Governance

 
GPI remains committed to ensuring best practice governance across the entire group to achieve sustainable growth in the interests of all our stakeholders. The Board places emphasis on the principles of fairness, transparency, integrity and accountability which ethos is similarly practised by the Boards of our operating subsidiaries, which all form part of the group's risk and governance framework.

During the year, we continued to review our day-to-day activities to ensure alignment, to the extent deemed appropriate by the Board, with the King III principles. We also ensured that practices were tailored to comply with the provisions of the Companies Act.

Accordingly, our corporate governance practices have been appropriately applied in all material respects during the period under review. The Board hereby confirms that the company has complied in all material respects, except as otherwise stated in this report.

The group operates in a highly-regulated environment, not only in terms of the JSE Listings Requirements and King III, but GPI and its Slots operations are also regulated by the gambling boards of the provinces in which they operate. The National Gambling Board also plays an oversight role from a policy perspective.

It is pleasing to report that there were no instances of noncompliance and that no fines were imposed for the period under review. We will continue to refine practices to ensure that standards continue to reflect the overall governance ethos of the group.
 
King III Register

King III Register

GRAND PARADE INVESTMENTS LIMITED (“GPI” or “the Company”)

REGISTER DOCUMENTING THE ASSESSMENT OF THE COMPANY’S COMPLIANCE WITH THE 75 PRINCIPLES OF KING III
For the year ended 30 June 2013, the board confirms that GPI complied to the following extent with the code of governance principles as set out in King III.

Where the Company has not complied, explanatory reasons have been set out in the table below containing the 75 principles of King III:
 
  PRINCIPLE STAGE OF MATURITY COMMENTS
1.
Ethical leadership and corporate citizenship
   
1.1 The board should provide effective leadership based on an ethical foundation 3 Applied - The values of the company and the board have an ethical grounding 
1.2 The board should ensure that the company is and is seen to be a responsible corporate citizen 3 Applied – The Board is responsible for economic, social and environmental performance and reporting
1.3 The board should ensure that the company’s ethics are managed effectively 3 Applied – The company’s Code of Ethics and Conduct is being reviewed by the Social and Ethics Committee as a precursor to adoption by the board and application across the company  
2.
Board of directors
   
2.1 The board should act as the focal point for and custodian of corporate governance 3 Applied – The board operates in accordance with the provisions of the company’s MOI and the board Charter
2.2 The board should appreciate that strategy, risk, performance and sustainability are inseparable 3 Applied – The board approves the company’s strategy and ensures that management has considered the potential risks that could impact on the performance of the company’s business plans so that the strategy yields sustainable outcomes.
2.3 The board should provide effective leadership based on an ethical foundation
3 Applied - Refer to principle 1.1 above.
2.4 The board should ensure that the company is and is seen to be a responsible corporate citizen 3 Applied - Refer to principle 1.2 above.
2.5 The board should ensure that the company’s ethics are managed effectively 3 Applied - Refer to principle 1.3 above.
2.6 The board should ensure that the company has an effective and independent audit committee 3 Applied - Refer to principle 3.1 below
2.7 The board should be responsible for the governance of risk   3 Applied - Refer to principle 4.1 below.
2.8 The board should be responsible for information technology (IT) governance 2 Partially applied – Refer to principle 5.1 below.
2.9 The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards 3 Applied – Refer to principle 6.1 below.
2.10 The board should ensure that there is an effective risk-based internal audit 3 Applied - Refer to principle 7.1 below.
2.11 The board should appreciate that stakeholders’ perceptions affect the company’s reputation 3 Applied – Refer to principle 8.1 below.
2.12 The board should ensure the integrity of the company’s integrated report 3 Applied – Refer to principle 9.1 below.
2.13 The board should report on the effectiveness of the company’s system of internal controls 3 Applied – Refer to principles 7.1-7.3 below.
2.14 The board and its directors should act in the best interests of the company 3 Applied – the board and its directors’ exercise due care, diligence and skill and act in good faith. Personal interests are declared and no dealings in the company’s securities take place during the mandatory closed periods or other periods determined by the board.
2.15 The board should consider business rescue proceedings or other turnaround mechanism as soon as the company is financially distressed as defined in the Companies Act, 71 of 2008, as amended N/A While the board is cognizant of the requirements as well as its responsibility regarding business rescue proceedings, it has not had occasion to apply this principle. The board monitors the company’s solvency and liquidity on an ongoing basis. 
2.16 The board should elect a chairman of the board who is an independent non-executive director.  The chief executive officer of the company should not also fulfill the role of chairman of the board. 2 Partially applied – The chairman of the board is an executive director, however as a compensatory measure, a lead independent director has been appointed. The role of chief executive officer is separate from that of the chairman.
2.17 The board should appoint the chief executive officer and establish a framework for the delegation of authority 3 Applied – requirement met.
2.18 The board should comprise a balance of power, with a majority of non-executive directors.  The majority of non-executive directors should be independent 3 Applied – Five of the nine directors of the board are non-executive directors and four out of the five are independent.
2.19 Directors should be appointed through a formal process   Applied – Director appointments are made by the board which is assisted by the Remuneration and Nomination Committee acting in accordance with the committee’s Charter. 
2.20 The induction of and ongoing training and development of directors should be conducted through formal processes 3 Applied – GPI’s directors are experienced and the chairman, with the assistance of the company secretary, ensures that they remain up to date.
2.21 The board should be assisted by a competent, suitably qualified and experienced company secretary 3 Applied – requirement met.
2.22 The evaluation of the board, its committees and the individual directors should be performed every year 3 Applied – requirement met.
2.23 The board should delegate certain functions to well-structured committees without abdicating its own responsibilities 3 Applied. While maintaining overall accountability for its functions, the board has delegated (within an established framework) certain functions to the audit and risk committee, remuneration and nomination committee, investment committee and social and ethics committee.
2.24 A governance framework should be agreed between the group and its subsidiary boards 3 Applied. The subsidiary boards operate within the same framework as the main board.
2.25 Companies should remunerate their directors and executives fairly and responsibly 3 Applied. The remuneration and nomination committee reviews the remuneration of directors and executives annually.
2.26 Companies should disclose the remuneration of each individual director and certain senior executives 3 Applied. Disclosure of the individual directors’ and certain senior executives’ remuneration is made in the company’s Integrated Annual Report.
2.27 Shareholders should approve the company’s remuneration policy 3 Applied. Special resolutions have been tabled and approved at the company’s AGMs.
3.
Audit Committees
   
3.1 The board should ensure that the company has an effective and independent audit committee 3 Applied – The company’s audit committee comprises independent non-executive directors who are elected at each AGM and the committee operates effectively.
3.2 Audit committee members should be suitably skilled and experienced independent non-executive directors 3 Applied – The members of the audit committee meet the requirements.
3.3 The audit committee should be chaired by an independent non-executive director 3 Applied – Requirements met.
3.4 The audit committee should oversee integrated reporting 3 Applied. The audit and risk committee oversees the integrated report which is ultimately approved by the board.
3.5 The audit committee should ensure that a combined assurance model is applied to provide a coordinated approach to all assurance activities 3 Applied. The audit and risk committee ensures that the activities of internal and external audit and that of management are co-ordinated.
3.6 The audit committee should satisfy itself of the expertise, resources and experience of the company’s finance function 3 Applied. The audit and risk committee reviews and evaluates the expertise, resources and experience of the company’s finance function on an annual basis.
3.7 The audit committee should be responsible for overseeing the internal audit function 3 Applied. The audit and risk committee approves the annual internal audit plan and any changes thereto; and monitors the internal auditor’s reports on an ongoing basis. 
3.8 The audit committee should be an integral component of the risk management process 3 Applied. The company’s audit and risk committee perform various functions relative to risk management as provided for in the committee’s Charter.  
3.9 The audit committee is responsible for recommending the appointment of the external auditor and overseeing the external audit process 3 Applied. The audit and risk committee recommends the appointment of the external auditor at the company’s AGM each year and oversees the external audit process.
3.10 The audit committee should report to the board and shareholders on how it has discharged its duties 3 Applied. The audit and risk committee’s report is included in the company’s Integrated Annual Report.
4.
The governance of risk
   
4.1 The board should be responsible for the governance of risk 3 Applied. The board assumes overall responsibility for the governance of risk as incorporated in the company’s Risk Management Framework
4.2 The board should determine the levels of risk tolerance 3 Applied. Risks are reviewed and prioritized regularly by management and the boards of the subsidiary companies, and the tolerance levels are reviewed, at least annually, by the board.
4.4 The board should delegate to management the responsibility to design, implement and monitor the risk management plan 3 Applied. Management has designed and implemented a risk management framework and monitors its application across the group.
4.5 The board should ensure that risk assessments are performed on a continual basis 3 Applied. The company’s risk framework makes provision for continual risk assessment to be performed at enterprise level.
4.6 The board should ensure that frameworks and methodologies are implemented to increase the probability of anticipating unpredictable risks 3 Applied. The company’s risk framework is intended to facilitate the early anticipation of unpredictable risks.
4.7 The board should ensure that management considers and implements appropriate risk responses 3 Applied. Management is required to consider and apply risk responses on an ongoing basis and the appropriateness of the responses is tested from time to time by the internal auditor.
4.8 The board should ensure continual risk monitoring by management 3 Applied. Management of each subsidiary is responsible for the continual monitoring of risk and for reporting to the relevant company board and/or the audit and risk committee.   
4.9 The board should receive assurance regarding the effectiveness of the risk management process 3 Applied. The audit and risk committee considers the effectiveness of the risk management process and provides feedback to the board.   
4.10 The board should ensure that there are processes in place enabling complete, timely, relevant, accurate and accessible risk disclosure to shareholders. 3 Applied. Shareholders are apprised of risk through the disclosures in the annual financial statements and the Integrated Annual Report.
5.
The governance of information technology
   
5.1 The board should be responsible for information technology (IT) governance 2 Partially applied. The board assumes responsibility for the governance of IT and internal audit reviews the effectiveness of IT internal controls. The Board has tasked management to develop an IT charter and policies and to design an IT internal control framework for the board’s approval.
5.2 IT should be aligned with the performance and sustainability objectives of the company 3  Applied. IT strategy is aligned with the company’s sustainability objectives and is integrated with the business processes.
5.3 The board should delegate to management the responsibility for the implementation of an IT governance framework. 2 Partially applied. While responsibility for the implementation of an IT governance framework has been delegated to management, an IT internal control framework is in the process of being designed (refer to principle 5.1) by management. Once approved by the board, the IT governance framework will be implemented by management at which point the requirements of this principle 5.3 will be deemed to have been fully applied.
5.4 The board should monitor and evaluate significant IT investments and expenditure 3 Applied. To the extent that there have been any significant IT investments and expenditure
5.5 IT should form an integral part of the company’s risk management 2 Partially applied. IT forms part of the company’s risk management however, a disaster recovery plan is being developed to accommodate the company’s new operating environment (in its new premises) as well as the new businesses that have been rolled out during the past 8 months (for example, Burger King). 
5.6 The board should ensure that information assets are managed effectively 2 Partially applied. Although information assets are managed effectively, management is developing a new Information Security Management System for approval by the board after which management will be delegated responsibility for its implementation.
5.7 A risk committee and audit committee should assist the board in carrying out its IT responsibilities   3 Applied. The audit and risk committee assists the board with its responsibilities in this regard.
6.
Compliance with laws, rules, codes and standards
   
6.1 The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards. 3 Applied. The board is committed to compliance with applicable laws and ensures adherence therewith across the group.
6.2 The board and each individual director should have a working understanding of the effect of applicable laws, rules, codes and standards on the company and its business 3 Applied. Directors are expected to have a working knowledge of the laws, rules, codes and standards applicable to company’s business and the directors of subsidiary boards are likewise expected to have such knowledge. Where changes occur, steps are taken to apprise directors accordingly.
6.3 Compliance risk should form an integral part of the company’s risk management process 3 Applied. The company operates in a highly regulated environment as both a listed company and one licensed in the gambling industry. Compliance risk and management thereof is accordingly integrated transversally across the group.
6.4 The board should delegate to management the implementation of an effective compliance framework and processes 3 Applied. Compliance risk forms part of the risk management framework and oversight thereof is performed by the audit and risk committee.
7.
Internal audit
   
7.1 The board should ensure that there is an effective risk based internal audit 3 Applied. The company has an effective risk based internal audit function.
7.2 Internal audit should have a risk-based approach to its plan 3 Applied. Internal audit follows a risk-based approach.
7.3 Internal audit should provide a written assessment of the effectiveness of the company’s system of internal control and risk management 3 Applied. The internal auditor provides the audit and risk committee with a written assessment of the effectiveness of the company’s system of internal control and risk management.
7.4 The audit committee should be responsible for overseeing internal audit 3 Applied. The audit and risk committee is responsible for approving the internal audit plan and is responsible for the performance of the internal audit function.
7.5 Internal audit should be strategically positioned to achieve its objectives 3 Applied. The internal audit function is independent and objective and reports functionally to the audit and risk committee.
8.
Governing stakeholder relationships
   
8.1 The board should appreciate that stakeholders’ perceptions affect a company’s reputation   3 Applied. Stakeholder engagement is important to the company and the board regularly considers the impact that stakeholder perceptions have on the company’s reputation.
8.2 The board should delegate to management to proactively deal with stakeholder relationships 3 Applied. Management engages with stakeholder groups according to
8.3 The board should strive to achieve the appropriate balance between its various stakeholder groupings, in the best interests of the company 3 Applied. The board considers the effect of its decisions on the legitimate interests and expectations of its stakeholders in the best interests of the company.  
8.4 Companies should ensure the equitable treatment of shareholders 3 Applied. All shareholders are treated equitably in accordance with the rights and terms applicable to the shares held in the company.
8.5 Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence 3 Applied. The company communicates with all stakeholders in a number of ways which are described more fully in the integrated annual report.
8.6 The board should ensure disputes are resolved as effectively, efficiently and expeditiously as possible 3 Applied in that the board would take steps to ensure that disputes are resolved effectively, efficiently and expeditiously whenever they arise.
9.
Integrated reporting and disclosure
   
9.1 The board should ensure the integrity of the company’ integrated report 3 Applied. The board has delegated to the audit and risk committee the function of evaluating the sustainability disclosures in the company’s integrated report and is ultimately responsible for ensuring the integrity of the report. 
9.2 Sustainability reporting and disclosure should be integrated with the company’s financial reporting 3 Applied. Sustainability reporting and disclosure form an integral part of the integrated report.
9.3 Sustainability reporting and disclosure should be independently assured   2 Partially applied. The audit and risk committee provides the board with assurance that the information in the integrated report is reliable and supports the financial aspects of the report and will consider obtaining external assurance for this purpose.
Board of directors

BOARD OF DIRECTORS

As the custodian of the company's values and ethics, the Board not only applies, but also demands high standards of conduct across the group to ensure sustainable growth and ultimately sustainable value for GPI's shareholders, taking into account the legitimate interests of all other stakeholders.

In terms of its charter, the Board retains full and effective control over the group and is responsible for risk management, corporate governance, determining corporate strategy and monitoring management's implementation thereof. It also reviews and approves specific financial and non-financial objectives and policies proposed by management; delegates authority to management for the day-to-day management of the business and capital expenditure; and considers and approves investment, capital and funding proposals.

The Board operates separately from executive management and each have separate performance areas, thereby ensuring a balance of power and authority which precludes any one individual or group of individuals from dominating Board decisions or exercising unfettered powers of decision making.

The Chairman of the Board performs an executive role at a strategic level and is also a shareholder of GPI. Although he does not meet the King III principle of independence, the Board considers that this is mitigated firstly by the weight of Hassen Adams' experience, his extensive expertise and commitment to serving the best interests of the company and greater community; and secondly, by the appointment of a lead independent director (LID).

Accordingly, Dr Norman Maharaj was reappointed as LID for the year under review. As LID, his role is to provide leadership to the Board, committees, directors and executives on matters where the Chairman may have a conflict of interest and, in conjunction with the Remuneration and Nomination Committee, he manages the performance appraisal of the Chairman.
Board composition

BOARD COMPOSITION

The Board has a unitary structure comprising a mix of executive and non-executive directors. At the start of the accounting period, the Board comprised nine suitably qualified and highly experienced directors of whom six were nonexecutive directors, four being independent non-executive directors, and three were executive directors - the Chairman, Finance Director and Richard Hoption.

At the company's annual general meeting on 7 December 2011, the shareholders appointed Uys Meyer as non-executive director. However, he subsequently resigned from the Board on 31 January 2012 due to work pressure that precluded him from having time available for Board meetings.

Alan Keet was appointed as an executive director following his appointment as group CEO on 10 April 2012; and Alex Abercrombie, formerly a non-executive director, was appointed as an executive director on 11 June 2012.

Ralph Freese, who was appointed to the Board on 20 July 2011, resigned with effect from 29 June 2012, and Colin Priem was appointed as a non-executive director to fill the resulting vacancy on the Board as well as the company's Audit and Risk Committee with effect from 20 August 2012.
Period of office and retirement

PERIOD OF OFFICE AND RETIREMENT

Non-executive directors hold office for a period of three years after which at least a third must retire by rotation with the longest serving directors retiring first. Directors remain eligible for re-election provided they have not reached the retirement age of 70 years and they satisfy the eligibility and qualification criteria of the Companies Act.

Any non-executive directors who are appointed to fill vacancies must be confirmed at the company's next general meeting.

Details of the appointment to be confirmed as well as the re-election of the directors who will be retiring by rotation are contained in the notice of annual general meeting of this report.

The tenure of executive directors is governed by way of their respective employment contracts which contain provisions in keeping with best practice in the market.
Appoinment and performance of directors

APPOINMENT AND PERFORMANCE OF DIRECTORS

Our appointment procedures are formal and transparent with guidance and advice being provided to the Board by its Remuneration and Nomination Committee. Whenever a vacancy arises on the Board, the committee assists the Board with the identification of potential directors and considers their skills and qualifications with due regard to the Board's knowledge and skills requirements, as well as those laid down in the Companies Act.

The committee also ensures that the eligibility and disqualification provisions of the Companies Act are taken into account before recommending a candidate for appointment to the Board. The Board ultimately decides on the appointment of the director and provides full disclosure of director appointments to shareholders.

On appointment, a director is provided with the relevant statutory information to ensure an understanding of the provisions of the Companies Act with particular reference to the duties and obligations of directors. The director is also provided with information on the group's strategy, operational activities, products and services offered by its Slots operations and the business environment in which the group operates. New directors are also informed of the closed periods for dealing in the company's securities, the procedure they are required to follow before dealing in securities as well as details pertaining to related party transactions.

The Board evaluates its own performance, processes and procedures as well as the performance of its committees. The chairman performs an annual evaluation of the attendance and performance of directors and the efficacy of Board committees by way of an informal process in light of the collective experience of the directors and their extensive knowledge of the company and its operating environment.
Independence assessment

INDEPENDENCE ASSESSMENT

Non-executive directors performed a written self-assessment based on the criteria provided in King III and the JSE Listings Requirements, the results of which were reviewed by the Remuneration and Nomination Committee and subsequently considered by the Board.

The Board is satisfied that, based on the assessment criteria mentioned above, four of its non-executive directors are independent.

The Board also reviewed the independence of directors who have served for periods longer than nine years and is satisfied that the directors concerned are independent of mind and judgement and that no conflicts of interest exist. Furthermore, the Board is of the view that notwithstanding the extended length of the directors' service, they contribute valuable experience to the Board.
Chief executive officer

CHIEF EXECUTIVE OFFICER

Alan Keet was appointed CEO of the group on 10 April 2012. The role and performance criteria of the CEO are formalised and the Remuneration and Nomination Committee will evaluate his performance against these criteria on an annual basis.

The CEO's primary role is to run the business and implement the decisions of the Board by means of written delegations of authority communicated through Board resolutions and standard approved levels of authority for capital expenditure, contracts and procurement.

Work has commenced on developing a succession plan for the CEO and other senior executives. It will be referred to the Remuneration and Nomination Committee before submission to the Board for adoption.
Board meetings

BOARD MEETINGS

As a minimum, the Board meets quarterly to discharge its statutory obligations and to ensure adherence with the company's strategic focus as determined by the directors prior to the commencement of the financial year. Additional meetings are held during the course of the year to attend to other specific business as and when the need arises.

Details of the Board meetings held during the accounting period and attendance at the meetings are as follows:
 
Name Number of
meetings
held*
Number of
meetings
attended
     
H Adams 8 8
A Abercrombie 8 8
A W Bedford 8 7
R G Freese 8 7
R J Hoption 8 8
A E Keet# 2 2
N V Maharaj 8 6
N Mlambo 8 8
S Petersen 8 8
M F Samaai 8 8
 
* The "number of meetings held" column represents the meetings that took place during the relevant director's term of office during the accounting period.
** Appointed on 10 April 2012.
Directors' dealings in securities

DIRECTORS' DEALINGS IN SECURITIES

Before dealing in the company's securities, it is necessary for directors, the Company Secretary and senior executives to obtain the Chairman's clearance in writing or, in his absence, that of the LID. All requests are referred through the company secretary for record-keeping purposes and to facilitate disclosure of such dealings to shareholders on SENS via the company's sponsors.

Directors, the Company Secretary and certain identified senior executives with access to price-sensitive information may not deal in shares of the company during the closed periods which fall within the following periods:
from 1 January to the date of publication of the interim results; 
from 1 July to the date on which the year-end results are published; and 
while the company is in the process of price-sensitive negotiations, acquisitions, pending any price-sensitive announcements, or while under cautionary. 
Access to company information

ACCESS TO COMPANY INFORMATION

Procedures are in place, through the Board Chairman and the Company Secretary, enabling the directors to have access, at reasonable times, to all relevant company information and to senior management, to assist them in the discharge of their duties and responsibilities and to enable them to make informed decisions. Directors are expected to strictly observe the provisions of the statutes applicable to the use and confidentiality of information.
Independent professional advice and company secretariat

INDEPENDENT PROFESSIONAL ADVICE AND COMPANY SECRETARIAT

A procedure is in place for directors to take independent professional advice for the furtherance of their duties, if necessary and within reason, at the company's expense, subject to prior notification to the Chairman or the Company Secretary. No such advice was sought during the year under review.

The Company Secretary serves as the central source of advice to the Board on the requirements of the Companies Act and the principles of corporate governance as contained in the JSE Listings Requirements and King III. In addition to the Company Secretary's statutory and other duties, she provides the Board as a whole, directors individually, and the committees with guidance as to the manner in which their responsibilities should be discharged in the best interests of the company. The appointment and removal of the Company Secretary is a matter for the Board as a whole.
Disclosure and conflicts of interest

DISCLOSURE AND CONFLICTS OF INTEREST

Directors are required to disclose any related party transactions and to inform the Board of any conflicts or potential conflicts of interest which they may have in relation to particular items of business. Furthermore, directors are required to recuse themselves from discussions or decisions in respect of which they have conflicts or potential conflicts of interest and the Board may request a director to recuse himself/herself from the meeting for the duration of the matter under discussion.
Board committees

BOARD COMMITTEES

The Board has four standing committees (referred to in the following paragraphs) which met at various intervals during the year.

Each committee has a charter containing details of the membership, appointment, roles and responsibilities and these are reviewed by the individual committees on an annual basis. Any proposed changes are reported to the Board for approval.

The chairman of each committee reports to the Board at each quarterly meeting and copies of their minutes of meetings are made available to directors.

The performance of the Board committees is evaluated by the Board at the end of the financial year.
Audit and risk committee

AUDIT AND RISK COMMITTEE

The committee comprises three independent non-executive directors.

The purpose of the obligations and to carry Board to assist the fulfilling its oversight shareholders, the investment reference to:
the integrity of the company's and group's annual financial statements;
the company's and group's compliance with legal and regulatory requirements;
the independent external auditor firm's qualifications, performance and independence; and
the expertise and experience of the Financial Director.
 
In fulfilling its purpose, it is the responsibility of the committee to maintain free and open communication between the committee, independent external auditors and management of the company and group, and to determine that all parties are aware of their responsibilities.

The committee meets at least once a quarter with two meetings being set aside specifically to deal with the company's financial results and the remaining two for purposes of dealing with its other responsibilities, namely, monitoring the effectiveness of internal controls; ensuring that adequate accounting records are kept; that risk is properly managed and controlled; that all applicable laws and prescripts are universally complied with throughout the group; overseeing integrated reporting for the group and other business arising from time to time.
Remuneration and nomination committee

REMUNERATION AND NOMINATION COMMITTEE

Composition: A W Bedford (Chairman), Ms N Mlambo, A Abercrombie (until 11 June 2012) and M F Samaai

The committee currently comprises three non-executive directors and its mandate is to:
Make recommendations to the Board policies for directors and senior company ensuring that remuneration policies:
 
are aligned with the strategy of the company;
are linked to individual performance;
are competitive, fair and affordable;
comprise a base fee as well as an attendance fee per meeting for non-executive directors in respect of their services as members of the Board; 
include provision, if applicable, for remuneration to be paid to non-executive directors for their services as members of Board committees in addition to their fees for their services as non-executive directors of the Board; and 
address base pay and bonuses, employee contracts, severance and retirement benefits and share-based and other long-term incentive schemes for senior company executives. 
Determine and recommend to the Board the terms and conditions of executive directors' employment agreements, including the performance criteria or metrics to be applied in setting the remuneration levels of executive directors (including any chief executives) and in measuring their individual performances, ensuring alignment between individual performance and rewards being recommended to the Board.
Evaluate the performance of executive directors (including any chief executives) in light of the criteria or metrics approved by the Board (as per the above paragraph) and recommend to the Board any rewards to be paid.
Consider management's proposals for annual salary adjustments for employees in the group and make recommendations in this regard to the Board.
Consider and approve management's proposals for the payment of performance-based rewards and/or incentive and retention bonuses to employees in the group ensuring that there is alignment between individual performance and rewards/bonuses to be paid.
Approve changes to the benchmarking methodology used for setting base salaries and incentive targets for employees in the group.
Review and approve any changes to the group's conditions of employment and other benefits offered to employees.
Ensure that the annual remuneration report, including the remuneration policy, included in the company's IAR provides the necessary level of disclosure in respect of the principles recommended in King III or provides an explanation in respect of any principles not applied.
Identify and nominate suitable candidates for appointment to the Board.
Make recommendations to the Board on the re-election of directors retiring by rotation, taking into account governance requirements.
Annually review and make recommendations to the Board as to the independence of non-executive directors.
Determine and recommend to the Board appropriate long-term succession plans for all key positions in the group, particularly for the chairperson and chief executive(s) in the group, and ensure implementation of approved succession plans.
 
The committee is required to meet at least twice a year but may meet at other times to dispose of business as and when issues concerning the committee arise.

Meetings, and attendance thereat, were held as follows:
 
Name Number of
meetings
held*
Number of
meetings
attended
     
A W Bedford 3 3
N Mlambo 3 3
A Abercrombie 3 3
M F Samaai 3 3
 
* The "number of meetings held" column represents the meetings that took place during the relevant director's term of office during the accounting period and includes one special meeting.
Investment committee

INVESTMENT COMMITTEE

The committee's mandate is to:
Determine investment policies and guidelines, subject to the approval of the Board.
Consider investments proposed by management with due regard to their viability, the sustainability of projected returns, the effect of such investments on the group's liquidity and cash flow and the group's strategy.
Approve new investments and/or extend existing investments subject to the total value of the investment not exceeding R20 million per investment.
Recommend investments to the Board for approval.
Ensure that appropriate due diligence procedures are followed when acquiring or disposing of assets.
Evaluate the performance of assets/investments against the group's strategy, compliance with the investment policy and guidelines, and risk tolerance levels.
Review and assess adequacy of the Charter and recommend changes to the Board.
Social and ethics committee

SOCIAL AND ETHICS COMMITTEE

Composition: H Adams, A Abercrombie, Dr N V Maharaj, M F Samaai and A E Keet (appointed 11 June 2012)

The committee's statutory duties involve monitoring of the company's activities in line with relevant legislation or prevailing codes of best practice to ensure good corporate citizenship through the promotion of:
Social and economic development;
Fair labour practices and employment equity;
Broad-based black economic empowerment;
Prevention of discrimination;
Anti-corrupt practices;
Development of the communities in which our activities are predominantly conducted or within which our products or services are predominantly marketed;
Charitable giving;
Preservation of the environment, health and public safety, including the impact of the company's activities and of its products or services; and
Consumer relationships, including the company's advertising, public relations and compliance with consumer protection laws.
 
Although the Committee did not meet during the year, the Board monitored the group's activities to ensure that practices maintained a high standard of corporate citizenship. Meetings of the committee will be held during the 2013 financial year and reported on in the IAR for that period.
Non-executive directors' remuneration

NON-EXECUTIVE DIRECTORS' REMUNERATION

At our annual general meeting on 7 December 2011 shareholders approved a fee structure for our non-executive directors which made provision for the fees to be paid for the 2012 financial year as well as for an annual increase not exceeding 10% to be applied from 1 July 2012 to 30 June 2013.

Non-executive directors are paid a base fee and an attendance fee per meeting as well as any disbursements for expenses incurred in the course of performing an approved function on behalf of the Board. The remuneration received by directors during the 2012 financial year is included in note 19 of the abridged annual financial statements and the remuneration that will be paid during the 2013 financial year is as follows:
 
Fees for 2012/2013 financial years Base fee Attendance fee Attendance fee above minimum number of meetings Minimum number of meetings per year
         
Lead Independent Director 110 000 11 000 6 600 4
Directors 88 000 11 000 6 600 4
Audit and Risk Committee Chairman 17 600 6 600 4
Audit and Risk Committee Member 8 800 6 600 4
Remuneration and Nomination Committee Chairman 13 200 6 600 2
Remuneration and Nomination Committee Member 6 600 6 600 2
Social and Ethics Committee Chairman n/a n/a n/a 2
Social and Ethics Committee Members 6 600 6 600 2
Investment Committee Chairman n/a n/a n/a 2
Investment Committee Member 6 600 2
 
A resolution seeking approval for non-executive directors' remuneration for the period 1 July to 31 December 2013 will be tabled at the forthcoming annual general on 12 December 2012.
 
Risk management

RISK MANAGEMENT

The Board acknowledges its accountability for the process of risk management and the system of internal control of the group and has, with the assistance of the Audit and Risk Committee, developed a risk management framework to ensure that the business achieves its overall strategic objectives and that long-term value is created for shareholders. The fundamental elements of our risk management approach include:
Raising awareness of the need for risk management throughout the group and integrating this into the culture at enterprise level;
Eliminating risks or reducing risks within acceptable parameters;
Allowing for controlled risk taking for the benefit of the business within pre-determined risk tolerance parameters (specified risk limits);
Ensuring that management acts in a way that increases its ability to anticipate unforeseen risks;
Anticipating and responding to changing social, environmental and legislative requirements which could impact on the business; and
Preventing damage or harm to property, finances, equipment and reputation, and reducing the cost of risk.
 
The Audit and Risk Committee is responsible for reviewing and assessing the effectiveness of the risk management system to ensure that risk is appropriately managed and mitigated. The Board has adopted a risk framework which is applied across the entire group with emphasis on integrating risk management into the culture of all enterprises.

At an operational level risk management processes such as occupational health and environmental responsibilities, safety management, asset management and protection, security and fire risk, are applied with processes for prompt incident-reporting to line managers and ultimately senior and executive management.

At enterprise level, risk committees have been established comprising senior management who are responsible for maintaining risk registers and assigning responsibility for risk management to specific owners. These risk committees are required to meet quarterly to review risks and risk mitigation measures, to re-rank risks and to consider new risks that may have arisen in the operating environment during the preceding quarter or to anticipate potential risks. The outcome of these proceedings are reported at the quarterly Board meetings of the operating enterprises or subsidiaries and are ultimately reported to the Audit and Risk Committee with exceptions being escalated to the main GPI Board.

Each risk is measured in terms of its probability and its potential impact on the group's profitability and financial position.

Going forward, the internal audit function will review the risk management review process and the annual internal audit plan will make provision for the efficacy of the risk controls at enterprise level to be evaluated at least once a year with direct reporting to the Audit and Risk Committee.
Combined assurance

COMBINED ASSURANCE

In terms of its Charter, our Audit and Risk Committee is required to ensure that a combined assurance model is applied. The objective is to provide a co-ordinated approach to all assurance activities, with particular reference to ensuring that the combined assurance received is appropriate to address all the significant risks facing the company.

The recently established internal audit function will now enable the roll out of the last element of our combined assurance model comprising management, internal audit and our external auditors.

Management will continue its role of providing the Board with the assurance that the group's risk management policy is implemented and integrated into the group's day-to-day business activities and that internal controls are implemented and their efficacy monitored on a regular basis.

The Internal Audit function, as mentioned previously, will operate under the auspices of the Audit and Risk Committee and will provide an independent assessment of the effectiveness of the company's system of internal control and risk management.

Our external auditors, Ernst & Young, have historically expressed and will continue to express an opinion on the fair presentation of the group's annual financial statements.
Governance of information technology

GOVERNANCE OF INFORMATION TECHNOLOGY

Although the Board assumes overall responsibility for information technology ("IT") governance, a dedicated internal IT resource is assigned responsibility for the management of the entire IT environment and the group's IT assets.

Management is currently reviewing the group's IT governance framework to ascertain potential risks and to develop risk amelioration strategies to ensure that IT is aligned with the company's performance and sustainability objectives. An IT governance committee will be established to monitor the effectiveness of the IT governance framework and to report thereon to the Audit and Risk Committee and ultimately the Board.
Internal audit

INTERNAL AUDIT

The internal audit function was previously out-sourced but following a review of the function by the Audit and Risk Committee, an in-house internal audit function was established and, as at time of writing this report, an internal auditor had assumed duty.

The objective of the internal audit function is to provide support to the Board of directors by performing independent assessments of the group's activities and the concomitant business risks, and providing impartial judgements thereon.

The purpose, terms of reference and scope of the internal audit function will be incorporated in an internal audit charter which will be reviewed by the Audit and Risk Committee and approved by the Board. Provision will be made for the charter to be reviewed annually and revised when necessary, subject to the approval of the Audit and Risk Committee and the Board.

The scope of the internal audit function includes: performing annual and bi-annual internal audits as prescribed by the provincial gambling legislation; performing internal control adequacy and effectiveness reviews; determining compliance with policies and procedures; adding value by directing the audit scope, interpreting results and enabling improvements to the group's governance, risk and control procedures; communicating findings to senior management and compiling comprehensive evidence-based reports for the Board.

The internal auditor reports to the Audit and Risk Committee and has direct access to the Chairman and LID.