Main Board Committees

The main board of directors has delegated specific responsibilities to board committees, each with their own terms of reference that define their powers and duties. The board committees meet independently and report back to the board through their chairpersons. The composition of these committees is reflected earlier in this report.

Audit committee

The committee is governed by a formal audit committee charter that complies with the requirements of King II. This charter guides the committee in terms of its objectives, authority and responsibilities.

The role of the audit committee is, inter alia:

• to review the effectiveness of the group’s systems of internal control, including internal financial control and business risk management, and to ensure that effective internal control systems are maintained;
• to ensure that written representations on internal control are submitted to the board annually by all divisional managing directors and general managers (these representations follow consultations with relevant line management and provide assurance on the adequacy and effectiveness of the group's systems of internal control);
• to monitor and supervise the effective functioning and performance of the internal auditors;
• to ensure that the scope of the internal audit function has no limitations imposed by management and that there is no impairment of their independence;
• to evaluate the independence, effectiveness and performance of the external auditors' and obtain assurance from the auditors that adequate accounting records are being maintained;
• to ensure that the respective roles and functions of external audit and internal audit are sufficiently clarified and co-ordinated; and
• to review financial statements for proper and complete disclosure of timely, reliable and consistent information and to confirm that the accounting policies used are appropriate.

The committee consists of four independent non-executive directors and meets at least twice annually. Executive directors, members of executive management, internal audit and the external audit partners and staff attend meetings at the invitation of the committee. Independent of management, members of this committee meet separately with the external auditors.

Remuneration committee

This committee is governed by a formal charter to ensure that there is a transparent procedure for developing policies on executive remuneration and determining remuneration packages of individual directors and senior executives, within agreed terms of reference and within the framework of good corporate governance.

Its key mandate is the compilation of emolument proposals in accordance with the group's remuneration strategy which are then considered by the board. These are designed and tailored to:

• continue to attract, retain and motivate executives of the highest calibre;
• enable the group to remain an employer of choice; and
• ensure a blend of skills that consistently achieves predetermined business objectives and targets.

Its powers regarding non-executive remuneration are limited to making recommendations to the full board.

This committee has access to independent surveys and consultants for best-practice advice and information concerning current and job-specific remuneration levels.

Its responsibilities include the making of recommendations to the board on remuneration structures, performance bonuses, conditions of appointment of the CEO and managing director, the CEO and managing director’s remuneration, executive and non-executive directors' remuneration and fees, service contracts, restraints, senior executive management remuneration, the employee share incentive schemes and general salary guidelines across the group.

The committee, which met three times during the course of the year, comprises three independent non-executive directors and an external consultant. The managing director and the operating board group human resources director attended by invitation, but recused themselves upon deliberation of their own remuneration.

Risk committee

The board is responsible for risk management, while divisional and operational management are accountable to the board for this process.

The group has adopted an ongoing, systematic and documented risk management process that ensures that all material risks are identified, evaluated, effectively managed and where practical, quantified. This process is undertaken within each division as well as by the operating board. This has served to ingrain a sustainable risk awareness and culture at all levels. The assessments are aligned to the business objectives within each division as well as those of the group as a whole. All significant projects undertaken by the group are subject to formal risk assessments. Ongoing business sustainability is addressed as part of this process.

The risk committee is responsible for ensuring that:

• appropriate risk and control policies are in place and are communicated throughout the group;
• the process of risk management and the system of internal control are regularly reviewed for effectiveness;
• there is an ongoing process of identifying, evaluating and managing the significant risks faced by the group, and that this was in place throughout the year under review;
• a formal risk assessment is undertaken annually;
• there is an adequate and effective system of internal control in place to manage the more significant risks faced by the group to an acceptable level;
• there is a documented and tested process in place that will allow the group to continue its critical business processes in the event of a disaster, inter alia, the destruction of a distribution centre, head office, or computer facility, impacting its activities;
• a risk register is maintained and kept up to date; and
• appropriate insurance cover is placed for the group, and that all uninsured risks are reviewed and managed.

The risk committee comprises two independent non-executive directors, two executive directors, a director of the operating board, and by invitation, the heads of the internal audit and risk management departments. Meetings are held four times a year.

Nominations committee

This committee is governed by a formal charter to ensure that there is a process in place to fairly and thoroughly identify and assess new executive and non-executive directors. Their responsibilities include:

• reviewing the board structure, size and composition;
• succession planning;
• reviewing the balance between non-executive and executive directors;
• ensuring that the directors have the required blend of experience, skills and knowledge to guarantee the continued success of the group; and
• compliance with the principles of good governance and the code of best practice.

This committee met twice during the year under review, and comprises three non-executive directors and one executive director.

Transformation committee

This committee was formalised during the course of the previous financial year. Its scope of authority has been clearly defined in a formal charter, as have its objectives and responsibilities.

The committee has established a broad-based BEE strategy aligned to the Broad-based Black Economic Empowerment Act of 2003 and the Codes of Good Practice, including a BBBEE-level contributor target with time-lines. Clear guidelines have been defined for each of the seven elements of BBBEE, being equity ownership, management control, employment equity, skills development, preferential procurement, enterprise development and socio-economic development. The committee’s ongoing responsibilities are to monitor and review all aspects of the group’s BBBEE strategies and to ensure the achievement of its stated targets.

In order to attain these targets, subcommittees for each of these seven elements have been established, which report directly to the transformation committee. The subcommittees meet at least quarterly.

The transformation committee, comprising two non-executive directors, two executive directors and the operating board group human resources director meets twice annually.