Nomination Committee report

King IV^TM disclosure and reference index for the 2019 SPAR integrated report

The table below provides a brief summary of SPAR’s application of the King IV™ principles, with references to where these are addressed in the integrated report.

Principle	Arrangements, achievements, measurements and future focus areas	Examples and references in the integrated report
1 The governing body should lead ethically and effectively	The board endeavours to meet the highest ethical standards of business practice and acknowledges that ethics are the foundation of, and reason for, corporate governance. The board is responsible for ensuring that management actively cultivates a culture of ethical conduct and establishes the values we must uphold. We value independent judgement and require that each board member prepare, participate and contribute at each meeting, in addition to informal discussions and interaction with the Chairman related to the SPAR business. The board meets formally four times year. To further improve non-executive directors’ understanding of the company’s operating divisions, a board meeting is held at least once a year at a distribution centre.	Our governance system Nomination Committee report
2 The governing body should govern the ethics of SPAR in a way that supports the establishment of an ethical culture	SPAR’s culture is informed by its values of passion, family values and entrepreneurship, in combination with the SPAR Code of Ethics. The board sets a leadership example through its adherence to the relevant guidelines, regulations and benchmarks for good corporate governance and ethics. This includes adherence to the Universal Declaration of Human Rights and the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work. The Social and Ethics Committee, which functions independently of the board, oversees SPAR’s actions and promotes a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public. The committee is responsible for monitoring and making recommendations in relation to the following: Social and economic development, including compliance with the United Nations Global Compact, the Organisation for Economic Co-operation and Development (OECD) recommendations on corruption, the Employment Equity Act and Broad-based Black Economic Empowerment Act. Good corporate citizenship, including the promotion of equality, prevention of unfair discrimination, reduction of corruption, contribution to community development, sponsorship, donations and charitable giving, environmental risks, health and public safety as well as reputational risks and other related risks. Consumer relationships, including advertising, public relations and compliance with Consumer Protection laws. Labour and employment, including employment relationships and contributions towards the educational development of employees. This also includes compliance with standards such as the International Labour Organisation Protocol on decent work and working conditions. Ethics management, including recognising the importance of all stakeholders while minimising the negative impacts and maximising the positive impacts of SPAR on the communities within which it operates. The committee exercises oversight by reviewing the programme to monitor compliance with the SPAR Code of Ethics annually. Employee recruitment, on-boarding and training interventions contain elements that relate to expected behaviours aligned to SPAR’s values and culture. An ethics survey was conducted by the Ethics Institute of South Africa (EthicsSA) during the 2015 financial year. Consequently, an action plan to address the shortcomings identified was discussed, and a relaunch of the Code of Ethics and Whistleblowing hotline took place in 2017. The independent whistleblowing hotline provides a mechanism for stakeholders to report any ethics breaches. These are reported to the Social and Ethics Committee and appropriate action is taken. SPAR has a customer care and complaints line with all complaints being reported to the Company Secretary, who directs these to the relevant distribution centres from where these are relayed to retailers. The distribution centres take ownership of complaints and are responsible for communication with the relevant manager of store in question to address any issues. The regional and national guild committees have the power to rescind retail membership if any ethics breaches take place. The board reviewed and approved the Group Fraud and Corruption Prevention Policy during 2016. This policy acts as a guide to ensure all instances of fraud or corruption are managed in a fair and uniform manner. The policy further assists us in creating a climate for the prevention and detection of fraud, theft, corruption or associated internal irregularity.	We are a family of entrepreneurs driven by passion Fact sheet: The SPAR Guilds Chairman’s report Our strategy and business model Our governance system Social and Ethics Committee report
3 The governing body should ensure that SPAR is and is seen to be a responsible corporate citizen	SPAR’s vision positions the group as a responsible corporate citizen: to be the first-choice brand in the communities we serve. A strong community focus is supported by the SPAR values of demonstrating passion, living our family values and encouraging entrepreneurship in our leadership as well as through our relationships. Where we are able to create authentic shared value, as per our sustainability pledge, we build our reputation as a good corporate citizen and strengthen the material relationships that enable value creation. Our supermarket strategy’s outcomes all consider our internal and external interactions with stakeholders and the environment to support our commitment to being a responsible corporate citizen. Our sustainability pledge aims to create authentic shared value through the following outcomes: Contribution to societal change Contribution to responsible living Opportunity creation Resources stewardship The report contains extensive context and commentary on SPAR’s material relationships, including interfaces with SPAR International and the guilds. SPAR’s voluntary trading model is furthermore based on relationships of trust and co-operation between SPAR and our retailers, to mutual benefit. For the voluntary trading model to operate effectively, all parties have to display responsible corporate citizenship. Corporate citizenship is one of the elements monitored by the Social and Ethics Committee and is based on SPAR’s stakeholder-inclusive approach. The committee approves and monitors corporate social development spend and impact, for example in the case of the emerging farmer programme. It also tracks progress with SPAR’s BBBEE rating.	Introducing SPAR We are a family of entrepreneurs driven by passion Fact sheet: The SPAR Guilds Fact sheet: SPAR International and the voluntary trading model Our material relationships Our strategy and business model Focus on South Africa Focus on Ireland Focus on Switzerland Our governance system Social and Ethics Committee report
4 The governing body should appreciate that SPAR’s core purpose, risks and opportunities, strategy, business model, performance and sustainable development are all inseparable elements of the value creation process	The board recognises that SPAR creates value on a global scale through the voluntary trading model. It creates significant value for our independent retailers, who benefit from the economies of scale gained by our buying efficiencies, and the cost savings through operational efficiency and a wide scope of products offered and distributed through our distribution centres. Our material relationships provide input into our business activities and help us mitigate the risks, including waste and resource depletion, associated with a distribution and wholesale business. The board provides overall guidance and direction for the development and annual review of the strategy, which articulates the key imperatives and enablers required to deliver on the group’s outcomes. Progress with the implementation of the strategy is measured according to financial and non-financial indicators, combined with an enterprise risk management programme which considers SPAR’s entire value chain. The board formally considered the going concern assertion of SPAR and is of the opinion that it is appropriate for the forthcoming financial year.	Fact sheet: The SPAR Guilds Fact sheet: SPAR International and the voluntary trading model Chairman’s report Our strategy and business model Our profile in South Africa Our governance system
5 The governing body should ensure that reports issued by SPAR enable stakeholders to make informed assessments of SPAR’s performance, and its short, medium and long-term prospects.	The board takes responsibility for SPAR’s financial and integrated reporting, supported by internal and external assurance mechanisms. SPAR’s integrated annual reports aim to provide our readers with a broad understanding of the group’s past performance in the context of the external environment, demonstrated through a wide range of activities, interactions and relationships. This should enable readers to gauge the prospects and future trajectory of SPAR’s value creation abilities. Our commitment to reporting according to the <IR> Framework means that we only report on what is material for SPAR to be able to create value over the short, medium and long term this is structured according to our material relationships. Our full reporting suite and archives are available on the SPAR website.	Our reporting approach
6 The governing body should serve as the focal point and custodian of corporate governance at SPAR	The board works according to an annual board plan which ensures a structured and formal approach to governance. There are at least four formal board meetings per annum and board members are provided with ample context, reports and indicators to be able to ensure that the group acts ethically, performs according to expectations, maintains the necessary controls and is being perceived as a responsible corporate citizen. Board meeting attendance is high and additional conversations between board members are encouraged for updates or when pertinent decisions require more deliberation. The board is satisfied that it has fulfilled its responsibilities according to its charter for the year. The board intends to improve the detail understanding of corporate governance structures per country where SPAR is invested and will ensure that more detail from these operations are available in the board packs.	Our governance system
7 The governing body should comprise the appropriate balance of knowledge, skills, experience, diversity and independence for it to discharge its governance role and responsibilities objectively and effectively	SPAR’s core governance structure includes the board and its committees; however, the wider governance ecosystem also encompasses the guild structures and external assurance providers, who all assist the board in discharging its governance role and responsibilities. The board member profiles in the integrated report summarise the demographics, qualifications, capacity, status and memberships of each board member and indicate their respective tenures. The nomination committee amended the company’s gender diversity policy to include a policy on race diversity and renamed it the board diversity policy. The voluntary targets in terms of this policy are a minimum of three black people and two females. An internally facilitated independence assessment is conducted annually by the Nomination Committee for each non-executive director who has served on the board beyond nine years. An externally facilitated, independent assessment is conducted every three years. The SPAR policy for board appointments is implemented by the Nominations Committee, who ensures that there is an appropriate balance of diversity, skills and experience within the board’s ranks to fulfil its mandate and covers both financial and sustainability roles and responsibilities.	Chairman’s report Leadership teams Our governance system Nomination Committee report
8 The governing body should ensure that its arrangements for delegation with its own structures promote independent judgment, and assist with balance of power and the effective discharge of its duties	The board delegates specific roles and responsibilities to the Chief Executive Officer (CEO) and the board committees. Each committee has terms of reference that is reviewed annually. In addition to the four committees, there are three Executive Committees according to the three main geographies, each with very specific functions and responsibilities. Diverse backgrounds and cross-membership between committees, including guild memberships, ensure that there is appropriate balance in judgement and influence. The committee reports contain details of membership, responsibilities, advisors, attendance and key areas of focus.	Our governance system Nomination Committee report
9 The governing body should ensure that the evaluation of its own performance and that of its committees, its chair and its individual members, support continued improvement in its performance and effectiveness	The board and its committees conduct an annual self-evaluation process to measure its respective performances and the chair of the board and committees present to the board the results of those self-assessments. Evaluation criteria include the effectiveness of the board’s composition, governance processes and procedures; the effectiveness of the board’s committees in discharging their respective mandates; the effectiveness of the executive directors; and the effectiveness and contributions of each of the directors.	Our governance system Nomination Committee report
10 The governing body should ensure that the appointment of, and delegation to, management contribute to role clarity and the effective exercise of authority and responsibilities	The SPAR governance bodies are all governed by a delegation of authority framework, which is reviewed annually and sets out the matters reserved for determination by shareholders, the board, and those matters delegated to management and the Executive Committees. The board is satisfied that the delegation of authority framework contributes to role clarity and the effective exercise of authority and responsibilities. The CEO is accountable to the board for the daily management of the company and co-ordinates the implementation of board policy and strategy through the Executive Committees. The CEO’s responsibilities include, among other things, ensuring that the company conducts its affairs within the rule of law and abides by the company’s Code of Ethics, and keeping the board informed of all its major business proposals and developments by way of specific reports, within limits set by the board. The CEO’s notice period is three months and his performance is measured as per the remuneration policy. The board approved the appointment of SPAR’s CEO as the chairman of SPAR International. Succession planning is an ongoing focus area and will become important in medium-term as a number of senior management members will be reaching retirement age. SPAR’s Company Secretary is a suitably qualified and experienced employee who is able to provide the board with the requisite support for its efficient functioning and discharge of its duties. She contracts with the necessary service providers to provide specialist input or guidance on board matters, including, for example, PwC, EOH Legal Services, the Chartered Secretaries South Africa, Garlicke & Bousfield, The Ethics Institute the Institute of Directors Southern Africa, the Ethics Institute and the company’s JSE sponsors. We believe these arrangements are effective and appropriate for the efficient functioning of the board.	Our governance system Nomination Committee report
11 The governing body should govern risk in a way that supports SPAR in setting and achieving its strategic objectives	SPAR operates according to a voluntary trading model, which creates unique challenges for effective control as retailers have the freedom to operate independently under the SPAR brand. Our primary area of control extends to operations at the distribution centres, including delivery, with more limited control in the retail environment. SPAR’s retail operations team, in co-operation with the guilds, provides the necessary structures to facilitate the most appropriate risk mitigation, and financial and reputational controls for retail. In terms of distribution centres, subsidiaries and central office functions, the board relies on a range of internal and external assurance mechanisms in combination with formal policies and frameworks. External mechanisms include, for example, the auditors, sponsors and verification agencies, while internal audit and management reviews provide internal control. SPAR’s risk management ability is integral to the achievement of strategic objectives. The integrated report includes detail reporting on these risks – showing the risk ranking, mitigation actions and a link to the relevant strategic imperative. We also identify the most strategic risks per material relationship. Risk is governed and managed through the Risk Committee. The committee oversees the company’s risk management, IT and compliance processes to ensure that management identifies potential risks in these areas which may affect the company or its operations. It implements effective policies and plans to mitigate any risks, enhance the company’s ability to achieve its strategic objectives, and support the company in being ethical and a good corporate citizen.	Risk Committee report
12 The governing body should govern technology and information in a way that supports SPAR in setting and achieving its strategic objectives	Technology and information at SPAR is governed through the Risk Committee mandate, which ensures that information technology (IT) is managed as an integral and strategic part of the business. The IT strategy supports and enables the business strategy and delivers value through cost and resource management, risk management and regulatory compliance. IT serves all aspects, components and processes of SPAR in South Africa, with limited integration with the international entities. The South African IT team creates synergies between the group operations where possible and provides the teams in Ireland and Switzerland with guidance and support to ensure acceptable governance measures are in place. IT is therefore leveraged to create opportunities and to gain a competitive advantage. The board is cognisant that, as much as IT is a strategic asset within the group, it also presents the organisation with significant risks. IT is represented on the SPAR Executive Committee. This generates continuous information management dialogue, aligned to the short, medium and long-term business requirements. Demands placed on IT resources are expected to exceed the capacity of these resources for the foreseeable future. It is therefore crucial that the limited resources available are put to optimal use. To this end proposed projects will be selected and ranked by the Executive Committee according to their value to SPAR. Application maintenance is limited to necessary fixes and selected change requests for which a convincing business case exists. All projects have an owner outside the IT department, responsible for the overall project management, acceptance by the business and implementation. IT work is divided in major projects, minor projects and maintenance. Each type is dealt with differently. Major projects take more than six months to deliver, and include, for example, the SAP implementation. Major projects follow the following steps: Initiation by a user, supported by the functional executive responsible for the relevant area of business. Investigation by initiator, functional executive, business analyst and systems manager. Development of a business case by functional executive, business analyst and systems manager. Presentation to Executive Committee for approval, ranking and budget. Delivery. Implementation pre- and post-reviews with all parties concerned. Minor projects typically take less than six months to deliver. These projects follow the same steps as major projects with the exception that approval and ranking take place by the IT management team together with the functional executive. IT risks were reviewed during the year with software quality emerging as the most significant risk. Cybercrime was rated fairly low due to the systems in place to mitigate this risk. South Africa is quickly following in the footsteps of first world countries by introducing legislation governing corporate behaviour. Some of the acts that have a direct effect on IT are: The Electronic Communications and Transactions Act The Promotion of Access to Information Act The Regulation of Interception of Communications and provision of communications related information Act Payment card industry data security standard Protection of personal information act Consumer Protection Act Non-compliance with this legislation exposes SPAR to unnecessary risk. It is the specific responsibility of the Group Systems Audit & Security manager to keep abreast of legislative developments by subscribing to a suitable legal service. Any significant IT investments form part of the budget process and are submitted to the board for final approval. The board subsequently oversees the return on investment from these projects. Annual internal and external IT audits are based on the COBIT IT governance framework. Based on these audits and feedback from the Audit and Risk Committees, the board is satisfied that the SPAR Group has adequate resilience arrangements in place for disaster recovery. IT effectiveness is monitored mainly through independent audits, user surveys, uptime and support statistics and user meetings with retailers. The SAP transition to the Enterprise Management generation software based on the HANA database architecture was completed with SPAR being the 6th installation worldwide to achieve this. The second phase of the SAP programme is well underway. This phase completes the finance area with the introduction of accounts payable and accounts receivable. Roll-out of this phase will start in 2019. Preparation for the third and last phase has started. This phase will cover merchandising, replenishment and logistics. Significant investment is also being made in advanced firewall technology to keep abreast with developments in the cybercrime area.	Risk Committee report
13 The governing body should govern compliance with applicable laws and adopted, non-binding rules, codes and standards in a way that supports SPAR being ethical and a good corporate citizen	One Capital is SPAR’s Sponsor and advises the board, through the Company Secretary on compliance with the JSE Listings Requirements. We subscribe to LexisNexis’s online legal library and engaged with LexisNexis to provide their Lexis Assure programme, which is a notification service that informs SPAR of any regulation changes and allows SPAR to view all the relevant Acts pertaining to its business, as well as the level of associated compliance risk for each Act. SPAR has had no regulatory penalties, sanctions or fines and had not had any inspections by environmental regulators. SPAR adheres to the Code of Commercial conduct of the Industry Association for Responsible Alcohol Use and is a co-signatory to industry and government bodies on issues relating to fishery improvements. We are aligning our seafood procurement to be within the parameters of the World Wide Fund for Nature (WWF) South African Sustainable Seafood Initiative (SASSI) guidelines on how seafood should be caught and sold. SPAR’s commitment to food safety and nutrition provides consumers with quality assurance and aims to promote healthy living. We deliver on our promise to provide consumers with high-quality, traceable product through strict adherence to product and packaging specifications. This includes providing information on sourcing and ingredients. To ensure our products meet the highest health and safety standards, we contract with an external laboratory that conducts random monthly testing across our entire product range. South African retailers rely on SPAR’s supplier management and audits to ensure food safety compliance for the products provided by the distribution centres. Where retailers elect to source their own products from smaller suppliers, they take responsibility for food safety. Since this poses a risk to SPAR and retailers alike, we work with retailers and hold them accountable to ensure that the appropriate controls are in place and documented. We also assist small suppliers to improve and align with programmes such as GFSI. An additional food safety control takes the form of quarterly inspections of all stores by a SPAR service provider. The operations in Ireland and Switzerland rely, to a larger extent, on government inspectors who enforce food safety regulations, enhanced by an internal SPAR audit programme. In terms of future reporting, SPAR is considering establishing a mechanism to alert the board of all fines. This would enable the board to monitor and track trends and potential impact.	Risk Committee report
14 The governing body should ensure that SPAR remunerates fairly, responsibly and transparently so as to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term	SPAR’s employees are pivotal in meeting our strategic objectives. The board is committed to paying fair, competitive and market-related remuneration to ensure that SPAR is able to attract, retain and motivate top-quality and talented employees. Shareholders voted in favour of the remuneration policy and implementation report at the AGM in February 2019. The remuneration report contains detail on SPAR’s approach to remuneration, policy and implementation.	Remuneration report
15 The governing body should ensure that assurance services and functions enable an effective control environment, and that these support the integrity of information for internal decision-making and of SPAR’s external reports	The board relies on internal and external assurance providers for effective control. Financial information contained in the 2019 integrated report was independently audited by PwC and external assurance was sought on non-financial data. This includes the group’s 2019 BBBEE verification, which was evaluated independently by AQRate. The SPAR Group board applied its collective mind to the contents of the integrated report and is satisfied that it provides a fair account of the business’s performance, risks, opportunities and prospects. An integrated assurance framework is still in development.	Our reporting approach Audit Committee report
16 In the execution of its governance role and responsibilities, the governing body should adopt a stakeholder-inclusive approach that balances the needs, interests and expectations of material stakeholders in the best interests of the organisation over time	The board takes SPAR’s responsibility as a corporate citizen seriously, which means that we continuously evaluate the group’s impact on stakeholders and the environment. The Social and Ethics Committee is mandated to provide guidance on and oversight of SPAR’s activities regarding the environment, consumers, employees, communities and other stakeholders, and to monitor the company’s sustainability and governance performance in this regard. The committee also ensures that these activities take place in a compliant and ethical manner that contributes to the welfare of the business and our stakeholders. To further expand on the group’s legitimacy, the SPAR guilds also have Social and Ethics Committees. Our sustainability pledge is to create authentic shared value through the following outcomes: contribution to societal change; contribution to responsible living; opportunity creation; and resources stewardship. Our commitment to creating authentic shared value is inherently linked to our values.	Introducing SPAR Fact sheet: The SPAR Guilds Fact sheet: SPAR International and the voluntary trading model Chairman’s report Our material relationships Our strategy and business model Focus on South Africa Focus on Ireland Focus on Switzerland Social and Ethics Committee report

The Nomination Committee (the committee) presents the following report for the 2019 financial year.

Committee governance

Composition

Members of the committee for the financial year under review were independent non-executive directors, Mike Hankinson (Chairman), Harish Mehta and Phumla Mnganga. Their qualifications and experience are available here.

Meetings

The committee met formally four times during the financial year under review. Members’ attendance at meetings are recorded here. The CEO attends meetings by standing invitation to make proposals and provide such information as the committee may require.

Evaluation of the committee

The committee conducted a self-assessment evaluation to measure its effectiveness and performance during the financial year under review. There were no concerns raised with the functioning of the committee nor with the efficiency and competence of its members. The next evaluation will be undertaken in 2021.

Role and responsibilities

The committee’s role and responsibilities are governed by its terms of reference as reviewed and approved annually by the board. The board has allocated the oversight of the process for nominating and electing members of the board, succession planning in respect of board members and the evaluation of the performance of the board, its committees and individual members to the committee.

The committee oversees:

the composition of the board and its committees by setting criteria for board positions, identifying candidates and making recommendations to the board on appointments – in doing so taking into consideration the board’s structure, size, diversity, demographics and balance between executive and non-executive directors;
succession planning for the Chairman, board members and the CEO, which includes the identification, mentorship and development of future candidates;
succession planning linked to all executive and senior management positions;
the induction of new directors and the ongoing training and professional development of board members, as and when required;
the effectiveness and ultimately the performance of the board, its committees and individual members; and
the evaluation of independence process.

The committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference, a copy of which can be found online.

Key focus areas

Board and committee composition

A board appointment policy is in place and sets out the formal, rigorous and transparent procedure for the appointment of new members to the board and its committees. The following changes are noted in respect of the board and its committees:

In the 2018 integrated annual report the committee announced the retirement of Mike Hankinson before the 2020 AGM. However, after much consideration, taking into account his wealth of experience, knowledge and input, the board have requested Mike to stay on and remain the Chairman of the board until the 2021 AGM.
Graham O’Connor’s employment contract as the CEO of SPAR was extended to 2021.
Phinda Madi retired as a non-executive director and member of the Risk Committee on 12 February 2019.
Lwazi Koyana was appointed by the board as a non-executive director with effect from 14 May 2019 and as a member of the Social and Ethics Committee and Risk Committee with effect from 1 November 2019. Given his appointment was made between AGM’s, he will stand for election at the 2020 AGM. The committee assessed the eligibility of Lwazi as a board and committee member and the board accepted the result of the assessment. Accordingly, the board recommends his appointment to shareholders at the 2020 AGM.
Roelf Venter retired as an executive director on 1 October 2019.
Wayne Hook will retire as an executive director and member of the Social and Ethics committee on 31 December 2019.
Chris Wells will retire as a non-executive director, at the 2020 AGM.
Chris Wells will retire as a non-executive director, member of the social and ethics committee and chairman of the risk committee and audit committee.
Andrew Waller has been nominated to replace Chris as the chairman of the Audit Committee at the 2020 AGM, following Chris’s retirement. The committee assessed the eligibility of Andrew as the chairman of the Audit Committee and the board accepted the result of the assessment. Accordingly, the board recommends his appointment as the chairman of the Audit Committee to shareholders at the 2020 AGM.
Marang Mashologu will replace Chris as the Chairperson of the Risk Committee with effect from 1 February 2020.
Graham O’Connor will replace Wayne as a member of the Social and Ethics Committee with effect from 1 January 2020.

The average age of the board is 59 years (2018: 58), therefore succession planning continues to be a key focus area for the board as a whole. It is the boards intention to balance fresh perspectives from new directors with the experience and knowledge of the directors due to retire.

The average tenure of board members is 10 years (2018: 11 years).

Newly-appointed directors receive a comprehensive induction pack which includes the company’s MOI, board charter, committees’ terms of reference, board policies and other documents relating to the company. Directors are encouraged to attend courses that provide them with the necessary training and information related to their duties, responsibilities, powers and potential liabilities, with regulatory and legislative updates provided at quarterly meetings.

Board diversity

The board recognises the benefits of a diverse board and has adopted a board diversity policy which sets out its approach to board diversity. The voluntary targets in terms of the policy are a minimum of three black people (as defined by the Black Economic Empowerment Act of 2003) and two females. At the date of this report, the board comprised of four black people, two of whom are female. A copy of the board diversity policy is available online.

The company is member of the 30% Club of Southern Africa. The aim of the club is to develop a diverse pool of talent for all businesses through the efforts of respective Chairman and CEO members. Business Engage, who are the custodians of the club, run a number of very specific and targeted networking initiatives that look to broaden the pipeline of women at all levels, from “schoolroom to boardroom”. Selected SPAR employees are encouraged to attend these initiatives, which provide them with valuable business insight and help them unlock their future potential to become aspiring leaders.

Rotation of non-executive directors

The company’s MOI requires that one-third of those elected non-executive directors who have served in office longest since their last election, retire by rotation at each AGM and being eligible these non-executive directors may seek re-election should they so wish.

Harish Mehta, Phumla Mnganga and Andrew Waller are required to retire by rotation at the 2020 AGM and have made themselves available for re-election.

The committee has conducted an assessment of the performance of each of the retiring directors and the board accepted the results of the assessment. Accordingly, the board recommends their re-election to shareholders.

Independence

All directors have a duty to act with independence of mind at the 2020 AGM and, in the best interests of the company. Accordingly, the board agreed that internally facilitated independence assessments would be conducted annually by the committee for each non-executive director who has served on the board beyond nine years, and that an externally facilitated, independent assessment would be conducted every three years. The last externally facilitated independence assessment was conducted in 2017 and will again be conducted in 2020.

The board conducted an assessment of the independence and performance of Mike Hankinson, Harish Mehta and Phumla Mnganga who have all served on the board for more than nine years and believe that they continue to be independent of mind, act in the best interest of the company and provide valuable insight and input into the company’s strategy, despite their long tenure on the board.

The assessment is based on whether the director has no interest, position, association or relationship which, when judged from the perspective of a reasonable and informed third party, is likely to influence unduly or cause bias in the decision-making in the best interest of the company.

Performance evaluations

The board agreed that the performance evaluation process would not be externally facilitated and that internal evaluation questionnaires would be completed biannually in respect of the following areas:

the effectiveness of the board’s composition, governance processes and procedures;
the effectiveness of the board’s committees in discharging their respective mandates;
the effectiveness of the executive directors; and
the effectiveness and contributions of each of the directors.

The evaluation in respect of the above areas was conducted during the financial year under review with no concerns raised. The next performance evaluation process will be undertaken in 2021.

In addition to the key focus areas detailed above, the committee received feedback on the succession of executive and senior management. Refer to the CEO’s report regarding the various changes made to the Executive Management Committee during the financial year under review.

Mike Hankinson
Chairman of the Nomination Committee
12 November 2019