Board committees

Lewis Group Audit Committee
Purpose and function

  • Approving the internal audit plan and reviewing the activities and findings of the department.
  • Ensuring that the chief audit executive position is set up to function independently from management and that the Internal audit functions have the necessary skills and resources to address the complexity and volume of risk of the company.
  • Assessing the independence and performance of the internal audit function.
  • Overseeing the design, implementation and effectiveness of the combined assurance model.
  • Reviewing the audit plan of the external auditors, providing guidance on non-audit services.
  • Assessing the independence and objectivity of the external auditors.
  • Considering significant differences of opinion between management and internal or external auditors.
  • Reviewing the adequacy of internal controls and internal financial controls.
  • Ensuring regulatory compliance.
  • Overseeing the integrated reporting process, which include:
    • Reviewing the financial reporting system, evaluating and approving accounting policies and the financial information issued to stakeholders in terms of IFRS.
    • Reviewing disclosure on sustainability to ensure it is reliable and does not conflict with the financial information.
  • Reviewing the expertise, resources and experience of the company’s financial function and financial director.
  • Assessing the effectiveness of internal financial controls based on assurance gained from management and written assessment from Internal Audit.
  • Monitoring the ethical conduct of the company, its directors and senior officials.
Members  
Duncan Westcott (chairman)  
Daphne Motsepe  
Tapiwa Njikizana  

 

The committee consists of three independent non-executive directors. The members are financially literate and suitably qualified to perform their role. The remaining non-executive directors attend by invitation. Meetings are also attended by the chief executive officer, chief financial officer, company secretary, internal audit executive, chief risk officer and the external auditors.

The Audit Committee meets four times a year.

The Group’s independent non-executive chairman (Mr Saven) also serves as a member of the Audit Committee. King IV recommends that the chair should not be a member of the Audit Committee. The board determined that his experience, expertise and skills are required for continuity and the efficient functioning of the Audit Committee.

Lewis Group Risk Committee
Purpose and function

  • Annually reviewing the risk management policy and plan and recommending these for approval to the board.
  • Making recommendations on risk tolerance and appetite.
  • Evaluate and agree the nature of and extent of the risks that the company should be willing to take in pursuit of its strategic objectives.
  • Annually reviewing the risk register of strategic and key operational risks.
  • Monitoring implementation of the risk management policy and plan.
  • Exercise ongoing oversight of risk management.
  • Assessing the effectiveness of the system and process of risk management based on assurance gained from management and written assessment from Internal Audit on the effectiveness of internal controls and risk management.
  • Reviewing the report on risk management to be included in the integrated report.
  • Reviewing and advising on the adequacy of insurance cover for recommendation to the board.
  • Overseeing IT governance and the function of the IT steering committee by:
    • Ensuring that an IT charter and policies are established and implemented;
    • Ensuring that an IT internal control framework is adopted and implemented; and
    • Receiving independent assurance on the effectiveness of the IT internal controls.
  • Oversee the implementation of the compliance policy and plan and the effective execution of effective compliance management.
Members  
Duncan Westcott (chairman)  
Fatima Abrahams  
Adheera Bodasing  
Hilton Saven  
Daphne Motsepe  
Tapiwa Njikizana  
Johan Enslin (CEO)  
Les Davies (IT and Insurance director)  
Jacques Bestbier (CFO)  

 

The committee consists of four independent non-executive directors and two executive directors.

Meetings are also attended by the company secretary, internal audit executive, the chief risk officer and the information technology general manager.

The Risk Committee meets four times a year.

Lewis Group Nomination Committee
Purpose and function

  • Establishing a formal process for the appointment of directors.
  • Overseeing a formal induction programme for new directors and continuing development programmes for all directors.
  • Ensuring directors receive regular briefings on changes in risks, laws and the environment in which the group operates.
  • Ensuring succession plans are developed for the chief executive officer and senior management.
  • Confirming annually that none of the directors have become disqualified (fit and proper test).
  • Ensuring the board has the required skills, experience and qualities.
  • Address gender and race diversity and talent management and ensure relevant reporting to shareholders.
Members  
Hilton Saven (chairman)  
Fatima Abrahams  
Adheera Bodasing  
Daphne Motsepe  
Tapiwa Njikizana  
Duncan Westcott  

 

The committee consists of six non-executive directors. The chief executive officer attends meetings at the invitation of the committee.

The Nomination Committee meets twice a year.

Lewis Group Remuneration Committee
Purpose and function

  • Ensuring the remuneration policy is aligned with the group’s strategic objectives and encourages superior individual performance.
  • Reviewing and approving compensation of executive directors, non-executive directors and senior executives.
  • Ensuring executive directors are fairly rewarded based on market trends, surveys, individual performance and contribution.
  • Reviewing incentive schemes to ensure continued alignment to the enhancement of shareholder value.
  • Approving the award of share incentives.
  • Ensuring employee benefits are suitably disclosed.
  • Recommending non-executive directors’ fees for shareholder approval.
  • Ensuring practices are compliant with relevant legislation and regulation.
Members  
Fatima Abrahams (chairperson)   
Hilton Saven  
Adheera Bodasing  
Daphne Motsepe  
Tapiwa Njikizana  
Duncan Westcott  

 

The committee consists of six non-executive directors. The chief executive officer attends meetings at the invitation of the committee.

The Remuneration Committee meets three times a year.

Lewis Group Social, Ethics and Transformation Committee
Purpose and function

  • Monitor activities relating to social and economic development, including the principles of the United Nations Global Compact, the Organisation for Economic Co-operation and Development recommendations regarding corruption, the Employment Equity Act and the Broad-Based Black Empowerment Act.
  • Good corporate citizenship, including the promotion of equality, prevention of unfair discrimination, reduction of corruption, contribution to the development of communities, and record of sponsorship, donations and charitable giving.
  • The environment, health and public safety, including the impact of the group’s activities and of its products and services.
  • Review the carbon footprint assessment and approve targets.
  • Consumer relationships, including the group’s advertising, public relations and compliance with consumer protection laws.
  • Labour and employment, including the standing in terms of the International Labour Organisation Protocol on decent work and working conditions, the group’s employment relationships and its contribution toward the educational development of its employees.
  • Developing and maintaining a transformation strategy.
  • Approving the transformation programme.
  • Determining targets in terms of the Codes of Good Practice of the Department of Trade and Industry (DTI).
  • Reviewing reports from verification agencies.
  • Annual evaluation of the group’s performance against the DTI scorecard.
  • Legislative compliance.
Members
Fatima Abrahams (chairperson)
Daphne Motsepe
Hilton Saven

 

The committee consists of four independent non-executive directors and one executive director. Meetings are also attended by the company secretary, directors’ of human resources and merchandise and senior managers responsible for socio-economic development and sustainability

The Social, Ethics and Transformation Committee meets twice a year.

 


 

Lewis Stores (Proprietary) Limited

Lewis Stores (Proprietary) Limited is the main trading subsidiary of the group and operational responsibility has been delegated to the Lewis Stores board for the ongoing management of the business.

Lewis Stores board

Purpose and function

  • Adoption of strategic plans.
  • Providing strategic direction to senior management.
  • Monitoring operational performance and management.
  • Preparation and integrity of financial statements and all related information.
  • Maintaining adequate accounting records.
  • Adequately safeguarding, verifying and maintaining accountability of assets.
  • Monitoring key performance indicators of the business.
  • Ensuring regulatory and legislative compliance.
  • Risk management.
  • Overseeing the corporate code of conduct.
Members  
Johan Enslin (chairman)  
Waleed Achmat (Human resources)  
Jacques Bestbier (Finance)  
Les Davies (Insurance and IT)  
Derek Loudon (Merchandise)  
Rinus Oliphant (Operations)  

 

The board consists of six executive directors.

The board meets three times a year.

Governance committees of Lewis Stores Proprietary Limited

Executive Committee

Consists of 23 members, including the six directors of Lewis Stores, and the heads of key areas of operation within Lewis. The committee meets three times a year in conjunction with the Lewis Stores board meetings.

Risk Working Group

The risk working group consists of the CEO, CFO and all relevant executives and senior management of the group.

The group meets quarterly and reports to the Executive Committee as well as to the Lewis Group Risk Committee and Monarch audit and risk committee. Refer above for their responsibilities, which are supervised by the Lewis Group risk committee.

Information Technology Steering Committee

Meets quarterly and comprises the chief executive officer, chief financial officer, IT director, IT general manager as well as business systems and IT operations executives. The committee reports into the Risk Committee. The committee is responsible for:

  • Ensuring that the implementation of the IT policy and plan conforms to the objectives of the IT charter;
  • Aligning IT with the business needs of the group;
  • Prioritising investment decisions relating to IT resources;
  • Sourcing decisions relating to IT services;
  • Identifying and exploiting IT opportunities;
  • Administrative and contractual decisions which have a significant impact;
  • Monitoring IT costs and capital expenditure;
  • A process to monitor, prioritise and co-ordinate the IT project portfolio;
  • Reporting to the Risk Committee on the performance of its duties;
  • Business continuity planning;
  • Implementing COBIT as its principle IT internal control framework; and
  • Implementing ISO 27000 as the Information Security Management System (“ISMS”) standard.
Monarch Insurance Company Limited (Monarch)

Monarch is the group’s short-term insurer. Knowledge and experience of short-term insurance is considered in appointing directors to the board. Robert Shaw, a non-executive director provides insurance advisory services to Monarch.

A formal report on the investment portfolio by Sanlam Investment Management, who manage the portfolio on Monarch’s behalf, is presented at each board meeting, covering market conditions and expectations, asset allocation, investment returns, review of the investment portfolios andrecommendations on the investment strategy.

Monarch board

Purpose and function

  • Approval and oversight of strategic plans for the insurer within the parameters of the overall strategic direction of the group.
  • Approval of budgets.
  • Providing oversight of performance against targets and objectives.
  • Providing effective leadership on an ethical foundation.
  • Overseeing relationships with stakeholders.
  • Regular review of underwriting criteria.
  • Adoption of asset allocation strategies for the investment portfolio, based on recommendations from Sanlam Investment Management.
  • Review of the performance of the investment portfolio against benchmarks.
  • Ensuring regulatory compliance.
  • Oversee key performance and risk areas.
  • Ensuring effective risk management and internal control.
  • Assessing director selection, orientation and evaluation.
  • Approving significant accounting policies.
  • Approving the annual financial statements.
Members  
Non-executive  
Alan Smart (chairman)  
Fatima Abrahams   
Hilton Saven  
Robert Shaw  
Ray Sanger  
Duncan Westcott  
Executive  
Les Davies (chief executive officer)  

 

The Lewis Group chief executive officer attends meetings at the invitation of the committee.

The Monarch board meets four times a year.

Monarch Audit and Risk Committee

Purpose and function

  • Reviewing the internal and external audit plans relative to the group’s audit plan.
  • Providing guidance on non-audit services.
  • Considering significant differences of opinion between management and internal or external auditors.
  • Ensuring regulatory compliance. The committee is also responsible for the group’s compliance with the Financial Advisory and Intermediary Services Act.
  • Reviewing the financial reporting system, evaluating and approving accounting policies and approving the financial statements.
  • Reviewing the adequacy of internal controls and internal financial controls.
  • Annually reviewing the risk register of strategic and key operational risks. Monitoring implementation of the risk management policy and plan.
  • Addressing risks specific to the company that have been identified in the group risk management process.
  • Assessing the effectiveness of the system and process of risk management based on assurance gained from management and written assessment from Internal Audit on the effectiveness of internal controls and risk management.
Members  
Duncan Westcott (chairman)   
Hilton Saven  
Ray Sanger  

The committee consists of three independent non-executive directors. The members are financially literate and suitably qualified to perform their role. The remaining non-executive directors, Monarch CEO and Lewis Group CEO attend by invitation. Meetings are also attended by the company secretary, internal audit executive, the chief risk officer and the external auditors.

The Monarch Audit and Risk Committee meets four times a year.

In terms of the Companies Act, non-executive director Robert Shaw is deemed to be a material supplier to Monarch and is therefore precluded from being a member of the Audit and Risk Committee.

Internal accountability

Risk management
The board is responsible for the oversight of the risk management process and has delegated specific responsibility to the Risk Committee.

The committee is responsible for ensuring the group has implemented an effective policy and plan for risk, and that disclosure regarding risk is comprehensive, timely and relevant.

A dedicated chief risk officer is responsible for the risk management process to identify, assess and manage potential risks and opportunities that may affect group strategies and objectives. The risk management framework includes the risk management policy, risk appetite, relevant responsibilities and the risk management plan.

The Risk Working Group (RWG) is responsible for designing and implementing the risk management process and monitoring ongoing progress. Senior executives and line management within each business unit are accountable for managing risk in achieving their financial and operating objectives.

The focus of the risk management process is on strategic and key operational risks. A top-down approach is applied by the business units in the group in assessing the risks on a quarterly basis. The RWG reviews the registers with a focus on:

  • completeness of risks identified across the group;
  • causes of the risks;
  • the residual risk ratings;
  • the tolerance levels based on the risk indicators; and
  • the need for further management action.

The RWG also develops the risk appetite and obtains board approval through the Risk and Audit Committees. Senior executives and line management are responsible for implementing the risk appetite and reporting any material deviations above the approved threshold limits.

The risks identified by the business units are consolidated by category of risk into a group register and the results of the group risk assessment are reported to the Risk Committee of Lewis Group and the Audit and Risk Committee of Monarch Insurance.

The key risks are documented under the Strategy tab.

The group’s external insurance and self-insurance programmes cover a wide range of risks. The insurance levels and insured events are reviewed annually to ensure adequate cover and amended after taking into account changed processes and emerging risks.

Internal control

A well-established control environment, which incorporates risk management and internal control procedures, exists to provide reasonable but not absolute assurance that assets are safeguarded and the risk facing the business is being adequately managed. The board confirms that during the period under review the group has maintained an efficient and effective process to manage key risks. The directors are not aware of any current or anticipated key risks that may threaten the sustainability of the business.

Going concern

The board is satisfied that the group will be a going concern for the foreseeable future, based on the budget and cash flows for the year to 31 March 2019, as well as the current financial position. The financial statements have therefore been prepared on the going concern basis. The board is apprised of the group’s going concern status at the board meetings coinciding with the interim and final results.

Internal audit

The internal audit function provides information to assist in the establishment and maintenance of an effective system of internal control to manage the risks associated with the business. Internal audit has performed a written assessment confirming the effectiveness of the company’s system of internal control and risk management, including internal financial controls. The role of internal audit is detailed in the internal audit charter which has been approved by the Audit Committee. Refer to the Audit Committee report in the annual financial statements.

Information technology governance

Information technology (IT) governance is integrated into the group’s operations, and governance practices and frameworks are reviewed as part of the annual internal audit plan. The IT steering committee is responsible for IT governance and reports into the Risk Committee.

Personal share dealings

An insider trading policy restricts directors and specific staff from dealing in the shares of Lewis Group during closed periods. The closed periods are effective from the end of the interim and annual reporting periods until the financial results are disclosed on SENS. Embargoes are also placed on share dealing when the group is trading under a cautionary statement.

Directors are required to obtain written clearance from the chairman of the board prior to dealing. The chairman is required to obtain written permission from the chairman of the Audit Committee. It is mandatory to notify the company secretary of any dealings in the company’s shares within three business days. This information must be published on SENS within 24 hours of the notification of such dealing. A register of share dealings by directors is maintained by the company secretary and reviewed by the board.