Corporate Governance is
the framework of corporate practices and conduct
under which companies are managed.
Murray & Roberts is fully committed to and supports
the principles embodied in the Code of Corporate
Practices and Conduct (“the Code”).
The Code has been revised in the King Report on
Corporate Governance for South Africa 2002 and the
revised version is applicable to the company’s
financial years commencing after 1 March 2002.
The board considers that Murray & Roberts substantially
complies with the revised Code as well as the requirements
for corporate governance that are included in the
listing requirements of the JSE Securities Exchange
South Africa. Areas of the revised Code that require
our further attention will be addressed during the
forthcoming year to ensure full compliance by 30
June 2003.
BOARD OF DIRECTORS
The Code emphasises that:
“The board is the focal point of the corporate
governance system. It is ultimately accountable
and responsible for the performance and affairs
of the company.”
During the year under review the board comprised
nine non executive directors and four executive
directors and is chaired by Mr DC Brink, a non executive
director. Mr AJ de Nysschen, an executive director,
resigned as a director on 31 August 2002.
The board has considered the categorisation of non
executive directors as set out in the Code and is
of the view that Ms BN Bam, Prof WP Esterhuyse and
Messrs SE Funde, PG Joubert, SJ Macozoma, AJ Morgan
and JJM van Zyl are independent non executive directors.
The board has designated
Mr PG Joubert as the senior independent non executive
director. Details of individual board members appear
on page 24.
The board has recently undertaken an evaluation
exercise under the guidance of an independen
consultant. The results of this evaluation, and
any apparent deficiencies in the current make up
of the board, will be addressed on an ongoing basis.
It is intended that this evaluation exercise will
be performed on a regular basis in the future.
The board meets at least four times a year in formal
meetings. In addition, an informal meeting is held
each year prior to the board meeting that will consider
the group’s budget and business plan in the
context of the approved strategy. This meeting includes
senior executives at the invitation of the group
chief executive and facilitates a free ranging conversation
on the group’s strategy. Details of the number
of meetings of the board and board committees held
during the year under review and the attendance
of each director is set out in table 1 on page 27
of this report.
The board is responsible to the shareholders for
the strategic direction of the group. This includes
the investment policy and the monitoring of performance
criteria. The detailed implementation of the strategy
and policies is delegated to management. Approved
levels of delegated authorities ensure that decisions
on major matters are made by the board.
As part of this process, the board is aware of the
need to achieve a balance between the pursuit of
new opportunities and the necessary constraints
imposed by corporate governance practices.
Directors are kept informed between meetings of
major developments affecting the group. All directors
have access to the advice and services of the group
secretary and are authorised to seek independent
professional advice on the affairs of the group.
As recommended in the Code, a board charter is presently
being developed which will define the board’s
responsibilities and will formalise existing corporate
governance practices and the core values that have
been in place in the group for some time.
BOARD COMMITTEES
Remuneration and audit committees have been in place
in the group for many years. The latter committee
has recently been renamed to incorporate some important
aspects of risk management and a nomination committee
has been constituted. Formal terms of reference
of these committees were reviewed and approved by
the board on 28 August 2002 and will be subject
to regular updating, at least annually. The purpose
of these committees is to assist the board in the
performance of its responsibilities but the board
accepts that, notwithstanding this assistance, the
ultimate responsibility for the performance and
affairs of the group remains with it.
Details of the composition of the committees and
their activities are set out below:
Audit and risk management committee
The audit and risk management committee meets at
least twice a year. The membership remained unchanged
during the year and comprised Messrs PG Joubert
(chairman), AJ Morgan and
AA Routledge. All of the members are financially
literate and the majority are independent non executive
directors. The group chief executive and group financial
director as well as the external auditor engagement
partners attend all meetings by invitation. The
committee’s main activities include, inter
alia:
•
monitoring of and recommending
to the board for approval, the group accounting
policies in compliance with generally accepted
accounting practice;
•
reviewing the external
auditor’s reports for the interim review
and year end audit;
•
reviewing and recommending
to the board for approval, the group’s
annual financial statements and the group’s
results as published in the interim and preliminary
reports;
•
reviewing and recommending
to the board for approval, the group’s
statement on the maintenance of a sound system
of risk management and internal control systems.
Remuneration committee
The remuneration committee meets at least three
times a year. The membership remained unchanged
during the year and comprised Messrs DC Brink (Chairman),
PG Joubert, JJM van Zyl and BC Bruce. Its main activities
include, inter alia:
•
approval of significant
changes in the group’s employment framework
and policies;
•
approval of the fixed remuneration
packages of executive directors and other
senior executives;
•
approval of the basis and
final awards of performance related remuneration
for executive directors and other senior executives;
•
monitoring of succession
plans in respect of executive directors and
other senior executives;
•
monitoring of major aspects
of the group’s retirement funding and
other benefit schemes;
•
approval of grants of options
under the rules of the group Share Incentive
Scheme;
•
recommendation to the board
on the function, role and mandate of the group
chief executive and an assessment of the related
performance;
•
recommending to the
board the levels of directors’ fees
payable and the fees payable for service on
board committees and the chairman’s
fee.
Nomination committee
A nomination committee was formed on 27 June 2002
and comprises Messrs PG Joubert (chairman), SE Funde
and JJM van Zyl. The committee will meet at least
twice a year and its main activities will include,
inter alia, recommendations to the board on:
•
structure, size and composition
of the board and board committees;
•
continuation, or otherwise,
in service of individual directors;
•
new appointments
to the board.
Corporate Social Involvement (CSI) committee
The CSI committee meets at least twice a year. The
committee is chaired by Prof WP Esterhuyse and the
membership included Messrs DC Brink, BC Bruce, AJ
de Nysschen and KE Smith as well as appropriate
executive management. Its main activities include,
inter alia:
•
recommending to the board
the annual budget for the centrally administered
CSI activities and the main target areas for
such expenditure;
•
receiving and adjudicating
proposals for individual grants within the
approved budget framework;
•
monitoring the effects
and benefits derived by the beneficiaries
of past grants.
RISK MANAGEMENT, INTERNAL
CONTROL AND INTERNAL AUDIT
The board is responsible to ensure that the group
maintains a system of reliable internal controls.
Internal audit procedures are in place in Murray
& Roberts Limited under the responsibility of
the chief financial officer of the group.
Further details of the group’s risk management
policies are set out in the Risk Management report.
SHARE DEALINGS
In terms of the group’s “closed period”
policy, directors and specified named officers who
could be expected to have access to price sensitive
information, are precluded from dealing in the company’s
shares, as well as the shares of its listed associate
company, for a period of six weeks prior to the
release of the group’s interim results and
a period of three months prior to the release of
the annual results. To ensure that dealings are
not carried out at a time when other price sensitive
information may be known, directors and named officers
must obtain permission from the chairman or group
chief executive before any dealings in the above
shares. Approved dealings in the company’s
shares by directors are disclosed to the JSE Securities
Exchange South Africa and published on the Stock
Exchange News Service (SENS). All approved dealings
are reported to the regular meetings of the board.
CORPORATE CITIZENSHIP
The group is committed to best practice in respect
of health and safety, employment practices, sustainable
development and environmental issues. Details of
the group’s philosophy and policies in this
regard are set out in a statement on page 33 of
this report.
GOING CONCERN
Based on the strength of the group’s balance
sheet, in particular the level of cash resources
and banking facilities at 30 June 2002, and the
consolidated budget for the ensuing financial year,
the board is of the opinion that the group and the
company have adequate resources to continue as a
going concern for the foreseeable future.
Table 1: Record
of directors’ attendance at board and board committee
meetings
