Corporate governance and risk management

PRINCIPLES AND IMPLEMENTATION OF CORPORATE GOVERNANCE

The directors of TMG are committed to effective corporate governance and the need for high ethical standards in conducting the Group’s business.  TMG has substantially applied the principles set out in the King Report on Governance for South Africa 2009 (King III) since its listing on the JSE in September 2012.  For the year under review, the exceptions were that the chairman of the board was also the chairman of the audit and risk committee, and that the nominations committee did not have a majority of independent members.  The nominations committee is addressing these issues.  TMG’s King III application register is available on the TMG website.  The directors acknowledge that they are responsible for TMG’s affairs.  This responsibility includes a strong focus on compliance with the qualitative aspects of corporate governance to ensure implementation matches the needs of the business.

BOARD OF DIRECTORS

TMG has a unitary board.  At year end, there were four independent non-executive directors, two non-executive directors and two executive directors.  There are five black directors.  Non-executive directors provide judgement on issues of strategy, performance, resources and standards of conduct based on their range of skills and commercial expertise.  Executive directors propose strategies and implement operational decisions, and execute specific roles and functions in their areas of expertise.  Appointments to the board are made in a formal and transparent manner, with the assistance of the nominations committee.  Changes in the directorate are detailed on pages ·· and ·· of this integrated annual report.

There is a clear division of responsibilities at board level, captured in a policy that provides evidence of the balance of power between the independent non-executive chairman, chief executive officer and non-executive directors.  The roles of chairman and chief executive officer are separate.  The chairman provides overall leadership to the board without limiting the principles of collective responsibility for board decisions.  The chairman has no executive functions.  The chief executive officer is responsible for developing and recommending to the board a strategy and vision for the Group, as well as an annual business plan and budget to support the strategy.  The board rigorously interrogates the strategy and provides input.  The chief executive officer exercises final executive authority to run the Company efficiently on a day-to-day basis, and is the leading interface between the board and executive management.

The board believes its members have the expertise and experience to fulfil their obligations to the Company and all its stakeholders.

No board member has served as a director for more than nine years.

The board has a defined charter in line with King III which sets out its roles and responsibilities, namely, to:

·         Provide effective leadership based on an ethical foundation

·         Ensure that the Company is, and is seen to be, a responsible corporate citizen, not only in the financial aspects of its business, but also the impact operations have on the environment and the society in which it operates

·         Exercise leadership and ensure that all deliberations, decisions and actions are based on the four values underpinning good governance - responsibility, accountability, fairness and transparency

·         Build and sustain an ethical corporate culture and ensure the Company’s ethics are managed effectively

·         Be the custodian of the Group’s corporate governance and be responsible for ensuring it complies with all relevant laws and codes of best governance practices and considers adherence to other non-binding rules, codes and standards

·         Facilitate the establishment of mechanisms and processes that support stakeholders in constructive engagement with the Company

·         Be accountable for the performance and affairs of the Company, appreciating that strategy, risk, performance and sustainability are inseparable.  The board provides strategic direction by proposing, discussing and questioning, while evaluating and approving plans and strategies based on TMG’s values and objectives and stakeholder interests and expectations

·         Empower management to provide timely, accurate and relevant feedback on progress with approved operational and investment plans and strategies

·         Be responsible for risk management and monitoring with assistance from the audit and risk committee

·         Prepare and approve the Company’s annual integrated report, ensuring it conveys adequate information on the Company’s financial and sustainability performance, focusing on substance over form

·         Advocate and promote good governance by the Company’s subsidiaries.

The board delegates certain functions to well-structured committees without abdicating its own responsibilities.  Delegation is formal and involves:

·           Establishing and approving formal terms of reference for each permanent committee of the board

·           Appropriately constituting these committees with due regard to the skills required by each

·           An annual review of the permanent committees’ terms of reference.

Annual strategic review meetings enable comprehensive objectives to be developed for the Group, its business units, executives and senior management. Once the board has approved the strategy, it oversees and monitors the progress of the business at quarterly board meetings, with additional meetings held as required.

The board has an approvals framework which is regularly reviewed and updated.  It clearly sets out authority levels for the board, its committees and executive management.  Matters specifically reserved for the board’s decision include the adoption of TMG’s strategic direction and the approval of financial reports for public disclosure, the budget and significant capital expenditure.

As part of the governance structure, the board also approved a directors’ code of conduct, directors’ expenses policy and a policy for dealing with price-sensitive information.

All board members are required to disclose their shareholdings in TMG, outside directorships, personal financial interests and any potential conflicts of interest.

Board and committee members are supplied with comprehensive information to discharge their duties effectively.

The board approved a risk management framework that includes a risk management policy and plan.  The risk management framework facilitates a proactive risk management process, and the inculcation of TMG’s risk management culture throughout the Group to optimise related efforts. The board approved the appointment of a group risk officer in terms of the risk management framework. The board also approved a compliance framework.  A group compliance officer and operational compliance officers have been appointed in terms of this framework.  The board is not aware of anything that would suggest a material breakdown in internal controls during the financial year.

The board agreed that the term ‘prescribed officer’, introduced by the new Companies Act, applied to TMG’s executive committee members who are not also executive directors of the Company.  The company secretary informed the relevant people accordingly.

A collective board-effectiveness evaluation was performed at the end of the financial year.

Attendance at board meetings

Name	8 Nov 2012	12 Mar 2013	11 Jun 2013
K D Dlamini (Chairman)	P	P	P
A D Bonamour	P	P	P
J H W Hawinkels	P	P	P
W Marshall-Smith	P	P	P
H K Mehta	P	P	P
R Naidoo	P	P	P
M S M Xayiya	P	P	P
M R Basel1	P

P – Present

MR Basel was appointed a director on 8 November 2012 and resigned on 1 March 2013.

BOARD COMMITTEES

During the year, the following permanent committees assisted the board in discharging its responsibilities and obligations: audit and risk committee, remuneration committee, nominations committee and the transformation, social and ethics committee.  Membership of the audit and risk committee is reflected in its report on page ··.  Membership of the remuneration committee is reflected in its report on page ··.  Membership of the transformation, social and ethics committee is reflected in its report on page ··.

All committees report to the board on their activities.  The board is cognisant that this does not detract from its ultimate responsibility and accountability for the affairs of the Company.

The board is satisfied that all committees discharged their responsibilities satisfactorily in accordance with their terms of reference.  Copies of these terms of reference are available from the company secretary on request.

Audit and risk committee

Full details of this committee are set out in its report on pages ·· to ··.

Remuneration committee

Full details of this committee are set out in its report on pages ·· to ··.

Nominations committee

The members of the nominations committee, specifically regarding gender diversification, considered various candidates for appointment to the board, and recommended the appointment of Manana Nhlanhla.  Messrs KD Dlamini (chairman) and HK Mehta were the committee members during the year.

Transformation, social and ethics committee

The transformation, social and ethics committee met on 10 June 2013.  It reviewed the Company’s transformation and initiatives in place and to be implemented for the social and ethics matters detailed in regulation 43 accompanying the Companies Act.  As at the Company’s year-end, the committee members were Mr MSM Xayiya (chairman), Ms MM Nhlanhla and Mr AD Bonamour.

Executive committee and business unit management committees

The executive committee, comprising TMG’s senior management, meets quarterly.  Other members of TMG’s management attend by invitation, as required.

Business unit management committee meetings are held quarterly, ensuring appropriate oversight of the business units.  Significant matters raised at these meetings are referred to the executive committee.

COMPANY SECRETARY

The company secretary ensures the board remains cognisant of its duties and that all directors have full and timely information that may be relevant in the proper discharge of their duties, collectively and individually, with detailed guidance on their duties, responsibilities and powers.  Directors have unrestricted access to the advice and services of the company secretary, who plays an active role in the corporate governance process.

The company secretary assists in determining the annual board plan and agenda, and in formulating governance and board-related matters.  She is closely involved in the induction and orientation of new directors, and acts as secretary for committees of the board.

The company secretary, Joanne Matisonn (FCIS HDip Co Law (Wits)), was appointed secretary to TMG on 3 September 2012.  She was previously group secretary at Avusa from 1 February 1998.

In line with the JSE Listings Requirements, the board has assessed the competence, qualifications and experience of the group secretary and concluded that she has the expertise to carry out her duties.  This conclusion was arrived at after reviewing her competence, qualification and experience.  The board is satisfied that an arms-length relationship exists between it and the company secretary as she is not a member of the board, is not involved in day-to-day operations of the Group and is not a prescribed officer.