BOARD OF DIRECTORS

BOARD COMPOSITION

Tongaat Hulett has a unitary Board structure, which at 31 March 2018 comprised nine non-executive and two executive directors, drawn from a broad spectrum of the business community. As per Principle 7 of King IV™, collectively, the directors possess a wide array of skills, knowledge, diversity and experience, and bring independent judgement to Board deliberations and decisions, with no one individual or group having unfettered powers of decision-making. The Board acknowledges that its demographic diversity (including race, gender, historically disadvantaged groups, age, regional diversity and nationality) promotes the consideration of various perspectives and thus enhances robust, balanced and effective discussions at the top tier of the organisation. The Board is sufficiently gender diverse, with five (5) out of eleven (11) directors on the Board being women, and has formally adopted a gender policy in accordance with the JSE Listings Requirements. The Board is also sufficiently race diverse, with seven (7) out of eleven (11) directors on the Board, being a majority of directors, representing previously disadvantaged groups. Given the importance that the Board places on gender and race diversity as evidenced in its current composition, the Tongaat Hulett Board is satisfied with how it applies the JSE Listings Requirements in this regard and is not contemplating any diversity targets at this stage. Furthermore, the Board is satisfied that its composition reflects the appropriate mix of knowledge, skills, experience, diversity and independence. The roles of the Non-Executive Chairman, CB Sibisi, and the Chief Executive Officer, PH Staude, are separate with a clear division of responsibilities.

Board and committee composition

The Chairman is not considered fully independent by virtue of his involvement in the company's BEE equity participation structure. Ms. J John, who is an independent non-executive director is the Lead Independent Director in situations where the Chairman is not independent.

BOARD CHARTER AND DELEGATED AUTHORITIES

The Board has an approved charter and an annual work plan that outline matters identified and reserved for its consideration. The charter records the Board’s objective to provide responsible business leadership with due regard to the interests of shareholders and other stakeholders, while reflecting a demonstrable concern for sustainability as a business opportunity that guides strategy formulation. It includes the Board’s responsibility to:

• lead the company ethically and effectively;
• govern the ethics of the company in a way that supports the establishment of an ethical culture;
• ensure that the company is and is seen to be a responsible corporate citizen by having regard to not only the financial aspects of the business of the company but also the impact that business operations have on the environment and society within which it operates;
• appreciate that the company’s core purpose, its risks and opportunities, strategy, business model, performance and sustainable development are all inseparable elements of the value creation process;
• govern risk and information technology in a way that support the organisation in setting and achieving its strategic objectives;
• serve as the focal point and custodian of corporate governance in the company;
• comprise the appropriate balance of knowledge, skills, experience, diversity and independence for it to discharge its governance role and responsibilities objectively and effectively;
• ensure that its arrangements for delegation within its own structures promote independent judgment, and assist with the balance of power and the effective discharge of its duties;
• 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;
• ensure that the appointment of, and delegation to management contribute to role clarity and the effective exercise of authority and responsibilities;
• govern compliance with applicable laws and adopted non-binding rules, codes and standards in a way that supports the organisation being an ethical and a good corporate citizen;
• ensure that the organisation remunerates fairly, responsibly and transparently, to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term;
• 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 the organisation’s external reports; and
• in the execution of its governance role and responsibilities, the Board ensures that it adopts 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 has mandated the following four committees, each with approved formal terms of reference, to support it in the execution of its governance responsibilities.

• Audit and Compliance
• Nomination
• Remuneration
• Risk, SHE, Social and Ethics

The Board has further delegated the authority to run the day-to-day affairs of the company to the Chief Executive Officer and other senior executives, as required by Principle 10 of King IV™. Levels of authority and materiality delegated to management are approved by the Board and clearly recorded in the Authorities Framework contained in the Corporate Governance Manual that is utilised by all operations within Tongaat Hulett. The Board is satisfied that it has discharged its responsibilities in accordance with its charter.

Board Changes and Rotation at AGM

In accordance with the company’s memorandum of incorporation (MOI), directors are required to retire either by rotation at intervals of three years, or at the close of business of the next annual general meeting (AGM) after a director attains the age of seventy (70) years. Directors retiring by rotation who avail themselves may be re-elected at the AGM at which they retire. New directors may only hold office until the next AGM, where they will be required to retire and offer themselves for election. Retiring at the next AGM (on 8 August 2018) by rotation are MH Munro, TA Salomão and CB Sibisi, who being eligible and available, will seek re-election as directors. The MOI states that a director who has reached the mandatory retirement age of seventy (70) is required to retire at the AGM and may be re-elected by shareholders for a specific term as determined by shareholders in a specific ordinary resolution. This applies to the Chairman of the Remuneration Committee, SG Pretorius, who turned seventy (70) in 2018, and whose services, experience, knowledge, skills and wisdom the company wishes to retain for a further period of up to two (2) years. The Nomination Committee has assessed each of the retiring directors and the Board unanimously recommends their re-election. There were no new appointments to the Board during the period under review. There are no term contracts of service between any of the directors and the company or any of its operations.

Board induction and development

On appointment, new directors have the benefit of induction activities aimed at broadening their understanding of the company and the markets within which it operates. The Company Secretary ensures that directors receive accurate, timely and clear information. The Chief Executive Officer and key executives hold detailed discussions with new directors on business performance, strategic objectives and key themes. This, together with business reports of prior Board and committee meetings, discussions with heads of operations accompanied by site visits of the mills, agriculture and development sites, provides new directors with sufficient exposure to the company’s operating dynamics. Directors are also encouraged to update their skills, knowledge and experience through participation in relevant programmes as deemed appropriate from time to time.

Board and committee meeting attendance for the year ended 31 March 2018

Board evaluation

The Board endorses the requirements of Principle 9 of King IV™ that requires the Board to ensure that the evaluation of its own performance and that of its committees, its chair and individual members should support continued improvement in its performance and effectiveness. The formal self-evaluation process of the Board and its committees, the assessment of the Chairman’s performance by the Board and the assessment of the performance of individual directors by the Chairman, which are conducted at least every two (2) years, are an integral element of the Board’s activities to review and improve its performance continually. This evaluation process also includes assessing the independence of non-executive directors as envisaged in King IV™. Of the nine non-executive directors, seven (7) are considered independent, while two (2) are not considered independent by virtue of their involvement in the company’s black economic empowerment equity participation structure. In arriving at the conclusion of independence, the requirements of the Companies Act and King IV™ on independence are taken into account and consideration is given, among others, to whether the individual non-executive directors are sufficiently independent of the company so as to effectively carry out their responsibilities as directors, that they are independent in judgement and character, and that there are no instances of conflicts of interest in the form of contracts, relationships, share options, length of service or related party disclosures that could appear to affect independence. Four (4) of the directors, CB Sibisi, J John, F Jakoet and N Mjoli-Mncube have been with the company for a period longer than nine (9) years. In addition, CB Sibisi is not independent by virtue of his participation in the company’s black economic empowerment equity participation structure. The directors have been assessed by the Board in accordance with the requirements of King IV™ and were confirmed to be independent.

The Board has decided to conduct the next formal, externally facilitated evaluation process for the performance of the Board, its committees, the Chairman and members as a whole in 2018/19 and an overview of the results and remedial action taken, if applicable, will be disclosed accordingly. The Board is satisfied that its evaluation processes improve its performance and effectiveness.

The Board meets at least five (5) times a year, with special or additional meetings convened as circumstances dictate. Comprehensive documentation is prepared and distributed in advance of each meeting, with an opportunity to propose additional matters for discussion at meetings. Independent professional advice is available to directors in appropriate circumstances at the company’s expense.

Evaluation of Company Secretary

All directors have access to relevant information and to the advice and services of the Company Secretary, MAC Mahlari, who holds BA and LLB qualifications, and has over ten (10) years' experience as a Company Secretary. She was appointed in December 2009. After assessing the Company Secretary as required by the JSE Listings Requirements, the Board concluded that Ms. Mahlari is suitably qualified, competent and meets the appropriate experience requirements to carry out the functions of Company Secretary of a public listed company. Ms. Mahlari is not a director of the company, nor does she enjoy any related or inter-related relationship with any of the directors or executives of the company that could give rise to a conflict of interest. The recommended best practices stipulated in King IV™, under Principle 10, on the arrangements for the provision of professional corporate governance services have been adequately provided to the Board.

BOARD COMMITTEE STRUCTURES AND RESPONSIBILITY

In compliance with Principle 8, the Board has ensured that its arrangements for delegation within its own structures promote independent judgment, and assist with balance of power and the effective discharge of its duties. The Board has reserved certain matters for its exclusive mandate (as set out above) and has approved and delegated authority for specific matters to various committees, all of which have formal terms of reference. Through transparency, disclosure, review and regular reporting by the committees, the Board is able to receive assurance that, inter alia, key risk and opportunity areas, operational, financial and non-financial aspects relevant to the company’s various businesses are monitored. The formal terms of reference and the delegated authority regarding each Board committee are set out in the Corporate Governance Manual, and are summarised below.

• Remuneration Committee
• Nomination Committee
• Audit and Compliance Committee
• Risk, SHE, Social & Ethics Committee