Governance Code
Corporate Governance
Compliance with the King Report
Sanyati is committed to the promotion of good corporate governance and to comply with the Code of Corporate Practices and Conduct as set out in the King III Report on Corporate Governance in South Africa – 2009 (King III) The Group has applied the principles of King III with effect from 1 March 2010. Every effort has been made to institute ‘best practice’ wherever possible. A summary of current compliance is provided below.
Sanyati’s Board of Directors set the Group’s overall policy and provides guidance and input in areas relating to strategic direction, planning, acquisitions, performance measurement, resource allocation, key appointments, standards of conduct and communication with shareholders.
The group’s corporate philosophy is consistent with the principles of King III in that, inter alia:
- the roles of the Chairperson and chief executive officer are separate;
- an independent non-executive director has been elected as Chairperson;
- service contracts of executive directors do not exceed four years in duration; and
- non-executive directors who act independently chair the HR and Remuneration, Risk Management and Audit Committees.
Non-executive directors who act independently chair the Human Resources and Remuneration, Risk Management and Audit Committees.
The Board will, at the very least, ensure compliance with the following:
1. Code of Conduct
Having acknowledged the importance of sound corporate governance and the guidelines set out in the Principles of corporate Governance and Code of Best Practice (Combined Code), the directors intend to embrace the Combined Code in so far as is appropriate having regard to the size and nature of the various companies making up the Group. The Board will take such measures as far as is practicable in compliance with teh combined Code.
2. The Board of Directors
The Company has a unitary Board of Directors.; The company had two executive directors and between four and six non-executive directors during the period under review.
The non-executive directors are fully independent of management, free to make their own decisions and independent judgements. They enjoy no benefits from the company for their services as directors other than their fees and the potential gains and dividends on any interests in ordinary shares. The non-executive directors do not receive share options. They are high-calibre professional and are sufficient in a number for their independent views to carry significant weight in the Board’s deliberation and decisions.
The Board of Directors is responsible for the proper management and ultimate control of the Group. In order to meet this responsibility to the shareholders and other stakeholders, the Board is responsible for setting the strategic objectives of the Group, determining investment and performance criteria, and taking ultimate responsibility for the proper management and ethical behaviour of the business of the group.
There exists a clear division of responsibilities at Board level that ensures a balance of power and authority such that no one individual has unfettered powers of decision-making. The Board is also responsible for monitoring the activities of the executive management. A formal Board charter hs been adopted and details the Board’s responsibilities as outlined above.
The Board meets at least quarterly on a formal basis. Additional meetings are arranged where necessary to review strategy, planning, operations, financial performance, risk and capital expenditure, human resources and environmental management. Four meetings were held in the period under review and the directors’ attendance record is set out.
The Board appoints a Nomination sub-committee on an ad hoc basis as and when new director appointments are required.
3. Board Committees
3.1 Audit Committee
The Audit Committee meets to review the draft audited financial statements and integrated report, the preliminary profit announcement and the interim statements, and receive reports on audits carried out by the external and internal auditors. The Audit Committee assists the Board by performing an objective and independent review of the organisation’s financial, accouting and internal control mechanisms.
3.2 HR and Remuneration Committee
The HR and Remuneration Committee during the year under review consisted of the following directors:
- RM Crowie (Non-executive Chairperson)
- ZB Ebrahim
- HM Dlamini (Resigned 25 May 2010)
- N Khambule (Resigned 27 March 2010) with the CEO, the CFO and the company secretaries in attendance at meetings
The HR and Remuneration Committee, which endeavours to meet at least twice annually, has adopted formal terms of reference, as recommended by King III, which details the following responsibilities:
- The establishment of the Group’s remuneration philosophy
- To review the terms and conditions of employment of the executive directors and other executives and their incentive schemes.
Remuneration is one of the largest cost components of the group and optimising the remuneration expense remains a core focus area. The directors’ remuneration for the period under review amounted to R5 891 000 (2010: R11 487 000) and comprises the following:
- Executive directors’ remuneration of R4 953 000 (2010: R10 817 000); and
- Non-Executive directors’ remuneration of R938 000(2010: R670 000).
3.3 Risk Management Committee
Risk Management Committee
The directors are responsible for risk management and ensuring that appropriate risk management processes are in place. This encompasses identifying, assessing, managing and monitoring all types of possible risk facing the group.
The Risk Management Committee during the year under review consisted of the following directors
- MR Gahagan (Independent Chairman)
- RM Crowie
- ZB Ebrahim
- MH Lobban
- JJ Deeb
- Lj Fosu
- N Khambule (Resigned 27 March 2010)with the company secretaries in attendance at meetings
The Risk Management Committee, in consultation with the board, ensures that an effective and ongoing risk management process is in place, measuring the potential impact of a risk against a broad set of assumptions and introducing risk mitigation procedures to reduce the exposure to an acceptable level. Formal terms of reference outlining these responsibilities have been adopted by the committee and approved by the board.
The group’s risk management strategy includes the following key elements:
- An appreciation of the importance of risk management;
- Setting mission and risk management objectives;
- Assessing existing solutions for vulnerabilities;
- Establishing risk management infrastructure and assigning leadership;
- Compiling a list of risks and assigning areas of responsibilities to various persons;
- Selecting assessment techniques and defining risk appetite and tolerances;
- Developing internal communication and reporting structures;
- Monitoring the implementation and execution of risk management; and
- Integrating risk management into existing operational systems.
The following key areas of risk have been identified:
- Construction projects
- tender phase
- project implementation phase
- Legal and regulatory compliance;
- Safety, health and environment;
- Human resources;
- Economic projects;
- Finance and administration;
- Communication and information technology;
- Procurement; and
- Asset management
- Cross-border construction projects and investments
The Risk Management Committee meets at least three times a year and the Board is satisfied that adequate measures and processes are currently in place to mitigate identified risks.
Company Secretaries
The Company Secretaries are Highway Corporate Services (Pty) Limited. The board is of the opinion that the secretaries are suitably qualified and experienced to carry out their duties as stipulated under section 268G of the Companies Act. The Company Secretaries provide guidance to the directors on their duties and ensure awareness of all relevant statutory requirements and legislation. All directors have access to the advice and services of the Company Secretaries. Independent professional advice will be arranged for the directors by the Company Secretaries, at the company’s expense, where requested by the directors.
Code of Ethics
The Group sets the highest level of ethical standards for all its directors and employees, all of whom are bound by the Group’s Code of Ethics. This ensures hat Sanyati remains committed to conducting business in a manner that is above reproach in all reasonable circumstances. In addition, the Group strives to provide a work environment that is non-discriminatory with sound safety, health and environmental practices.
Going Concern
The directors report that, after making enquiries, they have a reasonable expectation that the Group has adequate resources and workload to continue in operational existence for the foreseeable future. For this reason, the Group continues to adopt the ‘going concern’ basis in preparing the annual financial statements
Attendance at Meetings
Directors’ attendance at board and committee meetings during the period under review
| Director | Board | Audit | HR and Remuneration |
Risk Management |
| Zohra Begum Ebrahim | 4/4 | 1/1 | 2/3 | |
| Malcolm Hugh Lobban | 4/4 | 3/3 | ||
| Rowan Mark Crowie | 4/4 | 1/1 | 2/3 | |
| John Joseph Deeb | 4/4 | 3/3 | ||
| Hans Michael Dlamini | 4/4 | 2/2 | 1/1 | |
| Lesibana Japhtalina Fosu | 4/4 | 4/4 | 3/3 | |
| Michael Roderick Gahagan | 4/4 | 4/4 | 3/3 |