The Board is of the view that the company has complied in material respects with the provisions and spirit of King III, unless otherwise stated in this report or in the detailed King III disclosures contained in this integrated report, and has complied with the provisions of the Listings Requirements applicable to AltX listed companies.
The Board is a unitary structure, and currently consists of eight directors, five of whom are non-executive, of which 3 are independent
The general powers of the Board and the directors are conferred in the company's Memorandum of Incorporation. The roles and functions of the chairperson and the Chief Executive Officer ("CEO") are formalised in the company's board charter which is reviewed annually. In order to ensure that conflicts of interest are avoided, Board members are required, at least annually, to provide a general disclosure of their personal financial interests, in terms of section 75 of the Companies Act. Furthermore, at each board meeting, Board members are reminded of their obligation to declare any material personal financial interests they may have in contracts entered into or authorised by the company or in any matters to be disclosed at the meeting. There is a clear division of responsibilities at board level ensuring a balance of power, with functions of chairperson and CEO being separate and independent. No one director is able to exercise unfettered decision making powers. All of the company's directors may seek independent, professional advice on matters pertaining to the company, at the company's expense, and have unrestricted access to management and Company information, documentation and property.
The board is chaired by Ms A Kawa, an independent non-executive director, who is considered to be free of conflicts of interest.
Ms Kawa provides overall leadership and guidance to the Board and sets the ethical tone for the Board. Due to the limited size of the Board, Ms Kawa also serves as a member of the company's Audit Committee.
The position of CEO is occupied by Alan Willcocks, who is a co- founder of the company. Alan is responsible for the day to day affairs of the company and for the achievement of the company's strategic goals and objectives. Alan meets regularly with his executive team in ensuring that the strategic decisions by the Board are communicated and implemented.
The remaining directors are Andre Broodryk (financial director), Bronwyn Willcocks (non-executive), Funani Mojono (independent non-executive), Landiwe Mahlangu (independent non-executive), Gavin Tipper (non-executive) and Leon Grobbelaar (landfills director).
The independence of non-executive directors is assessed informally by the Board, on a regular basis, with reference to non-executive directors' declarations of interest and King III. An evaluation of the performance of the directors and the Board as a whole, takes place annually on an informal basis.
The company secretary, Allen de Villiers, assists the Board in discharging its responsibilities and is a source of guidance on matters of good governance and ethics.
The board meets quarterly and ad hoc meetings are convened when necessary. Representatives of the company's designated advisors, Grindrod Bank, attend all Board and Audit Committee meetings.
Rotation of Directors:
In terms of the company's Memorandum of Incorporation Ms Kawa and Mr Tipper retire by rotation at the forthcoming annual general meeting, but being eligible offer themselves for re-election.
The Board has appointed an Audit & Risk Committee, a Remuneration Committee and a Social & Ethics Committee. These committees are subject to formal terms of reference which have been approved by the Board and which have been reviewed to reflect, where appropriate, the company's application of the principles contained in King III and the statutory requirements of the Companies Act.
The terms of reference set out, inter alia, the committees' purposes, membership requirements, duties and reporting procedures.
Audit & risk Committee:
The Audit Committee is chaired by Gavin Tipper, a non-executive director, with Funani Mojono and Andisiwe Kawa as the other members of the committee. The Board is aware that, in terms of King III, the committee chair should be independent, however Mr. Tipper holds 3.1% of the issued shares in the company, and therefore the composition of the committee is under review. At the annual general meeting on 27 June 2013 shareholders will be asked to elect the members of the Audit Committee. Messrs Tipper, Mahlangu, Mojono and Ms Kawa will be available for re- election, with Mr Mojono proposed as the incoming chairman of the committee.
The Committee discharges its functions in accordance with legislative requirements and the delegated authority of the Board, as set out in its terms of reference.
The Audit Committee is responsible for ensuring there are appropriate key financial controls, in the context of the financial risks the company faces, and in particular assists the Board in the following matters:
- Monitoring the financial reporting process;
- Recommending the appointment of an independent registered auditor, determining the terms of engagement and approving fees for audit and non-audit work;
- Monitoring the operation and effectiveness of internal control systems, including information technology controls;
- Overseeing the implementation and effective operation of a structured risk management process;
- Implementing sound corporate governance policies;
- Reviewing and recommending to the Board for approval the interim and annual financial statements and the going concern
- Status of the company;
- Considering and satisfying itself, on an annual basis, of the expertise and experience of the financial director.
KPMG incorporated was re-appointed as the company's external auditors by shareholders at the company's annual general meeting. With reference to the non-audit services provided by the external auditor, and at the recommendation of the Audit Committee, the Board has resolved that the auditors shall not:
- Function in the role of management;
- Audit their own work; or
- Service in an advocacy role for the company.
In accordance with the requirements of the Companies Act, all non-audit specific service engagements with the external auditors were pre-approved by the Audit Committee.
The Audit Committee discharged the functions ascribed to it in terms of the Companies Act and the Listings Requirements, as reported in the Directors' Report. It also complied in all material respects with its mandate and responsibilities prescribed in its terms of reference.
The company's designated advisors and external auditors attend Audit Committee meetings by invitation and have unrestricted access to the chairman of the committee.
The Committee may call upon any executive directors, company officers, the company secretary or other assurance providers to provide it with information. The Committee has reasonable access to the company records and the resources that may be necessary for the fulfilment of its functions. It also has the right to obtain independent professional advice at the Company's expense, should such be required for it to fulfil its responsibilities.
The company currently does not have a separate internal audit function, although external assurance providers are contracted to the company to provide specific internal audit services, as and when deemed necessary by the Committee or the Board. The need for an internal audit function is regularly considered in the context of the size of the Group.
The company's Remuneration Committee is chaired by Mr F Mojono, an independent non-executive director, with Mr G Tipper as the Committee's second member. The Committee assists the Board in the determination of the Group remuneration philosophy and the remuneration policies applicable to all levels in the company.
The Committee ensures that the Group's executives and managers are remunerated in a manner that is competitive and appropriate to their individual contributions, it ensures that there is an effective remuneration and reward framework so that all employees are fairly paid and retention levels are at targeted levels, it considers succession planning and it reviews and makes recommendations regarding the composition of the Board and its sub committees.
Social and Ethics Committee:
The company's Social and Ethics Committee is chaired by Mr F Mojono and consists of Ms R Pillay, Mr A Cronje and Mr B Buys. The Social and Ethics Committee is tasked with discharging the functions as set out in the Company's Act and Regulations, including monitoring the Company's activities relating to social and economic development, good corporate citizenship, ethics, the environment, health and safety, consumer relations and labour and employment.
The Social and Ethics Committee operates in terms of a mandate approved by the Board and reports to shareholders at the company's annual general meeting on matters within its mandate.
The Group's remuneration philosophy is to pay packages benchmarked against comparable positions in the market that facilitate the employment and retention of individuals who are innovative, whose levels of integrity are high, who have a solid work ethic, appropriate experience and who subscribe to the Group's culture and values.
The objectives of the Group's remuneration philosophy are to:
- reward individuals for the achievement of the Group's objectives and motivate high levels of performance;
- reward exceptional performance by individuals through a performance management system;
- allow the organisation to compete effectively in the labour market and to recruit and retain high calibre staff; and
- achieve fairness and equity in remuneration and reward.
Board Charter and Policies:
The board functions within a framework provided by, inter alia, its Charter and the following Group policies:
- Trading in Securities;
- Appointments to the Board;
- Conflicts of Interest;
- Remuneration; and
- Non-Audit Services.
The Board Charter and the policies assist Board members in the discharge of their duties and responsibilities and help to ensure that principles of good corporate governance are applied in all their dealings with and on behalf of the company.
Dealings in JSE Securities:
The company and its directors comply with the Listings Requirements in respect of trading in company's shares. The company has a closed period policy, in terms of which all directors and company officers are precluded from dealing in company shares during closed periods, namely from 30 June and 31 December of each year until the release of the Group's interim and final results respectively.
The same arrangements apply for other closed periods declared during price sensitive transactions. A pre-approval policy and process for all dealings in company shares by directors and selected key employees is strictly followed. Details of directors' and the company secretary's dealings in company shares are disclosed through the Stock Exchange News Service ("SENS") in accordance with the Listings Requirements.
The company secretary regularly disseminates written notices to inform the directors, executives and employees of insider trading legislation, and closed periods.
The Board considers good corporate governance as vital to the sustainability of the Group, and believes that the structures currently in place are appropriate based on the Group's size, complexity and current requirements. The Board is cognisant of the challenges faced in balancing the achievement of the company's strategic goals with the implementation of all of the principles contained in King III.
A process of review of the company's practices against the provisions of King III is ongoing and the results thereof form the basis of efforts to further improve corporate governance structures, within the confines of available resources and having regard to what is practical and sensible given the Group's size.