Currently viewing: Corporate governance report / Next: Remuneration report

Corporate governance report

Governance framework and statement of compliance

Governance influences how the group's objectives are set and achieved, how risk is monitored and assessed and performance is optimised and in so doing plays a critical role in delivering sustainable value for shareholders.

Efforts to ensure that the group is managed in an efficient, responsible and ethical manner, in the interests of its stakeholders, are ongoing.

Being the focal point for and custodian of the group's corporate governance system, the board is ultimately accountable and responsible for the performance and affairs of the company. Recognising that the achievement of a long-term sustainable business depends on stable, well-functioning and well-governed social, economic and governance practices, it strives to continually enhance the group's governance system.

The group's governance framework has been designed to promote a positive ethical culture and ensure compliance with applicable laws, regulations, non-binding rules, standards and frameworks and codes of best practice, including:

  • King IVTM
  • JSE Listings Requirements
  • Companies Act
  • International Integrated Reporting Framework

taking the size, nature and complexity of its operations into account.

By executing its responsibilities within a framework of policies, procedures, controls and powers of execution, the board ensures that governance objectives are properly implemented, managed, reviewed and adjusted, where appropriate, and enables it to identify areas that need to be addressed, further entrenched or improved upon, where necessary.

The board, committees and management are responsible for embedding practices into the group's businesses, consistent with these principles.

Initiatives undertaken to enhance the governance framework during the reporting period, and which will remain areas of focus for the foreseeable future, included:

  • review of the group governance framework
  • revision of the board and committee's charters to ensure they remain aligned with the principles and recommendations contained in King IVTM
  • enhancing disclosures in the IR, particularly in relation to remuneration
  • revision of the remuneration philosophy and policy to ensure that it remains relevant and aligned with best practice
  • ongoing efforts with regards to implementation of appropriate governance practices as provided for in King IVTM
  • continuing advancement of the group's ethics management, particularly in terms of ethics awareness
  • the ongoing journey to ensure compliance with Protection of Personal Information Act (POPlA) and General Data Protection Regulation (GDPR), given its potential significant impact. Refer here for more detail.

The principles and recommended practices contained in King IVTM are reviewed annually and recorded in a register, which is available on the group's website at www.clhg.com (stakeholder relations/King IVTM governance register), demonstrating the group's implementation of the appropriate governance practices.

The board is satisfied that the company has satisfactorily applied the principles and recommended practices of King IVTM as are appropriate to its business.

Ethical leadership

City Lodge is committed to conducting its business:

  • within the framework of applicable laws, regulations, non-binding rules and recognised codes of good practice
  • ethically, which it has achieved through the adoption of certain values and principles, including personal integrity and fair play, while building a sustainable company that recognises the short and long-term impact of its activities on the economy, society and environment within which it operates.

The board provides effective leadership based on a principled foundation and is ultimately accountable for the group's ethics. Management is, in turn, responsible for formulating and implementing a well-designed ethics management process.

The code of ethics and business conduct (the code), which is applicable to all directors and employees and provided to them during induction, is available on the group's website, www.clhg.com, and raises awareness around ethics by providing clear guidelines on what are considered acceptable values and behaviour to guide day-to-day decision-making. Although the explicit values describe the core of ethical behaviour, they are not exhaustive of all the ethical norms that guide the behaviour.

The group has a zero-tolerance approach to violations of the code and responds to contraventions through various measures which can include disciplinary, civil and/or criminal action, as well as effecting improvements to the control environment.

Over and above the internal reporting mechanisms in place, there is an independently operated whistleblower alert line, managed by Whistle Blower Proprietary Limited, through which stakeholders can anonymously and confidentially report purported unethical or corrupt behaviour. The service, details of which can be found on the group's website, www.clhg.com, is available seven days a week, 24 hours a day. All reported incidents are investigated and, where appropriate, action is taken.

In total, 14 calls were logged during the year under review, three of which were duplicates in that they related to the same issue at a specific hotel.

All calls were investigated, and the majority were found to be internal grievances which were dealt with in accordance with the group's internal grievance procedure. Of the remaining calls, none indicated a material breach in the required standard of ethical behaviour. However, where the investigations highlighted the need to review and/or revise certain policies and/or procedures this was done and, where appropriate, revisions were implemented.

Governance structure

as of 9 September 2021

Governance structure
Audit committee (statutory and board)

Stuart Morris (chairman), Frank Kilbourn, Deon Huysamer, Ndumi Medupe

Risk committee (board)

Ndumi Medupe (chairman), Stephen Enderle, Deon Huysamer, Stuart Morris,
Dhanisha Nathoo, Vincent Rague, Andrew Widegger, Marcel Kobilski (divisional director)

Remuneration and nominations committee (board)

Frank Kilbourn (chairman), Stuart Morris, Bulelani Ngcuka

Social and ethics committee (statutory and board)

Sizakele Marutlulle (chairman), Lindiwe Siddo, Andrew Widegger

Executive committee (Exco)

Chaired by chief executive officer

Management development and succession committee (Mandasco)

Chaired by chief executive officer

 

Transformation committee

Chaired by chief operating officer

Environmental sustainability steering committee

No chair

The board retains full and effective control of the group and is ultimately accountable and responsible for its performance and maximising shareholder value. This includes responsibility for reviewing and guiding corporate strategy through the establishment of key policies and objectives, understanding the key risks faced by the group, determining the risk appetite, tolerance and preferences of the group and the processes in operation to mitigate these.

Assisting the board in carrying out its duties, promoting continued good governance and providing in-depth focus in specific areas, are the various board, statutory, executive and management committees depicted in the governance structure on the preceding page. Each committee operates in accordance with approved terms of reference, which define their roles and responsibilities, comprises appropriately skilled members, allows for senior management participation and has access to specialist advice when considered necessary. Terms of reference are reviewed periodically and updated where necessary to ensure they are aligned with current best practice, as well as internal, market, legislative and regulatory requirements. With the exception of the management committees, all committees are chaired by an independent non-executive director.

Various informal committees may be established for the purpose of gathering information, agreeing on and tracking actions, and where necessary, escalating findings or making recommendations to decision-making forums.

The board

The board operates in accordance with a formally approved charter that, in addition to setting out the processes and practices that have been adopted to assist it in the effective discharge of its responsibilities, sets out its composition, defines the roles and responsibilities of the board and its directors, and ensures that board activities conform to sound corporate governance principles and comply with applicable legislation. It also sets out the division of responsibilities to ensure a balance of power and authority so that no one individual has unfettered powers of decision-making. No changes were effected to the charter during the year under review.

All board members are aware of their collective, as well as individual, responsibilities.

In carrying out their duties, directors are required to:

  • act in good faith and for a proper purpose, exercise due care and skill in the best interests of the company and its stakeholders
  • avoid conflicts of interest
  • conduct themselves according to the highest standard of personal and professional integrity and set the standard for ethical conduct and promote ethical behaviour and compliance with all applicable laws and adopted non-binding rules, codes and standards
  • act within any limitations imposed by the board on its activities
  • exhibit characteristics of integrity, competence, responsibility, accountability, fairness and transparency.

The board conducts its chartered responsibilities through workplans set to timelines.

Primary areas of focus include monitoring, reviewing and implementing matters of a strategic, financial, non-financial (including governance, compliance, ethics, sustainability and social responsibility) and operational nature.

Each group operating subsidiary company is governed by a board of directors established in accordance with the laws of the country in which it operates, which meet as required. Certain members of Exco serve as directors on these boards and report through to the board on their activities.

Composition

The board may, in accordance with the company's memorandum of incorporation (Mol), comprise a minimum of four directors and a maximum of 12 directors, the majority of whom must be non-executive directors (NEDs). In turn, the majority of the NEDs should be independent, as defined in King IVTM.

The board currently comprises 11 members, who are classified as depicted in the governance structure on the preceding page.

Each of the NEDs are individuals of high calibre, with sound credibility, who possess the requisite knowledge, skills and experience to make a meaningful contribution to and ensure the effective leadership of the company. All directors participate actively in board deliberations and decision-making processes.

Stephen Enderle was appointed as a non-executive director to the board and member of the risk committee with effect from 1 April 2021.

Post-year-end Mr Rague, who in terms of the company's MOI retires by rotation at the annual general meeting (AGM), elected to not make himself available for re-election and will accordingly retire from the board and risk committee with effect from the close of the AGM. In preparation for the vacancy that would arise the Remcom embarked on a process of identifying a suitable candidate to fill the vacancy. Candidates were interviewed paying particular attention to knowledge of the industry, experience and skill set, with reference to additional factors such as:

  • current board composition in terms balance between independent, non-executive and executive, gender, race, skill experience, perceived fit and tenure
  • composition of the various board and statutory committees
  • the needs of the business.

Based on their suitability the board, on the recommendation of the Remcom, resolved to recommend the election and appointment at the AGM of:

  • Mr Moses Kgosana, to fill the vacancy arising following Mr Rague's retirement
  • Mr Andrew Lapping, as an additional appointment

both as independent non-executive directors.

Independence

Independence, including that of long-serving NEDs, is reviewed annually to ensure correct classification.

The process of gauging independence includes, in addition to participation at meetings, an assessment of a director's independence of behaviour and ability to exercise objective, unfettered judgement and whether there is an interest, involvement, position, association or relationship which, when judged from the perspective of a reasonable and informed third party, is likely to influence unduly or cause bias in decision-making and the ability to act independently.

At its most recent assessment, a sub-committee of the board comprising unaffected independent NEDs concluded:

  • that following the unwind of the B-BBEE transaction the chairman, Bulelani Ngcuka's holding and membership of the executive team, in Vuwa Investments Proprietary Limited, a related party through the B-BBEE transaction, was no longer considered relevant with reference to determining his independence. However, his independence with reference to tenure merited consideration.
  • with reference to long-serving directors Frank Kilbourn, Stuart Morris, Ndumi Medupe and Bulelani Ngcuka that:
    • they each continue to demonstrate the requisite knowledge, skills, experience and the ability to contribute to board deliberations in a manner that is objective, meaningful and unbiased and that their independence in character and judgement is in no way affected or impaired by their tenure on the board. Furthermore there is no interest, involvement, position, association, relationship or circumstance that is likely to, or could appear to, affect their independence.
    • generally, having regard to the impact of the Covid-19 pandemic on the group and the commitment, insight and contributions made by these individuals to the decisions taken to ensure the sustainability of the group, there is no doubt as to the value added by them, not only as a result of their individual knowledge and expertise, but also due to their intimate knowledge of the business of the company and the industry, which it forms part of. Furthermore, requiring directors of this calibre to resign due to tenure is not only impractical, but not in shareholders' best interests, particularly during this period of recovery for the company.
  • that despite having reached retirement age, Mr Morris' skills, experience and willingness to express his opinions are considered invaluable, and which the board wishes to continue to avail itself of until such time as Mr Morris indicates that he is ready to step down. To ready itself to this eventuality, the remuneration and nominations committee (Remcom) is refining an appropriate succession plan for this purpose.
  • with reference to the holdings of Stephen Enderle and his family of approximately 9% of the company's issued share capital at the time, considered whether this holding is material to his personal wealth and significant enough to impact his ability to act independently, and concluded that Mr Enderle was for purposes of the year under review not considered to be independent.
Appointment, rotation and retirement

The policy on selection and appointment of directors to the board and gender diversity sets out the process around the selection and recommendation of candidates for appointment to the board, which is formal and transparent and a matter for the board as a whole, assisted where appropriate by the Remcom. 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, diversity and gender into account, with reference, where required, to the board succession plan. All potential board appointees are subject to a fit and proper test, in accordance with the JSE Listings Requirements, and all appointments are subject to shareholder approval.

NEDs have no fixed term of appointment or service contract. In accordance with the group's Mol, at least one third of the NEDs retire by rotation at the group's AGM. The directors so retiring may, if eligible, offer themselves for re-election.

EDs are full-time salaried employees engaged on the group's standard terms and conditions of employment, which may be terminated on three months' notice. Termination of an ED's employment contract will result in resignation from the board and its committees.

EDs do not receive fees for their services as a director on the board or member of the board and statutory committees and do not retire by rotation at the AGM.

Newly appointed directors retire at the first AGM following their appointment and make themselves available for election and appointment by shareholders.

The retirement age for a NED is 70 years, subject to review at the discretion of the board, and 65 years for an ED.

Despite having reached retirement age, the board wishes to continue to avail itself of the services of Mr Morris, as he continues to be a valuable member who contributes meaningfully to board and committee deliberations and on the basis that his independence, which is reviewed annually, continues.

The group acknowledges the importance of diversity as a contributor to board effectiveness and supports the principles and objectives of diversity at board level. While no voluntary targets have been set, Remcom considers race and diversity and the promotion thereof on an annual basis. Currently the board comprises 11 members, five (45.45%) persons of colour, four (36.4%) of whom are female.

The strong representation of tourism industry expertise and experience blends well with the diversity of experience in other areas and serves to strengthen the board's collective business acumen.

As such, the board is satisfied that it possesses the appropriate mix of knowledge, skills, experience, diversity and independence to discharge its responsibilities.

Where a vacancy arises, or there is a requirement for an additional board appointment, consideration will be given to recommending for appointment a person of colour and/or female, on the basis that suitable candidates are available and with due regard to the mix of skills and experience currently represented and required.

Having considered the suitability of the directors retiring by rotation and being available for re-election, the board has resolved to put the directors, whose brief curricula vitae are set out on pages 16 and 17, forward to shareholders for re-election.

Board leadership

Responsibility for running the board and for running the group's business are two critical functions. The roles of the chairman and CEO are therefore distinct from one another, ensuring a clear division of responsibilities, which is necessary to ensure a balance of power and authority, so that no one individual has unfettered powers of decision-making.

Chairman of the board and deputy chairman

The chairman is responsible for setting the ethical tone for the company, ensuring the integrity and effectiveness of the board's governance processes, acting as the link between the board and management, and providing leadership and vision in a manner that serves to enhance shareholder value and ensure the long-term sustainability of the company. The chairman's responsibilities are as detailed in the board charter.

Where the elected chairman is not considered to be independent, the board, in line with the recommendations of King IVTM and the JSE Listings Requirements, will appoint a lead independent director (LID) to strengthen independence on the board and provide leadership and advice in matters where there may be an actual or perceived conflict of interest.

The chairman and, where applicable LID are elected annually.

Post-year-end and at the time of the review of the independence of the directors it was concluded that on the basis that the chairman is deemed to be independent there is no longer a requirement for the role of a LID. The board, however, considered it important from a succession and continuity point of view for there to be a director in a senior role to assume the chair should it be required and appointed Mr Kilbourn to the role of deputy chairman.

CEO

The CEO is appointed by the board and serves as the link between management and the board, ensuring the group's day-to-day business affairs are effectively managed.

The CEO's responsibilities are as detailed in the board charter and his job description and includes, inter alia:

  • implementation of the board-approved strategies, objectives and decisions within the framework of the delegated authorities, values, operational planning and policies of the company
  • developing and recommending the annual business plan and budget
  • monitoring and reporting on company performance
  • ensuring key management roles are occupied by individuals with the necessary competence and authority and that the functions are appropriately resourced.
Board meetings and procedures

The board meets at least quarterly and meeting dates are established in advance of each calendar year. Additional meetings may be convened when necessary to address matters of an urgent nature. The board works to a formal agenda prepared by the company secretary, in consultation with the chairman. Board packs containing the meeting agenda and relevant supporting documentation are circulated in advance of each meeting to allow sufficient time for preparation.

Meetings take place in person and/or virtually.

Where a director is not able to attend a meeting, they inform the chairman of the board or relevant committee, as well as the company secretary of this, together with the reason for their absence. They may make submissions on matters to be tabled for discussion, which submissions are recorded at the meeting.

Decisions taken between scheduled board meetings, as provided for in the group's Mol, are tabled for noting at the subsequent board meeting.

Details of the type and number of meetings held during the year under review, as well as individual director attendance, are set out in the table below.

Board and committee meeting schedule and attendance
Board   AGM   AC   Remcom   RC   SEC   Ad hoc – Rights  
offer and  
B-BBEE  
sub-committee  
EGM   Strategy
Number of meetings 5   1   5   8   2   2   4   1   1
S J Enderle 1# 0# –   –   1# –   –   0# 1
G G Huysamer 5   1   5   –   2   –   4   1   1
F W J Kilbourn 5   1   5   8   –   –   4   1   1
N Medupe 5   1   3 –   2   –   –   1   1
B T Ngcuka 5   1   –   8   –   –   –   1   1
M S P Marutlulle 4 1   –   –   –   2   –   0 1
S G Morris 5   1   5   8   2   –   4   1   1
V M Rague 5   1   –   –   2   –   –   1   1
L G Siddo 4 1   –   –   –   1 –   1   1
A C Widegger 5   1   5* 8* 2   2   4* 1   1
D Nathoo 5   1   5* –   2   –   4* 1   1
* By invitation
Not a member
Apologies
# Appointed 1 April

 

Board meeting dates

2 September 2020
9 October 2020 – special
17 November 2020
25 February 2021
19 May 2021

Extraordinary general meeting date

22 July 2020

Annual general meeting date

11 December 2020

Induction and ongoing training and development

To assist them in the effective discharge of their responsibilities, 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 company shares the responsibility of ensuring directors are equipped with the necessary skills to effectively carry out their duties and, when it is deemed appropriate, directors can avail themselves of continuing professional development programmes.

Succession plan

The board:

  • is responsible for its own succession planning and aims to balance the fresh perspectives from new members with the experience and knowledge of those with longer tenure
  • annually reviews the succession plans in place for the EDs and other senior executives.
Information and communication

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
  • unrestricted access to all company information and senior management to assist them in the discharge of their duties and responsibilities.
Group strategy

Strategy, risk, performance and sustainability are inseparable. The board assumes responsibility for:

  • formulating, developing and adopting the group's strategic plans and providing effective leadership and oversight of performance against targets and objectives
  • 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
  • considering sustainability as a business opportunity that guides strategic formulation
  • monitoring management in implementing board plans and strategies.

Progress on the implementation and achievement of the group's strategic objectives is monitored on an ongoing basis and is reported on regularly. Covid-19 and the resultant lockdown interrupted the implementation of certain strategic objectives and resulted in an ongoing review and adjustment, where appropriate, of the current objectives, including the introduction of a turnaround strategy to steer the company through the current challenges presented as a result of the Covid-19 pandemic in the medium to long term.

Evaluation of the board, chairman, CEO and company secretary

Board effectiveness is regularly assessed by way of a self-assessment. Where a director's performance is not considered satisfactory, remedial steps will be taken and in the appropriate circumstances that director will not be recommended for re-election.

The board is satisfied that it operates effectively, is suitably constituted, possesses the appropriate skills, experience and expertise, and that it has discharged its responsibilities as detailed in the board charter and annual work plan.

The chairman

The deputy chairman assesses the performance and leadership of the chairman in an informal manner.

The CEO

The chairman of the board, in consultation with the NEDs, assesses the performance of the CEO.

The company secretary

The appointment and removal of the company secretary is a matter for the board as a whole.

The group company secretary ensures statutory and legal compliance, as well as adherence to the JSE Listings Requirements and relevant governance principles. She is responsible for guiding the board in discharging its responsibilities, assumes responsibility for administering the proceedings and affairs of the board, monitors directors' dealings in securities, ensures adherence to closed periods, and liaises with various stakeholders including the group's transfer secretary, sponsor and relevant regulators.

Melanie van Heerden is an admitted attorney, notary and conveyancer, holding BCom and LLB degrees, with 19 years' post-qualification experience. Her academic and professional qualifications were externally verified prior to appointment.

In accordance with both the JSE Listings Requirements and King IVTM, the performance and independence of the company secretary is evaluated annually. The board, while evaluating her performance and interactions with the directors individually and the board as a whole, concluded that Mrs van Heerden is suitably qualified and experienced and is satisfied that she demonstrates the requisite competence, experience, and objectivity to provide independent guidance and support to continue to hold the office of group company secretary. The board is furthermore satisfied that the arrangements in place for providing corporate governance services are effective.

Board, statutory and management committee

A number of board, statutory and management committees have been established to assist with the balance of power and the execution of the board's responsibilities, as well as facilitate efficient decision-making and promote independent judgement. The board has four standing committees - audit, Remcom, risk and social and ethics (SEC).

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 delegated responsibility and the powers, limits and authorities attached to board committees are determinedand approved by the board, from time to time.

Each committee, with the exception of the management committees, is chaired by an independent NED who reports on committee activities at the board meeting immediately following the committee meeting. Minutes of all board and statutory committee meetings, save for Remcom, are tabled for noting by the board. The CEO chairs the Exco and Mandasco, which have been established to assist him in the discharge of the responsibilities delegated to him by the board. The group company secretary serves as secretary for all the committees.

Meetings in addition to scheduled meetings may be convened when necessary to address urgent matters falling within the committee's scopeof responsibility.

The board regularly assesses the composition of the committees to ensure that each possesses the appropriate balance of skills, knowledge and experience, as well as the need for additional committees, to assist it in carrying out its duties and meeting its statutory and other legal requirements. The following changes in committee composition took place during the year under review:

  • Stephen Enderle was appointed as a member of the risk committee.

As with the board, the effectiveness of each committee is considered at regular intervals and entails a self-assessment. Any areas identified as requiring improvement are considered and the appropriate measures put in place.

The board is satisfied that each committee operates effectively and has discharged the responsibilities detailed in their respective terms of reference, at the intervals indicated in their annual work plans.

The chairs of the respective committees attend the annual general meeting to respond to any questions shareholders may raise with regard to matters falling within their respective committee mandates.

Audit committee

The audit committee is a statutory committee whose members are appointed annually by the shareholders. It also assists the board in the discharge of other duties assigned to it by the board, and serves as the audit committee for the group subsidiary companies.

The committee meets at least three times a year and comprises four members, all of whom are independent NEDs who are financially literate and have the necessary business and financial acumen to carry out the committee's responsibilities. The CEO, CFO, lead external audit partner and internal audit partner attend committee meetings by invitation, but do not vote on any matters tabled for discussion.

The committee's responsibilities include:

  • safeguarding the group's assets, the operation of systems, control processes and the preparation of accurate financial reports and statements in compliance with relevant legal requirements and accounting standards
  • evaluating the adequacy and efficiency of internal control systems, accounting practices and information, as well as the auditing thereof
  • considering the internal and external audit process and accounting principles and policies
  • ensuring the independence of the external and internal audit functions
  • preparing materially accurate financial reporting information and statements in compliance with applicable legal and regulatory requirements and accounting standards
  • ensuring legislative and regulatory compliance, as well as compliance with applicable codes.

The internal and external auditors have unrestricted access to the committee through the chairman.

Meetings and activities

Five meetings were held during the year and focused on:

  • solvency, liquidity and funding
  • examining and reviewing reports to shareholders, including financial and sustainability reports
  • reviewing the annual financial statements, interim reports, accompanying reports to shareholders, preliminary results announcement and any other announcement regarding the group's results or other financial information to be made public, prior to submission to and approval by the board
  • reviewing of the financial information to be included in the rights offer circular prior to submission to and approval by the board
  • reviewing the internal control structures, including financial control, accounting systems and reporting
  • considering and satisfying itself that the company has established appropriate financial reporting procedures and that these procedures are operating effectively, as required by paragraph 3.84(g)(ii) of the JSE Listings Requirements
  • nominating the registered auditor, including the lead audit partner, having obtained and satisfied itself with the information required to be provided by the auditors as set out in paragraph 3.84(g) read with paragraph 22.15(h) of the JSE Listings Requirements
  • reviewing and approving the scope of work, the external audit budget and nature and extent of non-audit services, the latter of which represented 22% (2020: 22%) of the total audit fee paid
  • monitoring and supervising the effectiveness of the internal audit function, including the performance of the internal audit partner
  • ensuring that the roles and functions of external and internal audit are sufficiently clarified and coordinated
  • reviewing and approving the annual internal audit plan and fee, and receiving internal audit's written assessment of operational controls
  • receiving reports and noting the minutes from the risk committee with regard to the policy and plan for risk management and its implementation
  • IT's alignment with the company's performance and sustainability objectives, the implementation of the IT governance framework, and IT as an integral part of the risk management process
  • restructuring of intergroup loans
  • overseeing financial reporting risks, internal financial controls, fraud andIT risks as they relate to financial reporting
  • considering and confirming
    • that the finance function is adequately resourced with suitably skilled and technically competent people
    • that the company's CFO, Mrs Dhanisha Nathoo, is equipped with the necessary expertise and experience to fulfil the requirements and responsibilities associated with the position
  • monitoring revenue recognition and valuation of property, plant and equipment and right-of-use assets, specifically impairment losses, expected credit losses and recoverability of deferred tax assets, and the resultant impact on the going concern assertion, which have been highlighted as key audit matters
  • monitoring legislative and regulatory compliance, and compliance with governance codes and accounting standards (local and international)
  • considering and approving the material issues facing the company, against which reporting will take place
  • approving the annual work plan against which the agenda for committee meetings will be prepared and monitoring progress against it
  • considering and satisfying itself as to the independence of the external auditors and determining that the reporting accountant is accredited in accordance with the provisions of the JSE Listings Requirements.

The external and internal auditors and representatives from senior management meet at least annually with the committee independently of one another to report back and discuss any issues relevant to the audit process. During its meeting with management, the committee, in addition to discussing issues relevant to the audit, considered the quality and effectiveness of the external audit function and concluded that it was satisfied with the performance and level of services rendered by the external auditor.

On the basis that the auditor does not function in the role of management, does not audit its own work or serve in an advocacy role for the company, the committee concluded that the non-audit work performed did not impair the independence of the auditors.

During the year the decision was taken to early adopt the mandatory audit firm rotation rule. Following the conclusion of a comprehensive tender process, the board has endorsed the audit committee's proposal to appoint PricewaterhouseCoopers Inc. (PwC) as the company's external auditors and accordingly nominates PwC for appointment as the group's registered auditor for the ensuing year, with Ms Alinah Motaung as the designated audit partner. The appointment of PWC has been tabled for shareholder approval, as set out in the notice of AGM.

City Lodge extends its gratitude to KPMG for the long-standing positive relationship and quality of service received since it was appointed as the company's external auditors in 1986.

Both the external and internal audit partners attend the AGM to respond to any questions shareholders may raise.

Remcom

Remcom comprises three NEDs. The deputy chairman serves as chairman of the committee. The CEO attends meetings by invitation, but does not have a vote on matters to be decided upon nor does he participate in the decision-making process relevant to his remuneration.

The chairman of the board drives the nomination process and leads the nomination portion of meetings.

The committee assists the board in discharging its responsibilities for:

  • ensuring the board and its committees are appropriately constituted by:
    • identifying and evaluating whether individuals are suitable for board and committee membership
    • ensuring appointments are made through a formal and transparent process
    • ensuring that appropriate succession plans are in place
  • developing the group's remuneration policy and setting the direction for how remuneration should be approached and addressed on an organisation-wide basis and specifically at an executive and senior management level to ensure that they are fairly and responsibly remunerated.
  • ensuring that the directors and executives are fairly and responsibly remunerated and that the disclosure in respect thereof is accurate and transparent. Remcom does this by overseeing the implementation of remuneration policies in relation to NEDs, EDs and other senior executives and reviewing the outcomes of the implementation of these policies and evaluating whether they promote the achievement of the group's strategic objectives and encourage individual performance. Where circumstances necessitate, Remcom will recommend the necessary improvements to the board
  • reviewing other remuneration-related matters, as the board may from time to time direct
  • considering the appropriate composition, in terms of size, mix of perspective, knowledge, skills, experience, independence and diversity for the board and its committees
  • ensuring that induction and ongoing training and development of directors takes place
  • ensuring that formal succession plans are in place for the CEO and senior executives.
Meetings and activities

The eight meetings held during the year focused on:

  • enhancing remuneration disclosure by taking the principles and recommended practices of King IVTM into account
  • reviewing Exco's remuneration packages in accordance with the group's approved remuneration policy, which included commissioning a market trends report from a third-party service provider to assist in the formulation of a recommendation to the board
  • determining, following review of associated performance criteria, the vesting or lapsing of the long-term incentive awards awarded in 2018
  • considering the succession plans in place for the board, EDs, Exco and senior management, and approving the group's organisational structure, as well as executive structure and reporting lines
  • receiving and approving the committee's annual work plan against which the agenda for committee meetings are prepared to ensure that the committee attends to all matters falling within its mandate
  • determining, with reference to the labour cost containment measures implemented at operational level as a result of the impact of Covid-19, NEDs' fees for recommendation to the board and subsequent approvalby shareholders
  • ongoing review, and where appropriate adjustment, of reduced salary levels, with reference to the ongoing effect of Covid-19 and adjusted lockdown levels on operations, liquidity constraints, staff morale and in the interests of job preservation
  • placing a moratorium on the award of short-term incentives for the second six months for those who are measured bi-annually, as well as on annual awards for those who are measured annually to preserve cash
  • placing a moratorium on the award of LTIs for the 2021 financial year
  • implementation of a 5% percent salary increase across the board on 1 August 2021 taking a number of factors into consideration including the 0% increase in the last financial year and its associated impact on our people and staff morale
  • considering directors retiring by rotation and formulating a recommendation to the board, subject to them making themselves available for re-election
  • reviewing the independence of board members, specifically long-serving directors and confirming their ongoing ability to contribute to board deliberations in a manner that is objective, meaningful and unbiased
  • review of the current variable pay policy and approval of the introduction of a new long-term incentive, namely the CSP
  • formulation of malus and clawback policy applicable to variable pay
  • board and committee composition
  • reviewing the group's remuneration policy to cater for revised variable pay policy and report for tabling at the annual general meeting of the company by way of separate non-binding advisory votes.

Details on how Remcom discharged its responsibilities can be found in the Remuneration report.

Risk committee

Risk appetite and tolerance are fundamental concepts informed by the group's risk culture that set the context for determining the group's strategic objectives and details the risks the group can or is prepared to take and which are to be avoided.

The board determines the group's risk appetite and tolerance levels, while management assumes responsibilityfor implementing and monitoring the processes of risk management and for the integration thereof into the day-to-day activities of the company.

The group's enterprise risk management process encompasses the review, identification, quantification, prioritisation, response to and monitoring of the consequences of both internal and external risks, and accounts for new and emerging risks and opportunities. It also promotes ownership of risk areas and accountability for risk management. Risk and control procedures are developed, and enhanced upon, on an ongoing basis to improve risk identification, assessment and monitoring. Risks are assessed in terms of potential impact and likelihood. Inherent risk is determined with reference to an evaluation of impact and probability, and its significance to the business, while residual risk is determined with reference to the mitigating strategies in place.

The committee usually meets three times a year to ensure that the company has implemented an effective policy and plan for risk management that will enhance the group's ability to achieve its strategic objectives and determining the group's risk appetite and tolerance levels.

The eight-member committee comprises four independent NEDs, one NED, the CEO, the CFO and the divisional director: human resources. All members have the necessary risk management skills and experience required to discharge the committee's responsibilities.

The chairman of the board is not a member of the committee.

Role and responsibilities

The risk committee assists the board in discharging its responsibilities associated with risk management by reviewing the effectiveness of the processes and procedures adopted by management in relation to identifying, evaluating, documenting, managing, monitoring and reporting on risks and the assurance provided thereon.

It is the committee's responsibility to ensure that an effective policy and plan for risk management, that will enhance the group's ability to achieve its strategic objectives, has been implemented.

Responsibilities include:

  • overseeing the development of a policy and plan for enterprise risk management in the form of an enterprise risk register (ERR) (taking market risk, credit risk, liquidity risk, operational risk and commercial risk into account) and annually reviewing and recommending its approval to the board
  • continually monitoring the implementation of the policy and plan through risk management systems and processes
  • evaluating the nature and extent of the risks that the company is willing to take to achieve its strategic objectives and making recommendations to the board concerning the levels of tolerance and risk appetite and monitoring that risks are managed within these levels, as approved by the board
  • reviewing the nature, extent and parameters of the group's risk/reward strategy in terms of risk appetite and tolerance relative to reward, as well as the limit of potential loss which the company can accept, and ensuring that risks are quantified where practicable
  • reviewing and approving the scope of work of the risk management function, the systems and/or research required and planned activities, and satisfying itself that the function is sufficiently resourced to provide adequate assurance to the committee and specifically that appropriate resources are directed towards areas of high risk
  • monitoring that management creates and maintains an effective internal control and risk management environment and that risk is properly identified, managed and monitored
  • monitoring and reviewing the implementation and execution of risk management within the business on an ongoing basis
  • reviewing the effectiveness and efficiency of the enterprise risk management system and being assured that material risks are identified and appropriate risk management processes are in place, including the formulation and subsequent updating of appropriate company policies
  • regularly receiving a register of the group's key risks and potential material risk exposures;
  • reporting to the board any material changes to and/or divergence from the risk profile of the company
  • considering the deliberations of management, the SEC, audit committee, as well as the board to ensure appropriate consideration of key risks facing the company
  • periodically reviewing insurance and other risk transfer arrangements, and considering the adequacy of the coverage in place
  • expressing the committee's formal opinion on the effectiveness of the system and process of risk management, including instances where the determined tolerance levels have been exceeded or deviated from materially in the IR
  • considering internal audit's statement regarding the adequacy, effectiveness and efficiency of internal controls, governance and risk management
  • reviewing the impact that significant litigation could have on the group
  • reviewing of reporting concerning risk management for inclusion in the IR for timeliness, comprehensiveness and relevance
  • reviewing and approving the combined assurance model
  • liaising closely with the audit committee to exchange information relevant to risk, financial control and reporting
  • overseeing the distribution of the risk management plan throughout the company and its integration in the day-to-day activities of the company
  • monitoring the implementation of operational and corporate risk management plans
  • considering the need to receive periodic independent assurance on the effectiveness of risk management
  • reviewing the risks within the combined assurance model and ensuring coordination with the audit committee, which is ultimately responsible for combined assurance
  • reviewing the compliance monitoring plans and policies, and determining whether adequate and effective controls are in place to ensure regulatory compliance.

Key focus areas include the management, rather than elimination, of risk, and ensuring comprehensive, timely and relevant disclosure with regard to risks facing the company, as no risk management system or combined assurance provided can give absolute certainty that the risks the company faces are fully understood and can be avoided. While the committee assumes responsibility for overseeing the risk management programme in place for the group, management is responsible for identifying and evaluating strategic and operational risks and opportunities, putting the necessary mitigating strategies in place, allocating responsibility, formulation of a risk management plan and monitoring compliance against the plan.

Exco supports the committee in discharging its responsibilities.

Meetings and activities

Given the unprecedented circumstances the company found itself in at the start of the period under review which was during the early stages of the Covid-19 pandemic, coupled with the fluidity of the situation, the committee cancelled its first meeting of the year to afford management the opportunity to navigate the significant risk presented by Covid-19 on its operations and future sustainability.

The two meetings that did take place during the year focused on:

  • the far-reaching risk presented by the Covid-19 pandemic, specifically the responses to and strategies put in place to mitigate the impact on the company and its operations, not only during the crisis, but beyond, and monitoring the progress made in respect of the group's claim in respect of business interruption
  • performing the annual review of the ERR, incorporating the combined assurance framework, which includes:
    • considering whether any issues have come to light that impact the risk profile of the company which would result in an amendment of the ERR
    • anticipating/predicting risks and the effects thereof on the achievement of the company's strategic objectives and implementing risk responses that allow for the exploitation of opportunities
    • identifying opportunities where effective risk management can be turned into a competitive advantage
    • assessing whether there are appropriate controls in place to manage the risks down to an acceptable level
    • approving the risks identified on a qualitative basis, according to probability and severity and, where appropriate, re-ranking of existing risks
  • confirming its satisfaction with the effectiveness of the risk management system and processes in place and that the risks facing the company are being addressed appropriately
  • receiving the CEO's report on the status with regard to the group's key risks
  • considering the governance, legal and compliance reports, incorporating calls to the whistleblower alert line
  • considering uninsured and uninsurable risks and adequacy of cover
  • approving the committee's annual work plan against which meeting agendas are prepared.

The key risks provide further detail on the material risks the company faces.

Managing the changes in the risk environment particularly insofar as they relate to cyber-security, data privacy, sustainability, legal compliance and communicable, contagious and infectious diseases will continue to be areas of focus going forward.

The committee confirms its satisfaction that the group's risks are being managed appropriately and is comfortable with the risk management processes adopted by management.

Social and ethics committee (sec)

The SEC is a statutory committee of the board responsible for monitoring compliance with relevant social, ethical and legal requirements, as well as best practice codes, organisational ethics, social and economic development, responsible corporate citizenship, environmental sustainability and stakeholder relationships, and as a board committee in respect of the responsibilities delegated to it by the board.

The SEC meets twice a year and comprises three members, an independent non-executive chair and two EDs.

The report detailing how the SEC has discharged its responsibilities appears in Social and ethics committee report.

Ad hoc committee – B-Bbee and rights offer committee

The B-BBEE and rights offer committee was an ad hoc committee mandated by the board to consider options and make recommendations relating to the:

  • the B-BBEE transaction, which was due for redemption by 31 January 2021, as well as the consequences of the unwind for the three B-BBEE SPVs and the company, and future B-BBEE considerations
  • various liquidity and capital measures, specifically the rights offer, including the timing, size and pricing thereof, given the significant impact of Covid-19 and the nationwide lockdown on the group's cash flow and ability to service its ongoing obligations.

The committee, which comprised three independent NEDs, with the CEO and CFO attending meetings as invitees, met four times between July 2020 and September 2020 to carry out its responsibilities.

Management committees
Exco

Exco is the most senior executive decision-making body within the group and assists the CEO in the implementation of strategies and policies adopted by the board, managing the group's day-to-day operations, as well as its overall performance, and discharging the obligations delegated to the CEO by the board.

Exco comprises 10 members following the retirement of Mr Patrick Tate in November 2020 after 32 years with the company and is chaired by the CEO.

Exco meets at least quarterly and is specifically responsible for:

  • implementing strategies and policies adopted by the board
  • managing the day-to-day activities of the company
  • prioritising and allocating the group's capital, technical and human resources
  • establishing best management practices and functional standards
  • appointing and monitoring the performance of senior management
  • maintaining a group-wide system of internal control to manage all group risks to support the board in discharging its responsibility in respect of the effective risk management and, in so doing, supporting the creation and preservation of shareholder wealth
  • maintaining a group-wide legal compliance structure
  • setting the appropriate ethical tone and creating an ethical environment
  • developing and implementing business plans, policies, procedures and budgets, as approved by the board
  • monitoring the group's operational and financial performance
  • developing and implementing equity and transformation initiatives
  • developing and implementing corporate responsibility initiatives, including sustainability
  • identifying, managing and developing talent
  • managing the internal control environment and preparing reports for presentation to the audit committee
  • maintaining the integrity of management information and financial reporting systems
  • developing and implementing company policy guidelines, including the code.

As previously reported, in response to the declaration of the national state of disaster and with a view to navigating the company through the challenges presented by the lockdown, Exco was temporarily reconstituted as the Covid-19 Rapid Response Team (CRRT) to include the general managers: operations and head of property and development to specifically:

  • run scenarios covering the national state of disaster, and the associated consequences for the group
  • address team health and safety, with specific focus on employees, and guests to ensure peace of mind when returning to the group's hotels
  • monitor and review business strength, with particular focus on:
    • management and maintenance of hotels where operations were suspended temporarily
    • operations, covering preparation for resumption of operations, protocols, staffing requirements and refreshed food and beverage offerings
    • sales and marketing and a revised room rate strategy
    • IT support to employees working remotely, to the hotels as and when they came online as government eased lockdown restrictions and in preparation for fewer contact operations
  • monitor the group's financial resilience, specifically the measures implemented in respect of cost containment and liquidity constraints
  • consider execution clarity, aimed at timely and transparent communication
  • monitor recovery and revival and the associated preparations for the opening of the economy and the group's hotels and beyond the lockdown.

In addition to the four CRRT meetings, Exco met twice during the year.

Management development and succession committee (Mandasco)

Mandasco meets at least quarterly and comprises nine members, including the CEO, who serves as chairman, the COO and divisional directors and general managers: operations, divisional director: human resources and group talent manager.

The committee is responsible for ensuring that:

  • effective management development practices that align with the group's business needs and human capital requirements are in place
  • the group's employment equity and transformation objectives are advanced through the attraction and retention of the appropriate level of talent
  • a suitable succession pool and talent pipeline is maintained.

The various programmes in place saw the following appointments being made during the year under review:

  • General manager: one ADDP candidate and seven succession pool candidates
  • Assistant general manager: two ADDP candidates and three succession pool candidates.
  • Junior assistant general manager: three succession pool candidates.

Mandasco only met three times during the year given the limited level of operations and associated opportunities.

Governance processes
Combined assurance

The group, in its implementation of combined assurance, has identified a number of roleplayers who, when taken as a whole, enable an effective control environment, support the integrity of information used for internal decision-making as well as the integrity of the group's external reports.

The key differentiating factor between these roleplayers is their levels of independence from the group's operational activities and the company itself.

The various lines of defence distinguish between:

  • functions that own and manage risks as part of their day-to-day activities
  • functions that oversee risks and provide robust challenge to the management teams
  • functions that provide independent assurance.

First line of defence

Management – including strategy development and implementation, performance measurement, risk management, company control and monitoring of compliance to laws and regulations

Second line of defence

Corporate (specialist) functions and management committee oversight – the risk and compliance management structures of the company, such as risk management, compliance officers, occupational health and safety, legal services and internal control units

Third line of defence

Independent assurance – made up of internal audit, IT audit, forensic audit (reactive), external audit and occasionally external regulators, sustainability and environmental auditors, actuaries as is appropriate to the company. These structures are largely independent of the operational activities of the company and provide assurance to the board

Fourth line of defence

Oversight structures – made up of the overarching oversight structures in the company, including the board and its oversight committees such as audit, risk, SEC and Remcom

Risk management system

Risk management is an integral part of management processes. The group's effectiveness is enhanced when risk management is part of the culture and is embedded in its daily practices and business processes. Risk management focuses on the relationship between risk and its impact on achieving objectives.

The group's risk management system includes the establishment of various policies, strategies, processes, procedures and tools for identifying, measuring, monitoring, managing and reporting all material risks and opportunities to which the group is exposed. The ERM framework sets out the key principles that guide the implementation of risk and capital management at all levels. It provides the necessary foundations and organisational arrangements for managing risk within the group by promoting ownership of risk areas and accountability for risk management, and illustrates how risk management should be embedded in all business units to ensure effective risk management strategies are integrated in all work contexts.

Internal control system

The internal control system:

  • acts as an enabler for the delivery of effective governance and to demonstrate that adequate internal controls are in place and operating satisfactorily.
  • outlines the various elements influencing and contributing to a sound internal control environment to ensure adequate control over operations, compliance and financial reporting.
  • has been designed to provide reasonable assurance from a control perspective that the business is being operated consistently within the:
    • strategy and risk appetite set
    • agreed business objectives
    • agreed policies and processes
    • laws and regulations.
Internal audit

The internal audit function provides independent, objective assurance to the board in respect of the effectiveness of its governance, risk management and internal controls. The function, which is outsourced, complies with the Institute of Internal Auditors for the Professional Practice of Internal Auditing and Code of Ethics, 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.

Audits are conducted in accordance with the International Standards for the Professional Practice of Internal Auditing, with hotels being audited roughly once every three years, unless circumstances dictate otherwise. The customary number of hotel reviews, usually 20, was revised down due to Covid-19 and its effect on the team's ability to carry out the audits, as well as the likelihood that operations were only likely to resume during or about September 2020, and then only on a limited basis with hotel reopenings subject to demand. Reports are presented at each audit committee meeting and are prepared in accordance with a defined set of audit criteria which highlight audit area ratings per hotel and summarise internal audit activities. Corrective action is taken where significant internal control weaknesses are identified and follow-up audits may be conducted if deemed necessary.

Based on the results of the reviews completed during the year, which yielded an average score of 97% (2020: 93%), the internal audit function and the audit committee concluded that the overall operational internal control effectiveness is excellent.

The audit committee reviews the effectiveness of the internal audit function to ensure that adequate, objective internal audit assurance standards and procedures exist and annually approves the internal audit plan and budget for the ensuing year.

Where mandated by the audit committee, internal audit carries out special assignments. During the year under review a cyber-security assessment aimed at providing the company with:

  • a current state assessment of its cyber-security programme, including organisational structure, processes and supporting technology
  • an understanding of the existing cyber-security maturity programme
  • executive level reporting, as well as recommendations for improvement, was undertaken. The results of the assessment will be reported on in the 2022 IR.

The audit committee:

  • having confirmed the quality and effectiveness of the internal audit processes and taking cognisance of management's views, concluded that the internal audit function operates effectively
  • upon assessing the independence of the internal audit function has with reference to, inter alia, the IRBA Code of Professional Conduct requirements 290.192-290.195 and 290.197, concluded that, notwithstanding KPMG acting as internal and external auditors to the company and taking the ratio of fees between non-audit services and audit services into account, it is satisfied that the independence of the function has not been compromised.
Non-audit services

The policy for the provision of non-audit services by external audit provides guidelines on the audit, audit-related, tax and other non-audit services that the external auditor may and may not provide.

All non-audit services performed by the external auditor must be pre-approved by the audit committee in order to ensure that the provision of such services does not impair the external auditor's independence.

Dealing in securities and insider trading

The company has a board-approved policy on dealing in company securities, which requires prior written clearance before dealing in company shares.

Dealing in company shares must be approved as follows:

  • directors and the group company secretary – by the chairman
  • the chairman – by any other designated director, but preferably the deputy chairman.

All dealings in securities are effected through the office of the group company secretary and published via the group's sponsor on the JSE's Stock Exchange News Service.

The company has the following closed periods:

  • from the end of the interim and annual reporting periods until the day following the announcement of the group's results for the relevant period
  • any period when the company is trading under a cautionary announcement or is negotiating a major transaction and an announcement relating thereto is imminent, during which time no director, the group company secretary or prescribed officers may deal in company shares.
Conflicts of interest and other directorships

Declaration of interests in contracts and other companies, and details of other directorships, is a standing item on the board and Exco agenda in addition to making an annual written declaration in this regard.

Directors are required to recuse themselves from discussions on those matters where they are, or may potentially be, conflicted after they have provided any material information relating to the matter.

EDs may, with the chairman's permission, having due regard to whether the appointment may conflict with the business of the company and/or have a negative impact on their ability to effectively meet their responsibilities, accept external board appointments.

While no limitations are imposed on the number of other appointments directors may accept, they are required to engage with the chairman with regard to their external appointments in order to ensure that acceptance of the additional appointments will not impact their ability to devote sufficient time to the company.

The chairman of the board is satisfied that the NEDs have devoted the requisite amount of time to discharge their responsibilities to the company and that no director has a material interest in any contract entered into by the company.

Anti-bribery and corruption

The group's zero-tolerance approach to all forms of bribery and corruption applies to all business relationships and requires everyone to work against corruption in all its forms, including extortion and bribery.

The giving and receiving of bribes and facilitation of payments, as well as the making of political donations, are strictly forbidden.

Various procedures are in place throughout the group to facilitate reporting and outside interests and monitoring of inter alia receipt of gifts, including hospitality.

In compliance with section 159 of the Companies Act, the company has established and maintains a system to receive whistleblowing alerts to enable internal and external stakeholders to report any suspected activity anonymously. Refer to Sustainability review for further detail.

Compliance

The group:

  • recognises the critical role that compliance plays in both the governance and sustainability of its business. Accordingly compliance is built into the fabric of its governance frameworks and structures.
  • has a strong culture of compliance and is committed to conducting its business in accordance with applicable laws, rules and regulations, as well as codes and standards that have been adopted by the group.

The governance and compliance function monitors governance developments and assesses compliance with, and the impact of, applicable laws and regulations on the business. The board is informed of regulatory changes, non-binding standards and codes that may have an impact on the group.

The board, through the SEC and risk committee, monitors compliance and compliance risks by means of committee reports. Where required, external experts are engaged to assist and advise.

The main areas of focus during the year were:

  • POPIA and GDPR compliance specifically:
    • delivering against the various privacy workstreams as documented in the privacy execution plan including:
      • formalising privacy governance structures, including the appointment of an information officer and their registration with the information regulator
      • development of a privacy policy, compliance statement, operator and data processing agreements
      • updating the group's promotion of access to information manual to address the requirements of POPIA
      • formation of a standing committee, chaired by the group's information officer to consider all privacy-related matters and requests
      • aligning business practices with the required controls to align with privacy
      • embedding mechanisms to give effect to individual rights for privacy
      • physical and technical controls for security
      • managing third parties who process personal information on the group's behalf
      • privacy awareness campaigns and training around protecting information
    • cyber-security enhancements covering, inter alia:
      • securing of information and infrastructure through, inter alia, threat and vulnerability management, as well as access and asset management
      • ongoing monitoring of IT environment
      • ongoing security awareness campaigns
      • business continuity planning
  • ongoing maintenance of the regulatory universe, including ongoing identification and compliance monitoring, which includes, inter alia, the review of legislation, its impact on the company, the associated compliance requirements, implementation of policies and procedures based on applicable laws and regulations, and creating awareness.

Planned areas of focus include:

  • ongoing delivery of privacy execution plan deliverables
  • compliance training in identified areas, including information security and privacy awareness campaigns and training around protecting information
  • ongoing maintenance of the regulatory universe
  • effecting improvements to the legal compliance framework with reference to emerging risks, and reviewing and updating existing policies.
Information technology

IT is integrated into the business and is an important enabler both in the enhancement and advancement of the group's objectives and position as a leader in its field.

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 where ITG is a standing item on the audit committee agenda.

IT policies and procedures cover, inter alia, the use and safeguarding of the group's information and IT systems, use of social media, disaster recovery plans, as well as the regular updating and improvement of IT technology.

The divisional director: IT, who reports directly to the CFO, is responsible for IT operations within the group, specifically the implementation of business-focused IT strategies and ensuring proper system security, data integrity and business continuity.

She is furthermore responsible for consolidating feedback relating to the performance of IT within the company, so that reactive or proactive steps may be taken to ensure that the company derives the maximum value from IT, while at the same time managing its risks and ensuring that the IT function is focused on IT investment initiatives, internal engagement to promote collaborative IT planning and the promotion of IT effectively to capitalise on economies of scale across the group.

Areas of focus included:

  • enhancements to the WiFi infrastructure, like the WiFi portal
  • continued investment into technology platforms with a view to stabilising the current environment
  • trialling of a BI tool that uses AI for predictive analysis in the future
  • introduction of enhanced technology services for guests and staff
  • identifying and migrating from paper-based processes to digital-based processes
  • leveraging off the BI tools implemented to predict future trends and provide rich data analysis
  • implementation of a Best Available Rate (BAR) rates engine for our property management system for direct and website bookings.

Future focus areas include:

  • improving our security posture, including a revised disaster recovery strategy
  • developing our cloud transformation strategy
  • formalising our digital transformation strategy to streamline our back-office functions and guest interaction
  • implementation of BAR rates engine for our OTA and GDS channels
  • enhancements to the BI tools
  • investigating a new loyalty programme.

The board is satisfied that ITG is being addressed appropriately and is suitably aligned to the achievement of the group's objectives, that the systems of internal control over IT are adequate and effective, and that there has not been a material breakdown in the functioning of the internal control systems during the year under review.

Litigation

The group is, in the ordinary course of business, subject to legal proceedings, which for a number of reasons, including risks and uncertainties, cannot be reliably predicted.

The group is not, and has not during the year under review, been involved in any legal or arbitration proceedings that will or may have a material effect on the operations or financial position of the company, nor are there any such known proceedings pending.

Sponsor

The group's sponsor, Nedbank Corporate and Investment Banking, advises the board on compliance with the JSE Listings Requirements.

Stakeholder engagement

The group is committed to the timeous and transparent reporting of relevant matters to its stakeholders as required by the Companies Act, the JSE Listings Requirements and best practice guidelines, recognising that its long-term sustainability objectives are supported through engaging with stakeholders to address matters of mutual interest. 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.

The board, as ultimate custodian of stakeholder relations, has delegated responsibility for proactively dealing with the group's various stakeholders to the executive and divisional directors, group company secretary, hotels and outsourced public relations function.

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.

General investor interaction during closed periods is limited to discussions on strategy and/or historical, publicly available information.