periodically re-assessed. |
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Overall Score |
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Disclaimer
The assessment criteria of the web-based tool, the governance assessment instrument (GAI) have been based on the practice recommendations of the King III report. These criteria are intended to assess quantitative aspects of corporate governance only and not qualitative governance. As such, the results are proposed to serve as an indication of the structures, systems and processes in place and are not intended to include an indication of the governance culture of an entity.
The responsibility for the input of data in order to attain a result through the use of this is that of the user and the entity in respect of which the user licence has been granted (licensee). The results based on the use of the GAI may be based on the subjective opinion of the licensee or the representative user(s) and may not be true reflection of the actual state of the governance structures, systems and processes at the entity.
The The Global Platform for Intellectual Property (Pty) Ltd ("TGPIP") makes no warranty or representation as to the accuracy or completeness of either the assessment criteria or the results. Neither TGPIP nor any of its affiliates nor the software developer shall be held responsible for any direct, indirect, special, consequential or other damage of any kind suffered or incurred, as a result of reliance on the results produced through the use of the GAI.
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