The Board is responsible for ensuring that sound corporate governance principles are applied across the Group. As defined by the Board Charter, the Board must exemplify the characteristics of integrity, competence, accountability and transparency.
Our seven core values (opening page) shape our governance philosophy, and together with King IV, guide the Board and management in their leadership decisions and behaviour. This results in the four good governance outcomes of ethical and effective leadership, sustainable value creation, effective controls and oversight and trust and confidence in the Group.
Board composition
The Board is satisfied that its composition reflects an appropriate mix of knowledge, skills, experience, diversity and independence.
The Board comprises a majority of independent non-executive directors (7), two non-executive directors and two executive directors, the CEO and Group Financial Director. The Board is adequately sized to meet the needs of the Group. Famous Brands does not have a lead independent non-executive director position.
The Board acknowledges the importance of diversity, including gender, race, age, experience and expertise. The Board’s Diversity Policy is incorporated into the Nominations Committee Charter. The Board has set a target of 35% for gender representation by 2024 as part of its focus on contributing to SDG 5 (gender equality). There are currently no targets for race representation.
There are succession plans for the CEO and other critical non-executive and executive positions.
Rotation and changes to the Board
Norman Adami, John Halamandres and Nic Halamandaris will retire by rotation. Norman and Nic have made themselves available for re-election at the AGM and the Board supports their re-election. John Halamandres will, however, retire at the AGM.
Santie Botha and Chris Boulle have served longer than 9 years on the board of Famous Brands. In terms of good corporate governance, the board has, in accordance with the recommendation of Principle 7 of King IV, conducted an assessment of their independence and is satisfied that notwithstanding their tenure on the board being longer than 9 years, they remain independent.
Changes to the Board and its Committees in 2023
We are guided by our Nomination Committee Charter when appointing non-executive directors. The Nomination Committee presents non-executive directors to the Board for approval. The following changes to the composition of the Board took place during the year:
- Busisiwe Mathe was appointed as a member of the Social and Ethics Committee, effective 3 November 2022.
- Thabo Mosololi was appointed as an independent non-executive director and Audit and Risk Committee member. This appointment was effective from 1 February 2023.
- On 8 March 2023, Norman Adami resigned as an Audit and Risk Committee member. He remains a member of the Nomination and Investment Committees.
Exco-composition
Key governance matters addressed during 2023
Operational
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Strategy and financing
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Risk management, internal control and compliance
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Succession and talent management
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Corporate and performance reporting
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Corporate citizenship
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Performance evaluations
The Board is satisfied that its evaluation process is improving its performance and effectiveness. In October 2022, Famous Brands conducted a formal internal evaluation of the Board’s overall effectiveness across several categories.
The Board evaluation results show that the Board functions well and allows for robust discussion of important topics and the expression of varied perspectives. Improvements were noted in:
- Strategy development and implementation.
- IAR drafting and approval process.
- Stakeholder management.
- Board succession and diversity at Board level.
- Executive succession.
Key focus areas for improvement in 2023 include:
- Gender diversity at Board and Committee level.
- More regular engagements with shareholders on remuneration report prior to AGM.
- Adoption and implementation of a revised Long-Term Share Incentive Plan for executives.
- Development of ESG strategy and framework.
- Development of a formal legal and regulatory compliance framework.
Meeting attendance
Ethical and effective leadership
The Board
The Board is held accountable for ethical and effective leadership through a Code of Conduct and annual performance evaluations. At each Board meeting, potential conflicts of interest are noted, and the members’ declarations of interests are periodically reviewed and amended. The Nomination Committee assesses potential conflicts of interest. The Committee expresses its concerns to the Board Chairman, or the Chairman of a pertinent Committee tasked with speaking with the director in question.
The Company
Famous Brands has a Code of Ethics that is reviewed each year. Employees must comply with the Code of Ethics. The following policies are in place to foster an ethical culture:
- A Gift Policy.
- A Whistle-blowing policy.
- Conflict of Interest Declaration Policy.
Famous Brands has an Ethics Management Programme facilitated by The Ethics Institute. The programme aims to foster ethical conduct, due care and compliance with our Code of Ethics. In 2023, 43 employees underwent this programme (2022: 46).
Future focus areas for ethics
In 2023, we conducted an ethics assessment by The Ethics Institute. Based on the results we are developing a plan to improve ethical behaviour throughout the Group.
This plan includes:
- Measures to entrench the Famous Brands’ values.
- Measures to improve ethics commitment and accountability.
- Increased focus on the topic of ethics including channels for employees to ask questions.
- Ethics awareness training for new and existing employees.
- Improving the fairness and perceived fairness of certain people practices.
Famous Brands offers all employees training on ethical behaviour and major workplace issues. Training modules include:
- Meeting etiquette.
- Workplace ethics.
- Workplace professionalism.
- Dealing with bullying.
- Sexual harassment.
- Risk management.
- POPIA.
- The Labour Relations Act.
- The Basic Conditions of Employment Act.
- Occupational health and safety.
Famous Brands has an anonymous ethics hotline in South Africa. In 2023, we received seven disclosures, seven concept queries and 220 dropped or no response calls. All seven disclosures were investigated and closed appropriately. This hotline will be rolled out to selected African markets in 2024.
Technology governance
Famous Brands makes use of technology to assist with various aspects of its business.
| Read more about our consumer-facing technology. |
Governance Hierarchy Model
This Hierarchy Model is enabled by the IT governance operating structures, as reflected in the diagram below. IT strategic planning, project management, managed security processes and continuity as well as performance and conformance management support the IT Governance Framework.
Processes and procedures
Several policies govern what constitutes the appropriate use of IT resources and infrastructure. They include rules for using the internet, email, company systems, buying and disposing of IT equipment, and creating passwords.
The Famous Brands Group’s IT Steering Committee oversees IT governance, with the Board providing direction through the Audit and Risk Committee. This committee meets quarterly to discuss subjects outlined in its Charter document, including alignment of the annual IT strategic objectives to the overall business objectives, prioritisation of projects, IT policy reviews and implementation, the three year IT Security plan among other things. It also performs bi-annual reviews of the disaster recovery plans and business resumption contingencies.
In addition, the IT Steering Committee holds weekly IT feedback sessions with Exco to facilitate better alignment to update them on technology projects the teams are working on, update on the IT security plan including any potential IT matters that can disrupt business operations.
In 2023, the Audit and Risk Committee monitored the implementation of the following critical technology projects:
- Cyber security: Implementation of the second year of the three-year IT security plan, including monitoring the development and implementation of Information and COBIT control objectives.
- System integration platform: Implementation of the system integration platform for the Financial Management system (SAGE X3) and the 3rd party systems that integrate with SAGE X3; Warehouse Management, Truck Delivery Route Planning and Vehicle Tracking.
- Server replacement: Replacement and migration of the old server that had reached end of life, to a new server in the Vodacom Data Centre without any down time to the business.
- Wifi network: Replacement of Wifi at all sites with modern 6th Generation technology, to manage traffic.
- Wide Area Network Architecture: Installed Fortigate Firewalls at each site to enable direct access to internet and cater for remote management of each firewall.
The Audit and Risk Committee will monitor critical technology deployment planned for 2024. These include:
- Server & storage replacement for Sage X3.
- Implementation of the final year of the three year IT security plan to enhance the organisations cybersecurity posture.
- Ongoing implementation of the IT security plan to enhance the organisations Cyber Security profile.
- ERP migration of Botswana Retail Group, Cater Chain Food Services and Venus Solutions Limited to SAGE X3.
- Investigating whether a “tailored” Enterprise Architecture function will benefit the organisation in better managing the investment the business makes in technology.
Compliance
Our Legal Department monitors our compliance with legislation and regulations, including expected regulatory changes. Famous Brands is developing a comprehensive regulatory compliance framework to map the legislation across each geography.
We have processes and procedures to ensure ongoing compliance with POPIA. In this year we reviewed the data protection legislation across all territories in which we operate and updated the POPIA Policy and framework to cater for it. We continued to monitor and ensure POPIA compliance through Data Protection Agreements (DPAs), training and regular reviews.
We further ensured that the appointment of POPIA information officers in all subsidiary entities were completed and registered with the Information Regulator.
In November 2022, Famous Brands received a formal request for information in terms of PAIA from the Animal Law Reform of South Africa (ALRSA) regarding records relating to the supply and distribution of eggs (or chickens) in South Africa. Although Famous Brands is not a supplier nor a distributor of eggs (or chickens), in an effort to assist the ALRSA with its exercise and to promote transparency and accountability, we provided information and records which were already available in the public domain.
South Africa’s Extended Producer Responsibility regulations came into effect in May 2021. Famous Brands has registered various producer responsibility organisations. We await clarity from the regulator on certain details on how the levies will be calculated in retrospect (refer page 88).
Famous Brands achieved 100% NOSA compliance for all plants, with no plants receiving less than a three-star rating.
Our planned future focus areas include:
- Monitoring developments regarding the Employment Equity Amendment Bill, which is expected to be effective on 1 September 2023.
- Continue the implementation of data protection activities across all AME entities territories, including training.
- The drafting and implementation of a Retention of Records Policy.
- Review and update the PAIA manual
Combined assurance
The Audit and Risk Committee assists the Board in embedding the combined assurance model across the Group.
The Committee monitors Famous Brands’ internal control system, designed to assess, manage, and offer reasonable assurance against significant misstatement and loss. The Audit and Risk Committee works with the Group Risk Executive to ensure that risks and opportunities are accurately recognised, evaluated and quantified. Divisional management supports the Board through the Group Risk Forum.
The Group’s combined assurance model enhances the assurance obtained from management and internal and external assurance providers while developing a strong ethical environment and mechanisms to ensure compliance.
The Internal Audit and Risk departments ensure adequate controls are in place. The external auditor, KPMG, evaluates key controls and accounting matters during the annual audit process. In 2024, a GRC tool with a built-in combined assurance reporting module will be implemented across the Group.
Internal audit
In 2023, Famous Brands conducted ten internal assurance audits across the Group (2022: 17). Internal resources were responsible for 70% of these audits (2022: 82%).
The audit approach for the year was narrow and deep with key focus on supply chain, POPIA and subsidiaries with minority shareholding. The scope of work mainly focused on plant operations, distribution, inventory and finance. The strengthened financial control environment and the implementation of the consolidation tool is welcomed.
Company Secretary
Celeste Appollis, the Company Secretary, ensures that the Board is aware of its fiduciary duties and that the Board and management execute their functions per the Limits of Authority Framework. The Board and each director have unfettered access to the Company Secretary. She also facilitates the appointment, induction and ongoing training of all directors.
The Board has evaluated the Company Secretary function as set out by the JSE Listing Requirements and Companies Act. It is satisfied that Celeste has the required experience and expertise to fulfil the role. The Board is confident that there is an arm’s length relationship between her and the Board to allow her to execute her role properly. The Board has trust in the arrangement for accessing professional governance services. As the Company Secretary, Celeste can contact the Chairman to express any concerns.
