BJM is committed to the principles of good corporate governance, and has adopted a risk-based compliance management programme that is characterised by monitoring of all business practices and procedures. This will enable the Group to give substance to its commitment to the principles set out in the King III Report on Corporate Governance.

Matters of conscience

In addition to working towards compliance with King III, we are focused on meeting all of the requirements of South Africa's new Companies Act. Doing the right thing should be a matter of conscience, not a matter of compulsion. The objective is to put BJM ahead of the curve on ethical questions. BJM believes reputation management is a strategic business issue and sees accountability as a key driver of a culture of corporate governance, with clearly defined and uncluttered areas of responsibility to ensure individual accountability. Sturdy habits of ethical dealing and robust governance structures are already in place at BJM. They are regularly reviewed, renewed and reinforced.

Board of Directors

The Group benefits from the guidance of an experienced and stable Board of Directors and comprises a balance of executive and non-executive directors, with a majority of independent non-executive directors. The Board is responsible for the Company's compliance with laws and regulations and ensures that the Company implements an effective compliance framework and process. The Board is governed by a charter setting out broad principles, functions, duties and procedures and is led by an independent nonexecutive director, informed by a CEO and assisted by an Executive Committee.

The roles of Chairman and CEO are distinct. Appointments are for a period of three years and one-third of directors retire by rotation to facilitate staggered rotation of directors and to ensure continuity of the Board.

Board composition

The following tabulation lists our current Board members and their status:

Timely meetings

Meetings take place at least once a quarter. Timing is also dictated by the need for strategic scenario planning at times when markets change significantly or when major events occur with the potential to challenge previous assumptions. All directors have unfettered access to company information, records and property and to senior management. Directors have the discretion to call for independent professional advice at company expense, should this be necessary to fulfil their fiduciary responsibilities.

Strategic role

The Board's primary function is to ensure the business is conducted in a manner that accords with the best interests of the Company. In addition, it must set, implement and monitor Group strategy while ensuring that policies, procedures and practices are followed that reflect BJM values and respect all relevant laws and regulations. The Board acts as a focal point for corporate governance. A key role is that of business risk identification and mitigation. Directors act in the best interest of the Company, effectively manage conflict of interest and insist on effective risk-based reporting. Directors also ensure that adequate resources are available for the proper running of the business. The Board may delegate its responsibilities to certain Board committees.

Appraisal and evaluation

The Board oversees succession and continuity planning for the Executive, senior management and the Board. The Board annually reviews its own effectiveness and the effectiveness of its sub-committees, applying a formal evaluation process. The effectiveness of individual Board members is also assessed.

Attendance

The attendance record of Board members for the period under review is:

Executive Committee (Exco)

Exco convenes every week to receive and consider reports on Group and subsidiary operations, staffing matters and developments affecting the day-to-day running of the businesses. Exco operates within an established framework of delegated authority approved by the Board. The Group CEO communicates between the Board, Group executives and the subsidiaries. Matters of a strategic nature or those requiring an opinion are escalated to the Board. Formal Exco processes ensure comprehensive management reporting, the development of business plans that can be critically assessed by one's managerial peers and the presentation and monitoring of precise divisional and departmental budgets. Minutes by the Company Secretary provide documentary evidence that minds were applied to all material business decisions.

Audit and Risk Committee

The Board has delegated certain of its risk management responsibilities to the Audit and Risk Committee. The committee is governed by a charter and comprises suitably skilled and qualified independent non-executive directors. The Chief Operating Officer, other executives and external professionals may be invited to attend to provide advice and guidance as required, but may not vote.

The committee is led by an independent non-executive director and meets at least four times a year. The committee has access to both management and compliance reports that monitor and manage risk. The committee is integral to the risk management programme implemented by the Board and focuses on the control environment within BJM. The committee assesses risk exposure and determines the appropriate response in line with BJM's risk tolerance.

The risk process developed by the committee imposes an obligation on each business within the Group to assess and calibrate its key risks. Any change in the nature, likelihood or severity of business risk must be noted and steps taken to address the risk. While ensuring compliance with the company's risk policies and strategy, the committee also has the task of inculcating a culture of risk awareness throughout the organisation. The committee has unlimited access to BJM's internal and external auditors and senior managers and may consult independent experts as required.

In the auditing sphere, the committee:

• recommends the appointment of independent external auditors and facilitates the exchange of views and information among Board members and the auditors;
• aligns the audit and risk processes and reviews the internal/external auditors' audit plan and scope of the audit;
• approves budgets and fees for the internal and external auditors, agrees to the terms of engagement and considers any proposed contract with the auditor for non-audit services;
• evaluates the effectiveness and quality of the audit while determining that the internal/external auditors are free of management restrictions;
• considers any matters identified by the internal/external auditors, evaluates the Group's accounting system and guards against exposure to fraud;
• considers any accounting treatments, unusual transactions or accounting judgements that could be contentious; and
• reviews financial information presented to the Board, investors and regulators and evaluates the adequacy and effectiveness of the Group's administrative, operating and accounting policies.

The composition of the committee and the record of attendance are:

Remuneration and Nominations Committee (Remco)

Remco is a Board-appointed committee that operates according to an established Remco Charter. Talent attraction and retention are strategic business issues. This committee assists the Board in the task of securing the future of the business by securing the requisite skills, knowledge and experience at senior management and Board level.

Its primary responsibility is to ensure fair remuneration for senior managers and directors. To this end, compensation levels across the financial services industry are regularly monitored. In addition, the committee reviews and facilitates the implementation of Group succession plans. As skills shortages remain an industry challenge and talent "leakage" is a key business risk at BJM, the committee also reviews all restraint-of-trade agreements and mechanisms for rewarding superior performance. In carrying out these duties, the committee must maintain a balance between the interests of all stakeholders, including shareholders, directors, executives and staff.

In addition, the committee:

• evaluates and nominates new members for the Board and the chairperson and members of various Board committees;
• determines Group remuneration policy and the promotion and salary of senior executives and members of Exco; and
• determines the BJM code of conduct and human resources policy for the Group and all subsidiaries.

Non-executive directors are excluded from the Group's annual bonus plan and share incentive scheme. Their fees are reviewed annually. The composition of the committee and the record of attendance are:

HIV/Aids

BJM's policy on HIV/Aids insists on non-discrimination, confidentiality and the right to dignity and respect of those living with HIV/Aids.

Empowerment and equity

BJM embraces broad-based black economic empowerment. BJM views BBBEE as a critical component of business sustainability in South Africa. BJM continues to strive towards the achievement of employment equity targets while its investment in skills development has increased.

BJM has given an investment industry lead by pioneering an enterprise development model focused entirely on critical needs as identified by the beneficiary businesses themselves. Our development partners all operate in the financial services field and include start-ups and black women-led enterprises.

In addition to financial backing, they receive ongoing support while enjoying regular engagement with senior BJM executives and specialists. Interaction with BJM adds value to the partner business and makes good deficiencies of specialist expertise and company resources. All beneficiary companies are 100% black owned and typically have a turnover of R5 million or less.

Corporate social investment

As a business, we believe we have a fundamental responsibility to help improve the lives of those living in disadvantaged communities in South Africa and to embrace the need for transformation and the eradication of poverty. Our social responsibility policy is a key means of giving expression to this commitment. Our policy is set and periodically reviewed by our Board and we have made a formal commitment to earmark an amount equal to 1% of our annual dividend (or a minimum of R150 000 per year) for corporate social investment activities.

A key focus area is to provide education in impoverished areas, particularly through initiatives that will ultimately assist our own industry to address the shortage of well qualified black professionals. We believe that education is the foundation of success and our initiatives include an annual primary school art competition, the conversion of school classrooms into computer centres and the provision of software. In making allocations, we are careful not to neglect those with disabilities.

We have found that many of our clients share our passion and enthusiasm for helping those less fortunate and supporting the growth and development of our nation. The BJM Charitable Foundation was formed to create an efficient, well-monitored and managed vehicle for charitable giving with its primary focus on education. It attracts donations from the BJM Group, its staff and its clients. In addition, trustees identify appropriate projects and monitor the outcomes achieved by our project partners. In this way the Foundation facilitates the development and transformation of South Africa while addressing critical areas of need.

Some of the initiatives we have supported include:

• We show our support of primary school education through several initiatives, including our annual art competition. Through the competition we provide children with an opportunity to express themselves creatively while providing assistance to their schools.
• Another key intervention involves the early learning programme at two preschools in the KwaZulu- Natal Midlands run by the iThemba Foundation. All programme funding comes from the BJM Charitable Foundation.
• The growing need for improved environmental awareness and "green" activity led to an initiative to encourage employees to help us reduce our Company carbon footprint. Numerous suggestions from staff were implemented at our Illovo offices, including newspaper recycling, having office lights switched off automatically each evening and the use of environmentally friendly cleaning products. This initiative is ongoing and all our offices are encouraged to implement as many environmentally friendly practices as possible.
• We have also encouraged our staff to get directly involved in helping those in need. A "Do It Day" was held for staff to volunteer to help with certain projects and activities, from painting to planting and digging. The day was well supported and received positive feedback and input from our staff.

The BJM Charitable Foundation is making a real difference in the lives of young children in particular. Returns from these initiatives are not financial, but are even more crucial to the ongoing development of our country and its people.

Built-in integrity

Absolute integrity cannot be an optional extra in the financial services sector and has to be integral to every aspect of operations. Absolute integrity and honesty have to be the prime requirements of the position when recruitment takes place.

They must remain non-negotiable along any individual's career path, from the mail-room to the boardroom. This uncompromising attitude towards integrity has characterised the BJM brand since inception. BJM's vision and values of uncompromising and passion for excellence are clearly set out.

They guide the conduct of our business and our relationship with our clients, peers and suppliers. All staff members are required to adhere to a code of conduct. Strict policies and procedures are in place to ensure the interests of our clients remain paramount during all engagements.

Professional dealings within the investment environment are further guided by the BJM employee share trading rules and the standards of practice adopted by the Association of Investment Management and Research.

A dedicated compliance department works full time to inform all staff members on the laws and industry regulations governing the activities of financial service companies and their employees. This same department monitors compliance with all high-risk legal and industry standards and with BJM's own policy. No material contraventions were reported in the last year.

Meticulous tracking and monitoring of all trades are maintained. Particular rigour is applied to ensure that no one exploits information asymmetries. Advice to clients is independent and objective. Our ownership structure provides further reassurance that our advice is untainted by any connection with any parent or shareholder in the banking and investment banking field. We serve the best interests of our clients at all times and without equivocation.

Internal audit

The BJM internal audit function is an independent, objective assurance and consulting activity designed to add value and improve the operations of BJM, its subsidiaries, and offshore operations. Internal audit will help executive management and the Audit and Risk Committee to accomplish their objectives by adopting a systematic, disciplined approach to evaluate and improve the effectiveness of risk management control and governance processes. Internal audit will follow a risk-based audit approach and adhere rigorously to the Institute of Internal Auditors' standards and code of ethics.