Corporate governance in South Africa is regulated by the King Report on Corporate Governance. First issued in 1994, the King Report was revised and expanded in 2002 (King Report II) to cover boards and directors, accounting and auditing, internal audit and risk management, non-financial matters, compliance and enforcement. The King Report II incorporates best international practice. The JSE endorsed the King Report II by requiring disclosure of compliance and non-compliance (and the reasons therefore) in the JSE Listings Requirements. Implats complies in all respects with the provisions of the King Report.
The board comprises thirteen directors. There are seven independent non-executive directors, two non-executive directors and four executive directors on the board. Dr FJP Roux, an independent non-executive director, is chairman of the board. Mr DH Brown, an executive director, is the Chief Executive Officer. The roles of the chairman and CEO are separate.
Mr TV Mokgatlha and Mr DS Phiri are not considered to be independent given their relationship with the Royal Bafokeng Nation, a substantial shareholder of the company.
During the year, Ms F Jakoet was appointed as an additional independent non-executive director on the board and a member of the Audit Committee in place of Mr JV Roberts, who retired as a non-executive director and as a member of the Audit Committee and Remuneration Committee. The appointment of Ms Jakoet was confirmed by shareholders at the annual general meeting held on 25 October 2007. There were no other appointments.
The board comprises 62% HDSAs and 31% female members.
Details of all board members are presented in this report.
In terms of the company's articles of association board members are appointed for a three-year term of office. Re-election of board members takes place on a staggered basis to ensure continuity. An executive director retires at the annual general meeting following his/her 63rd birthday, and a non-executive director following his/her 67th birthday. A non-executive director’s term of office continues on an annual basis, if a majority of the board so request. The names of the retiring directors and their curriculum vitae are stated under the heading of annual general meeting below.
The role of the board is regulated by a formal board charter which defines matters reserved for board approval. A formal delegation of authority is in place which defines the powers and authority of management. The board charter (PDF - 140KB) is available on the company's website, www.implats.co.za.
In addition to quarterly board meetings, a full-day strategy session, attended by the board and senior executives, is held annually. An annual board meeting is also held to discuss and approve the group's business plan. The board meets on an ad hoc basis to consider specific issues if the need arises. The progress and status of identified strategic issues are reported and monitored at quarterly board meetings.
Non-executive directors meet formally and informally with management on a regular basis.
Board functions are supported by the following committees of the board:
The composition of these committees and their terms of reference are given under their respective headings below.
| Board | Audit Committee | Remunera- tion Committee | SHE Committee | Nomina- tions Committee | Transfor- mation Committee | Annual General Meeting | |
|---|---|---|---|---|---|---|---|
| Number of meetings | 6 | 4 | 4 | 4 | 4 | 4 | 1 |
| FJP Roux | 6/6 | 4/4 | √ | ||||
| S Bessit | 6/6 | 4/4 | √ | ||||
| DH Brown* | 6/6 | 4/4 | 4/4 | √ | |||
| D Earp† | 6/6 | 3/4 | √ | ||||
| F Jakoet | 4/5 | 2/2 | √ | ||||
| JM McMahon | 6/6 | 4/4 | 4/4 | √ | |||
| MV Mennell | 6/6 | 4/4 | 4/4 | √ | |||
| TV Mokgatlha | 6/6 | 1/1 | 4/4 | √ | |||
| K Mokhele | 6/6 | 4/4 | 4/4 | 3/4 | |||
| NDB Orleyn | 6/6 | 4/4 | 4/4 | √ | |||
| LJ Paton | 6/6 | 4/4 | √ | ||||
| DS Phiri | 5/6 | 3/3 | √ | ||||
| JV Roberts | 1/1 | 1/1 | 1/1 | √ | |||
| LC van Vught | 5/6 | 4/4 | |||||
| MF Pleming ø | 4/4 |
* CEO
† CFO
ø External Consultant
Thandi Orleyn (Chairperson)
Michael McMahon
Steve Phiri
The Remuneration Committee comprises two independent non-executive directors and a non-executive director. An independent non-executive director chairs the committee. The chairman of the board, chief executive officer and the human resources executive are invited to attend all Remuneration Committee meetings except when their own remuneration is under consideration.
Mr DS Phiri was appointed as a member of the Remuneration Committee in October 2007 after Mr JV Roberts retired from the board.
The company's Remuneration Policy is determined by the Remuneration Committee and strives for competitive and fair reward in recognising and rewarding individual and team achievement that contribute to the attraction, retention and motivation of employees, organisational growth and prosperity.
The main functions of the Remuneration Committee are to:
Khotso Mokhele (Chairman)
Fred Roux
Vivienne Mennell
The Nomination Committee comprises three independent non-executive directors. It assists the board in ensuring that the structure, size, effectiveness and composition of the board and its committees:
The Nomination Committee is responsible for ensuring that the board, its directors and its committees are assessed regularly; proposing adjustments to the board and its committees, appropriate planning for the succession of directors; recommending appointments and reelections of directors; establishing a formal induction process and ensuring that a training and development programme is in place for board members.
A self-assessment of the board committees as well as a peer evaluation of the chairman of the board and the chairmen of the board committees were undertaken during the year. Corrective action will be taken by the relevant committee to address issues identified. In addition, the directors retiring and available for re-election were evaluated by their fellow board members who endorsed their reappointment unanimously.
An assessment of the board was undertaken during the previous financial year and will be reassessed during the ensuing year.
Lex van Vught (Chairman)
Vivienne Mennell
Fatima Jakoet
During the year Mr JV Roberts retired as a member of this committee and was temporarily replaced by a non-executive director, Mr TV Mogatlha. Ms F Jakoet, as an independent non-executive board member, was appointed as the permanent replacement on the committee.
The Audit Committee comprises three independent non-executive directors. Its role is to provide assurance that relevant board duties are discharged by:
The committee, in carrying out its tasks, has a wide range of powers to consult, both internally and externally. The overriding principle is that the committee shall be provided with sufficient resources to undertake its duties.
The use of the external auditors for non-audit services is disclosed in the annual financial statements.
Its terms of reference allow investigation into any activity of the company and permit the seeking of information or advice from any employee in the course of its duties. The chairman of the Audit Committee meets at least once a year on an individual basis with the external and internal auditors, the chief executive officer and the chief financial officer without any other non-executive member of the board in attendance.
The Audit Committee oversees the Risk Management Committee.
Michael McMahon (Chairman)
Fred Roux
Khotso Mokhele
David Brown (Chief executive officer)
Mike Pleming (External consultant)
A board-appointed Safety, Health and Environmental (SHE) Audit Committee has been in place since 1988. Its role in terms of its mandate is to monitor and review health, safety and environmental performance and standards. The SHE Audit Committee supplements and gives support, advice and guidance on the effectiveness or otherwise, of management's efforts in the areas of safety, health and the environment. The SHE Audit Committee comprises three independent non-executive directors and the chief executive officer. The committee also contains an external consultant.
The chairman is an independent non-executive director.
The committee meets at least once a quarter. Meetings are held alternately at operations, coinciding with visits to sites of SHE importance/relevance or at Implats' head office. At all meetings, Implats' overall performance in all areas of safety, health and the environment is critically appraised. Internal audit regularly reviews reporting systems to ensure that injuries sustained by employees/contractors are reported timeously and effectively.
Thabo Mokgatlha (Chairman)
Shadwick Bessit
David Brown
Dawn Earp
Khotso Mokhele
Les Paton
Thandi Orleyn
This committee comprises two independent non-executive directors, a non-executive director and the four executive directors.
The Transformation Committee is responsible for monitoring progress in achieving a transformed workforce. In particular it is responsible for:
The challenge of achieving the company's strategic imperative of becoming a transformed workplace hinges on it meeting and exceeding its targets and the numerical goals set as per the Employment Equity Act, the Minerals and Petroleum Resources Development Act (MPRDA) and the related Mining Charter. These targets have been affected by an amendment to the Employment Equity Act regarding the definition of designated groups.
The Transformation Committee of the board as well as the transformation steering committees at all South African operations monitor targets and numerical goals. The tables below reflect the targets and the progress made as at 30 June 2008.
| HDSAs in management | Total employees/ members | Total HDSA* | % HDSA | Target (%) 2009 |
|---|---|---|---|---|
| Board | 13 | 8 | 62 | 40 |
| Senior management | 97 | 26 | 27 | 40 |
| Middle management | 590 | 279 | 47 | 40 |
| Total # | 700 | 313 | 45 | 40 |
| Women | Total employees/ members | Total Women | % women | Target (%) 2009 |
|---|---|---|---|---|
| Board | 13 | 4 | 31 | 10 |
| Senior management | 97 | 9 | 9 | 10 |
| Middle management | 590 | 115 | 20 | 10 |
| Sub-total | 700 | 128 | 18 | 10 |
| Skilled | 3 929 | 336 | 9 | 10 |
| Non-skilled | 27 406 | 2 032 | 7 | 10 |
| Total # | 32 035 | 2 496 | 8 | 10 |
| # | Total employees/members in service as at June 2008. The table includes nine non-executive board members. The targets as required by the Mining Charter are 40% HDSAs in management and 10% women in mining by 2009. |
| * | The term historically disadvantaged South African (HDSA) refers to those employees as defined in terms of the MPRDA and the Mining Charter. This category is also referred to as 'designated employees' in terms of the Employment Equity Act as having been historically disadvantaged and includes white women. |
All committees report regularly to the board at quarterly board meetings. Reports from the chairman of the committees, together with the minutes of the relevant committees, are tabled at board meetings.
Board members have access to a company secretary to provide guidance on their responsibilities and the discharge thereof. In addition, board members are able to request outside independent advice when required.
The risk management philosophy of the group is explained in a separate section of the report.
The board has ultimate responsibility for establishing a framework for internal controls, including appropriate risk management and good corporate governance frameworks and systems. Implats has established key controls that focus on critical risk areas identified by line management, facilitated by risk management, assessed and evaluated by the auditors. The controls are designed to provide a cost-effective assurance that Implats assets are safeguarded and that liabilities and working capital are efficiently managed. Established organisational policies, procedures, standards, guidelines, structures and delegation frameworks clearly define and provide appropriate levels of direction, accountability and segregation of responsibility, which facilitate self-checking and monitoring mechanisms. Internal audit, in partnership with senior management, monitor these controls and risk management processes.
Group internal audit is an independent, objective assurance that delivers substantial benefits to Implats by primarily focusing on systems of internal control, resulting in better risk management and good governance as well as the achievement of set business objectives. In 2005 group internal audit began a three-year rolling plan, incorporating a risk-based approach, that was completed in June 2008. Owing to the consistent and systematic application of this risk-based approach, the desire for an improved internal control environment throughout the Implats group has been achieved.
Internal audit is well supported by the board and well positioned to deliver on its mandate. The group internal auditor reports to the Executive Director, Finance for administrative purposes and to the Audit Committee chairman for functional purposes; as well as holding quarterly meetings with the chairman of the board to discuss internal audit issues.
Implats has a bona fide code of business practice to which all employees and suppliers are expected to adhere. The policy outlines conflicts of interest, the prevention of dissemination of company information, the acceptance of donations and gifts, and protection of the intellectual property and patent rights of the company. The policy outlines the disciplinary action (including dismissal or prosecution) which will be taken in the event of any contravention.
A 'whistle-blowing' toll-free helpline is in place to facilitate the confidential reporting of alleged incidents which are reported to the chairman of the board.
The group observes a closed period from the end of the relevant accounting period to the announcement of the interim or year-end results, as the case may be, during which neither directors nor employees may deal, either directly or indirectly, in the shares of the company or its listed subsidiaries.
The company publishes a Corporate Responsibility Report in conjunction with the Annual Report. A summary of the contents of the report is given in a separate section of this report and the full contents of the report can be accessed on the company's website.
Investors, fund managers, analysts, the media and the market are kept fully, timeously and openly informed of all developments. Implats communicates regularly with shareholders and other stakeholders regarding its financial and operational performance. Communication with interested institutional and private investors pays due regard to the statutory and regulatory requirements on the communication of price-sensitive information by the company and its officers.
It is company policy to pay a dividend twice a year, at the end of the interim financial period (when approximately one-third of the dividend is paid) and at the end of the financial year (when the remaining two-thirds are paid). While the payment of dividends is not guaranteed, they have been paid consistently. During the year the dividend cover was further reduced from 1.7 to 1.4 (1.9 in 2006).
The shareholder communication function of the company secretary and the share registrar are supported by an investor relations programme which operates in South Africa, Europe, the United States and Canada. The progamme is aimed at maintaining contact with institutional shareholders, fund managers and analysts in these countries as well as with the media, and at undertaking formal financial disclosure through interim and annual results announcements, the annual report, roadshows, press releases, ad hoc investor meetings, participation in investment conferences and the website. In particular, roadshows and teleconference calls also provide investors with the opportunity to communicate with management and to make recommendations to the board. Management is also open to meetings requested by shareholders and contact details are available on the company website.
The result announcements, both the interim and annual, take the form of live presentations which are webcast simultaneously. International conference calls are also held. All presentations, webcasts and conference call transcripts are available on the website. In addition, copies of all presentations made by executive management to the investment community are posted on the website.
Implats has complied with the requirements of the Promotion of Access to Information Act of 2000. The corporate manuals are available on the website www.implats.co.za and from the company secretary.
Deutsche Bank is the company’s corporate sponsor, in compliance with the JSE Listing Requirements.
The notice of the annual general meeting includes the following items:
The curriculum vitae of all directors to be reappointed at the annual general meeting are set out below:
Vivienne Mennell (65) (Non-executive director) BA, MBA, FCMA, THD. Joined the board as financial director in 1990. Rejoined the board as a non-executive director in 1998. Member of the Audit Committee and the Nominations Committee. Former director of Gencor Limited, Tourvest Limited, TransNatal Coal Limited and Rustenburg Platinum Mines Limited.
David Brown (46) BCom, CTA, CA(SA) Joined the group in 1999 as Financial Director and appointed as Chief Executive Officer in 2006.
Thabo Mokgatlha (33) (Non-executive director) CA(SA) Financial Director of Royal Bafokeng Resources Management Services (Pty) Limited. Previously partner at Mokua & Associates, audit firm. Chairman of the Transformation Committee. Joined the board in 2003 as a representative of the Royal Bafokeng Nation.
Les Paton (56) BSc (Hons) (Geology), B Comm, Pr SciNat, FGSSA. Joined the group as geologist in 1975 and appointed to the board in 2003. Chairman of Marula Platinum (Pty) Limited.
Lex van Vught (65) (Non-executive director) BSc (Hons) (Chemistry) Joined the board in 2004. Chairman of the Audit Committee. Chairman of Tiger Brands Limited, and a director of AECI Limited.
To extend for a further year the authority of the directors to buy-back a maximum of 10% of the company's issued share capital. The company bought back approximately 1.7% of the issued share capital in prior years, utilising surplus cash to acquire shares at lower price levels.
The special resolution requires approval by a 75% majority of members present in person or by proxy at the meeting.
Chairmen of all the board committees are encouraged to attend the annual general meeting to answer any questions from shareholders.
Implats - Annual Report 2008
| Forward-looking statements