Corporate governance and sustainability report

Introduction

Mvelaphanda Group Limited and its subsidiaries (“Mvela Group” or “Group”) endorse the principles of the South African Code of Corporate Practices and Conduct as recommended in the King III Report (“King III”) except where otherwise disclosed. The board of directors (“board”) recognises that good corporate governance is essential in achieving high standards of business integrity and ethics across all of its activities. Sound governance remains a priority of the board and the board continues to review and benchmark the Group’s governance structures and processes.

Exceptions to King III

Audit committee

Shareholders have not had the opportunity to appoint the members of the audit committee. The nomination committee presents suitable candidates to the board which elects the members. Shareholders will approve these appointments at the forthcoming annual general meeting.

The internal audit function does not go through an independent quality review as the board is of the opinion that the audit committee is the appropriate body to independently review this function.

Company secretary

The role and function of the Company secretary has not been formulated in writing since the function and responsibility belongs to Mvelaphanda Treasury and Financial Services (Proprietary) Limited.

Information technology (“IT”)

Due to the diverse nature of the Group’s IT requirements, the Group is not in need of a detailed IT governance framework, charter and policies. Each of the Group’s investment companies are responsible for their own IT governance. The Company’s IT function is outsourced to an independent service provider and through its service level agreement the Group ensures adequate system security, data integrity and business continuity controls and processes are in place.

Integrated reporting and disclosure

The sustainability report has not been externally assured. The board is satisfied with the review being made by the audit committee.

Board, directors and committees

Board composition

As at 30 June 2011, the board of directors comprised two executive directors and three non-executive directors. All non-executive directors are independent in accordance with King III.

Ms Cuba resigned as executive director with effect from 31 December 2010. In view of the Group’s unbundling strategy, the JSE approved that the position of CEO remains vacant for a period of 18 months from 30 March 2011. In this regard, the Group will provide a quarterly report to the JSE on its progress with the unbundling of its assets. Mr Hopkins, an independent non-executive director and chairman of the audit committee, is the lead independent director.

There is adequate division of responsibilities amongst board members to ensure a balance of power and authority. The independence of non-executive directors is assessed as part of the board’s annual review.

Details of directors of the board are set out here.

Board appointment and re-election process

The appointment of new directors is considered by the board as and when the need arises, and from time to time recommendations for the appointment of new directors are made by the nomination committee of the board and approved by the full board of directors. If appropriate, external consultants are engaged to recommend candidates for appointment to the board. Executive directors are appointed to the board on the basis of functional expertise, experience and overall contribution to the Group. Non-executive directors are selected on the basis of industry knowledge, professional skills and experience.

In terms of the Company’s articles of association, one-third of the directors shall retire from office at every annual general meeting of the Company. The directors who retire in terms thereof shall be those who have been longest in office since their last election. In addition to the aforementioned retiring directors, any director appointed as such after the conclusion of the Company’s preceding annual general meeting shall retire from office at the conclusion of the annual general meeting held immediately after his appointment. Any retiring director shall be eligible for re-election, and, if re-elected, shall be deemed not to have vacated his office.

Role and function of the board

The board has adopted a board charter which covers, inter alia, the following:

The role and function of the board.
The board structure.
Meeting procedures.
Monitoring of investment and operational performance.
Risk management and internal control.
Code of ethics.

Each board committee has its own charter which defines its purpose, authority and responsibility.

All directors have access to the advice and services of the Company secretary, whose appointment is in accordance with the South African Companies Act No. 71 of 2008 (“Companies Act”) and who is responsible to the board for ensuring the proper administration of board proceedings. The Company secretary also provides guidance to the directors on their responsibilities within the prevailing regulatory and statutory environment and the manner in which such responsibilities (including not dealing in the Company’s shares during restricted periods) should be discharged. The directors are entitled to seek independent professional advice at the Group’s expense concerning the Company’s affairs and have access to any information they may require in discharging their duties as directors.

The board met eight times, the attendance by each director was as follows:


	1 July 2010*	5 July 2010*	23 August 2010¹	7 October 2010*	20 October 2010*	22 February 2011	14 March 2011	6 June 2011


Executive directors
M Xayiya	√	√	√	—	√	√	√	√
Y Cuba	√	√	√	—	√	#	#	#
E Röth	√	√	√	√	√	√	√	√
Non-executive directors
K Dlamini	√	√	√	√	√	—	—	√
B Hopkins	√	√	√	√	√	√	√	√
O Mabandla	√	√	√	√	—	√	√	√

*Special board meeting ¹ Mr Jorge Ferreira was invited √ indicates attendance — indicates absence with apology
# indicates no longer a member of the board

The Group complies with the Listings Requirements of the JSE (“the JSE Listings Requirements”) in relation to the restrictions applicable to trading in Mvela Group shares by directors and employees during closed periods. Closed periods endure from the end of a financial reporting period until the publication of financial results for that period. Additional closed periods, as defined in the JSE Listings Requirements, may be declared should such circumstances prevail.

Board committees

The board has three subcommittees to assist in carrying out its duties. The board has delegated to the subcommittees specific roles of responsibility and these are set out in the respective subcommittee charter. There is full disclosure and transparency from the subcommittees to the board. The board annually reviews the effective performance of each of its subcommittees.

Nomination committee

Members: O Mabandla (chairperson), B Hopkins and M Xayiya. All members, except Mr Xayiya, are non-executive and are independent. The nomination committee assists the board in the appointment of new directors.

Remuneration and transformation committee

Members: O Mabandla (chairperson), B Hopkins and M Xayiya. All members, except for Mr Xayiya, are non-executive directors and are independent.

The committee evaluates the annual performance of individual directors.

Details of directors’ remuneration are disclosed in the directors’ report set out here.

The committee met four times, the attendance by each member was as follows:


	23 August 2010	27 September 2010	26 October 2010	6 June 2011


O Mabandla	√	√	√	√
M Xayiya	√	√	√	√
B Hopkins	√	√	√	√
Y Cuba¹	√	—	—	#
E Röth¹	√	—	—	√

¹Invitee √ indicates attendance — indicates absence with apology ^# indicates no longer a member of the board