TGPIP :: Reports - King IV Application Register


King IV^TM Report by Principle at 30 Jun 2022
City Lodge Hotels Limited Registration Number: 1986/002864/06		Run Date: 12/11/2024 2:53:30 PM

Principle 1	The governing body should lead ethically and effectively.
	King IV™ Outcome	King IV™ Reference
The board provides effective and ethical leadership and directs the group within the group governance framework and delegation of authority which supports value creation and protection, over the long-term, for all stakeholders. Directors are required to conduct themselves in accordance with the Group’s Code of Ethics and Business Conduct ("the Code") and their duties under the Companies Act 71 of 2008 (Companies Act) and Board Charter. Integrity - Directors are required to act in the best interests of the Company at all times. - Declarations of interests are submitted on a quarterly basis at each board meeting and not just annually. - Any conflicts of interest with directors are managed. - Directors are recused from voting on decisions where they are, or may potentially be, conflicted in compliance with the Companies Act, the board charter and conflicts of interest policy. - The Board leads by example. Competence - Directors are afforded the beneﬁt of an induction programme tailored to their individual needs and aimed at broadening their understanding of the company and the business environment within which it operates. The process affords each new NED the opportunity of meeting with the EDs to better understand the business, site visits and meeting with the company’s JSE sponsor to highlight their responsibilities with specific reference to the JSE Listings Requirements and the regulations affecting listed companies. - Directors are kept updated on developments in the business. - The mix and skills of the directors are reviewed annually by the Remcom to ensure the appropriate mix of competencies, experience and diversity to effectively discharge the Board's responsibilities. Responsibility - The Board approves material financial commitments and decisions. - Management act in accordance with the approved delegation of authority. - All decisions are debated in detail either at Board or committee level. - Cognisance is taken of risks and unintended consequences when making decisions. - Directors are expected to participate fully, frankly and constructively in Board discussions and to bring the benefit of their particular knowledge, experience, skills and abilities to the Board table. They are provided with board material well enough in advance of each meeting to ensure adequate preparation. - Absenteeism at meetings is the exception rather than the norm. Accountability - All directors take accountability for decisions – collectively and individually. Fairness - Stakeholder relations are very important to the Board. Continuous engagement with key stakeholders takes place to promote the achievement of the group’s business objectives and support economically, socially and environmentally sustainable practices. The group aims to treat all its stakeholders fairly and strives to enhance and develop services and communication channels to meet their expectations. Transparency - Comprehensive disclosure is made in the Integrated Report.
Principle 2	The governing body should govern the ethics of the organisation in a way that supports the establishment of an ethical culture.
	King IV™ Outcome	King IV™ Reference
The board provides effective leadership based on a principled foundation and is ultimately accountable for the group’s ethics. The board has put a number of structures, policies and processes in place to ensure that business is conducted in an ethical manner, taking into account the impact of the organisation’s business on the economy, society and the environment and balancing the interest of its stakeholders. Management has been delegated the responsibility for the implementation and execution of the Codes and ethics management process. The board, with the assistance of the Social and Ethics Committee (SEC), exercises ongoing oversight of the management of ethics, monitoring the group’s activities with regards to ethics and ensuring ethics is integrated into the operations. The code applies to all directors and employees and forms part of their induction. The code is available on the group’s website, www.clhg.com and is premised on the company’s values, organisational culture and the 10 UNGC Principles. It raises awareness on what is considered acceptable and unacceptable behaviour to guide day-to-day decision-making. The Code covers, inter alia, declarations of interests, receiving and giving of gifts and hospitality. Online training is provided to guide employees on how to implement basic business principles. Employees have a duty to report any suspected breaches of the Code and transgressions of Company policies. The company operates a 24 hour anonymous tip-off reporting line through Whistle Blower Proprietary Limited. This anonymous telephone line provides an impartial facility for all stakeholders to report deviations from ethical behaviour.
Principle 3	The governing body should ensure that the organisation is and is seen to be a responsible corporate citizen.
	King IV™ Outcome	King IV™ Reference
The board, through the SEC ensures that the company remains a responsible corporate citizen that engages in sustainable business practices and positively impacts the communities in which it operates. A number of initiatives are in place across the group to develop small businesses, facilitate transformation, uplift communities in which the company operates and promote employee educational development and wellbeing. The company is committed to responsive and transparent stakeholder engagement. Continuous engagement with key stakeholders takes place to promote the achievement of the group’s business objectives and support economically, socially and environmentally sustainable practices. The Integrated Report, specifically the social and ethics committee report and sustainability review provides further detail in this regard.
Principle 4	The governing body should appreciate that the organisation's core purpose, its risks and opportunities, strategy, business model, performance and sustainable development are all inseparable elements of the value creation process.
	King IV™ Outcome	King IV™ Reference
The board approves the strategy. In doing so it: - ensures that the strategy is aligned with the company's purpose, and takes into account the legitimate interests and expectations of stakeholders; - satisfying itself that the strategy and business plans do not give rise to risks that have not been thoroughly assessed by management. - ensuring that the strategy will result in sustainable outcomes. The Board oversees and monitors management’s progress in respect of the implementation of board plans and strategies. Performance against its strategic objectives is reported on in the Integrated Report.
Principle 5	The governing body should ensure that reports issued by the organisation enable stakeholders to make informed assessments of the organisation's performance, and its short, medium and long term prospects.
	King IV™ Outcome	King IV™ Reference
The company prepares an Integrated Report that follows the Integrated Reporting Framework and King IV recommended disclosures as appropriate to the group. The Annual Financial Statements are prepared in compliance with International Financial Reporting Standards and the Companies Act and are audited by the company's external auditors. The various reports, including CEO report, operations update, finance report, budgets, top risks, strategy progress, stakeholder engagement, legal and governance and committee feedback serve to provide the board with assurance on the information to be provided to stakeholders. The Board, assisted where appropriate by the Audit and other board committees, ensures that the necessary controls are in place to verify and safeguard the integrity of the information in the integrated report, annual financial statements and any other disclosures. Reporting frameworks and materiality are approved by the Audit Committee to ensure compliance with legal requirements and relevance to stakeholders. The Audit Committee reviews the audited financial statements to ensure that they are compliant with all necessary prescribed standards and that such reports adequately provide information to support decision-making for all stakeholders. The Integrated Report is published on the group's website, www.clhg.com and through other media, as is appropriate. Independently assured sustainability reporting and disclosure has not yet taken place and remains under review by management.
Principle 6	The governing body should serve as the focal point and custodian of corporate governance in the organisation.
	King IV™ Outcome	King IV™ Reference
The board operates in accordance with a formally approved charter to assist it in the effective discharge of its responsibilities, which sets out its governance responsibilities, including composition requirements, roles and responsibilities and procedural conduct to ensure that board activities conform to sound corporate governance principles and comply with applicable legislation. The Board charter is regularly reviewed. Directors have access to the advice and services of the company secretary and may, where necessary, and in accordance with the board-approved policy, seek independent professional advice at the group’s expense concerning matters within the scope of their duties. Directors have access to all company information and senior management, as and when required, to assist them in the discharge of their duties and responsibilities. The Company Secretary serves as the primary contact between non-executive directors and the group. The board meets at least four times a year. Additional meetings may be convened when necessary to address matters of an urgent nature. The Integrated Report further details the corporate governance protocols established and overseen by the board in the discharge of its responsibilities.
Principle 7	The governing body should comprise the appropriate balance of knowledge, skills, experience, diversity and independence for it to discharge its governance role and responsibilities objectively and effectively.
	King IV™ Outcome	King IV™ Reference
City Lodge has a unitary board of 12 directors, the majority of whom are non-executive directors. 8, including the chairman of the 9 non-executive directors are independent. 3 Executive directors, the CEO, CFO and COO serve on the board. The company’s policy on selection and appointment of directors to the board and gender diversity includes diversity requirements beyond race and gender and extends to culture, age, field of knowledge, skills and experience, all of which contribute to optimal composition and overall effectiveness. In assessing eligibility to serve the Remcom ensures that new directors are not disqualified from acting as a director (c/r s 162 of the Companies Act). The board skills matrix informs what the future composition of the board should look like. Appointments are made on merit against objective criteria, taking suitability for the role, board balance and composition, required mix of skills, background, knowledge, experience and expertise required, independence, demographics and gender into account, with reference, where required, to the board succession plan. All potential board appointees are subject to the JSE ﬁt and proper test and all appointments are subject to shareholder approval. Remcom reviews the composition of the board and all committees with reference to skills requirements, succession planning and diversity, as well as director independence. The chairman and CEO have separate responsibilities. The board is satisfied that the balance of power and authority on the Board is sufficient so that no one individual has unfettered powers of decision-making and that no additional independent voices are required. The board is satisfied that the composition of the board reflects the appropriate balance of knowledge, skills, experience, competencies in industries and fields relevant to the group’s business operations, diversity(including gender and demographics) and independence to execute its roles and responsibilities effectively The categorisation, qualifications, experience, length of service, age and other positions are disclosed per board member on the website www.clhg.com and in the Integrated report.
Principle 8	The governing body should ensure that its arrangements for delegation within its own structures promote independent judgement, and assist with balance of power and the effective discharge of its duties.
	King IV™ Outcome	King IV™ Reference
Board committees have been established to assist the Board in discharging its responsibilities. The board has four standing committees - audit - remuneration and nominations (remcom) - risk - social and ethics (SEC). The audit and social and ethics committees are statutory committees and respectively perform the same function for all subsidiary companies. All committees operate in accordance with their terms of reference, which are reviewed regularly and updated where applicable, to ensure alignment with the latest developments in legislation, King IV™, the JSE Listings Requirements and business requirements. Each committee is chaired by an independent NED and is appropriately constituted, with each committee having at least three members appointed by the board, with the exception of the Audit Committee whose members are nominated by the board and elected by shareholders. The majority of committee members are independent, except for the risk committee (albeit that the majority of members are non-executive) and SEC. The remcom reviews the composition of each committee, taking into account factors such as diversity and skills. External advisors and members of management attend committee meetings by invitation. The board receives reports and minutes of each committee meeting. save for Remcom. The board considers the allocation of roles and responsibilities and the composition of membership across committees holistically, to achieve the following: - effective collaboration through cross-membership between committees, coordinated timing of meetings, and the avoidance of duplication or fragmented functioning in so far as possible; - where more than one committee has jurisdiction to deal with a similar matter, the specific role and positioning of each committee in relation to such a matter is defined to ensure complementary rather than competing approaches; and - there is a balanced distribution of power in respect of membership across committees so that no individual has the ability to dominate decision-making, and no undue reliance is placed on any individual. Delegation in no way relieves the board from discharging its duties and it remains ultimately accountable for the performance and affairs of the company. The board applies its collective mind to the information, opinions, reports and statements presented by the Chairperson of each committee. Audit Committee The Audit Committee is constituted as a statutory committee o in terms of section 94(7) of the Companies Act and also assists the board in the discharge of other duties assigned to it by the board. The Audit Committee consists of independent, non-executive directors, elected annually by shareholders. The members of the committee, as a whole, have the necessary financial literacy, skills and experience to execute their duties effectively. The CEO, CFO, lead external audit partner and internal audit partner attend committee meetings by invitation. The internal and external auditors have unrestricted access to the committee through the chairman. The responsibilities of the Audit Committee as well as significant matters dealt with during the year are disclosed in the IAR. Remcom The Remuneration Committee is responsible for oversight of: - remuneration - the process for nominating, electing and appointing members of the Board - succession planning of directors - evaluation of the performance of the Board and its committees. All members of the committee are independent, non-executive directors. The CEO attends meetings by invitation. Risk committee The Risk Committee is responsible for overseeing risk governance and comprises both executive and non-executive members with the majority being non-executive members of the Board. All members have the necessary risk management skills and experience required to discharge the committee’s responsibilities. Social and Ethics Committee (SEC) The SEC is constituted as a statutory committee of the board in terms of its responsibilities in terms of s 72(4) of the Companies Act and regulation 44 of the Companies regulations Act and as a committee of the board in respect of its social and ethical responsibilities. In addition to its statutory duties, the SEC is responsible to oversee and report on ethics, responsible corporate citizenship, sustainability and stakeholder relationships. The Chairperson is an independent non-executive directors, but the majority of members are executive directors.
Principle 9	The governing body should ensure that the evaluation of its own performance and that of its committees, its chair and its individual members, support continued improvement in its performance and effectiveness.
	King IV™ Outcome	King IV™ Reference
Board and committee effectiveness is assessed by way of a self-assessment aimed at evaluating the board, individually and collectively, governance issues, board and committee mandate and authority, composition, mix of knowledge, skills and experience, processes and procedures as well as other administrative duties. The outcomes of such assessments are evaluated by the Chairperson with the assistance of the Group Company Secretary and the results are presented to the Board and its committees. Appropriate interventions are implemented to address any areas of improvement identified by the assessment process and in the appropriate circumstances a director will not be recommended for re-election. The deputy chairman assesses the performance and leadership of the chairman in an informal manner. The chairman of the board, in consultation with remcom, evaluates the performance of the CEO. Board members assess the competency and effectiveness of the Group Company Secretary. The audit committee assesses the resources and adequacy of the finance function, in particular the expertise and experience of the CFO.
Principle 10	The governing body should ensure that the appointment of, and delegation to, management contribute to role clarity and the effective exercise of authority and responsibilities.
	King IV™ Outcome	King IV™ Reference
The role and functions of the CEO are specified in the Board Charter and the performance of the CEO is evaluated by the chairman in consultation with the remcom. The remcom: - appoints members of the Group Executive Committee (Exco) upon recommendation of the CEO - is responsible for ensuring that succession plans are in place for the position of CEO and other members of exco. The CEO is the highest executive decision-making authority of the Group and is delegated with authority from, and is accountable to, the Board for the successful implementation of the Group strategy and the overall management and performance of the Group. The CEO may sub-delegate all matters not specifically reserved for decision-making by the Board or shareholders while retaining ultimate accountability to the board. The CEO is not a member of the audit committee or remcom. The Group Company Secretary: - has been duly appointed by the Board in accordance with the Companies Act - is accountable to the Board and all directors have access to her professional corporate governance advice and services. She has unrestricted access to the Board, but at the same time maintains an arm’s length relationship with it and is not a director of the company. The Group Company Secretary is independent and functionally reports to the Board on company secretarial matters. Her duties include but are not limited to those listed in section 88 of the Companies Act.
Principle 11	The governing body should govern risk in a way that supports the organisation in setting and achieving strategic objectives.
	King IV™ Outcome	King IV™ Reference
The Board retains overall responsibility for the governance of risk and approves the risk policy that gives effect to the company's set direction on risk. The Board has delegated risk management oversight jointly to the Risk Committee. The Risk Committee reviews significant risks and their related mitigations and reports back to the Board at each meeting. The Audit Committee assists with the management of of financial risks and reviews the effectiveness of the risk process. Risk appetite and tolerance are reviewed regularly to determine the level of risk the company is willing to accept to achieve its strategic objectives, and in pursuit of creating and maintaining value for all stakeholders. The Enterprise Risk Management (ERM) framework provides a structured, dynamic and consistent approach to risk management. It is an integrated approach and recognises that effective risk management is critical to the achievement of strategic objectives and the long-term sustainable growth of the business. Risks are reviewed throughout the year and inform any updates to the Group’s enterprise risk register and combined assurance plan. The Group continuously seeks to improve and enhance the risk management process, while maintaining a practical and business-minded approach. Risks, opportunities and updates on current and emerging risks together with the associated risk exposure and mechanisms to mitigate risks are presented as appropriate. Each business area is responsible for identifying, assessing and managing the risks in their respective area.
Principle 12	The governing body should govern technology and information in a way that supports the organisation setting and achieving its strategic objectives.
	King IV™ Outcome	King IV™ Reference
The board is ultimately responsible for IT governance (ITG) and the strategic alignment of IT with the group’s performance and achievement of its strategic objectives. It has delegated responsibility to implement the ITG framework to management under the oversight of the audit committee. The Group’s IT Policy Framework incoporates standards, controls, and procedures on governance and legislative requirements. Measures to ensure compliance to all relevant laws, information security and the protection of personal information are in place. The Divisional Director: IT guides management on the acceptable use of technology and information services. Internal review of existing technology and information governance controls indicate adequacy of design and operating effectiveness.
Principle 13	The governing body should govern compliance with applicable laws and adopted, non-binding rules, codes and standards in a way that supports the organisation being ethical and a good corporate citizen.
	King IV™ Outcome	King IV™ Reference
The Board retains ultimate responsibility for compliance with applicable laws, adopted non-binding rules, codes and standards and is assisted where appropriate by the SEC and Risk Committee. Responsibility for the implementation and execution of effective compliance management is delegated to management. The Governance and Compliance function ensures that processes are in place and are continuously improved to mitigate the risk of non-compliance with the laws and to ensure appropriate responses to changes and developments in the regulatory environment. No material penalties, sanctions, fines, censures or compliance orders for contraventions of, or non-compliance with, regulatory or statutory obligations have been reported. The SEC and risk committee receives regular reports on compliance matters and to the extent that legal and regulatory matters have an impact on financial statements, such reports are presented to the Audit Committee.
Principle 14	The governing body should ensure that the organisation remunerates fairly, responsibly and transparently so as to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term.
	King IV™ Outcome	King IV™ Reference
The Board assumes responsibility for the governance of remuneration and sets the direction for remuneration across the Group. The Group’s remuneration policy seeks to ensure that the Group’s executives are fairly rewarded for their individual and joint contributions to the company’s performance and that the company remunerates fairly, responsibly and transparently at all levels to enable the company to achieve its strategic objectives and secure positive outcomes in the short, medium and long term. The board has tasked remcom with overseeing the governance of remuneration matters. Remcom is speciﬁcally responsible for ensuring that the company remunerates its EDs and senior executives fairly and responsibly, and that the remuneration policies in place serve the group’s long-term interests. In discharging its responsibility, the remcom reviews the remuneration policy and its implementation annually to ensure alignment with legislation and best practice, oversee the implementation thereof and whether it promotes the achievement of the group’s strategic objectives and encourages individual performance. The remuneration policy aims to enable the attraction, motivation and retention of skilled resources to implement the group’s strategy and is designed to achieve: • External equity: employees are rewarded in line with market benchmarks, taking relevant and appropriate factors into account. • Internal equity: employees are remunerated fairly in relation to one another and in recognition of their individual contribution and accountability. • Performance alignment: employees are aware of the requirements for sustained short-term and long-term performance in terms of rewards. • An appropriate remuneration mix: employees are aware of the need to establish a balance between cash salary, benefits, STIs and LTIs to drive the performance and values-based behaviours. Directors' remuneration is disclosed in the AFS. In line with the recommended practices in King IV, both the remuneration policy and the implementation report will be put forward to shareholders in order to obtain separate endorsement thereof by way of a non-binding vote at the AGM. The remuneration policy provides for the measures that the company will take in the event that either the remuneration policy or the implementation report, or both, are voted against by 25% or more of the votes exercised at the AGM. The remuneration policy and the implementation report are reported on in detail in the Integrated Report.
Principle 15	The governing body should ensure that assurance services and functions enable an effective control environment, and that these support the integrity of information for internal decision-making and of the organisation's external reports.
	King IV™ Outcome	King IV™ Reference
The Board is responsible for the integrity of the IAR, AFS and other external reports that are issued. The Board, with the support of the Risk Committee satisfies itself that the combined assurance model is effective and sufficiently robust for the Board to be able to place reliance on the combined assurance underlying the statements that the Board makes concerning the integrity of the Group’s external reports. The Board has approved the charters for both the Audit and Risk Committees, which gives effect to assurance over internal controls. The Group maintains a system of internal financial control that is designed to provide assurance on the maintenance of proper accounting records and the reliability of financial information used within the business and for publication. The system contains self monitoring mechanisms and actions are taken to correct deficiencies as they are identified. A combined assurance model is in place which aligns and optimises assurance and ensures that significant risks are adequately addressed. The model recognises four lines of defence. Regular communication between assurance providers optimises areas of reliance and enhances value delivery to stakeholders. Assurance providers collectively provide assurance to the Board. The outsourced internal audit function provides independent, objective assurance to the board in respect of the effectiveness of its governance, risk management and internal controls and operates within approved terms of reference. It follows a risk-based approach, evaluating significant business, strategic and control risks, and the internal audit plan is informed by the strategy and risks of the group. This assists management in the development and implementation of effective internal controls to address the risk of material misstatement of ﬁnancial results. The head of internal audit reports functionally to the audit committee and administratively to the CFO. Internal audit has unrestricted access to the CEO, CFO, and the chairman of the audit committee. The Audit Committee has been delegated the responsibility for overseeing that assurance services are executed in line with the charter and considering the resource capacity, skills and effectiveness of the internal audit function.
Principle 16	In the execution of its governance role and responsibilities, the governing body should adopt a stakeholder-inclusive approach that balances the needs, interests and expectations of material stakeholders in the best interests of the organisation over time.
	King IV™ Outcome	King IV™ Reference
City Lodge is committed to responsive and transparent engagement with our stakeholders which include guests, employees, unions, shareholders, suppliers, government, regulators and the communities in which the company operates. The Board has approved a stakeholder engagement policy in terms of which it, with the assistance of the SEC, considers issues around stakeholder engagement and management, including the principles and practices to be applied by the company in order to act with integrity towards its stakeholders and guides its interactions with them. Interaction with stakeholders takes place during the normal course of business at multiple levels across the Group. Various methods of engagement have been adopted and include face-to-face meetings, results presentations with major institutional shareholders after the release of results, hosting investor and analyst sessions, the annual general meeting, engaging with the broader stakeholder community through its marketing efforts, advertising via various social media platforms, directly with guests via guest questionnaires, and with local communities through various corporate social initiatives. Timeous communication on material developments of the business is conducted via SENS, ensuring proactive information and communication. Details of stakeholders and how the company engaged with them during they year, as well as the issues important to them are disclosed in the IR.