Governance

Executive summary

The Board of Airports Company South Africa acknowledges its responsibility for good corporate governance, including the effective implementation of King IV principles to achieve the governance outcomes of an ethical culture, good performance, effective control and legitimacy. Sound governance is implicit in our values, culture, processes, frameworks, functions and operational model. The Board exercises leadership, integrity and judgement in pursuit of the Group’s strategic goals and objectives to achieve long-term sustainability, growth and prosperity for Airports Company South Africa and its shareholders.

Airports Company South Africa’s approach to corporate governance is based on six fundamental principles: accountability, transparency, responsibility, independence, ethical fairness and social development. The Group acknowledges that its dual purpose – to both serve its customers profitably through world-class airports and fulfil a social development role as an ancillary body of government in line with National Development Plan objectives – requires that it is fully committed to the effective implementation of King IV principles throughout the organisation.

Airports Company South Africa ensures that its operations are conducted ethically within the regulatory framework, with a focus on improving irregular expenditure management, ensuring leadership acts in an ethical manner and conducting itself as a responsible corporate citizen. The Board sets the tone from the top in the manner in which it conducts itself and oversees the structures and the governance framework.

We acknowledge that the year under review has been a challenging one from the point of view of oversight. For part of the year, Airports Company South Africa operated with only four Board members due to the resignation of some Board members and existing vacancies. While the Board remained legally constituted, for a portion of the year, we were without a sufficient number to constitute Board committees.

Notwithstanding the absence of the intended and stipulated support for decision-making at Board committee level, due to circumstances beyond the Group’s control – namely the appointment of new Board members – we are pleased to report that the Group’s performance was not negatively affected. The appointment of new Board members and Board Chairman in the course of FY2018/19 has not only brought oversight back to required capacity, but has bolstered the Group’s governance control framework.

In fact, during the year under review, the Group’s reputation score measured among stakeholders through the RepTrak® survey has increased, indicating that our stakeholders not only view us as a valued partner but as an entity with dependable internal controls.

Our approach to corporate governance is backed by the Group’s values expressed in the PRIDE acronym: Passion, Results, Integrity, Diversity and Excellence. The Group’s Code of Ethics has been approved by the Board and is monitored by the Social and Ethics Committee, in addition to the behavioural standards specified in the employee manual. Our Audit and Risk Committee ensures that we comply with all relevant regulations and legal requirements.

The Group is committed to meeting all King IV disclosure requirements. Relevant supplementary documents and reports are available online at www.airports.co.za. The Board approves the annual financial statements, sustainability reports, Social and Ethics Committee reports after they have been considered by the Audit and Risk Committee, and Social and Ethics Committee. The reports are prepared in compliance with the PFMA, Companies Act, IFRS, IIRC’s International Integrated Reporting Framework and ISO/SANS 31000. External auditors provide assurance on all external reports.

Effective and ethical leadership

The Board, through the Social and Ethics Committee, takes ultimate responsibility for ensuring that the Group cultivates a culture of ethical conduct to which management and all employees adhere.

In FY2018/19 all members of the newly constituted Board signed an ethics pledge committing themselves to the highest ethical standards and practices, individually and collectively. A copy of this pledge, our ethics policy and values can be found on our website at www.airports.co.za.

Ethics in action

During our annual ethics awareness training, we ensured that our employees acknowledged receipt of the code of ethics manual and read it to reaffirm their commitment to ethical practices. To date, 2 988 copies of the code of ethics have been issued to employees, Board members and other stakeholders.

Our code of ethics is unchanged and outlines standards of conduct expected of directors, managers, employees, service providers, suppliers and trading partners. Training is conducted throughout the Group, including our code of ethics, gift policy, conflict of interest policy, anti-corruption management plan and whistleblowing policy.

In the year under review an ethics risk assessment survey was sent to 2 960 employees, with 1 525 (51%) employees participating, evenly split between males and females – a record for the Group. This was done in an attempt to assess the Group’s risk profile. The participating employees cited the following areas of an ethics management strategy and ethics management plan which they felt most needed to be addressed:

• Continuous leadership commitment to an ethical culture (talking the talk, walking the talk, transparency).
• Incorporating identified ethics risk into the Group’s risk register and subjected to mitigation interventions, such as improving fairness and perceived fairness of certain people practices in the Group: appointment and promotion on merit and rooting out unfair favouritism.

We have committed to holding face-to-face workshops and continued ethics awareness campaigns to address these issues.

The Group’s whistleblowing policy has brought tangible results, and the Group provides employees with various avenues, such as an anti-corruption hotline, walk-in reporting, direct calls through the ethics office or internal audit and direct reporting to management, to report unethical or irregular conduct. The anti-corruption hotline is independently administered by an external company, which submits reports daily for investigation.

When a report is received, a preliminary investigation is conducted to establish whether there is a prima facie case. Thereafter, further investigation is conducted with the appropriate recommendations, should a more detailed investigation be warranted. Alternatively, appropriate action is taken where necessary, including referrals to external law enforcement agencies. We have acted on suggestions from employees to communicate better about action taken and cases closed, to boost the visibility of ethical conduct and remedial action within the Group.

Anti-corruption hotline: reported cases

	FY2018/19	FY2017/18	FY2016/17
Total number of cases	1722	627	622
Prima facie cases	619	185	132
Prima facie cases closed	120	118	146

We have appointed ethics champions at all our airports. We report to employees, on anti-corruption measures and investigative processes in our newsletter to foster a culture of honesty, where employees are encouraged to report unethical behaviour confidentially.

The Group has begun reporting to stakeholders and employees on a quarterly basis, to improve our stake-holder relations function and further build trust. Responses through our reputation survey have shown that this has been effective in bringing the desired results. The IIRC’s International Integrated Reporting Framework, IFRS and ISO/SANS 31000 have been adopted as guidelines for producing the integrated annual report. The IAR is approved by the Board prior to submission to stakeholders.

As illustrated, we focused strongly on ethics during the year and intend to continue strengthening our ethical conduct. A measure of our success will be a reduction in the number of litigations brought against the Group.

Hotline number 0800 00 80 80;
acsa@thehotline.co.za; or www.thehotline.co.za

Responsible corporate citizenship

Airports Company South Africa is committed to its role in supporting economic growth and development, and making a meaningful contribution to transformation in South Africa. Our Social and Ethics Committee is mandated to oversee the fulfilment of this role. The committee reports quarterly to ensure regular oversight of outcomes related to:

• Environmental health and public safety
• Transformation
• SED projects and expenditure
• HR and the work environment

We strongly support and align with the United Nations Principles for Responsible Investment. Airports Company South Africa’s majority shareholder, the South African government, is a signatory to the UNPRI and, as such, the Group strives to place environmental, social and development goals at the heart of strategic decisions. We are proud to be a net contributor of value in South Africa.

In the remuneration report on page 118 we have included information on the focus of our remuneration policies and practices on fair remuneration and additional assistance to employees. This includes a bursary scheme for employees’ children (20 awarded in FY2018/19) and our contribution to reducing the significant remuneration gaps that exist in South Africa.

In addition to our focus on fair reward for our employees, we are committed to improving the workplace safety of our employees and contractors, who are an important extension of our human resources.

Value creation and reporting

Airports Company South Africa continuously strives to improve reporting standards through disclosure and alignment to relevant reporting frameworks and best practice. We seek to provide investors and other stakeholders with all relevant and material information. Page 4 sets out information regarding our reporting suite and how we ensure the integrity of each report through our assurance approach.

Our integrated reporting process has matured over the past five years to include quarterly integrated reports presented to the Board by our CEO. The rationale is to entrench and embed managing, measuring and reporting on the Group’s business, people and society and environmental impacts and outcomes, in line with the Sustainability Framework within our strategy.

Governance Structure