STATEMENT OF COMMITMENT
The Board endeavours for the Group 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 to focus on 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.
In general, the Group is already compliant with King IV and is far advanced on implementing the "apply and explain" principle espoused in King IV. It will be adopted in the new financial year ending 30 June 2018.
BOARD OF DIRECTORS
At the date of this report, Murray & Roberts had a unitary Board with 12 directors, of whom 10 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 acknowledges the importance of diversity and a formal policy was adopted to guide and assist the Board in attaining gender and race diversity at board level. The Board adopted the following targets (based on 10 Board members).
The Board is the Group’s highest governing body 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 societies 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.
The Board’s key responsibilities in terms of the Board Charter include:
- 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 prosperity 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.
In July 2017, the Board Charter was updated to reflect the recommendations contained in King IV, in particular on the inclusion of a lead independent director on the board.
The Board formally meets five times a year. In addition, directors meet ahead of the scheduled meeting where 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, by the Group chief executive, of major developments affecting the Group.
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 Medupi Power Station project in Lephalale, Limpopo, South Africa.
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 AGM 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.
The Board, assisted by the nomination committee, assessed the independence of the non-executive directors.
Dave Barber reached nine years’ service on the Board at the end of June 2017, but as he will retire at the conclusion of the AGM on 2 November 2017 and will not be available for re-election, the nomination committee did not assess his independence.
CHANGES TO THE BOARD
Daniël Grobler was appointed as Group financial director in April 2017. Ralph Havenstein was appointed as lead independent director, and three new directors: Diane Radley, Emma Mashilwane and Alex Maditsi, were appointed to the Board in August 2017. Emma and Diane have been appointed to both the audit & sustainability and risk management committees, with Diane assuming chairmanship of the audit and sustainability committee after the AGM. Alex has been appointed to the health, safety and environment, remuneration and social & ethics committee. Ntombi will be appointed to the nomination committee after the AGM.
Mahlape Sello and Dave Barber will retire from the Board at the conclusion of the 2017 AGM and at the same time, step down from all committees. Suresh Kana will take over as chairman of the Group.
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, implementing 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 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 Group 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 the Bombela Concession Company.
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:
Shareholders elect the members of the audit & sustainability committee at each AGM. The audit & sustainability committee 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 regularly reviewed 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 AGM and is available to respond to shareholder questions on committee activities.
BOARD AND COMMITTEE EFFECTIVENESS
An external review of the effectiveness of the Board and individual directors was 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 overall feedback of the Board appraisal was positive with respect to the work of the Board and the Board is well functioning and professional. Matters raised for consideration by the Board include:
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 report on page 64.
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 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, from the end of June until the release of the Group’s annual results in August of each year, or when trading under a cautionary announcement.
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 on SENS of the JSE Limited.
In terms of the JSE Listings Requirements, Deutsche Securities (SA) Proprietary Limited acted as sponsor.