STATEMENT OF COMMITMENT
The Board continues to lead the Group in striving to achieve the highest standards of business integrity, ethics and corporate governance, in the pursuit of its strategic and business objectives. The Board also encourages the executive team to conduct the business of the Group with prudence, transparency, integrity and accountability.
The Board has continued on its journey of achieving and exceeding the requirements of King III. The Group complies with all 75 principles of King III.
The full table of King III Governance Principles, showing the level of Group compliance, is available online at www.murrob.com.
BOARD OF DIRECTORS
At the date of this report, Murray & Roberts had a unitary Board with nine directors, of whom seven are independent non-executive directors and two are executive directors. The composition of the Board promotes a balance of authority and prevents any one director from exercising undue influence over decision-making.
The Board is the Group’s highest governing authority and has ultimate responsibility for corporate governance across the Group. It appreciates that strategy, risk, performance and sustainability are interdependent and the Board is responsible for approving the strategic direction of the Group, which addresses and integrates each of these elements. The Board is governed by a charter (“the Board Charter”) that sets out its accountability, responsibility and duty to the Group through the Company.
Each member of the Board has a fiduciary duty to act in the best interests of the Company and, in discharging such duty, ensures that the Company performs in the best interests of its stakeholders.
The Company’s stakeholders include its shareholders, clients, partners, employees, regulators and the communities in which it operates.
Directors are required to act with due care and skill in all dealings and to uphold the ethics and values of the Group. The Board is required to adhere to agreed standards of accepted behaviour and guidance on decision-making, which promotes integration and coordination, and reaffirms the commitment of each Board member to the Group.
The independent non-executive directors complement the executive directors through the diverse range of skills and experience they bring to bear. They also provide the Board with independent perspectives on corporate governance and strategy as a whole.
There is an agreed procedure for directors to seek professional independent advice at the Company’s expense when they feel the need to seek such advice.
- Providing ethical leadership and direction to the Group in all matters;
- Approving and monitoring the implementation of the strategic plan developed by management;
- Responsibility for risk governance and monitoring key risk areas;
- Responsibility for the governance of IT;
- Directing the commercial and economic fortunes of the Group;
- Ensuring the Group is a responsible corporate citizen by considering the impact of its business operations on its employees, society and the environment;
- Monitoring that the Group complies with all relevant laws, rules, codes and standards of business practice through a Compliance Framework;
- Monitoring that the Group’s communications with all relevant stakeholders are open and prompt;
- Ensuring shareholders are treated equitably and equally;
- Ensuring that disputes are resolved effectively and expeditiously; and
- Monitoring performance through the various Board committees established to assist in the discharging of its duties while retaining full accountability and without abdicating its own responsibilities.
The Board formally meets five times a year. In addition, directors meet ahead of the scheduled meeting at which the Group’s budget and business plan is examined in the context of an approved strategy. At this meeting, the directors engage with senior executives on the development and implementation of the Group’s strategy.
Between meetings, directors are kept informed of major developments affecting the Group by the Group chief executive.
The Board’s policy of visiting areas of the Group’s operations on an annual basis has continued. During the year under review, the Board visited the Kusile Power Station project.
SELECTION OF DIRECTORS
The Board has an approved policy on the selection and continuation of office for directors, and the nomination and evaluation processes to be followed. One third of all directors are required to retire annually by rotation and if put forward for re-election, are considered for reappointment at the annual general meeting. All directors are appointed at the annual general meeting by shareholders’ resolution. The Board is permitted to remove a director without shareholder approval for due cause.
The nomination committee makes appropriate recommendations to the Board on the appointment and re-election of directors. This process encompasses an annual evaluation of skills, knowledge and experience, considers South African transformation imperatives and ensures the retention of directors with an extensive understanding of the Group. All recommended director appointments are subject to background and reference checks. Re-election of directors to the Board is made according to a formal and transparent process. Each non-executive director is provided with a formal letter of appointment.
Newly appointed non-executive directors undergo an induction process to familiarise them with the Group. This includes extensive meetings and discussions with Group management.
The Board, assisted by the nomination committee, assessed the independence of the non-executive directors. All non-executive directors meet the criteria for independence, including Royden Vice who has served on the Board since 2005. The Board confirmed that it is satisfied that there are no relationships or circumstances, which affect or appear to affect his judgement and that his independence is not in any way affected by his length of service.
CHANGES TO THE BOARD
During the year under review, Suresh Kana joined the Board
on 1 July 2015 and was appointed to the audit & sustainability,
remuneration & human resources and risk management
committees. Xolani Mkhwanazi joined the Board on 1 August 2015
and was appointed to the risk management and health, safety
& environment committees.
Keith Spence joined the Board on 25 November 2015 and was appointed to the risk management, audit & sustainability and the health, safety & environment committees.
Subsequent to year end, Michael McMahon retired from the Board at 30 September 2016, he also stepped down as chairman of the risk management committee and as a member of the nomination and audit & sustainability committees. In addition, Royden Vice will retire from the Board on 30 November 2016 and at the same time, step down as chairman of the remuneration & human resources committee and as a member of the nomination, risk management and audit & sustainability committees. Following the retirements outlined above, Keith Spence will take over as chairman of the risk management committee and Ralph Havenstein as chairman of the remuneration & human resources committee. Suresh Kana and Ralph Havenstein have been appointed to the nomination committee and Ntombi Langa-Royds to the risk management committee.
CHAIRMAN AND GROUP CHIEF EXECUTIVE
The roles of chairman and Group chief executive are separate. They operate under distinct mandates issued and approved by the Board that clearly differentiate the division of responsibilities within the Group and ensure a balance of power and authority.
The chairman, an independent non-executive director, presides over the Board, providing it with effective leadership and ensuring that all relevant information is placed before it for decision. The Group chief executive is responsible for the ongoing operations of the Group, developing its long-term strategy, and recommending the business plan and budgets to the Board for consideration and approval.
The Board appoints the chairman and the Group chief executive. The Board appraises and appoints the chairman annually and the remuneration & human resources committee appraises the Group chief executive annually. This committee also assesses the remuneration of the Board, the chairman and the Group chief executive. The nomination committee is responsible for Board succession planning.
Bert Kok is the company secretary, and is responsible for ensuring the proper administration of the Board and that sound corporate governance procedures are followed. All directors have access to the advice and services of the company secretary and have full and timely access to information that may be relevant for the proper discharge of their duties.
The Board evaluates the competency and effectiveness of the company secretary, as required in terms of the JSE Listings Requirements. The evaluation process includes an assessment of the company secretary’s eligibility, skills, knowledge and execution of duties. The Board has considered and is satisfied that the company secretary is competent and has the requisite qualifications and experience to effectively execute his duties. Bert has more than 10 years’ experience as a company secretary in a listed company environment. He was previously a director of Chartered Secretaries Southern Africa and its past president in 2010. He is also the secretary of BCC, in which the Group holds a 33,3% shareholding.
The Board confirms that the company secretary maintains an arm’s length relationship with the Board and the directors, noting that the company secretary is not a director of the Company and is not related to any of the directors. The company secretary is independent from management and does not have executive duties and responsibilities, aside from the core responsibilities of a company secretary. He is not a material shareholder of Murray & Roberts and is not party to any major contractual relationship with Murray & Roberts.
The Board has established and mandated a number of permanent standing committees to perform specific work on its behalf in various key areas affecting the business of the Group. They are the:
- Executive committee;
- Audit & sustainability committee;
- Health, safety & environment committee;
- Nomination committee;
- Remuneration & human resources committee;
- Risk management committee; and
- Social & ethics committee.
Shareholders elect the members of the audit & sustainability committee at each annual general meeting. The audit & sustainability committee still forms part of the unitary Board even though it has statutory duties over and above the responsibilities set out in its terms of reference.
Although all the committees assist the Board in the discharge of its duties and responsibilities, the Board does not abdicate its responsibilities. The Board and each committee give attention to new and existing governance and compliance matters according to their respective mandates.
Each committee operates according to Board-approved terms of reference, which are reviewed annually and updated where necessary. With the exception of the executive committee, an independent non-executive director chairs each committee.
The committee chairmen are appointed by the Board.
Each committee chairman participates fully in setting the committee agenda and reporting back to the Board at the following Board meeting. As mandated by the individual committee’s terms of reference, each committee chairman attends the annual general meeting and is available to respond to shareholder questions on committee activities.
BOARD AND COMMITTEE EFFECTIVENESS
Self-assessment questionnaires on the effectiveness of the Board, its committees and individual directors were conducted during the year. An internal appraisal of the chairman was led by the chairman of the remuneration & human resources committee and discussed by the Board. The appraisals were positive and their recommendations are being followed through for implementation.
The directors of Murray & Roberts Limited serve as members of the executive committee of the Board, which is chaired by the Group chief executive. The directors of Murray & Roberts Limited support the Group chief executive in:
- Implementing the strategies and policies of the Group;
- Managing the business and operations of the Group;
- Prioritising the allocation of capital, technical know-how and human resources;
- Establishing best management practices and functional standards;
- Approving and monitoring the appointment of senior management; and
- Fulfilling any activity or power delegated to the executive committee by the Board that conforms to the Company’s memorandum of incorporation.
RISK MANAGEMENT, SYSTEMS OF CONTROL AND INTERNAL AUDIT
Details of the Group’s risk management process, systems of control and internal audit are set out in the Risk management report.
CONFLICTS OF INTEREST AND SHARE DEALINGS
Directors are aware that when a matter is considered by the Board in which they individually have a direct or indirect interest, this interest is to be disclosed prior to the Board meeting. These disclosures are noted by the Board when necessary, and recorded in the minutes of the Board meeting.
In accordance with the JSE Listings Requirements, the Group has a policy requiring directors and officers who may have access to price-sensitive information, to be precluded from dealing in the Group’s shares, as well as during closed periods. Such closed periods commence from the end of December until the release of the Group’s interim results in February of each year and from the end of June until the release of the Group’s annual results in August of each year.
To ensure that dealings are not carried out at a time when other price-sensitive information may be known, directors, officers and participants in the share incentive scheme must at all times obtain permission from the chairman, Group chief executive or Group financial director, as the case may be, before dealing in the shares of the Group. The company secretary is notified of any share dealings and, in conjunction with the sponsor, publishes the details of dealings in the Group’s shares by directors and officers that have been approved on the Stock Exchange News Service of the JSE Limited.
In terms of the JSE Listings Requirements, Deutsche Securities (SA) Proprietary Limited acted as sponsor.
THE GROUP INTEGRATED ASSURANCE FRAMEWORK COORDINATES THE GROUP’S OVERALL APPROACH TO RISK MANAGEMENT
This entails identifying, assessing, addressing, monitoring, communicating and reporting Group risk, and includes the process of independently auditing adherence to and implementation of Group policies, standards, plans, procedures, practices, systems, controls and activities to ensure that the Group achieves the level of operational efficiency and compliance required by the Board.
The Board-approved Group integrated assurance policy established and sets the mandates for the risk management, regulatory compliance and internal audit functions, effectively forming the following three pillars of the Group Integrated Assurance Framework: