No N/A 1 Chapter 1 - Ethical leadership and corporate citizenship 1.1 The board s should provide effective leadership based on an ethical foundation 1.2 The board should ensure that the Company is and is seen to be a responsible corporate citizen 1.3 The board should ensure that the Company s ethics are managed effectively. 2. Chapter 2 - Boards and Directors 2.1 The board should act as the focal point for and custodian of corporate governance. 2.2 The board should appreciate that strategy, risk, performance and sustainability are inseparable. Refer to values and corporate governance report. The board is very aware of the part that can play in contributing to the education of the next generation within South Africa. Corporate citizenship programmes are in place throughout the organisation. Adherence to good ethical values is at the heart of the culture of the group, and is monitored by the board. Rather than codifying its ethics, the Company has elected to maintain focus on its values, the first of which is Through our own ethical conduct, practices and policies we seek to set an example to our candidates, learners, students and clients. The Board has a charter setting out its responsibilities; meets at least 4 times annually; and ensures that the Company thrives and survives. Strategy is set by management but approved and implementation thereof monitored by the board. The board ensures that the strategy is aligned with the purpose of the company, the value drivers of the business and legitimate interests and expectations of stakeholders. The board (through various committees and by activities of the board as a whole) monitor risk throughout the company and King III checklist 2016 Page 1
2.3 The board should provide effective leadership based on an ethical foundation. 2.4 The board should ensure that the company is and is seen to be a responsible corporate citizen. 2.5 The board should ensure that the Company s ethics are managed effectively. 2.6 The board should ensure that the Company has an effective and independent audit committee. 2.7 The board should be responsible for the governance of risk. 2.8 The board should be responsible for information technology (IT) governance. 2.9 The board should ensure that the Company complies with applicable laws and consider adherence to non-binding rules, codes and standards. 2.10 The board should ensure that there is an effective risk-based internal audit function. 2.11 The board should appreciate that stakeholders perceptions affect the Company s reputation. 2.12 The board should ensure the integrity of the company s integrated report. No N/A ensure that it is appropriately managed by management. See 1.1 above. The Transformation, Social and Ethics Committee (TSEC) is tasked with monitoring the ethical foundation of the business. See 1.2 above. TSEC is also responsible for monitoring the company s activities as a responsible corporate citizen. See 1.3 above. Although all of management are involved in the governance of risk, a risk committee has been established as a committee of the board with responsibility for monitoring management of risk. The board regularly reviews its role in IT governance. Adherence to legislation is a fundamental requirement of the board in line with its commitment to good corporate ethics. Where appropriate, the board will require adherence also to non-binding rules, codes and standards. Refer to the corporate governance report. The Board approved the Company s integrated report after recommendation of such approval has been made by the Audit Committee. King III checklist 2016 Page 2
No N/A 2.13 The board should report on the effectiveness of the Company s systems of internal controls. Refer to the corporate governance report. 2.14 The board and its directors should act in the best interests of the Company. 2.15 2.16 2.17 2.18 The board should consider business rescue proceedings or other turnaround mechanisms as soon as the Company is financially distressed as defined in the Companies Act, 2008 (Act). The board should elect a chairman of the board who is an independent non-executive director. The CEO of the company should not also fulfil the role of chairman of the board. The board should appoint the chief executive officer and establish a framework for the delegation of authority. The board should comprise a balance of power, with a majority of non-executive directors. The majority of non-executive directors should be independent. 2.19 Directors should be appointed thorough a formal process. 2.20 2.21 2.22 The induction of and ongoing training and development of directors should be conducted through a formal process. The board should be assisted by a competent, suitably qualified and experienced company secretary. The evaluation of the board, its committees and the individual directors should be performed every year. n/a This is regarded as a fundamental duty by the board to always act in the best interests of the Company. If necessary and in appropriate circumstances it will take independent advice. Directors are required to disclose conflicts as and when they arise, but at least annually. The chairman is independent and free from conflicts. A separate CEO has been appointed. The board has appointed a CEO and there is a framework for delegation of authority. Refer to corporate governance report. The board has a formal process for the appointment of directors. A nominations committee (consisting of all non-executive directors and the CEO) is involved in the process. An informal induction process is in place which is subject to ongoing improvement. Refer to corporate governance report for the qualifications and experience of the company secretary. She has an armslength relationship with the board and is not a director. In prior years a self-assessment of the board and directors was undertaken. An evaluation of the board by an external service provider was undertaken during 2014. An internal evaluation of the board King III checklist 2016 Page 3
2.23 The board should delegate certain functions to well-structured committees but without abdicating its own responsibilities. 2.24 A governance framework should be agreed between the Group and its subsidiary boards. 2.25 Companies should remunerate directors and executives fairly and responsibly. 2.26 Companies should disclose the remuneration of each individual director and certain senior executives. 2.27 Shareholders should approve the Company s remuneration policy. 3. Audit Committee 3.1 3.2 The board should ensure that the Company has an effective and independent Audit Committee. Audit Committee members should be suitably skilled and experienced independent nonexecutive directors. 3.3 The Audit Committee should be chaired by an independent non-executive director. 3.4 The Audit Committee should oversee integrated reporting. No N/A and its committees was undertaken in 2016. Individual NED performance is continually observed by chairman during meetings board small in number thus a formal evaluation not undertaken in 2016. See corporate governance report for the committees established by the board. A governance framework is in place between the holding company and its subsidiaries boards. Remuneration payable to directors and executives is reviewed annually and benchmarked against industry norms. See directors report. The remuneration policy was approved by a non-binding vote of the shareholders at the Annual General Meeting on 24 May 2016; the policy will once again be tabled for approval by a non-binding vote at the Annual General Meeting on 18 May 2017. See corporate governance report and Audit Committee report. See corporate governance report and CVs of directors. KDM Warburton, Chairman of the Audit Committee, is an independent nonexecutive director. The Audit Committee on the financial statements and the summarised information, which are also audited by the external auditors. King III checklist 2016 Page 4
3.5 3.6 The Audit Committee should ensure that a combined assurance model is applied to provide a coordinated approach to all assurance activities. The Audit Committee should satisfy itself of the expertise, resources and experience of the Company s finance function. 3.7 The Audit Committee should be responsible for overseeing of internal audit. 3.8 The Audit Committee should be an integral component of the risk management process. 3.9 3.10 The audit committee is responsible for recommending the appointment of the external auditor and overseeing the external audit process. The Audit Committee should report to the board and shareholders on how it has discharged its duties. 4. The governance of risk 4.1 The Board should be responsible for the governance of risk. 4.2 The board should determine the levels of risk tolerance. 4.3 The Risk Committee or Audit Committee should assist the board in carrying out its risk responsibilities. No N/A A combined assurance model is in place. The relationship between the external auditors, internal audit function and finance function in general is monitored by the Audit Committee. The Audit Committee has satisfied itself of the expertise, resources and experience of the finance function. See corporate governance report. A separate risk committee has been established but all Audit Committee members and the CEO and CFO are members of that committee. This ensures that the Audit Committee remains an integral part of the risk management process. See Audit Committee report. See Audit Committee report. Through the Risk Committee, the board assumes responsibility for the governance of risk. However, managing risk is part of every manager s mandate. The board has set the levels of risk tolerance and appetite, which will be reviewed on an annual basis The Risk Committee assists the board with its risk responsibilities. The performance of the Risk Committee will be evaluated. The functions and responsibilities of the Risk Committee have been reviewed. King III checklist 2016 Page 5
4.4 The board should delegate to management the responsibility to design, implement and monitor the risk management plan. 4.5 The board should ensure that risk assessments are performed on a continual basis. 4.6 4.7 The board should ensure that frameworks and methodologies are implemented to decrease the probability of activating unpredictable risks. The board should ensure that management considers and implements appropriate risk responses. 4.8 The board should ensure continual risk monitoring by management. 4.9 4.10 The board should receive assurance regarding the effectiveness of the risk management process. The board should ensure that there are processes in place enabling complete, timely, relevant, accurate and accessible risk disclosures to stakeholders. 5. The governance of information technology 5.1 The board should be responsible for information technology (IT) governance. No N/A The risk management plans and processes are subject to annual review. Management of risk is integrated into the day to day activities of the Company. The Group Risk Register has been reviewed, and accepted by the Risk Committee. In 2016, the divisional risk registers will be formulated in a similar format and tabled for consideration by the Risk Committee. Such frameworks and methodologies are in place. The CEOs of the divisions attend selected Risk Committee meetings, at which time they are required to advise the committee how risks are being managed. Risk management is an integral part of management of the business. In addition, the board requires management to report on its processes and procedures, as well as its monitoring activities. Assurance is provided by executive management that risk management is integrated into daily activities of the Company. Internal audit provides written assurance to the board regarding the effectiveness of the system of internal controls and risk management. Disclosure on risk management is included in the annual report. The board has delegated this function to the Risk Committee. Risk Committee increased its focus on IT governance in King III checklist 2016 Page 6
5.2 IT should be aligned with the performance and sustainability objectives of the Company. 5.3 The board should delegate to management the responsibility for implementation of an IT governance framework. 5.4 The board should monitor and evaluate significant IT investments and expenditure. 5.5 IT should form an integral part of the company s risk management. 5.6 The board should ensure that information assets are managed effectively. 5.7 A risk and audit committee should assist the board in carrying out its IT responsibilities. 6. Compliance with laws, rules, codes and standards 6.1 6.2 The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards. The board and each individual director should have a working understanding of the effect of the applicable laws, rules, codes and standards on the Company and its business. 6.3 Compliance risk should form an integral part of the Company s risk management process. 6.4 The board should delegate to management the implementation of an effective compliance framework and processes. No N/A 2016. The Risk Committee reports to the board on matters of concern. The group IT strategy and framework is aligned to group strategies. IT risks are considered taking into consideration business strategies and sustainability objectives. A IT governance framework has been approved and risks related thereto are monitored by the Risk Committee. All major IT projects require approval and regular reporting to the board. IT is included in the group s risk management. The issue of IT governance and related aspects will be dealt with at the May Risk Committee meeting. See corporate governance report. Risk and audit committees have been established with specific mandates. See corporate governance report. The Company complies with laws and standards because it is the right thing to do. Compliance is an ethical imperative. The board consists of experienced directors who are familiar with the impact of legislation, rules, codes and standards. Compliance risk is an integral part of risk management throughout the Group. Internal audit reports on the effectiveness of controls around compliance. Compliance at an operational level is largely monitored King III checklist 2016 Page 7
No N/A at divisional level. The compliance function is partly carried out by internal audit and partly by the legal department. 7. Internal audit 7.1 The board should ensure that there is an effective risk based internal audit. 7.2 Internal audit should follow a risk based approach to its plan 7.3 Internal audit should provide a written assessment of the effectiveness of the Company s system of internal controls and risk management. 7.4 The Audit Committee should be responsible for overseeing internal audit. 7.5 Internal audit should be strategically positioned to achieve its objectives. 8. Governing stakeholder relationships 8.1 The board should appreciate that stakeholders perceptions affect the Company s reputation. 8.2 The board should delegate to management to proactively deal with stakeholder relationships. See corporate governance report. See corporate governance report. Internal audit presents its reports to the Audit Committee and the internal audit manager attends all Risk Committee meetings. The internal audit manager is therefore an integral part of the risk management of the Company. She provides a written assessment of the effectiveness of the Company s system of internal control and risk management on an annual basis. See corporate governance report. See corporate governance report. Internal audit remains independent from management and reports functionally to the Audit Committee. The board has identified important stakeholder groupings and manages them appropriately. The board is well aware that is a people business, both in the education and resourcing sectors. Management of stakeholder relationships and perceptions King III checklist 2016 Page 8
8.3 The board should strive to achieve the appropriate balance between its various stakeholder groupings, in the best interests of the Company. 8.4 Companies should ensure the equitable treatment of shareholders. 8.5 8.6 Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence. The board should ensure that disputes are resolved as effectively, efficiently and expeditiously as possible. 9. Integrated reporting and disclosure No N/A is therefore crucial to the success of the business. Insofar as may be appropriate in each set of circumstances, the Board takes account of the legitimate interests and expectations of stakeholders in its decision-making in the best interests of the Company. The Company only has one class of shares and care is taken to ensure that shareholders are treated equally. However, with the best interests of the Company in mind, the Company has regular contact with its major shareholders. Complete, timely, relevant, accurate, honest and accessible information is provided by the Company to its stakeholders whilst having regard to legal and strategic considerations. The board supports the resolution of disputes in an effective, efficient and expeditious manner as possible. 9.1 The board should ensure the integrity of the Company s integrated report. 9.2 Sustainability reporting and disclosure should be integrated with the Company s financial reporting. 9.3 Sustainability reporting and disclosure should be independently assured. No The content of the integrated report is compiled with information supplied from a variety of sources and checked on a number of levels for accuracy. The going concern statement is considered by the board before approval of the annual financial statements. The Company reports on sustainability in the integrated report. Independent assurance has not been obtained but will be considered annually going forward. King III checklist 2016 Page 9
King III checklist 2016 Page 10