Corporate Governance

Introduction

As enunciated in its value statements, the ADvTECH Group remains firmly committed to the principles of effective corporate governance and ethical leadership in all its business activities. The practices and policies of the ADvTECH Group are therefore aligned with the values espoused in the King Report on Corporate Governance for South Africa 2009 (King III) as well as the Companies Act, No 71 of 2008 (the Act). The Group currently complies, except in so far as indicated below, with the principles contained in the Code of Corporate Practices forming part of King III. The Board and its Committees acknowledge their responsibility to ensure that the principles of good corporate governance are observed, and the directors, collectively and individually, acknowledge their responsibilities in terms of the JSE Limited Listings Requirements.

The Board continuously reassesses its principles and policies against King III and the Act, and will make changes as and when appropriate to ensure that they remain relevant. This is an ongoing process.

Internal control

The Board is responsible for ensuring that appropriate internal control systems are implemented and maintained to ensure that the Group’s assets are safeguarded and managed in order to minimise potential losses arising from possible fraud and other illegal acts.

Internal control is implemented through the proper delegation of responsibility within a clearly defined approval framework, through accounting procedures and adequate segregation of duties. The Group’s internal accounting controls and systems are designed to provide reasonable assurance as to the integrity of the Group’s financial statements and to safeguard, verify and maintain accountability for all its assets.

Internal auditors monitor the operation of the internal controls and systems and report their findings and recommendations to management and the Board. Corrective action is taken to address control deficiencies and where other opportunities present themselves for improving the systems. The Board, operating through its Audit Committee, provides oversight of the financial reporting process and internal control systems.  No material incidents have come to the attention of the Board that would indicate any breakdown in internal controls during the year under review.

Internal audit

The Group’s internal audit department has a specific mandate from the Audit Committee to independently appraise the adequacy and effectiveness of the Group’s internal controls, governance and risk management processes. The department, headed by the Group Internal Audit manager, reports to the Group financial director on an administrative basis but has direct access to the CEO and the Chairman of the Audit Committee.

The Board and Exco are ultimately responsible for overseeing the establishment of effective internal control systems in order to provide reasonable assurance that the Company’s financial and non-financial objectives are achieved. The internal control and risk management process is ongoing and has remained in place to date of approval of the annual financial statements.

The internal audit coverage plan, which is subject to approval by the Audit Committee and updated annually, covers all major risk areas as identified and assessed by Internal Audit and the Group’s risk management process. This ensures that the audit coverage is focused on and identifies areas of high risk.

Internal Audit provides a written assessment of the system of internal financial controls and risk management to the Board and the Audit Committee on an annual basis. Nothing has come to the attention of the Board to indicate that any material breach of these controls has occurred during the year under review.

Ethical standards

Compliance with ethical standards of behaviour has always been regarded as of primary importance to the Group; this has found expression in the Group’s values – “Through our own ethical conduct, practices and policies we seek to set an example to our learners, students and clients”. Integrity is fundamental to the manner in which the Group conducts its business, and permeates its approach to all activities. These values are communicated to all personnel during induction. The Transformation, Social and Ethics Committee monitors and oversees the Group’s adherence to ethical standards. Group personnel are required at all times to act with the utmost integrity and objectivity and in compliance with the letter and the spirit of both the law and Group policies.

A culture of ethics is integrated at all levels within the Group, with the Board accepting responsibility for ensuring that it is promoted throughout the Group. The Group espouses these principles not because it is required to do so by any legislative requirements, but simply because it is the right thing to do.

Accounting and auditing

The Board places strong emphasis on achieving the highest level of financial management, accounting and reporting to shareholders. The Board is committed to complying with International Financial Reporting Standards (IFRSs), the Act and the JSE Limited Listings Requirements. The directors are responsible for ensuring that Group companies maintain adequate records in order to report on the financial position of the Group and the results of activities with accuracy and reliability. Financial reporting procedures are applied at all levels in the Group to meet this responsibility. The external auditors are responsible for independently auditing and reporting on these financial statements in accordance with IFRSs. It is the directors’ responsibility to prepare financial statements that fairly present:

• the state of affairs as at the end of the financial year under review;

• profit or loss for the year;

• cash flows for the year; and

• other material non-financial information.

The external auditors, Deloitte & Touche, were given unrestricted access to all financial records and related data, including minutes of all meetings of shareholders, the Board of directors and Committees of the Board. The directors believe that all representations made to the independent auditors during their audit are valid and appropriate. The external auditors provide an independent assessment of systems of internal financial control to the extent necessary for the audit, and express an independent opinion on whether the financial statements are fairly presented.

Employment Equity

The Group continues to subscribe to the philosophy of employee upliftment and has dedicated resources to both training and development programmes to achieve demographic representation in its workforce. This philosophy has enabled the Group to embrace the principles of the Skills Development Levy Act (with its training initiatives) and the Employment Equity Act. All employees are encouraged to develop their full potential for both themselves and the Group. More recently, the Group has established the ADvTALENT programme and the Transformation Forum, as well as continued with its popular Mentoring Programme.

IT Governance

The Board is responsible for IT governance and ensuring that IT strategy is aligned with the Group’s strategic objectives.

Going concern

The Board has reviewed the assumptions of the financial forecasts and, based on that, has concluded that the business will be a going concern for the next financial year. The Board’s statement regarding this is contained in the directors’ responsibility statement.

Company secretary

All directors have access to the advice and services of the company secretary, SK Saunders, whose appointment is in accordance with the Act. Although an employee of the Company, she is not a director. As an admitted attorney with more than 20 years of practical experience as a company secretary, she is considered to be a fit and proper person with appropriate skills and experience for the post.  The company secretary is responsible to the Board and provides guidance and advice to the Board on matters of ethics and good corporate governance, and ensures compliance with other statutory requirements. The company secretary works with the Board to ensure compliance with the rules of the JSE Limited Listings Requirements. The company secretary oversees the induction of new directors and assists the Group Chairman and the CEO in setting the annual Board plan and other related matters.

Insider trading

The Group has a written policy on insider trading, adopted by the Board which states that no director, executive, manager or any employee with price sensitive information may deal directly or indirectly in the Company’s shares during closed periods. The Group adheres to two closed periods in each financial year. The first commences at the end of June until the publication of the interim results, and the second commences at the end of December, the Group’s financial year end, until the final audited results for the year are released. All directors’ share dealings require the prior approval of the Chairman, and the company secretary retains a record of all such share dealings and approvals.

Related party transactions

Members of the Board are required to disclose any conflict of interest which they may have at Board meetings.  During the year under review, no material contracts involving directors’ interests were entered into.

Directors

HR Levin was a non-executive director and CH Boulle was a non-executive alternate director (now a non-executive director). Both HR Levin and CH Boulle are partners at HR Levin Attorneys, who provide occasional legal services to the Group, but are neither the only nor the Group’s lead firm of legal advisors. (2012: R2 071; 2011: R1 816).

JDR Oesch has been awarded a CrawfordSchools™ bursary for his children in terms of the Group’s bursary policy.

Prescribed officers

The Board has identified DL Honey and A Isaakidis as prescribed officers in terms of the Act.

Exco

DL Honey is a member of Exco and his brother, E Honey, is a director of Adams and Adams Attorneys, which firm provided specialised legal services to the Group in relation to intellectual property related matters.

O Francesconi, DL Honey and J Coetzee have been awarded bursaries for their children in terms of the Group’s bursary policy.