In terms of the JSE Listings Requirements, all JSE-listed companies must comply with the King Code of Governance Principles for South Africa (King III Code).
Hulamin views the implementation of good corporate governance practices as integral to its business and recognises the need to conduct its business with openness, integrity and accountability.
Hulamin applies all the principles of the King III Code and the vast majority of the recommended practices of the King III Code. A summary of how each principle is applied is shown here.
Board of directors
As set out in its charter, the board’s objective is to provide responsible business leadership to the group with due regard to the interest of all stakeholders.
Hulamin has a unitary board consisting of three executive directors and normally ten non-executive directors, of whom seven are independent.
G Pretorius resigned from the board with effect from 31 August 2012 and a formal process to fill the vacancy has commenced in terms of procedures agreed to by the Remuneration and Nomination Committee. Appointments to the board of directors follows a formal and transparent process and is a matter for the board of directors as a whole, assisted by the Remuneration and Nomination Committee.
The additional board appointment will further strengthen the business skills and experience base of the board. The board endeavours to ensure that it has the right balance of skills, experience, background, independence and business knowledge necessary to discharge its responsibilities.
Details of the directors are listed here together with a brief résumé of each director. The roles of M E Mkwanazi as an independent non-executive Chairman and R G Jacob as the Chief Executive Officer are separate with a clear division of responsibilities which are set out in the board charter.
The appointment and performance of the Chairman are reviewed annually. The board and the Remuneration and Nomination Committee are responsible for the succession plan for the Chairman.
At board level there is a clear division of responsibilities to ensure a balance of power and authority, such that no one individual has unfettered powers of decision making.
In accordance with the company’s proposed Memorandum of Incorporation, to be adopted by shareholders at its annual general meeting in April 2013, executive directors in addition to non-executive directors will be subject to retirement by rotation at intervals of three years and may be re-elected at the annual general meeting at which they retire. Newly appointed directors hold office until the next annual general meeting at which they retire. The board charter was amended in 2012 to require non-executive directors who have served on the board for more than nine years to retire, except in exceptional circumstances.
The appointment and removal of directors, as well as changes to the composition of the board, are based on the recommendation of the Remuneration and Nomination Committee. Non-executive directors are chosen for their business skills and expertise appropriate to the strategic direction of the company.
There are no term contracts of service between any of the directors and the company or any of its subsidiaries.
Non-executive directors’ remuneration is not linked to the group’s financial performance.
Newly appointed directors are introduced to the group via a formal induction programme. In order to improve the board’s effectiveness, evaluations of the board, individual directors, board committees and the Chairman are carried out annually. External evaluations are done every second year.
|ATTENDANCE OF DIRECTORS AT BOARD AND COMMITTEE MEETINGS DURING THE YEAR ENDED 31 DECEMBER 2012|
|Board||Audit||Risk and SHE||Remuneration and Nomination||Transformation, Social and Ethics||Ad-hoc board sub-committee|
|Number of meetings||5||3||1||4||2||7#|
|L C Cele*||5||3||2||7|
|V N Khumalo||5||4|
|T P Leeuw*||5||3||1(2)||6|
|J B Magwaza||4||4||2|
|N N A Matyumza*||5||1(2)||4||2|
|M E Mkwanazi*||5||1||4||7|
|S P Ngwenya||2|
|P H Staude*||5||1|
|G H M Watson*||5||7|
|C D Hughes||5||3^||1(2)||7^|
|R G Jacob||5||1(2)||4^||2||7^|
|M Z Mkhize||5||1(2)|
|*||Independent non-executive director.|
|^||Attendance by invitation.|
|#||Includes one telephone conference ad-hoc board committee meeting.|
|(1)||Resigned as a director with effect from 31 August 2012.|
|(2)||Appointed as a member with effect from 1 October 2012.|
The board’s key responsibilities are:
- Approve corporate strategy, including business plans and budgets and to bring independent, informed and effective judgment and leadership to bear on the material decisions of the company;
- Monitor management’s implementation of the approved strategies;
- Approve major acquisitions and disposals;
- Oversight of the group’s systems of internal control, governance, including that of information technology, and risk management;
- Guiding the group’s values, including principles of ethical business practice and the requirements of being a responsible corporate citizen;
- Appointment of the Chairman and Chief Executive Officer, nomination of directors and review of directors’ and senior management’s remuneration, appointments and succession plans;
- Approval of the authorities assigned to the board, its committees and management;
- Ensure disputes are resolved as effectively, efficiently and expeditiously as possible; and
- Monitoring the relationship between management and stakeholders of the company.
The quorum for board meetings is a majority of the directors.
The board is supplied with all relevant information and has unrestricted access to the management of the group and all group information, which enables the directors to adequately discharge their responsibilities. All directors and board committees have full access to the Company Secretary and may, in appropriate circumstances, take independent professional advice at the company’s expense.
The Company Secretary provides guidance and advice to the board and the group on governance matters and changes in legislation. All directors have access to the advice and services of the Company Secretary.
The responsibilities of the Company Secretary are described in detail in the board charter.
Directors’ declaration of interests are tabled annually and additional or amended declaration of interests are circulated at every board meeting.
The board has delegated, through formal terms of reference, specific matters to a number of committees whose members and Chairman are appointed by the board. There is full disclosure of matters handled by the committees to the board.
The committees play an important role in enhancing high standards of governance and achieving increased effectiveness within the group.
The board has an Audit Committee, a Risk and Safety, Health and Environment Committee, a Remuneration and Nomination Committee and a Transformation, Social and Ethics Committee.
The group Audit Committee consists solely of independent non-executive directors. Its current members are T P Leeuw (chairman), L C Cele and
N N A Matyumza. The members were re-elected at the annual general meeting held in May 2012, other than N N A Matyumza who became a member on
1 October 2012 following the resignation of G Pretorius. The Chief Financial Officer as well as V N Khumalo and representatives of the internal and external auditors attend committee meetings by invitation. The Company Secretary, W Fitchat is the secretary of this committee.
Following the 2012 annual general meeting, the Audit and Risk Committee was split into two separate board committees and a board Risk and Safety, Health and Environment Committee (SHE) was created to deal with risk, safety, health and environment matters. The Audit and Risk Committee was renamed the Audit Committee.
The responsibilities of the committee and details of the execution of the duties of the committee during the year under review are set out in the Report of the Audit Committee here
Risk and SHE* Committee
The Risk and SHE Committee consists of three independent non-executive directors and three executive directors. Its current members are P H Staude (appointed as chairman with effect from 1 October 2012 following the resignation of G Pretorius who was the previous chairman of the committee), T P Leeuw (appointed as a member with effect from 1 October 2012), M E Mkwanazi, C D Hughes, R G Jacob and M Z Mkhize.
C D Hughes, R G Jacob, and M Z Mkhize were appointed as members with effect from 1 October 2012.
A P Krull (Financial Manager) is an invitee to the Risk and SHE Committee meetings.
W Fitchat (Company Secretary) is the secretary of this committee.
The responsibilities of the committee are set out in written terms of reference. These terms of reference and the company’s risk appetite statement were adopted by the board. The Risk and SHE Committee’s key responsibilities are:
- Overseeing and monitoring the development and implementation of a risk management framework, policy, strategy and plan for a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes within Hulamin;
- Recommend levels of tolerance and appetite for risk to the board;
- Report to the board information relevant to risk management and procure independent assurance regarding the effectiveness of the risk management process; and
- Oversee and monitor the implementation of safety, health and environment policies, strategies, targets, plans and systems and review the safety, health and environment risk profile.
* Safety, Health and Environment.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee consists of non-executive directors of whom three are independent directors. Its current members are N N A Matyumza (chairman) with effect from 10 October 2012 (previous chairman was J B Magwaza), V N Khumalo, T P Leeuw, J B Magwaza and M E Mkwanazi. The board appointed T P Leeuw to the committee with effect from 4 December 2012 to correct the imbalance between non-independent and independent non-executive directors serving on the committee.
The Chairman of the board serves as chairman of the committee for nomination matters.
R G Jacob, T K Mshengu (Human Resources executive), and M A Janneker (Human Resources Manager) are invited to attend meetings of the committee.
W Fitchat (Company Secretary) is the secretary of this committee. The committee normally meets four times a year. The responsibilities of the committee are set out in written terms of reference, which are reviewed periodically.
The Remuneration and Nomination Committee’s key responsibilities are:
- Formulation of employment and reward strategies to attract and retain executives and senior management;
- Recommend to the board the remuneration of directors and senior management; and
- Recommend to the board changes in the composition of the board and the appointment and the removal of directors.
The nomination of board members to be considered at the annual general meeting of shareholders is the responsibility of the board.
Transformation, Social and Ethics Committee
To comply with the Companies Act, the terms of reference of the Transformation Committee were expanded to include those prescribed in terms of the Companies Act for a Social and Ethics Committee and the name of the committee was amended to be the Transformation, Social and Ethics Committee with effect from 1 January 2012.
The Transformation, Social and Ethics Committee in 2012 consisted of four non-executive directors of whom the Chairman is an independent non-executive director. Its members are: L C Cele (chairman), J B Magwaza, N N A Matyumza, S P Ngwenya, R G Jacob and H T Molale (Corporate Affairs Executive).
T K Mshengu (Human Resources Executive) and F B Bradford (executive for marketing and commercial activities) attend committee meetings by invitation.
M Mthembu (Communications Manager) is the secretary of this committee. The committee normally meets three times a year. The responsibilities of the committee are set out in written terms of reference, and are reviewed periodically.
The Transformation, Social and Ethics Committee’s key responsibilities in 2012 were:
- Recommend to the board the strategies and policies to be adopted to ensure the group’s Transformation, Social and Ethics targets are achieved;
- Align the group’s Transformation, Social and Ethics strategy with its overall business strategy;
- Monitor the implementation and efficacy of the employment equity, black management development, black equity ownership, preferential procurement, skills and enterprise development and socio-economic initiatives of the group;
- Monitor activities relevant to social and economic development, good corporate citizenship, environment, health and safety and consumer relationships; and
- Review policies and statements on ethical standards and on whistle-blowing.
Group executive committees
The group has a number of executive committees consisting of executive directors and other senior executives, with formal terms of reference approved by the board.
The Executive Committee consists of the executive directors and other senior executives. The current members are: R G Jacob (chairman), F B Bradford,
C D Hughes, C J Little, M Z Mkhize, H T Molale, T K Mshengu, P A Taljaard and D R Weisz.
D R Weisz was appointed with effect from 1 September 2012.
The Company Secretary, W Fitchat is the secretary of this committee. The committee normally meets on a monthly basis.
The objective of the committee is to assist Hulamin’s board in discharging its responsibilities, while acting within the parameters of the authority limits agreed by the board. The responsibilities of the committee are set out in written terms of reference which are reviewed from time to time.
The Executive Committee’s key responsibilities are:
- Recommend the business strategy, business plans and budgets to be adopted by the group;
- Manage the implementation and execution of business strategies and plans approved by the board;
- Recommend major acquisitions and disposals as part of the group’s business strategy;
- Ensure the group’s systems of internal control, governance (including that of information technology) and risk management are both robust and well managed;
- Implement the approved authorities matrix within the organisation and approve the appointment of senior managers and the members of the group’s other executive committees; and
- Approve the capital expenditure plans of the group, within the budget approved by the board.
Broad-BaseD Black Economic Empowerment (BBBEE) Committee
The Hulamin BBBEE Committee reports to the Transformation, Social and Ethics Committee on the six elements of the BBBEE scorecard, which are: ownership, management control, employment equity, skills development, preferential procurement, enterprise development and socio-economic development.
The BBBEE Committee members are drawn from the group’s senior managers. The current members are:
R G Jacob (chairman), F B Bradford, M Z Mkhize, H T Molale,
C D Hughes, P A Taljaard, T K Mshengu, D R Weisz,
P M Lancaster, H de Villiers, A M J Omar,
M Reddy, C Fisher, R Nyandeni, M W Webb, M Mthembu, M A Aldworth, S M Mabe, M A Janneker, W N Matyolo (Secretary).
The committee normally meets four times a year.
The BBBEE Committee’s key responsibilities are:
- To provide strategic direction with regard to Hulamin’s overall BBBEE strategy;
- Align Hulamin’s BBBEE strategy with the overall business strategy of the company;
- Monitor and review BBBEE progress within Hulamin;
- Provide the mandate for the setting of targets for the various BBBEE elements;
- Development of appropriate strategies and processes for the achievement of BBBEE targets;
- Review the progress towards the achievement of the BBBEE targets and provide direction where challenges are experienced;
- Ensure the appropriate communication of the company’s BBBEE strategy and the implementation thereof;
- Create a platform for sharing BBBEE information and relevant experiences from which we can learn;
- Review on the company’s compliance with employment legislation and regulatory requirements, e.g. the Employment Equity Act, Black Economic Empowerment Act; and
- Report to the Transformation, Social and Ethics Committee.
Information Technology (IT) Management Committee
The members of the IT Management Committee are drawn from the group’s senior executives. The current members are
P A Taljaard (chairman),
C D Hughes, L Gertenbach, PM Lancaster, E Jonker, T Hawkins, M Reddy, R Venkatsami, I Smith and D Seager (secretary).
The committee meets six times a year.
The IT Management Committee’s key responsibilities are:
- Ensure that an IT governance charter and policies are established and implemented;
- Promote an ethical IT governance and management culture;
- Provide leadership and direction to ensure that the IT function achieves, sustains and enhances the company’s strategic objectives;
- Ensure that an IT governance framework is adopted and implemented and that the board via the Audit Committee receives independent assurance on the effectiveness thereof;
- Ensure that the IT strategy is integrated within the company’s strategic and business processes;
- Ensure there is a robust process in place to identify and exploit appropriate opportunities to improve the performance and sustainability of the company;
- Oversee management who are responsible for the implementation of all the structure, processes and mechanisms to execute the IT governance framework;
- Ensure the company obtains independent assurance on the governance of IT, and that adequate controls are in place for outsourcing IT services;
- Ensure IT legal risks are addressed;
- Ensure that there are systems in place for the management of information assets;
- Ensure that the information security strategy is successfully implemented; and
- Ensure appropriate reporting to the Executive Committee, and to board committees.
Risk Management Committee
The members of the Risk Management Committee are drawn from the group’s senior executives. The current members are:
C D Hughes (chairman), F B Bradford, R G Jacob, A P Krull,
D R Weisz, M Z Mkhize, H T Molale, T K Mshengu and
P A Taljaard. The Company Secretary,
W Fitchat is the secretary of this committee. The committee normally meets four times a year.
While the board is ultimately accountable for risk management through the Risk and SHE Committee, the implementation of the group’s risk management policies and systems of internal control are an integral part of management of the group’s operations.
The Risk Management Committee’s key responsibilities are:
- Recommend to the Risk and SHE Committee the risk management strategies and policies of the group;
- Review the integrity and appropriateness of the group’s systems of risk assessment and management;
- Identifying new or emerging risks related to all aspects of the business, including financial, operational and compliance risks;
- Monitor risk reduction actions;
- Review the internal controls that have been implemented to manage significant risks, and the assurance provided in respect of those controls; and
- Report on its activities to the Risk and SHE Committee.
Safety, Health and Environment Committee
The Safety, Health and Environmental (SHE) Committee members are drawn from the group’s senior managers. The current members are:
R G Jacob (chairman), M A Aldworth, B Henderson, D Jackson, M Z Mkhize, H T Molale, T K Mshengu, M Reddy, P A Taljaard and D R Weisz.
The Company Secretary, W Fitchat, is the secretary of this committee. The committee normally meets on a quarterly basis.
The Safety, Health and Environment Committee’s key responsibilities are:
- Review SHE performance;
- Review major SHE risks;
- Monitor actions to reduce SHE related risks;
- Identify new or emerging risks related to SHE;
- Review of the internal controls to manage SHE risks; and
- Report to the Risk and SHE Committee.
The board is satisfied that the Company Secretary is appropriately qualified, competent and experienced for his position in a listed company. Hulamin’s Company Secretary plays a pivotal role in the continuing effectiveness of the board, ensuring that all directors have full and timely access to information that helps them to perform their duties and obligations, and enables the board to function effectively.
The Company Secretary’s key duties with regard to the directors include, but are not limited, to the following:
- Collating and distributing relevant information, such as board meeting agenda items, and board/committee meeting papers, corporate announcements, investor communications and any other developments affecting the Hulamin group;
- Providing guidance to the board on their individual and collective powers and duties;
- Inducting new directors together with the company’s sponsor. This includes a briefing of their fiduciary and statutory duties and responsibilities, including those arising from the JSE Listings Requirements;
- Providing regular updates on changes to laws and regulations affecting the Hulamin group; and
- The Company Secretary is responsible for the functions specified in section 88 of the Companies Act, 2008 (as amended). All meetings of shareholders, directors and board committees are properly recorded as per the requirements of the Act.
The Company Secretary is not a director of any of the Hulamin group operations and accordingly maintains an arm’s length relationship with the board and its directors. The Company Secretary reports to the Chief Financial Officer and has a direct channel of communication to the Chief Executive Officer and to the Chairman. The removal of the Company Secretary would be a matter for the board as a whole.
Hulamin subscribes to the principles on stakeholder management expressed in the King III Code. Management has developed a strategy and formulated policies for the management of relationships with each stakeholder grouping, and an integrated approach to stakeholder management within the group is adopted to strive for consistency and balance in treatment across stakeholder categories.
The group communicates its strategy, performance and vision through regular presentations to investors, analysts, employees and other stakeholders. In addition, management regularly meets with investors and institutional stakeholders on a one-to-one basis.
The group website (www.hulamin.co.za) is also used for this purpose. Hulamin invites all shareholders to attend its annual general meeting and also facilitates participation by way of focused proxy solicitation.
Hulamin strives to resolve disputes with its stakeholders effectively and expeditiously. Hulamin has a preference to settle disputes rather than to litigate and uses alternative dispute resolution mechanisms whenever appropriate.
Access to information
Hulamin complies with the requirements of the Promotion of Access to Information Act, 2000. Details are available on Hulamin’s website.
During 2012, the Hulamin group received no requests for access to a record under the Promotion of Access to Information Act, 2000.
Code of ethics
The group’s code of ethics requires all directors and employees to be committed to fair dealing, honesty and integrity in the conduct of its business and also outlines the group’s position on gifts and entertainment. The code of ethics has been actively endorsed by the board and distributed to all employees in
the group. The code is designed to raise ethical awareness, act as a guide in day-to-day decisions and to assure customers and other stakeholders
of the group’s commitment to ethical behaviour.
An important element of the induction process is to communicate to new employees the code of ethics, the group’s core values and its compliance procedures.
Compliance by all employees to the high moral, ethical and legal standards of the code is mandatory, and if employees become aware of, or suspect, a contravention of the code, they must promptly and confidentially report it in the prescribed manner. Appropriate action has been taken in respect of all reported instances of non-compliance with the code by employees.
Hulamin does not contribute any funding to political parties, their elected representatives or persons seeking political office.
Hulamin has an established whistle-blowing policy and has an anonymous reporting facility (the Vuvuzela Ethics Line), enabling employees and other stakeholders to report fraudulent, corrupt or unethical behaviour related to any of the group’s activities, without fear of victimisation and retribution. Anonymity is guaranteed and the facility is managed in compliance with the Protected Disclosures Act, No 26 of 2000.
Contact details of the Vuvuzela Ethics Line are as follows:
Toll-free number: 080 225 5688
All fraud and theft matters are reported to the Audit Committee. There were no significant frauds or thefts during the period under review.
No director, officer or employee may deal either directly or indirectly in the company’s shares on the basis of unpublished price-sensitive information regarding the company’s business or affairs. In addition, no director, officer or employee in possession of price-sensitive information may trade in the company’s shares during closed periods. Closed periods are from the end of the interim and annual reporting periods to the announcement of financial and operating results for the respective periods, and while the company is under a cautionary announcement.
Hulamin’s compliance framework rests on the company’s comprehensive set of policies in this respect. These are updated when needs be to reflect governance best practice and the changing legal environment. All Hulamin group companies and employees are obliged to comply with these policies.
Non-compliance risks are reviewed by the Risk Management Committee.
No judgement, damages, penalties or fines were recorded and/or levied against any group company, directors or employees during the period under review for non-compliance with any legislation.
|King III principle||Application status||Commentary||Cross reference|
Ethical leadership and corporate citizenship
|1.1||The board should provide effective leadership based on an ethical foundation||Yes||The board takes responsibility for strategic direction based on a set of values through interaction with the group executives||Corporate Governance Report|
|1.2||The board should ensure that the company is and is seen to be a responsible corporate citizen||Yes||The group believes its focus extends beyond considering the group’s financial performance||Sustainability Report|
|1.3||The board should ensure that the company’s ethics are managed effectively||Yes||Transformation, Social and Ethics Committee established with effect from 1 January 2012. The group has a zero tolerance policy towards unethical behaviour||Corporate Governance Report|
Boards and directors
|2.1||The board should act as the focal point for and custodian of corporate governance||Yes||The board has adopted a charter setting out its responsibilities which includes being custodian of corporate governance||Corporate Governance Report|
|2.2||The board should appreciate that strategy, risk, performance and sustainability are inseparable||Yes||The board directs and approves the formal business plans and that the strategy takes into account the value drivers of the business and its stakeholders||Corporate Governance Report|
|2.3||The board should provide effective leadership based on an ethical foundation||Yes||Refer to principle 1.1|
|2.4||The board should ensure that the company is and is seen to be a responsible corporate citizen||Yes||Refer to principle 1.2|
|2.5||The board should ensure that the company’s ethics are managed effectively||Yes||Refer to principle 1.3|
|2.6||The board should ensure that the company has an effective and independent audit committee||Yes||Refer to item 3 – Audit committees|
|2.7||The board should be responsible for the governance of risk||Yes||Refer to item 4 – Governance of risk|
|2.8||The board should be responsible for information technology governance||Yes||Refer to item 5 – Governance of information technology|
|2.9||The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards||Yes||Refer to item 6 – Compliance with laws, rules, codes and standards|
|2.10||The board should ensure that there is an effective risk-based internal audit||Yes||Refer to item 7 – Internal audit|
|2.11||The board should appreciate that stakeholders’ perceptions affect the company’s reputation||Yes||Refer to item 8 – Governing shareholder relationships|
|2.12||The board should ensure the integrity of the company’s integrated report||Yes||Refer to item 9 – Integrated reporting and disclosure|
|2.13||The board should report on the effectiveness of the company’s system of internal controls||Yes||Refer to items 7 and 9 – Internal audit and Integrated reporting and disclosure|
|2.14||The board and its directors should act in the best interests of the company||Yes||Board members disclose potential conflicts of interest||Corporate Governance Report|
|2.15||The board should consider business rescue proceedings or other turnaround mechanisms as soon as the company is financially distressed as defined in the Act||Yes||Noted – not been necessary to date. The board considers the group’s solvency and liquidity through the Audit Committee||Report of the Audit Committee|
|2.16||The board should elect a chairman of the board who is an independent non-executive director. The CEO of the company should not also fulfil the role of chairman of the board||Yes||The board deems the Chairman to be independent and free of conflict. Succession plan for the Chairman is addressed by the Remuneration and Nomination Committee||Corporate Governance Report|
|2.17||The board should appoint the chief executive officer and establish a framework for the delegation of authority||Yes||The board approves all senior executive appointments and a defined authority framework has been approved by the board||Corporate Governance Report|
|2.18||The board should comprise a balance of power, with a majority of non-executive directors. The majority of non-executive directors should be independent||Yes||Hulamin has a unitary board consisting of three executive directors and ten non-executive directors of whom seven are independent. Currently there is a vacancy on the board for an independent non-executive director||Corporate Governance Report|
|2.19||Directors should be appointed through a formal process||Yes||The Remuneration and Nomination Committee identifies suitable members for the board, following a formal process||Corporate Governance Report|
|2.20||The induction and ongoing training and development of directors should be conducted through formal processes||Yes||Newly appointed directors are introduced to the group via a formal induction programme and are updated on legal and regulatory and other developments on a regular basis||Corporate Governance Report|
|2.21||The board should be assisted by a competent, suitably qualified and experienced company secretary||Yes||The Company Secretary is appointed by the board. The Company Secretary has a formal arm’s length relationship with the board and is not a director of any company in the group, provides guidance to the board and has qualifications fit for the purpose||Corporate Governance Report|
|2.22||The evaluation of the board, its committees and the individual directors should be performed every year||Yes||Annual evaluations alternate between internal and external evaluations||Corporate Governance Report|
|2.23||The board should delegate certain functions to well-structured committees but without abdicating its own responsibilities||Yes||Formal approved terms of reference are in place for each committee of the board||Corporate Governance Report|
|2.24||A governance framework should be agreed between the group and its subsidiary boards||Yes||All policies, processes or procedures approved by Hulamin’s board and its committees relate to the group as a whole|
|2.25||Companies should remunerate directors and executives fairly and responsibility||Yes||Remuneration is benchmarked against current market remuneration for similar roles and individual performance||Remuneration Report|
|2.26||Companies should disclose the remuneration of each individual director and prescribed officer||Yes||Refer to the Remuneration Report||Remuneration Report|
|2.27||Shareholders should approve the company’s remuneration policy||Yes||The current remuneration policy was approved by shareholders at the annual general meeting held on 7 May 2012||Notice of Annual General Meeting|
|3.1||The board should ensure that the company has an effective and independent audit committee||Yes||The group Audit and Risk Committee became the Audit Committee with effect from October 2012||Corporate Governance Report|
|3.2||Audit committee members should be suitably skilled and experienced independent non-executive directors||Yes||The board and Remuneration and Nomination Committee believe this to be the case||Corporate Governance Report|
|3.3||The audit committee should be chaired by an independent non-executive director||Yes||The chairman of the Audit Committee is an independent non-executive director||Corporate Governance Report|
|3.4||The audit committee should oversee integrated reporting||Yes||The Audit Committee reviews the Integrated Annual Report||Audit Committee Report|
|3.5||The audit committee should ensure that a combined assurance model is applied to provide a coordinated approach to all assurance activities||Yes||Evaluated on an annual basis||Audit Committee Report|
|3.6||The audit committee should satisfy itself of the expertise, resources and experience of the company’s finance function||Yes||Done annually||Audit Committee Report|
|3.7||The audit committee should be responsible for overseeing of internal audit||Yes||The Audit Committee is regularly updated on internal audit matters||Audit Committee Report|
|3.8||The audit committee should be an integral component of the risk management process||Yes||The Audit Committee regularly reviews the process and the consequences for financial reporting||Audit Committee Report|
|3.9||The audit committee is responsible for recommending the appointment of the external auditor and overseeing the external audit process||Yes||A responsibility of the Audit Committee||Audit Committee Report|
|3.10||The audit committee should report to the board and shareholders on how it has discharged its duties||Yes||Performed at board meetings and within the integrated report||Audit Committee Report|
The governance of risk
|4.1||The board should be responsible for the governance of risk||Yes||A separate Risk and SHE Committee was established effective October 2012 which oversees risk management in the company. Prior to October 2012, this was the responsibility of the Audit and Risk Committee||Corporate Governance Report|
|4.2||The board should determine the levels of risk tolerance||Yes||Risk tolerance levels are included in the risk management framework which has been approved by the Risk and SHE Committee||Corporate Governance Report|
|4.3||The risk committee or audit committee should assist the board in carrying out its risk responsibilities||Yes||Refer to commentary for principle 4.1 above||Corporate Governance report|
|4.4||The board should delegate to management the responsibility to design, implement and monitor the risk management plan||Yes||Management represented on the Risk Management Committee are responsible for integrating risk in the day-to-day activities of the company||Corporate Governance Report|
|4.5||The board should ensure that risk assessments are performed on a continual basis||Yes||Risk assessment is ongoing within the group. The Risk Management Committee is responsible for effecting risk assessments, which are reviewed by the Risk and SHE Committee||Corporate Governance Report|
|4.6||The board should ensure that frameworks and methodologies are implemented to increase the probability of anticipating unpredictable risks||Yes||A formal risk identification process is in place to identify unpredictable risks, which process is undertaken at every Risk Management Committee meeting||Corporate Governance Report|
|4.7||The board should ensure that management considers and implements appropriate risk responses||Yes||This is reviewed by the Risk and SHE Committee||Corporate Governance Report|
|4.8||The board should ensure continual risk monitoring by management||Yes||This has been addressed in the risk management framework||Corporate Governance Report|
|4.9||The board should receive assurance regarding the effectiveness of the risk management process||Yes||Written assurance from internal audit is obtained on the effectiveness of the risk management process which is a responsibility of the Risk Management Committee||Corporate Governance Report|
|4.10||The board should ensure that there are processes in place enabling complete, timely, accurate and accessible risk disclosure to stakeholders||Yes||The board’s view on the effectiveness of the risk management process is included in the risk management report in the 2012 integrated report. Material undue, unexpected or unusual risks will be disclosed where these occur||Risk Management Report|
The governance of information technology
|5.1||The board should be responsible for information technology (IT) governance||Yes||The board deals with the strategic fit of IT to the business needs and the appropriateness of Hulamin’s IT efforts as part of the strategic and business plans. The Audit Committee assists the board with its IT governance responsibilities||Corporate Governance Report|
|5.2||IT should be aligned with the performance and sustainability objectives of the company||Yes||As above||Corporate Governance Report|
|5.3||The board should delegate to management the responsibility for the implementation of an IT governance framework||Yes||The IT Management Committee is responsible for the implementation of structures, processes and mechanisms for the IT governance framework||Corporate Governance Report|
|5.4||The board should monitor and evaluate significant IT investments and expenditure||Yes||The board has delegated this to the IT Management Committee||Corporate Governance Report|
|5.5||IT should form an integral part of the company’s risk management||Yes||IT risks are reviewed by the Risk and SHE Committee. A formal disaster recovery plan was approved by the IT Management Committee and there are regular update reports on the progress and improvements thereof. Actions have also been taken by the IT Management Committee to address compliance with IT rules, codes, standard and leading practices||Corporate Governance Report|
|5.6||The board should ensure that information assets are managed effectively||Yes||This is managed through the IT Management Committee||Corporate Governance Report|
|5.7||A risk committee and audit committee should assist the board in carrying out its responsibilities||Yes||This is performed by the Risk and SHE Committee. The IT Management Committee reports to the Risk and SHE Committee (previously the Audit and Risk Committee) on a regular basis||Corporate Governance Report|
Compliance with laws, rules, codes and standards
|6.1||The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards||Yes||A compliance policy and framework has been adopted by the Risk and SHE Committee and the implementation thereof is work in progress. The board fully appreciates that compliance is non-negotiable||Corporate Governance Report|
|6.2||The board and each individual director should have a working understanding of the effect of the applicable laws, rules, codes and standards on the company and its business||Yes||The board is informed of relevant laws, rules, codes and standards, including changes by the company’s legal advisors and its sponsors||Corporate Governance Report|
|6.3||Compliance risk should form an integrated part of the company’s risk management process||Yes||Risk of non-compliance is identified, assessed, and responded to through the risk management process||Corporate Governance Report|
|6.4||The board should delegate to management the implementation of an effective compliance framework and processes||Yes||Refer to comment 6.1 above||Corporate Governance Report|
|7.1||The board should ensure that there is an effective risk-based internal audit||Yes||This is the responsibility of the Audit Committee. An internal audit charter approved by the Audit Committee has been adopted||Audit Committee Report|
|7.2||Internal audit should follow a risk-based approach to its plan||Yes||Key developments in the business and external environment and changes in key risks are incorporated in the internal audit plan||Audit Committee Report|
|7.3||Internal audit should provide a written assessment of the effectiveness of the company’s system of internal control and risk management||Yes||Provision for these assessments was made in the approved 2012 internal audit plan||Audit Committee Report|
|7.4||The audit committee should be responsible for overseeing internal audit||Yes||The internal audit plan is approved annually by the Audit Committee who also evaluate the internal audit function by discussion with management and external auditors||Audit Committee Report|
|7.5||Internal audit should be strategically positioned to achieve its objectives||Yes||Hulamin has considered it appropriate to outsource the internal audit function, combined by strong oversight of the internal audit effort by the Hulamin financial manager responsible for internal audit||Audit Committee Report|
Governing stakeholder relationships
|8.1||The board should appreciate that stakeholders’ perceptions affect a company’s reputation||Yes||Key shareholders of the company have been identified and relationships managed by various officers and executives in the company. The reputation of the company and its linkage with stakeholder relationships is frequently dealt with by the board||Stakeholder Engagement Report|
|8.2||The board should delegate to management to proactively deal with stakeholder relationships||Yes||Management have developed a strategy and formulated policies for the management of relationships with each stakeholder grouping||Stakeholder Engagement Report|
|8.3||The board should strive to achieve the appropriate balance between its various stakeholder groupings, in the best interests of the company||Yes||The board gives consideration to the legitimate interests and expectations of its stakeholders||Stakeholder Engagement Report|
|8.4||Companies should ensure the equitable treatment of shareholders||Yes||Management deem that the treatment of all holders of the same class of shares issued is equitable and the board ensures minority shareholders are protected||Stakeholder Engagement Report|
|8.5||Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence||Yes||Management believes it provides complete, timely, relevant, accurate, honest and accessible information to its stakeholders whenever items of communication are required||Addressed via the Integrated Annual Report 2012 and SENS announcements|
|8.6||The board should ensure disputes are resolved as effectively, efficiently and expeditiously as possible||Yes||The board has adopted a dispute resolution policy to address internal and external disputes||Stakeholder Engagement Report|
Integrated reporting and disclosure
|9.1||The board should ensure the integrity of the company’s integrated report||Yes||Controls are in place to verify and safeguard the integrity of the Integrated Annual Report and the Audit Committee is empowered to evaluate sustainability disclosures||Audit Committee Report|
|9.2||Sustainability reporting and disclosure should be integrated with the company’s financial reporting||Yes||The company publishes an Integrated Annual Report which recognises the diverse needs of its shareholders||Integrated Annual Report|
|9.3||Sustainability reporting and disclosure should be independently assured||Yes||As mentioned in 9.1 above, the Audit Committee assists the board by reviewing the Integrated Annual Report to ensure the information is reliable and the Audit Committee oversees the provision of assurance over sustainability issues||Audit Committee Report|