INSTITUTE OF DIRECTORS IN SOUTHERN AFRICA...This 2017 integrated report (report) of the Institute of Directors in Southern Africa NPC (IoDSA) covers the year 1 January to 31 December

INSTITUTE OF DIRECTORS IN SOUTHERN AFRICA

BETTER DIRECTORS / BETTER BOARDS / BETTER BUSINESS

INDEX

ABOUT OUR REPORTREPORTING SUITEThe integrated report is our primary communication regarding our value creation. It includes summarised financial statements extracted from the full audited annual financial statements.

The following information is published on the IoDSA’s website:

This icon used in the report indicates further information available online at www.iodsa.co.za

Feedback from our members and other stakeholders is essential for understanding the value we create, and for identifying areas where we should improve. We have a dedicated feedback mechanism, and value your feedback on our strategy, performance and reporting.

Please visit: www.iodsa.co.za/page/IntegratedReports to provide feedback to the IoDSA executive.

Phone: +27 11 035 3000 Website: www.iodsa.co.za Email: [email protected]

GET IN TOUCH

IFC | ABOUT OUR REPORT

1 | WHO WE ARE

6 | MESSAGES FROM LEADERSHIP

8 | BUSINESS MODEL

10 | STAKEHOLDER LANDSCAPE

14 | RISKS AND OPPORTUNITIES

18 | PERFORMANCE REVIEW

26 | IODSA AS A GOVERNANCE ROLE MODEL

30 | SUMMARY FINANCIAL INFORMATION

Integrated report 2017

www.iodsa.co.za/page/IntegratedReports

• 2018 Annual General Meeting (AGM) notice

• Annual financial statements 2017

• Remuneration Policy• Governance report

www.iodsa.co.za/?page =AGM2018

Refer to principle 5 in the Governance report.

This 2017 integrated report (report) of the Institute of Directors in Southern Africa NPC (IoDSA) covers the year 1 January to 31 December 2017. This report was prepared using the International Integrated Reporting Council’s (IIRC) Integrated Reporting <IR> Framework as a guideline.

The report focuses on providing IoDSA’s members and other key stakeholders with a holistic view of our operations, performance, risks and opportunities. It covers our strategic priorities and objectives leading up to 2020. This report will be used for marketing, public relations and new member/employee induction purposes.

The report was prepared considering our material matters. These are defined as those matters that are relevant and important, and could substantively influence our stakeholders’ assessment of our ability to create value over the short, medium and long term.

We applied internal management peer reviews to ensure the appropriateness of material matters and the accuracy and completeness of this report. BDO SA Inc. conducted an independent audit of our annual financial statements. The Audit and Risk Committee and the Board reviewed this report, with the final responsibility resting with the Board.

The Board applied its collective mind to ensure that all material matters are presented and that the report fairly represents the performance and practices of the IoDSA.

Dr Prieur Du Plessis Angela CherringtonChair Chief Executive Officer

25 April 2018

1 INTEGRATED REPORT 2017

WHO WE AREThe IoDSA is a professional body and a non-profit company (NPC) that exists to promote corporate governance, and to maintain and enhance the credibility of directorship as a profession. The IoDSA is recognised by the South African Qualifications Authority (SAQA) (ID: 422). Refer to www.iodsa.co.za/page/OurTimeline for our history.

REPUTATION AND SATISFACTION SURVEYUnderstanding the needs and interests of our stakeholders forms a significant part of our value-creation process. We recognise the need to review this regularly as it informs our strategy, business planning and decision-making.

We use the Repudometer® measurement tool to conduct a comprehensive annual reputation and satisfaction survey. The following indicators – referenced to related sections in the report – are used to measure our progress.

INDICATOR CORPORATE MEASURE AND RESULTS

DISCLOSURE IN THE REPORT

Strategic intent

Measures alignment to our core function of building better directors, better boards and better business.

Management 87% (2016: 88%)How the IoDSA is operated and managed.

Strategic direction toward 2020 – page 4Progress toward our 2020 vision – page 5

Corporate governance

Measures leadership, management and policies within the organisation.

IoDSA as a governance role model – page 26

Human capital

The quality of employees and their ability to render high-quality service.

Capital 87% (2016: 85%) The IoDSA’s ability and capability to deliver on services and stakeholder expectations.

Human capital – page 25

Operational capability

Whether the organisation is adequately equipped to deliver on promises made.

Business model – page 8Performance review – page 18

External dialogue

Communication to the public about the organisation, its membership benefits and events.

Dialogue 84% (2016: 80%)Communications with stakeholders to build mutually beneficial relationships.

Meeting stakeholders’ expectations – page 11Human capital – page 25Internal

dialogueCommunication with employees about the organisation and the industry.

Value offering

Indicates to what extent stakeholders believe that membership offers value for money.

Performance 86% (2016: 89.5%)The perception of stakeholders of how the IoDSA is performing and the value offered.

Why be a member – page 3

Business development and results

Looks at the financial management of the organisation such as transparency regarding financial matters.

An overview of our performance – page 2Performance review – page 18

Strategic alliances

Indicates to what extent stakeholders perceive the IoDSA to have sustainable partnerships in place to achieve its goals.

Positioning 81% (2016: 81.5 %)The IoDSA’s partnerships and interactions with its communities in terms of social investment.

Stakeholder landscape – page 10Performance review – page 18

Corporate social investment (CSI)

Indicates to what extent stakeholders perceive the IoDSA’s involvement in CSI projects to be aligned with their core focus.

Corporate social investment – page 25

VALUESIntegrity acting with honesty and openness; being trustworthy; consistent good behaviour over time; and ensuring words and actions correspond.

Efficiency doing the right things in a productive way; considering whether there is merit in doing or not doing certain things; and producing the desired result in the shortest time possible.

Innovation finding new and better solutions; being creative; and continually striving for improvement.

Professionalism projecting an image and demeanour suitable to a business environment; being competent and skilled; maintaining confidentiality; and showing respect for others.

Ubuntu forming meaningful professional relationships inside and outside the IoDSA; acting as servant leaders within our sphere of influence; understanding what it means to receive and give – reciprocity and balance; and respecting others.

VISIONBetter directors. Better boards. Better business.

That those charged with governance duties in all sectors be empowered to discharge these effectively.

MISSIONTo support and develop those charged with governance duties through thought leadership and provide a platform for peer interaction.

The results of this survey are presented throughout the report and are indicated with this icon:

2 WWW.IODSA.CO.ZA

WHO WE ARE – Continued

SNAPSHOT OF OUR PERFORMANCE

Members

0

2 000

4 000

6 000

8 000

10 000

20172016201520142013

Total members (numbers) Retention (%)

20

40

60

80

100

0

8 7378 151

7 6386 8546 203

82.7 83.3 81.2

78.8 79.2

%

Member retention improved, but greater focus on retention is required for 2018.

Revenue

0

10

20

30

40

50

20172016201520142013

Revenue (R million)

32.436.1

39.7

45.5 47.3

Revenue increased by 4%. This modest result was anticipated as the significant impact of the King IV launch was recognised in 2016.

Total Director Development attendees delegates

0

1 000

2 000

3 000

4 000

5 000

6 000

20172016201520142013

Number

3 605 3 786

4 3934 870

5 840

Delegate numbers increased by 20%.

The King IV Report launched in 2016 had a direct positive influence on demand for King IV and other governance training.

Board Appraisal Services (BAS) – new vs repeat clients

0

10

20

30

40

50

60

70

80

20172016201520142013

New (%) Repeat (%)

36.0

64.061.0

39.0

27.0

36.0

64.0

73.0

58.0

42.0

Although there was a decline in BAS revenue, the percentage of appraisals performed for repeat clients increased for the third consecutive year. This is a good indication of brand loyalty, good service and the positive impact experienced by clients, making them return in subsequent years.


WHY BE A MEMBERThe findings of our reputation survey provided us with valuable information on how our members view the IoDSA, and what value they receive from membership.

Members have indicated the following areas where they would like more and/or new benefits:

• Thought leadership• Governance advice• Director development• Networking opportunities• NED vacancies

These areas were taken into account in our business planning for 2018. We will also focus on business intelligence, helping us to enhance our connection with members and to deliver targeted and personalised communications.

Refer to www.iodsa.co.za/?page=whyjointheIODSA_pg for more reasons to be a member of the IoDSA.

RESULTS (%)

2017 2016

Value offering 81 86

ALIGNMENT TO OUR GREATER PURPOSE

• Support our purpose and objectives – to promote good corporate governance and to maintain and enhance the credibility of directorship as a profession

• Contribute toward ensuring our constituency gives us a voice and enables us to influence stakeholder perceptions

ACCESS OUR THOUGHT LEADERSHIP

• Be informed about the latest developments in corporate governance• Access our papers, technical newsletters and guidelines• Participate in our forum events and governance research

CONTINUING PROFESSIONAL DEVELOPMENT

• Commit to life-long learning • Recognise directorship as a profession• Support career pathway toward becoming a Certified Director (Cert. Dir) or a Chartered Director

CD(SA)

NETWORK WITH PEERS

• Maintain or expand personal networks• Further enhance personal profile for business opportunities• Share experiences and practices, and broaden perspectives through discussion

NON-EXECUTIVE DIRECTOR (NED) VACANCIES

• Receive our NED vacancy notices

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1.

3.

4.

5.

6.

7.

8.

2.

STRATEGIC DIRECTION TOWARD 2020The IoDSA’s strategic objectives are set by the Board. They were critically reviewed during our 2017 Board strategy session to determine their appropriateness and relevance. Our eight strategic objectives remain unchanged and are aligned to the overall mandate and purpose of the IoDSA. We set key targets to achieve by 2020, with milestones for each year.

Achieve continual growth in revenue to reach an annual turnover of R55 million. Remain financially secure by maintaining appropriate reserves of at least six months’ operating costs.

Sustainable organisational development

To sustainably grow the organisation.

Develop the director profession

To be the professional body for directors to develop the profession.

350 CD(SA)s (cumulative to 2020).

Committed and loyal membership

To broaden our influence and reach by developing a committed and loyal membership base.

10 000 members and an 85% retention rate.

Increase the number of competent directors

To provide learning and development opportunities that increase the number of competent directors.

Recognise the progression of directors to CD(SA). 8 000 Director Development delegates.

Build a credible and visible brand

To build a credible and visible brand.90% score on our reputation survey.

Collaboration between like-minded professional institutes

To serve as a hub for collaboration between like-minded professional institutes.

Formal continuing professional development (CPD) recognition for IoDSA Director Development programmes and events.

Be a role model for corporate governance and leadership

To serve as a role model for corporate governance and leadership.

Highest application of King IV. All IoDSA non-executive directors (NEDs) are CD(SA)s.

STRATEGIC FOCUS 2020 VISION

Promote good governance practices

To set principles, develop guidelines, and support the implementation of good governance practices.

International recognition for King IV as a leading governance code.

RESULTS (%)

2017 2016

Strategic intent 88 89

WHO WE ARE – Continued


PROGRESS TOWARD OUR 2020 VISIONWe are past the mid-point of our five-year plan and have found some areas where our progress is slower than anticipated. These include CD(SA) numbers and member retention. Both areas are outlined further in the overview of our performance on page 18 and will receive priority focus for 2018.

2020 INDICATOR

STRATEGIC OBJECTIVE1

2017 GOAL 2017 PROGRESS 2018 GOAL

1

2

3

4

5

6

7

8

Revenue of R55 million per annum

R47 million R47.3 million R51.7 million

350 CD(SA)s37 new CD(SA)s

Cumulative total of 93 CD(SA)s

26 new CD(SA)s

Cumulative total of 82 CD(SA)s

Certified Director (Cert.Dir) launched with a total of 44

25 new CD(SA)s

40 new Cert.Dir

Consistent member retention of 85% 81% 79.2% 80%

Membership of 10 000

7% membership growth

8 450 members


8 737 members


9 019 members

8 000 delegates 5 360 5 840

5 364 – fewer than prior year due to drop in demand for King IV programmes

All IoDSA NEDs are CD(SA)s 7 NEDs to be CD(SA)s 6 out of 10 NEDs are

CD(SA)s 8 NEDs to be CD(SA)s

Highest application rating for King IV™ Early adoption of King IV

King IV gap analysis completed and early adoption implemented

King IV reporting and ongoing monitoring of implementation

King IV™ penetration of the market

40 King IV training sessions

Establish an endorsement recognition website and reporting

86 King IV training sessions

Endorsement page live on IoDSA website

Anticipate fewer sessions (15) Commence King IV adoption research

Established research centre

Annual Director Sentiment Survey

Annual NED Fees Guide

Second African Governance Showcase

All three elements were released

Annual Director Sentiment Survey

NED Fees Guide

Third African Governance Showcase

Employer of choice

Maintain positive reputation survey results

Launch internal loyalty programme

Maintained our 85% overall rating

Internal loyalty programme deferred to the second quarter of 2018, after the implementation of our new HR portal

To maintain a rating of between 84-86%

Implementation of new HR portal, intranet and loyalty programme

Professional body engagement matrix

Four Independent Professional Body Forum (IPBF) meetings planned

Formalised professional body engagement framework

Four successful IPBF meetings hosted

Professional body engagement framework is in progress

Finalisation of the engagement framework, formalised memoranda of understanding and formal CPD recognition programme

Refer to principle 4 in the governance report

1 Legend1. Sustainable organisational development 5. Increase the number of competent directors2. Promote good governance practices 6. Build a credible and visible brand3. Develop the director profession 7. Collaboration between like-minded professional institutes4. Committed and loyal membership 8. Be a role model for corporate governance and leadership

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CHAIR’S REPORTIn the past, corporate governance was often seen as a compliance burden. However, over the past few years we have seen governance maturing into a critical tool for building successful and sustainable organisations – not only businesses, but also nations. And after a rather tumultuous 2017, South Africans should understand this better than most.

King IV defines corporate governance as the “exercise of ethical and effective leadership by the governing body” to achieve certain outcomes, namely ethical culture, good performance, effective control and legitimacy. With companies starting to apply the King IV principles we have started moving away from a compliance mindset to the notion of board leadership to achieve desirable goals.

Recent events in South Africa have driven home the message that corporate governance is critical. To quote Mark Goyder, British governance expert and author of Tomorrow’s Company: “We know that without governance, leadership can degenerate into tyranny, fraud and personal fiefdoms. Equally, governance without leadership risks ineffectiveness, bureaucracy and indifference.” The year 2017 served up a number of examples.

Considerable research has been done, linking effective corporate governance to meaningful benefits for organisations and countries. Using foreign direct investment as an example, an Organisation for Economic Co-operation and Development (OECD) research report concluded that corporate governance impacts the development and functioning of capital markets, and “exerts a strong influence on resource allocation” in a world characterised by increasing capital mobility.

This is a hard lesson South Africa learnt after the country’s credit downgrades. Arthur Levitt, former chairman of the US Securities and Exchange Commission, said: “If a country does not have a reputation for strong governance, capital flows elsewhere.” It is as simple as that.

Corporate governance comes about when the board exercises ethical and effective leadership to improve the organisation’s sustainability, also lowering the likelihood of corporate scandals and reputational risk. This hinges on an organisation’s ability to make good financial returns while being seen by society as a legitimate and responsible user of resources. Without it – as seen by the performance of a number of South African state-owned and private enterprises – the organisation is not profitable either to itself and its shareholders, or to society as a whole.

If a country does not have a reputation for strong governance, capital flows elsewhere.

DR PRIEUR DU PLESSISChair

I thank my fellow directors on the IoDSA Board for their collective wisdom and commitment, and the executive management and employees for their energy and diligence in advancing our work to realise the power of corporate governance as a critical lever of success in South Africa.

MESSAGES FROM LEADERSHIP


We will focus our efforts on enhancing our member value proposition.

AN OVERVIEW OF OUR PERFORMANCEOff the back of our 2016 performance and the positive impact of the King IV launch, our performance expectations for 2017 were modest. We anticipated that greater investment of effort would be needed to achieve our expected results and a greater focus on cost management would be required.

We therefore achieved a modest revenue growth of 4% (2016: 17%) and membership increased by 7% (2016: 7%). Total revenue was R47 389 813 (2016: R45 553 964), and total expenses were R44 678 091 (2016: R46 819 940). Total accumulated funds were R18 812 205 (2016: R15 198 151) and we retained our strong financial position, readying us for planned investment in technology and new member benefits in 2018.

We reviewed our 2020 target of 350 CD(SA)s in light of our progress in CD(SA) certification and the introduction of Certified Director, which was not factored into the target. Although this is a stretch target, we will ramp up our awareness efforts both in terms of designations and the directorship career pathway.

Our overall reputation score remained the same as last year at 85%, which we regard as healthy. From a reputation point of view, the IoDSA scored well above average compared to the average of previous Repudometer® studies conducted (75%).

The main dimensions impacting the IoDSA’s reputation positively were:

• corporate management, namely strategic intent and corporate governance; and

• corporate capital, namely human capital and operational capability.

Having fallen just short of our 80% retention target, at 79.2%, our outlook for 2018 remains positive. Retention rates improved in the first quarter of 2018 versus the same period in 2017. Director Development in-house bookings also showed a positive trend for the first quarter. We will focus our efforts on enhancing our member value proposition and we launched three new member benefits in March 2018.

When we reach the revenue threshold of R50 million, we will be required to apply the generic broad-based black economic empowerment (BBBEE) scorecard. Therefore, a significant focus will be the implementation and monitoring of a robust BBBEE strategy in 2018.

In closing, I wish to offer thanks and appreciation to our team. Your individual and team efforts continue to make the journey worthwhile. I extend a special note of thanks to Daleen Henning, our former Executive: Finance & Operations, for the commitment and dedication she gave to the IoDSA; and we wish her well in her next chapter.

And to our members, I thank you for committing to the objectives of the IoDSA and offering your valued support.

Yours in membership service

ANGELA CHERRINGTONChief Executive Officer

RESULTS (%)

2017 2016

Business development and results

90 93

MESSAGES FROM LEADERSHIP

8 WWW.IODSA.CO.ZA

BUSINESS MODELThe value we create for our members and other stakeholders is illustrated in our business model below.


Develop the director profession



Marketplace

Having regard to any legislation or codes of best practice relating to social and economic development, including anti-corruption, consumer relationships and stakeholder engagement.

Workplace

Having regard to any legislation or codes of best practice relating to human resources and labour, ethics management, and the integration of our values.

Social environment

Applying the principles of good corporate citizenship and respecting the protection of human rights.

Natural environment

Considering the impact of the IoDSA’s activities and services on the environment.

Financial capital

We derive income primarily from subscription revenue (35 %), Centre for Corporate Governance (CCG) (11 %) and Director Development (42 %) and other revenue made up 12%.

Human capital

We depend on a small employee complement of 36 (2016: 35). This enables us to deliver member and professional services.

This is complemented by external specialists and eight core facilitators, as needed, for specialised and other training.

Intellectual capital

We leverage the strength and integrity of our brand and ownership, copyright and trademarks related to the King Reports, and CD(SA).

Natural capital

Although we use water and energy sources, we do not have a material impact on the environment.

Social and relationship capital

We focus on enhancing relationships with stakeholders. Our activities are guided and impacted by stakeholders’ input, engagement and relationships.

RESULTS (%)

2017 2016

Operational capability 85 84

WE APPLY A SOCIAL AND ETHICAL LENS BY:

STRATEGIC FOCUS

WHAT WE RELY ON1

1 Manufactured capital is not significant to the IoDSA business, hence we use five capitals.

• Support and develop members• Develop and enhance governance

standards, reports and guidance papers

• Provide Board Appraisal Services and advisory services

• Host Director Development programmes, workshops and seminars

• Make provision for a certification programme and professional designation

• Host peer networking events

HOW WE CREATE VALUE




Collaboration between like-minded professional institutes

To serve as a role model for corporate governance and leadership

• 308 Director Development training days

• 5 840 delegates attended programmes

• 26 new CD(SA)s Refer to pages 23 and 24.

• 4% revenue growth Refer to page 30.

• 7% membership growth • 31 member events • 92 NED vacancy notices • 7 CV search projectsRefer to page 18.

• 4 Directorship magazines • 2 guidance papers • 4 governance newsletters • 2 King practice notes• 6 forum papers• 26 Board Appraisals Refer to page 20.

Our third online impact assessment determined our impact based on direct feedback from clients using the first survey in 2015 as the baseline.

Board Appraisal Services

Of the respondents to our IoDSA Board Appraisal:

• 92% reported that their boards’ governance processes had improved (2016: 94%, 2015: 100%) • 84% (2016: 82%, 2015: 81%) confirmed a positive change in strategic discussions

• 92% (2016: 89%, 2015: 71.5%) stated a positive change in interpersonal relationships

Testimonies

The assessment was professionally conducted and sound recommendations were provided to improve the effectiveness of the Board as a whole as well the functioning of the committees.

The involvement of IoDSA has helped our Board understand its mandate better and engage more positively with the Executive.

Director Development

• 94% (2016: 100%, 2015: 100%) of respondents stated that the in-house Director Development programme had a positive impact on their boards’ governance practices

• 91% (2016: 94%, 2015: 92%) confirmed a positive impact on their board/committee strategic discussions

• 96% (2016: 100%, 2015: 100%) stated a positive impact on their board committees’ understanding of their roles.

Testimonies

The course in general was excellent. Our directors are from all over Africa. For some of them these concepts were new. The risk management process was an eye opener for them.

The programme was insightful and enabled the Board to fully embrace and structure its functions along good governance principles. Insight into King IV was useful in also setting and adopting the new strategy for the Board.

Membership

• 77% (2016: 100%, 2015: 91%) of respondents confirmed that their group or board membership enhanced their access to governance thought leadership

• 65% (2016: 100%, 2015: 90%) stated a positive impact on strategic discussions

• 75% (2016: 100%, 2015: 82%) confirmed a positive influence on governance practices

Some respondents stated that membership was only taken up mid-year, resulting in insufficient interface between board members and the IoDSA to provide a rating. This has negatively impacted the rating percentage in this category.

Testimonies

Better informed. Better equipped. Broaden insight and understanding of corporate governance enabling knowledgeable input into Board matters.

We weren’t members for the entire year, and will be able to give better feedback next year.

THIS RESULTS IN VALUE CREATED

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STAKEHOLDER LANDSCAPE

ENGAGEMENT STRATEGYStakeholder interaction is prescribed and guided by our stakeholder engagement framework. The IoDSA recognises that building relationships with our stakeholders is a key priority and feedback informs and influences our activities and initiatives. Ongoing engagement and feedback channels enable us to understand the needs of our stakeholders.

• Email, newsletters and electronic and printed magazine

• Courtesy calls• Networking events• New member induction

• Annual reputation survey• AGM• Feedback mechanisms• Website and member

portal• Social media

• Transparent reporting• Weekly management

and monthly employee meetings

• “Keeping you informed” emails

• Quarterly team-building

• Employee wellness programme

• Employee survey• Formalised performance

appraisal process• Informal interactions

Members Employees

EMPOWER

PARTNER PARTNER AND ENGAGE

ENGAGE

Facilitators• Facilitator meetings• Informative emails

Professional bodies• Quarterly IPBF

meetings• Regular interaction on

various IoDSA forums and committees

• Informal networking and information sharing

• CEO lunch series

Suppliers and vendors

Business and industry

• Supplier registration process

• Informal interactions

• Maintain formal associations through memoranda of understanding

ENGAGE AND MONITOR

Government Media• Representation on various IoDSA

forums and working groups• Ad hoc one-on-one meetings and

interaction• CEO lunch series

• Public relations agency• Direct communication

Regulators and policymakers• Representation on various IoDSA

forums and working groups • One-on-one meetings and

interaction

STAKEHOLDER LANDSCAPE AND HOW WE ENGAGE


STAKEHOLDER LANDSCAPE

1 Legend1. Sustainable organisational development 5. Increase the number of competent directors2. Promote good governance practices 6. Build a credible and visible brand3. Develop the director profession 7. Collaboration between like-minded professional institutes4. Committed and loyal membership 8. Be a role model for corporate governance and leadership

Our engagement strategy seeks to:

• monitor developments and our landscape;• engage with the aim of influencing stakeholder

perception;• partner with like-minded parties; and• empower those charged with governance duties

or those we can guide and develop with our overarching vision of “Better directors. Better boards. Better business”.

Refer to principle 16 in the governance report.

RESULTS (%)

2017 2016

Strategic alliances 81 83

STAKEHOLDER GROUP AND OUR REASON FOR ENGAGING THEIR EXPECTATIONS

CONNECTED TO OUR STRATEGIC OBJECTIVES1

1

2

3

4

5

6

7

8

Members

• Support, guide and develop members to strengthen our voice in the directorship space

• Ensure the sustainability of our subscription revenue

• Benefits and value in return for their annual investment

• A platform to network and share views• Receive relevant information

Employees

• Develop and retain talent • Ensure we have a motivated and

productive team that delivers professional support to our stakeholders

• Ethical and supportive working environment

• Access to training and development• Fair recognition and reward • Job security

Facilitators

• Work with our team of specialists to ensure we deliver high-quality and relevant advice, thought leadership and development programmes

• Ability to influence or develop content• Access to fee-earning activities• Active engagement

Professional bodies

• Collaborate to enhance member benefits and extend our reach and influence

• A mechanism to share information and best practice

• To offer reciprocal member benefits• To partner on activities where member

footprint overlaps

MEETING STAKEHOLDER EXPECTATIONSThe table that follows sets out why our stakeholders are key to our value creation, and how engaging with them supports our strategic objectives.

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STAKEHOLDER LANDSCAPE – Continued

STAKEHOLDER GROUP AND OUR REASON FOR ENGAGING THEIR EXPECTATIONS

CONNECTED TO OUR STRATEGIC OBJECTIVES1

1

2

3

4

5

6

7

8

Suppliers and vendors

• Ensure we have suppliers and vendors who support us in the value chain to deliver quality products and services

• Fair and transparent procurement processes

• Prompt payment for products and services

Business and industry

• Provide us with greater exposure to the business community and extend our reach


• Access to thought leadership and advisory services

Government

• Extend our reach and influence• Provide us with greater exposure to the

community and positively influence governance practices


• Promotion of good governance

Media • Extend our reach and influence • Enhance the perception of our role in

governance thought leadership

• Access to credible thought leadership that informs opinion and enhances public awareness

Regulators and policymakers • Stay abreast of changes or updates

within the governance landscape and influence policy development

• Good governance practice

Stakeholder feedback informs and influences the IoDSA’s activities and initiatives.

RESULTS (%)

2017 2016

External dialogue 77 72

Internal dialogue 91 88

1 Legend:1. Sustainable organisational development 5. Increase the number of competent directors2. Promote good governance practices 6. Build a credible and visible brand3. Develop the director profession 7. Collaboration between like-minded professional institutes4. Committed and loyal membership 8. Be a role model for corporate governance and leadership


Race (%)African/Indian/Coloured: 60%(2016: 58%)

White: 40%(2016: 42%)

Members

African/Indian/Coloured: 78%(2016: 71%)

White: 22%(2016: 29%)

Employees


White: 33%(2016: 46%)

Board

2017 2016

Race (%)African/Indian/Coloured: 60%(2016: 58%)

White: 40%(2016: 42%)

Members


White: 22%(2016: 29%)

Employees


White: 33%(2016: 46%)

Board

2017 2016

MEMBERSHIP PROFILEWe have 8 737 members (2016: 8 151) and our membership spread remained fairly constant. Gauteng continues to be our largest membership region with 70.6% of our total membership base.

The following graphs provide a sample of membership representation, compared to our employees and Board representation.

Sectors our members represent (%)

0

10

20

30

40

50

60

Pension/retirement/

other

ListedPrivateSMEPublic sectorNon-pofit

13

5357

12

6

24

2016Members represented 67%


11

42

27

52

139

Age (%)

60 – 797%(2016: 7%)

4%(2016: 4%)

80+

40 – 5962%(2016: 63%)

20 – 3927%(2016: 26%)

Members represented 77% (2016: 76%)

Members represented 76%

20162017

Age (%)

60 – 797%(2016: 7%)

4%(2016: 4%)

80+

40 – 5962%(2016: 63%)

20 – 3927%(2016: 26%)

Members represented 77% (2016: 76%)

Members represented 76%

20162017

Board committee representation (%)

0

10

20

30

40

50

60

70

Other or none

Social and Ethics Committee

Remuneration Committee

Nomination Committee

Investment Committee

Audit and Risk

Committee



55

63

813 14 14

30 3125 26

37

62

70.6% 1.0% 7.2%

2.0% 12.2% 7.0%

Gauteng Free State KwaZulu-Natal

Eastern Cape

Western Cape

Other and International

(2016: 70.9%) (2016: 1.2%) (2016: 6.8%)

(2016: 2.1%) (2016: 11.9%) (2016: 7.2%)

Members per region (%)

Gender (%)Male: 66%(2016: 68%)

Female: 34%(2016: 32%)

Members

Male: 28%(2016: 23%)

Female: 72%(2016: 77%)

Employees

Male: 58%(2016: 46%)

Female: 42%(2016: 54%)

Board

2017 2016

Gender (%)Male: 66%(2016: 68%)

Female: 34%(2016: 32%)

Members

Male: 28%(2016: 23%)

Female: 72%(2016: 77%)

Employees

Male: 58%(2016: 46%)

Female: 42%(2016: 54%)

Board

2017 2016

The gender representation of our membership increased by two percentage points to 34% female membership. We are encouraged that our progress is above that of the targets of the 30% Club, a movement that aims to achieve a minimum of 30% women on boards. The proportion of African/Indian/Coloured members also increased by two percentage points to 60%.

Our Board and employee female representation reduced marginally, but we still maintain a high female representation of 42% and 72% respectively. African/Indian/Coloured proportionality increased by 13% and 7% respectively. Board gender representation will be a focus area for the Nominations Committee for the 2018 Board appointments.

The accuracy of member information and statistics remains a focus even though the number of members updating their full profiles improved. We believe that greater focus is still required to prompt members to update their sector, board and committee information.

14 WWW.IODSA.CO.ZA

RISKS AND OPPORTUNITIES

RISK MANAGEMENTManagement reviewed the risk register and risk management processes in 2017. The risk management process identifies all risks that will impact our ability to meet our strategic objectives. Risks are ranked in order of priority, based on the evaluation of the likelihood of the risk occurring and the potential impact.

RISK GOVERNANCE STRUCTURE

Employees and contractors Comply with risk management policies and procedures

Executive managementDrives culture of risk management and

approves annual risk verification

ManagementEnsures that employees in their departments comply with the Risk Management Policy and foster a culture

of risk identification and escalation

Audit and Risk CommitteeOversees the regular review of risk management

activities and reporting

Executive: Finance & OperationsContinuously improves risk management policy,

strategy and supporting frameworks

BoardApproves policy and planning, and oversees,

monitors and ensures accountability


RISKS AND OPPORTUNITIES

RISK MANAGEMENT PROCESS

The IoDSA created an environment where good performance is rewarded and promotion of internal staff is prioritised.

1.

4.

5.

6.

3.

Establish the context of the riskSet the stage for risk identification. Risk impacts our ability to achieve our strategic objectives, and contextualising these objectives is a prerequisite to identifying risk.

Generate a comprehensive list of risks and opportunities based on events that may positively or negatively impact the achievement of strategic objectives. The influence of the external and internal environment across the five capitals is considered when risks and opportunities are identified.

Evaluate the risk

Respond

Review and monitor

Communicate and report to stakeholders

Each risk is assessed considering the likelihood of occurrence and the severity of impact, also referred to as the assessment criteria.

Evaluation includes the impact on:

• the timeframe for Board and executive to address the risk;• financial resources;• external environment;• our reputation;• regulatory requirements; and• management effort.

We plan our response to each risk by focusing on the high priorities. We formulate controls, and develop preventive and contingency plans to mitigate the risk and take advantage of the opportunities that align with our strategic objectives.

We calculate residual risk and determine if further action is needed.

We communicate and deliberate at Board level and report to our stakeholders in this report.

2. Identify the risk

Refer to principle 11 in the governance report

16 WWW.IODSA.CO.ZA

RISKS AND OPPORTUNITIES – Continued

MATERIAL RISKS AND OPPORTUNITIESThe top four material risks described below are those that have the most significant impact on our ability to create value for our stakeholders and meet our strategic objectives. During 2017 we reviewed the risks impacting our business, bearing in mind current economic and business conditions. This resulted in changing the priority of certain risks.

Prioritisation changed as follows

RISK DESCRIPTION AND REASON FOR CHANGE2017

RANKING2016

RANKING

Added

Inadequate BBBEE rating: Inadequate BBBEE rating influencing customers and service providers.

This ranking of this risk has escalated due to the expected application of the Generic scorecard in 2018 as opposed to the current Qualifying Small Enterprise (QSE) scorecard.

1 12

Removed

Intellectual property: We own various copyrights and trademarks that need protection. Copyrights and trademarks could be used without authorisation.

This ranking changed following a change in the IoDSA’s approach to the use of King IV trademarks and the removal of certain royalty requirements. It is no longer within the top risks.

5 3

Removed

Information security and protection: Cyber security is a key risk in relation to our customer relationship management (CRM) system, which integrates most of our products and services, and the Protection of Information Act (PoPI Act).

This ranking reduced due to the proactive review of PoPI Act compliance and enhancement of policies in 2017. It is no longer within the top risks.

6 5

INADEQUATE BBBEE RATING

Current risk ranking – 1 Definition Inadequate BBBEE rating influencing customers and service providers.Previous risk ranking – 12

Risk owner: Executive: Finance & Operations

The principle cause is the introduction of new BBBEE codes and our expectation that the IoDSA will exceed the revenue threshold for qualifying small enterprises. This will result in the IoDSA changing to the generic assessment scorecard in 2018. This could be further impacted should we not ensure adequate procurement policy implementation and monitoring.

A significant change in the IoDSA’s BBBEE level could result in reputational damage and financial loss. However, the implementation of new practices in enterprise and supplier development is an opportunity for the IoDSA.

We continue to mitigate this risk through refinement of our procurement and recruitment policies and the development of a BBBEE strategy that will be implemented in 2018.

Likelihood:5

Magnitude: 5

Strategic impact



RETENTION OF KEY EMPLOYEES

Current risk ranking – 2 Definition Our small employee complement makes retention of key individuals critical, as many perform multiple tasks and contribute towards various objectives as set out in the business plan.

Previous risk ranking – 1

Risk owner: Chief Executive Officer

Our ability to retain employees is impacted by market competition, lack of defined succession plans and limited career opportunities due to the size of our organisation, along with the investment required in training and upskilling all employees.

A high employee turnover impacts on our ability to deliver against business plans and service levels and increases recruitment costs. The related opportunity is the fresh thinking and focus that new employees bring.

In order to mitigate this risk we have developed formalised succession plans and salary benchmarking. The IoDSA created an environment where good performance is rewarded and promotion of internal staff is prioritised. We also increased our investment in training and bursaries for all employees. Cross-transfer of knowledge within departments is encouraged and a formalised Knowledge Management Policy and process has been developed.

Likelihood: 5

Magnitude: 4

Strategic impact



SKILLS ATTRACTION

Current risk ranking – 3 Definition It is a challenge to attract skilled employees in the non-profit sector due to funding restrictions and limited growth opportunities.

Previous risk ranking – 2


Our ability to attract talent is influenced by our ability to offer market-related salaries and the limited opportunity for career growth due to our size.

Positions that are vacant for an extended time negatively impact our ability to deliver on our business objectives. We focus on financial and non-financial benefits and development and training to enhance attraction. We rely on the strength of our brand and vision to attract talent.

Likelihood: 5

Magnitude: 4

Strategic impact


ECONOMIC CONDITIONS

Current risk ranking – 4 Definition As a voluntary organisation, insufficient funding is a risk in the current economic climate.Previous risk ranking – 4


The IoDSA competes for the “share of wallet” with other professional associations. Our competitor landscape spans not only other associations, but also governance consulting firms and training providers.

As IoDSA is a non-statutory voluntary association, members may opt for membership of a statutory association. There are opportunities to enhance our member value proposition and innovate with new offerings to remain relevant.

Loss of membership subscriptions and revenue from services would result in the inability to deliver on our business plans; liquidity concerns; an inability to adequately remunerate and reward employees; and would impact our ability to expand our service offerings.

We mitigate this risk by monitoring our investments and investment strategy, by robust financial management and planning, and through the development of supportive relationships with other professional associations in order to collaborate rather than compete.

Likelihood: 5

Magnitude: 4

Strategic impact


Collaboration with like-minded professional bodies

18 WWW.IODSA.CO.ZA

Our performance discussion is structured around four primary service channels and our human capital. The diagram below shows how the focus areas of our service channels align to our strategic objectives.

RESULTS (%)

2017 2016

Operational capability 85 84

Business development and results 90 93

Strategic alliances 81 83

PERFORMANCE REVIEW

1. 3.

4.

5.

6. 7. 8.

2.

MEMBERSHIPCENTRE FOR CORPORATE

GOVERNANCE

DIRECTOR DEVELOPMENT

DIRECTOR CERTIFICATION






Collaboration between like-minded

professional institutes

Developing the director profession

Be a role model for corporate governance

and leadership

HUMAN CAPITALOur employees are the foundation of our business and support the achievement of our strategic objectives


MEMBERSHIPThe IoDSA membership increased by 7%, with notable improvements in our membership representation in KwaZulu-Natal and Western Cape. We achieved a satisfactory retention rate of 79.2%, falling just short of our target of 80%. We are confident that we will see increased growth in 2018. We have assessed our member value proposition and will enhance our member benefits in alignment with our 2020 vision.

We will continue to improve services for our members, as the organisation can only move forward with their support.

EVENTS AND NETWORKING

The IoDSA events team experienced a learning curve in 2017. We refreshed our eventing methods and networking strategies. This gave us insight into the networking needs and wants of our members.

A total of 1 727 members and 605 non-members attended our events during the year (2016: 1 585 members and 634 non-members). We hosted 31 events for members, with seven events in Cape Town and six in Durban (2016: 30 events, 6 Cape Town, 7 Durban). Using lessons learned from 2017, we will endeavour to create a better networking environment for members.

Our key events were the IoDSA annual executive golf day, the AGM luncheon, and the Women’s Day tea, which continues to grow in popularity. The golf day enjoyed its biggest attendance to date with 256 participants filling two courses. We received encouraging feedback from all who participated. Thomas International was the presenting sponsor.

NED VACANCIES

NED vacancies advertised increased by more than 100%, with 92 vacancies advertised (2016: 19). The positive impact of advertising the vacancies at no cost, as a value enhancement for members, contributed to the increase in 2017.

We still face challenges whereby organisations appointing our members do not provide timeous feedback, negatively impacting the accuracy of our reporting.

In 2018 we will focus on becoming the organisation of choice for NED vacancies through greater engagement with recruitment firms and nominations committees.

We will continue to improve services for our members, as the organisation can only move forward with their support.

PERFORMANCE REVIEW

Number of potential candidate searches: 7

Non-members appointed43%(2016: 17%)

43%(2016: 33%)

Members appointed

Awaiting feedback14%(2016: 50%)

(2016: 6)

2017

Number of vacancy notices: 92


36%(2016: 47%)

IoDSA Members appointed


(2016: 19)

2017

Number of potential candidate searches: 7


43%(2016: 33%)

Members appointed


(2016: 6)

2017

Number of vacancy notices: 92


36%(2016: 47%)

IoDSA Members appointed


(2016: 19)

2017

20 WWW.IODSA.CO.ZA

PERFORMANCE REVIEW – Continued

ALLIANCES AND ASSOCIATES

We are formally associated with the professional bodies and business chambers below, which have not changed since 2016.

South African Institute ofChartered Accountants

The Institute of Internal Auditors South Africa

Institute of Risk Management South Africa

Association of Certified Fraud Examiners

Durban Chamber of Commerce and Industry

Cape Chamber of Commerce and Industry

South African Chamber ofCommerce and Industry

(SACCI)

Business Women’sAssociation

CENTRE FOR CORPORATE GOVERNANCETHOUGHT LEADERSHIP

AdvocacyThe IoDSA endeavours to provide comment and input on material legal changes within the governance realm that affect directors and our members. Mandatory audit firm rotation was still strong on our advocacy input agenda and we gave comments to the Independent Regulatory Board for Auditors (IRBA) and Parliament as requested.

Furthermore we were in consultation with South African Revenue Service (SARS) regarding the changes to tax laws impacting non-executive directors. Subsequently, the IoDSA, in collaboration with South African Institute of Chartered Accountants (SAICA), issued a VAT Guide for non-executive directors regarding the SARS binding rulings changes.

General guidance and practice notesWe released one further general guidance note on King IV Report disclosures. We also released, with the King Committee, two King IV practice notes on the independence of directors and the role of the chair and the lead independent director. The primary reason for the practice notes was to clarify any possible confusion when interpreting a practice in King IV.

Articles and media releasesThe IoDSA continues to produce and publish a number of articles and media releases regarding key governance matters which were topical and in the media during 2017. We also launched our six-monthly showcase in the Business Report which was co-written by our Chair and our Executive: Centre for Corporate Governance.

Some of the publications we contributed to include: Directorship® magazine, the Corporate Report, and the Business Report.

Governance mattersThe IoDSA changed from a quarterly publication on governance matters to issuing a governance alert when

prevailing changes impacting directors and our members are released. The following alerts were issued:

• IRBA mandatory audit firm rotation update• Update on SARS treatment of non-executive director fees• Amendment to the JSE listings requirements• Draft Protection of Information Act Regulations and changes

at the Companies and Intellectual Property Commission (CIPC)

Directorship magazineOur Chief Executive Officer, Angela Cherrington, continued in the role of editor of our quarterly magazine. Our governance specialists produced the “frequently asked questions” segments in each edition dealing with common questions arising from our free member queries benefit. We also brought back the ‘from the boardroom” column that our facilitators author. Key themes of the magazine were South Africa’s “junk status”, director’s sentiment, courage in the boardroom and celebrating our IoDSA members.

BOARD APPRAISAL SERVICES (BAS)

The number of appraisals performed decreased to 26 (2016: 36) as we saw a trend for organisations to opt for internal projects due to tougher economic conditions. The review and update of all BAS questionnaires in line with King IV is underway and will be used in 2018. We updated our reporting to clients at the end of the appraisals and are optimistic that, with the all-inclusive approach we adopted, our clients will see more value in the outcome of their board appraisals

BAS – number of projects per entity type (%)

0

5

10

15

20

25

30

35

40

20172016

Listed and large private

Major national and provincial

Non-profit Other

2

7

11

6

7

18

11


GOVERNANCE ADVISORY SERVICES

The release of the King IV Report had a direct impact on the amount of Governance Advisory Services queries and projects undertaken during 2017. The majority of the projects focused on King IV governance assessments and related assistance.

Due to the new corporate governance approach, we continued to see the need for more practical and educational advisory services to equip clients not only to find solutions to their issues, but to understand how to apply King IV. We created new service offerings and adapted current ones, and allowed for specific customisation and flexibility in all service offerings. This allows us to meet our client needs and provide value-add services to help them execute effective governance.

An increase in combined BAS, In-House Director Development and Advisory projects was provided to clients to provide a more holistic approach. The feedback received on the level of service and practical value-add of this combined offer was positive. We will continue this approach in 2018.

We exceeded our 2017 budget for fee-based services and the number of technical support queries increased to 222 (2016: 162). However, the level of complexity of the queries increased the average time spent per query to 23 minutes (2016: 18 minutes).

We will continue to improve the quality and value of services through integration and customisation, with specific focus on improving our reporting to be more user-friendly and impactful.

FORUMS AND NETWORKS

We reviewed the performance of our technical forums in 2017, with a view to streamlining their activities. We will continue working with the forum chairs and sponsors to maintain relevance. This will become an annual process.

FORUM PURPOSE ACTIVITIES FOR 2017

The Audit Committee Forum (ACF)(sponsored by KPMG)

Promote the efficacy of audit committees through sharing knowledge with their peers, disseminating relevant information, and focusing on key performance areas.

The IoDSA activities on the ACF were suspended for 2017 following the suspension of activities with KPMG and will be reviewed during the course of 2018.

The Corporate Governance Network (CGN)(sponsored by PwC)

Provide directors and senior executives with the tools to understand and implement sound governance.

The CGN released two papers on governing body composition and succession planning for the governing body. Launch events were hosted and well attended in Johannesburg and Durban regions.

The papers on the board’s role in preserving the moral landscape, cyber security, board mentorship and representative shareholder activism will be released in 2018.

The paper on communication that was due for release in 2017, is no longer deemed appropriate.

The Sustainable Development Forum (SDF)(sponsored by Standard Bank)

Disseminate information on developments relating to sustainability issues through regular discussion events and, when appropriate, publications.

The SDF released a paper on social inequality.

The Remuneration Committee Forum (Remco Forum) (sponsored by EY)

Research and disseminate information on developments relating to remuneration committee issues through published position papers and discussion events.

The Remco Forum released a paper on fair and responsible remuneration.

The Public Sector Audit Committee Forum (PSACF) (sponsored by National Treasury)

Facilitate guidance of and assistance to members of public sector audit committees.

The PSACF released two papers on the audit committee competency framework and audit committee reporting.

A round table discussion event was hosted in the Western Cape in partnership with the Institute of Internal Auditors South Africa (IIASA) on the relationship between public sector audit committees and internal audit.

Online discussion groups were launched on LinkedIn for CGN, SDF and Remco to provide a platform for member engagement on the respective focus areas.

22 WWW.IODSA.CO.ZA

Our participation in forums includes two international networks. The purpose for and objectives of these networks are outlined below.

NETWORK PURPOSE ACTIVITIES FOR 2017

Global Network of Director Institutes (GNDI)

Share knowledge and practices with like-minded institutes and provide members with access to international governance resources and events.

The GNDI commenced with a benchmarking exercise of member institutes of the GNDI, to be completed in 2018.

Angela Cherrington was elected to chair the GNDI executive committee.

Upcoming activities:

• A sentiment-style survey and report, measuring the views of directors and tracking global results and trends across GNDI member organisations

• Global cyber summit to be hosted in April 2018 in Geneva, together with GNDI Executive Committee meeting

• GNDI Executive Committee meeting in June 2018 (Bangkok)

African Corporate Governance Network (ACGN)

Engage with contemporary African institutes of directors with the aim of enhancing effective corporate governance practices, and building better organisations and corporate citizens in Africa.

The IoDSA attended and contributed to two meetings of the ACGN in Abidjan, Cote d’Ivoire (February) and Addis Ababa, Ethiopia (August). In 2018, there will be two meetings in

• March (Namibia) and• September (Algeria).


RESEARCH

South African Directors’ Sentiment Index™ Report The second edition of the IoDSA’s South African Directors’ Sentiment IndexTM Report was released in the second quarter of 2017. The research tracks the sentiment of our country’s directors by measuring their views on a variety of elements covering economic, business, governance and directorship conditions.

Ultimately, the study provides a valuable indicator of the matters that are important to our members and the wider director community. It also provides a different platform for the IoDSA to consult and engage with its members on matters affecting them.

The African Governance Showcase competition The second African Governance Showcase case study competition was held in collaboration with the International Finance Corporation (IFC) and the Swiss State Secretariat for Economic Affairs (SECO). The competition encourages global submissions from participants on all areas of African corporate governance. The case studies must be based on corporate governance cases in Africa, within organisations that could be expected to, or chose to, apply the principles contained in the King Reports on Corporate Governance in South Africa or the relevant corporate governance codes of the country in which the organisation operates.

The top three case study winners met the aspirations of wider participation, hailing from South Africa, Ghana and Kenya respectively.

NED Fees GuideThe IoDSA collaborated with EY to produce the fifth edition of the Non-Executive Directors’ Fees Guide. This resource provides a useful reference point for benchmarking NED fees as disclosed by JSE-listed companies.

Governance research platformThe IoDSA, in support of master’s and doctoral level students, created a governance research platform for students to engage with the IoDSA membership with regards to governance-related research projects.

COMMITTEES

King CommitteeWe are the convener and secretariat of the King Committee, which is responsible for the King I, King II, King III and King IV reports. We are unique in that we are the only directors’ institute internationally that legally owns its national code of corporate governance. This is a position of privilege and a responsibility we take seriously – to the extent that our primary objective is to promote corporate governance in South Africa.

The key focus in 2017 was the issuing of King IV Practice Notes. Refer to www.iodsa.co.za/?page=KIVPracticeNotes for more information.

CRISA CommitteeThe role of secretariat for the committee of the Code for Responsible Investing in South Africa (CRISA) was consigned to the Association for Savings and Investment South Africa (ASISA) in 2017. The IoDSA remains an active member of the committee.


DIRECTOR DEVELOPMENTWe hosted 308 open and in-house programmes and reached 5 840 delegates, a 22% and 20% increase respectively.

OPEN PUBLIC PROGRAMMES

We hosted 142 open public programmes (2016: 116), which reached 2 531 delegates. Cancelled programmes reduced by 38% compared to 2016, with only nine programmes cancelled.

We launched Being a Director Part 5: Board Theory into Practice, as planned. We also launched our online multiple choice questions (MCQs), which are based on the knowledge and learnings from the Being a Director series – financial insights for non-financial directors and governance of ethics modules. This forms part of the Certified Director Pathway. We hosted 11 Being a Director Part 5 programmes and a total of 307 MCQs were completed for the modules.

We plan to have new programmes in 2018, including:

• Effective remuneration committees, which will help remuneration committees become effective in executing their mandate.

• King IV insights on implementation and disclosure, focusing on the practical implementation and disclosure of King IV.

IN-HOUSE PROGRAMMES

We conducted 166 in-house programmes, an increase of 22% (2016: 136 programmes). We reached 3 309 delegates, an increase of 29% (2016: 2 569 delegates). The demand for King IV programmes increased, and accounted for about half our in-house programmes delivered. There has been an increase in demand from the private and not-for-profit (NPO) sectors for governance programmes, compared to 2016.

The focus for 2018 is to continue marketing and offering customised and integrated governance programmes to boards in and around South Africa.

Coverage per sector for in-house o erings (%)

Public sector41%(2016: 53%)

34%(2016: 24%)

Private sector

NPOs11%(2016: 8%)

International clients14%(2016: 15%)

2017

Coverage per sector for in-house o erings (%)

Public sector41%(2016: 53%)

34%(2016: 24%)

Private sector

NPOs11%(2016: 8%)

International clients14%(2016: 15%)

2017

We are unique in that we are the only directors’ institute internationally that legally owns its national code of corporate governance.

24 WWW.IODSA.CO.ZA


DIRECTOR CERTIFICATIONDirector Certification was established in January 2017. The two-person department manages all the activities related to the marketing, recruitment, assessment and CPD of CD(SA) and Cert.Dir.

We have not made sufficient progress toward the achievement of our 2020 goal and therefore we increased the marketing of CD(SA) and Certified Director as the premium designations for professional directors building their careers. Marketing was done through information sessions to our members – four sessions were held in Johannesburg, two in Cape Town and one in Durban. We launched a chairman’s campaign with targeted desk-drop marketing packages sent to high-profile directors.

Although the conversion rate was low, our aim was to build awareness for the designation and we were able to promote CD(SA) to these individuals. Different designated members – CD(SA) and Cert.Dir. – were profiled in every Directorship magazine in 2017.

CHARTERED DIRECTOR (SA)

26 new CD(SA)s were certified and not 37 as planned. This was mainly due to the lack of availability of members to complete the final stage of the assessment process, the peer review.

We intend to harness the community of practice by providing opportunities to facilitate conversations about topical issues relating to director practices and governance failures. A pilot article summarising the discussions about state-owned enterprise governance challenges was published in Directorship magazine.

CERTIFIED DIRECTOR

Certified Director was re-launched on 10 March 2017. Twenty-one individuals who had completed the Accelerated Director Programme during the period 2009 to 2012 renewed their status. The Certified Director Handbook 2017 was released on the day of the re-launch. An additional 22 individuals successfully completed Part 1: Training and MCQs and Part 2: Assessment of the new process to attain the professional designation.

CURRENT CD(SA)

CANDIDATES: 53 IN PROCESS

Total CD(SA)s

Gender diversity

Gender diversity

Geographic location

Geographic location

2017

Portfolio

2016

Exam

2015

Interviews

2014

82

35

Gauteng

Gauteng

64

42

Other

3

Other

3

KwaZulu-Natal

KwaZulu-Natal

4

3

Western Cape

Western Cape

11

5

56

13

45

5

33

Female26%

74%Male

Female25%(13)

75% (40)

Male

Currently completing the assessments


HUMAN CAPITALWe wish to be considered an “employer of choice”, which means we aim to attract and retain skilled employees by offering fair remuneration, rewarding good performance, creating development and growth opportunities, and providing a safe and healthy working environment. Refer to page 13 for the gender and race diversity employee statistics.

Working under the guidance of our Social and Ethics and Remuneration Committees, the table below sets out some of our key activities.

Fair and responsible remuneration

• Salary benchmarking

Performance reward • Annual review of our Bonus and Remuneration Policy• Team member of the month and year awards

Development and growth • Investment of approximately R500 000 in the development of employees through bursaries or work-relevant training programmes

Safe and healthy workplace • Enhancement of our Health and Safety policies, formalisation of employee representation on our internal health and safety structures and the completion of a full health and safety audit

• Employee wellness and assistance programme through ICAS

Engagement • Ethics survey• Social interactions, team-building and events

RESULTS (%)

2017 2016

CSI 80 80

RESULTS (%)

2017 2016

Internal dialogue 91 88

Human capital 88 86

Our planned employee loyalty programme was deferred to 2018 to follow the implementation of a new human resource management portal and intranet in the second quarter of 2018.

CORPORATE SOCIAL INVESTMENTWe launched an NPO initiative offering pro bono governance training and board evaluations to selected NPOs, to further good governance in the sector. This sponsorship initiative provided the following:

• A select number of individuals had the opportunity to attend Director Development programmes with a full IoDSA sponsorship. • Two organisations received a fully sponsored basic board appraisal.• Two organisations received a fully sponsored in-house governance induction programme.

This initiative aims to align our corporate social investment (CSI) initiatives to our strategic objectives. This is achieved by utilising our specific organisational skill set to build the capacity of non-profit directors. This approach will replace our ad hoc CSI initiatives, introducing a structured programme and defined reporting. It will be repeated each year.

26 WWW.IODSA.CO.ZA

The IoDSA upholds the principles of the King IV Report on Corporate Governance™ (King IV) and strives, through ethical and effective leadership, to achieve the governance outcomes of an ethical culture, good performance, effective control and legitimacy.

King IV was released on 1 November 2016, with an effective date for financial years beginning on or after 1 April 2017. The IoDSA decided to adopt King IV early. During 2017, we conducted a gap analysis from King III to King IV, with most of the gaps subsequently addressed. The Board restructured the composition of some of its committees, made adjustments to Board and committee work plans, and approved new policies, charters and terms of references to align with King IV.

We have produced a full governance report as part of our reporting suit which can be found at www.iodsa.co.za/?page=AGM2018

OUR BOARDThe IoDSA is governed by a Board of Directors, who are elected from its membership at the AGM held in June each year, at which all subscription-paying members have voting rights. The Board comprised 12 directors as at 31 December 2017. The maximum allowed per the Memorandum of Incorporation is 15.

The Board consists of a majority of non-executive directors (nine), all of whom are considered independent. The Chief Executive Officer is an ex-officio member of the Board. The Board determines which other Executives serve as ex-officio members of the Board.

With the resignation of Venete Klein as Chair, effective May 2017, and the King IV implementation, the Board selected a new Chair, Dr Prieur Du Plessis, and a lead independent director, Muhammad Seedat, effective June 2017.

During 2017, there were three executive directors on the Board – the Chief Executive Officer, the Executive: Finance & Operations and the Executive: Centre for Corporate Governance. The Executive: Finance & Operations resigned in November 2017 and her successor will join in April 2018.

RESULTS (%)

2017 2016

Corporate governance 86 87

IODSA AS A GOVERNANCE ROLE MODEL

The Board paid specific attention to recruitment and succession planning at executive level.


BOARD As at 31 December 2017

Audit and Risk Committee

Assists the Board with overseeing assurance, integrity of financial reporting, risk governance as well as technology and information governance.

Social and Ethics Committee

Assists the Board with overseeing organisational ethics, responsible corporate citizenship, sustainable development and stakeholder relationships.

Remuneration Committee

Assists the Board with overseeing fair and responsible remuneration and transparent remuneration disclosure.

Nominations Committee

Assists the Board with overseeing board composition, succession planning for Board and management, Board nominations and Board evaluation.

Investment Committee

Assists the Board with overseeing responsibilities relating to the investment management activities.

MEMBERS

Resigned during the year

Ingrid Goodspeed Daleen Henning Venete Klein (previous Chair)

Prieur du Plessis (Chair effective June 2017)

Ntuthuko Bhengu (appointed June 2017)

Parmi Natesan

Sana-Ullah Bray

Pumla Radebe

Sathie Gounden

John Burke

Muhammad Seedat (lead independent director effective June 2017)

Patrick Kabuya

Angela Cherrington

Louisa Stephens (appointed June 2017)

Refer to www.iodsa.co.za/page/Board for more information on our Board members.

Yolan Friedmann

28 WWW.IODSA.CO.ZA

BOARD MEMBERS AND DIVERSITYThe Board promotes diversity of knowledge, skills, experience, age, culture, race and gender in its membership, through the use of a board skills matrix, ongoing monitoring by the Nominations Committee and diversity considerations during the shortlisting of candidates for Board vacancies.

Board diversity statistics include:

Age (%)

40 – 5967%

16%20 – 39

60 – 7917%

2017

Age (%)

40 – 5967%

16%20 – 39

60 – 7917%

2017

Race (%)

White33%

67%African/Indian/Coloured

2017Race (%)

White33%

67%African/Indian/Coloured

2017

Gender (%)

Female42%

58%Male

2017Gender (%)

Female42%

58%Male

2017

Tenure (%)

2 – 3 years25%

17%1 year

4 – 6 years

41%

6 – 9 years

17%

0 5 10 15 20 25 30 35 40 45

8% 13% 11%

20%

11%

7%

7%

7%

16%

Legal Education Finance

Governance

Risk

Operations

Sustainability

Remuneration

Strategy

Skills

IODSA AS A GOVERNANCE MODEL – Continued


BOARD FOCUSThe CD(SA) governing structures and the IoDSA regional structures were revised to re-align the Board’s attention to strategic matters and appropriate focus was given to the King IV implementation (refer to Governance report).

A significant focus area for the Board in 2017 was the IoDSA reputation and the potential impact the IoDSA could have on SA Inc., following various governance/corporate scandals in the country.

The Board also approved a medium-term BBBEE strategy.

The Board paid specific attention to recruitment and succession planning at executive level due to the resignation of the Executive: Finance & Operations and the Chief Executive Officer contract, which is due to end in March 2019. A CEO succession framework and recruitment plan was developed to address this.

Following the release of King IV, the Board deliberated on feedback received and determined to significantly reduce the instances where royalties would be charged. This was done so as not to limit the use of King IV, ultimately for the greater good of governance in the country. The impact of a reduction in revenue from royalties was not financially material.

Other recurring matters addressed by the Board included:

Leadership, ethics and corporate citizenship

• Approval of updated Board Code of Conduct and Ethics Policy• Noting of the NPO sponsorship initiative

Strategy, performance and reporting

• Ongoing monitoring of performance against business plan and budget for 2017• Approval of annual financial statements and integrated report for 2017• Approval of business plan and budget for 2018

Governing structures and delegation

• Monitoring of declaration of interests• Consideration of the Board evaluation outcomes• Approval of delegation of authority, with added focus on which policies should be

approved by which structure• Noting and consideration of feedback from Board Committees• Approval of candidates put forward for voting for Board vacancies

Governing functional areas

• Oversight of compliance in general, including IoDSA’s tax-exempt status specifically• Approval of the Bonus and Remuneration Policy and ratification of employee bonuses• Oversight of technology and information governance, including results of penetration

testing• Approval of risk register, as well as risk appetite and tolerance levels• Consideration of assurances received for board decision-making

Stakeholder relationships• Monitoring of stakeholder relations activities• Approval of 2017 AGM notice and related processes

The Board is satisfied with the application of corporate governance in 2017, as espoused in King IV on a proportionality basis for the size and nature of the IoDSA. We will continually strive to make enhancements where deemed fit. The Board is also satisfied that it has fulfilled its responsibilities in accordance with its charter for the 2017 financial year.

The Board is satisfied that each Committee has the necessary knowledge, skills, experience and capacity to execute its duties effectively. Each Board Committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference for the 2017 financial year.

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SUMMARY FINANCIAL INFORMATIONSTATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOMEfor the year ended 31 December 2017

REVENUE2017

R2016

RBad debts recovered 25 840 34 668Board appraisal and advisory services 5 479 801 6 038 984Conferences and functions 453 285 5 540 951Directors’ certification 704 559 305 374Director development programmes 20 296 118 16 265 211Forums 365 773 442 985Governance assessment instrument – 131 000Investment income 1 158 753 1 092 296King IV Income 657 825 402 126Marketing and advertising 47 642 234 923Membership subscriptions 16 778 438 14 440 483Publications and surveys – 39 233Research 367 593 238 195Royalties 955 578 274 048Sundry revenue 98 606 73 487Total revenue for the year 47 389 813 45 553 964Fair value adjustment of investments in collective investment schemes 902 332 317 933

EXPENDITUREAccounting fees 9 220 22 277Audit fees 227 520 259 006Bad debts 133 048 104 274Bank charges 191 947 184 814Directors’ certification 217 021 136 235Computer and database development 1 040 388 624 164Conferences and functions 1 748 254 6 121 962Depreciation 576 978 578 652Director development programmes 2 336 456 1 736 400Directors’ emoluments: Executive directors 4 706 358 4 329 733Facilitator fees 9 319 387 8 121 558Forums 213 876 304 544International conventions and conferences 100 698 316 596Insurance and licences 199 347 156 095Impairment and loss on disposal of assets 6 400 1 240Investment charges 93 008 129 378King IV expenses 115 639 2 692 921Legal, consulting and trademarks 881 738 789 496Mailing and postage 320 693 257 308Marketing and public relations 2 126 431 1 391 874Member benefits 2 049 935 1 830 836Membership cards and certificates 182 838 237 704Operating lease charges – office equipment 657 984 687 450Printing and stationery 498 629 440 784Rent and services 3 329 271 3 230 350Research 448 168 223 595Salaries, bonuses and welfare 10 916 383 10 002 959Subscriptions and publications 93 661 247 695Sundry expenses 1 262 973 1 013 598Telephone and fax 323 215 349 832Travelling and entertainment 350 627 296 610Total expenditure for the year 44 678 091 46 819 940Total comprehensive income for the year 3 614 054 (948 043)


STATEMENT OF FINANCIAL POSITION at 31 December 2017

ASSETS2017

R2016

RNon-current assetsFurniture and equipment 1 773 835 1 840 927

1 773 835 1 840 927Current assetsInventory 52 851 174 345Trade and other receivables 1 637 021 2 788 936Investments in collective investment schemes 23 057 134 21 378 579Cash and cash equivalents 7 595 900 6 167 529

32 342 906 30 509 389Total assets 34 116 742 32 350 316

FUNDS AND LIABILITIESFunds and reservesAccumulated funds 18 812 205 15 198 151Non-current liabilitiesAmounts received in advance 1 709 317 2 312 593Current liabilitiesTrade and other payables 4 552 824 5 872 277Provisions 1 333 280 1 289 043Amounts received in advance 7 709 116 7 678 252

15 304 537 17 152 165Total funds and liabilities 34 116 742 32 350 316

STATEMENT OF CHANGES IN ACCUMULATED FUNDSfor the year ended 31 December 2017

ACCUMULATED FUNDS

RBalance at 1 January 2016 18 742 362Restatement: First-time adoption of IFRS for SMEs (2 596 168)Comprehensive income for the year (948 043)Balance at 31 December 2016 15 198 151Comprehensive income for the year 3 614 054Balance at 31 December 2017 18 812 205

STATEMENT OF CASH FLOWS for the year ended 31 December 2017

2017R

2016R

Cash inflow from operating activitiesCash generated by operations 1 562 128 1 394 210Cash interest received 382 530 189 953Net cash inflow from operating activities 1 944 658 1 584 163

CASH OUTFLOW FROM INVESTING ACTIVITIES

Acquisition for furniture and equipment (516 287) (346 607)(Payment)/receipt for other financial assets – 70 010Net cash outflow from investing activities (516 287) (276 597)

NET INCREASE IN CASH AND CASH EQUIVALENTS 1 428 372 1 307 567

Cash and cash equivalents at the beginning of the year 6 167 529 4 859 963Cash and cash equivalents at the end of the year 7 595 900 6 167 529

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ABBREVIATIONS

Below is a reference of commonly used abbreviations:

ACF Audit Committee Forum

ACGN African Corporate Governance Network

AGM Annual General Meeting

ASISA Association for Savings and Investment South Africa

BAS Board Appraisal Services

BBBEE broad-based black economic empowerment

CCG Centre for Corporate Governance

CD(SA) Chartered Director

Cert. Dir Certified Director

CGN The Corporate Governance Network

CIPC Companies and Intellectual Property Commission

CPD continuing professional development

CRISA Code for Responsible Investing in South Africa

CRM customer relationship management

CSI corporate social investment

GNDI Global Network of Director Institutes

IFC International Finance Corporation

IIASA Institute of Internal Auditors South Africa

IIRC International Integrated Reporting Council

IoDSA Institute of Directors in Southern Africa NPC

IPBF Independent Professional Body Forum

IRBA Independent Regulatory Board for Auditors

King IV King IV Report on Corporate Governance™

MCQs multiple choice questions

NED Non-executive director

NPC non-profit company

NPO not-for-profit

OECD Organisation for Economic Co-operation and Development

PoPI Act Protection of Information Act

PSACF The Public Sector Audit Committee Forum

QSE Qualifying Small Enterprise

Remco Forum Remuneration Committee Forum

report integrated report

SACCI South African Chamber of Commerce and Industry

SAICA South African Institute of Chartered Accountants

SAQA South African Qualifications Authority

SARS South African Revenue Service

SDF Sustainable Development Forum

SECO Swiss State Secretariat for Economic Affairs

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INSTITUTE OF DIRECTORS IN SOUTHERN AFRICA...This 2017 integrated report (report) of the Institute of Directors in Southern Africa NPC (IoDSA) covers the year 1 January to 31 December