Governance & Risk

GOVERNANCE

The Board aims to integrate responsible corporate citizenship into the Group’s growth strategy and to embed sound corporate governance values and principles into daily operations and processes in order to build a culture of sustainability. It further endeavours to ensure that these sustainability components form part of all strategic decisions, audits and assessments and recognises this as a dynamic responsibility requiring continuous monitoring of processes to ensure improved compliance in line with developments in corporate governance in South Africa and internationally.

King IV defines corporate governance as the exercise of ethical and effective leadership towards achieving four advocated outcomes, which are set out further in this section of the report. Such report also sets out the practices implemented and the progress made towards achieving the 17 principles in meeting the advocated outcomes. It is done on an “apply and explain” basis as recommended by King IV.

Peregrine’s Board actively reviews and enhances the Group’s systems of internal control and governance on a continual basis to ensure that the business is managed ethically and within prudently determined risk parameters, in conformity with South African accepted standards of best practice.

Board of Directors

The Board is responsible and accountable for the performance and affairs of the Group and in so doing it: (i) effectively represents and promotes the legitimate interests of the Group and its stakeholders in a manner that is both ethical and sustainable; and (ii) the Directors acknowledge the need to exercise leadership, enterprise, integrity and judgement in directing the Group’s affairs to achieve continuing sustainability within the context of transparency and accountability. The Social and Ethics Committee, Audit Committee, Risk and Compliance Committee and Remuneration Committee ensure that active measures are taken in the adherence of the ethical standards of the Group.

Peregrine’s unitary Board is chaired by Sean Melnick, as a Non-Executive Chairman and comprises a further eight Directors, three of whom are Executive (with Claire Coward having been appointed as Chief Financial Officer with effect from 1 June 2018) with Leonard Harris as the Lead Independent Non-Executive Director. The majority of the Directors (six) are Non-Executive Directors, four of whom are classified as independent. As at the date of this report, two of the Directors are female and one male Director is black.

The Board members are all suitably qualified for their roles as Directors and have extensive experience in a variety of sectors. Their diverse backgrounds (including age, core expertise, gender and racial diversity) enable them to provide independent advice and judgement in the execution of their duties. The Board recognises that it should be comprised of individuals who are able to work together effectively to lead a viable, profitable and efficient Group. The Group took the above factors into account when nominating and appointing Claire Coward as Chief Financial Officer with effect from 1 June 2018 and will ensure that these factors are considered in future Director nomination processes.

In accordance with the intention stated in the results announcement dated 12 June 2018 to propose Board changes before the upcoming Annual General Meeting (“AGM”), Boitumelo (“Tumi”) Tlhabanelo has been appointed as an Independent Non-Executive Director with effect from 1 August 2018. Should shareholders approve Tumi’s appointment at the upcoming Annual General Meeting (“AGM”), the number of Independent Non-Executives will be five and the percentage of black people who are Directors will be 20%. 

Click here to view the names and brief curriculum vitae of each Director.

Board Committees

Peregrine has an established Group Audit Committee, Group Remuneration Committee, Group Risk and Compliance Committee, and a Group Social and Ethics Committee that assists the Board in discharging its collective responsibility of sound corporate governance. All committees were found to have satisfied their responsibilities in compliance with their formal charters and/or written terms of reference. Having regard to the principles of King IV and the JSE Listings Requirements, the Board regularly assesses the composition of the committees and the functions carried out by the Non-Executive Directors as members of the various subcommittees.

An Independent Non-Executive Director chairs each committee.

Remuneration of Directors

The Group’s remuneration policy has the primary objective of aiming to ensure fair and responsible Executive remuneration practices in the context of overall employee remuneration and aligning with the principle of ethical leadership. In determining its remuneration policy, the Group Remuneration Committee (“Group Remco” or “the Committee”) has given much consideration to the King IV reporting requirement regarding the remuneration governance principle 14 that, “the governing body should ensure that the organisation remunerates fairly, responsibly and transparently, so as to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term”. Whilst this principle and recommendation was adopted by Peregrine for the current reporting period to 31 March 2018 it was, to a large degree applied, implemented and ingrained in Peregrine’s remuneration philosophy in the prior year.

In terms of its mandate, the Group Remco assists the Peregrine Holdings’ Board by ensuring that Group remuneration and recruitment is aligned with the overall business strategy, with the aim of enabling Peregrine to attract and retain personnel who will create long-term value for all stakeholders. The Group Remco is assisted in its task by the Remco’s that have been established within the major subsidiaries, which enable them to apply the same objectives to their unique operations and their strategic objectives. Each of these subsidiary Remco’s, which comprises of Executive Directors of the subsidiaries, as well as two Peregrine Group Executive Directors or Non-Executive Directors within the Stenham subsidiary, report into the Group Remco, which enables the latter to assess that these subsidiary Remco’s are aligned with the specific performance of the subsidiaries and hence the Group’s overall remuneration philosophy.

More information on the remuneration of Directors is contained in the Group Remuneration Report, set out under the Corporate Governance section of Peregrine’s 2018 Integrated Report

Company Secretary

The Company Secretary, Peregrine Management Services (Pty) Limited, is responsible for ensuring that Board procedures are in compliance with relevant regulation and legislation and that full compliance is adhered to. Wherever necessary, Peregrine’s Sponsors and other relevant advisors/experts will be invited to become involved to ensure that the Directors have adequate information to sufficiently discharge their responsibilities.

Ethics

In compliance with the requirements of the Companies Act, the Social and Ethics Committee was formed by the Board during July 2012.The Committee is chaired by an Independent Non-Executive Director and includes two Executive Directors. The objective of the Committee is to review and approve the policy, strategy and structure to manage transformation and social and ethics issues in the Group. Amongst the issues falling within the scope of the Committee's functions are social and economic development, good corporate citizenship and environmental issues, the latter including climate change.
A formal Code of Conduct (‘the Code') is in place and is approved by the Board, setting out standards of integrity and ethics in dealings with all stakeholder groups including suppliers, customers, business partners, stakeholders, government and society at large.

Every employee of Peregrine is expected to subscribe to the Code, which requires all to act with honesty and integrity in all dealings with stakeholders; to interact with fairness, dignity and respect within and outside of the Group in all business dealings; and to create and protect a credible and well-reputed business and working environment free from harassment and discrimination.

The Code is communicated to all employees and is reviewed annually.

Dealing in securities

In accordance with the Listings Requirements of the JSE Limited:

  • Directors of the Holdings Board as well as Directors of major subsidiary companies require advance approval from the Chairman, Deputy Chairman or CEO, prior to them or any of their associates dealing in Peregrine shares;
  • Once executed, appropriate disclosure is made on the Securities Exchange News Services (SENS).

In addition to the above:

  • The Board has implemented a formal trading policy prohibiting all Directors, officers and employees of the Peregrine Group from dealing in Peregrine shares during closed periods which start at the close of the interim and annual reporting periods and last until the financial results are announced on SENS. Closed periods also include periods during which the Company is trading under a cautionary announcement;
  • Appropriate personal account trading rules are in place within the subsidiary companies.
RISK

Within an ever changing and complex financial services environment, the Board recognises that risk management needs to be a dynamic process with a framework that is robust enough to effectively manage and react to change in an efficient and timeous manner. The global financial crisis of 2008/2009 prompted regulatory and risk management changes, which resulted in the Twin Peaks model of financial sector regulation in South Africa. As a result, with effect from 1 January 2018, the Group appointed Eben Kolesky as Group Chief Risk Officer (CRO), to assist the Group in improving Enterprise Risk Management and Compliance related initiatives. Eben brings more than 10 years of Risk and Compliance executive management experience to the role and has valuable international Risk Management experience spending two years in Amsterdam in the Strategic Risk Advisory at ABN AMRO Bank. Eben graduated with a B.Proc degree and holds a post-graduate professional qualification in Financial Risk Management from the Global Association for Risk Professionals.

Peregrine acknowledges that risk management is a corporate discipline demanding the highest quality processes, training and infrastructure, so that corporate executives at all levels can understand and control risks in their business units and across the entire business. To this end Peregrine’s risk methodology integrates risk and legal compliance and internal audit in a single database. Risks, as set out in a formal risk matrix, are monitored on a daily to a monthly basis, depending on their respective nature and severity. Risk ratings are assessed as part of an ongoing exercise as documented in the Risk Charter and discussed at the Risk and Compliance Committee meetings. Peregrine has initiated the implementation of a new Risk Management and Compliance solution within various subsidiaries of the Group, in order to further entrench formalized risk management processes within the daily operations of the Group.

Whilst the Board is ultimately responsible for the management of risk, the Board relies on management to operate within the control structures and frameworks established by the Board and has delegated the responsibility for implementation of the risk framework to the Risk and Compliance Committee. The primary role of the Risk and Compliance Committee is to assist the Boards of Group and subsidiary entities in fulfilling their oversight responsibilities by providing guidance regarding risk governance and the development of the Group’s risk profile, including regular review of major risk exposures and the management of risk limits.

RISK MANAGEMENT PROCESS: