LIMITED - mustek.co.za · ustek Corporate Governance Report, including the King IV™ application register 02. CORPORATE GOVERNANCE REPORT INCLUDING THE KING IV™ APPLICATION REGISTER

L I M I T E D

CORPORATE GOVERNANCE REPORT, INCLUDING THE KING IV™

APPLICATION REGISTER 2018

CORPORATE GOVERNANCE REPORT, INCLUDING THE KING IV™ APPLICATION REGISTERfor the year ended 30 June 2018

GOOD CORPORATE GOVERNANCE PROVIDES THE FRAMEWORK WITHIN WHICH WE STRIVE TO CREATE SUPERIOR LEVELS OF PERFORMANCE TO THE BENEFIT OF ALL OUR STAKEHOLDERS. THIS IS WHY THE GROUP WELCOMES THE INTRODUCTION OF THE KING IV™ REPORT ON CORPORATE GOVERNANCE FOR SOUTH AFRICA 2016TM* (KING IV™) AND IS PLEASED TO PRESENT ITS FIRST KING IV APPLICATION REGISTER.

* Copyright and trademarks are owned by the Institute of Directors in Southern Africa NPC and all of its rights are reserved.

The Board of directors of Mustek Limited (the Board) believes that achieving the highest standards of corporate governance is key to achieving the Group’s vision and strategy as well as creating and sustaining value for the Group’s stakeholders.

Transparency, accountability, integrity and openness in reporting and disclosure of information, both operational and financial, are internationally accepted to be vital to the

practice of good corporate governance. Achieving this objective demonstrates Mustek’s public accountability and its commitment to conduct its business within ethical standards and outcomes-based strategic objectives.

As an indication of its commitment to good corporate governance practice, the Group has commenced addressing gaps identified through the King IV™ analysis.

CORPORATE GOVERNANCE REPORT, INCLUDING THE KING IV™ APPLICATION REGISTER (CONTINUED)for the year ended 30 June 2018

Leadership, ethics and corporate citizenship

Principle 1: The Board should lead ethically and effectively

The Group is committed to achieving its goals with integrity, high ethical standards and in compliance with all applicable laws, while being a responsible corporate citizen. The Board will assess its leadership qualities by an informal evaluation to be conducted in the current financial year.

The Board has adopted and implemented policies and procedures to govern the ethics of the organisation and is satisfied that its practices prove ethical and effective leadership through the collective and the individual behaviours of all of its members.

Principle 2: The Board should govern the ethics of the Group in a way that supports the establishment of an ethical culture

The Code of Ethics and Business Conduct is included as part of induction for new employees as well as other regular training programmes and is available on the company’s website at www.mustek.co.za. Ethics are part of our recruitment process, evaluation of performance and rewards of employees as well as the sourcing of suppliers.

Directors and officers of the company are committed to always act in good faith and in the best interest of the company. A register of directors’ interests is circulated at each meeting for directors to confirm their interests. Declaration of interests is a standard agenda item and specific conflict of interests are captured in the minutes.

A whistle-blowing line exists and any incident reports are being investigated with recommended actions to be taken. The Board is satisfied that the awareness of ethical requirements is adequate and its processes effective.

Principle 3: The Board should ensure that the Group is and is seen to be a responsible corporate citizen

No material ethical leadership and corporate citizenship deficiencies were noted. The Board, through the Audit and Risk Committee as well as the Social and Ethics Committee, monitors compliance with Mustek’s governing policies and culture and delegated the responsibility for monitoring of the corporate citizenship to its Social and Ethics Committee and executives.

Mustek did not receive any requests during the financial year in terms of the Promotion of Access to Information

Act, 2000 (Act 2 of 2000). The Board is satisfied that the practice of the core purpose, values and strategy of the company is consistent with it being a responsible corporate citizen and that it has made disclosures in the 2018Integrated Annual Report in this regard.

Strategy, performance and reporting

Principle 4: The Board should appreciate that the Group’s core purpose, its risks and opportunities, strategy, business model, performance and sustainable development are in all elements of the value creation process (refer to strategy, material matters and risks on pages 8 to 15 in the Integrated Annual Report)

The Board is the highest decision-making body in the Group. It approves the Group’s strategy and ensures that it is aligned with the Group’s values. The Board assumes collective responsibility for steering and monitoring strategy implementation and performance targets as well as any risks involved in the implementation of the strategy. It is collectively responsible for the Group’s long-term sustainability and success.

The Board has considered the strategies for the Group and operating subsidiaries, delegated these to management and aligned incentive programmes accordingly. The Board is satisfied that the Group’s core purpose and values are being realised and steered though strategy and quarterly monitoring.

Principle 5: The Board should ensure that reports issued by the Group enable stakeholders to make informed assessments of the Group’s performance, and its short and medium-term prospects (refer to strategy, material matters and risks on pages 8 to 15 in the Integrated Annual Report)

ReportingThe Board is overall responsible for overseeing that reports to stakeholders comply with the necessary legal requirements as well as include true, accurate and reasonable information. This function is delegated to the Audit and Risk Committee and recommended to the Board for final approval. Materiality issues are formally determined and reported on accordingly.

The Board has made its Integrated Annual Report, its annual financial statements, presentations to shareholders and investment analysts, SENS announcements, relevant reports and any disclosures of materiality available to stakeholders through publication on its website.

Mustek 2018Corporate Governance Report, including the King IV™ application register 2018 01


Governing structures and delegation Primary role and responsibilities of the Board

Principle 6: The Board should serve as the focal point and custodian of corporate governance in the Group

The role, responsibilities and procedural conduct of the Board have been set out and approved in a Board Charter, which emphasises the Board’s role as the focal point and custodian of corporate governance in the organisation. Board sub-committee terms of references and various formal policies reinforce this position. The Integrated Annual Report has disclosed meetings held and attendance at each and the Board’s satisfaction in terms of meeting its responsibilities.

The directors have access to the advice and services of the company secretary. They are entitled, at the company’s expense, to seek independent professional advice about the affairs of the company regarding the execution of their duties as directors.

Summarised roles and responsibilities•• governing the Group on behalf of its shareholders•• steering the Group and setting its strategic direction•• approving policy and planning that gives effect to the direction provided

•• overseeing and monitoring the implementation and execution by management

•• appointment of chief executive officer•• ensuring communication to stakeholders is timeous and transparent

•• ensuring compliance with relevant legal requirements•• approving and monitoring the annual budget•• guarding and promoting values and ethics•• managing the Group’s risk profile.

The Board met four times during the reporting period and held a strategy workshop on 21 June 2018. The Board is satisfied that it has fulfilled its responsibilities in accordance with its charter for the reporting period.

Board members as at 30 June 2018

Meeting attendance

Meeting attendance

Independent non-executive directors Invitees

Mdu Gama 5/5 Rectron executives

Ralph Patmore 5/5 Spencer Chen 5/5

Lindani Dhlamini 4/5 Christiaan Engelbrecht* 2/2

Non-executive director Gerhard Malan* 3/3

Vukile Mehana 3/5 Company secretary

Executive directors Sirkien van Schalkwyk 5/5

David Kan 5/5

Hein Engelbrecht 5/5

Neels Coetzee 5/5

* Appointed and resigned during reporting period.

In addition to the focus areas per sub-committee, the Board is pleased to report back on its focus areas of 2018 and lists its focus areas for the current financial year:

Focus areas during 2018 Delivery 2018

Implementation of King IV™ •• The terms of reference were updated with the requirements of King IV™ and all policies falling under the ambit of the committee

Introduced the new remuneration report to shareholders

•• The remuneration report, including the remuneration policy and implementation report are included in this Integrated Annual Report and will be tabled to shareholders for approval as two separate resolutions at the company’s annual general meeting

Mustek 2018Corporate Governance Report, including the King IV™ application register 201802


2019 focus areas•• enhancing corporate governance processes and practices and ensuring alignment with recommended practices of King IV™

•• executing of strategy.

Principle 7: The Board should comprise the appropriate balance of knowledge, skills, experience, diversity and independence for it to discharge its governance role and responsibilities objectively and effectively

The Board considers its composition in terms of the balance of its members annually. This is done in conjunction with inputs from the Remuneration and Nomination Committee and the informal evaluation processes conducted at Board and sub-committee level. The Integrated Annual Report has disclosed all recommended matters. The Board is further satisfied that it has an appropriate balance of knowledge, skills, experience, diversity and independence, given proportionality considerations in respect of the Group.

Board composition and independenceAs at 30 June 2018, the Board consisted of three independent non-executive directors, one non-executive director and three executive directors. The Board’s composition is in line and in accordance with the principles of King IV™, being that a majority of directors are non-executive and the majority of non-executive directors are independent.

The non-executive directors have the necessary skills and experience to provide judgement that is independent of management on matters relating to strategy, performance, resources, transformation, diversity, equity employment, standards of conduct and evaluation of performance. The Board is satisfied that its composition reflects the appropriate mix of knowledge, skills, experience, diversity and independence.

Tenure of non-executive directors

< 3 years > 9 years

- 2

- 1

- 0

2 2

Classi�cation

Independent non-executive

directors

Executive directors

Non-executive directors

- 3

- 2

- 1

- 0

3

1

3

■ White ■ Black

Demographics and gender

Female Male

33

10



Board appointment and re-election process The Board has a formal and transparent policy regarding the appointment of directors to the Board. While the appointments are a matter for the Board, the authority to oversee the nomination and to carry out the interview process have been delegated to the Remuneration and Nomination Committee.

Apart from a candidate’s experience, knowledge, skills, availability and likely fit, the committee also considers a candidate’s integrity, as well as other directorships and commitments to ensure that the candidate will have sufficient time to discharge his/her role properly. The Remuneration and Nomination Committee also considers race and gender diversity in its assessment in line with its race and gender diversity policy. The policy was updated to include a target for race representation in its membership.

In line with the memorandum of incorporation, one-third of the non-executive directors and executive directors are required to retire, and if available and eligible, stand for re-election at the company’s annual general meeting. Those directors who have been in office for the longest, as calculated from the last re-election or appointment date, are required to stand for re-election. At the 2018 annual general meeting, Vukile Mehana, Mdu Gama and Neels Coetzee will retire and be eligible for re-election. A brief professional profile of these directors can be found on pages 70 and 71 of the Integrated Annual Report.

New appointees are appropriately familiarised with the Group’s business through an induction programme. The composition of the Board is reviewed on a regular basis to ensure ongoing compliance with the requirements set out in the Companies Act, 71 of 2008 as amended (the Companies Act) and King IV™.

The management of the Board’s succession process is crucial to its sustainability. The Remuneration and Nomination Committee ensures that, as directors retire, candidates with the necessary experience are identified to ensure that the Board’s competence and balance is maintained and enhanced, taking into account the Group’s current and future needs.

The role of the Board in formulating and prioritising the company’s strategy remains a focus area, as well as the mix of financial and operational information to support the measurement of the strategy. Informal succession planning for the chairman of the Board and sub-committees, as well as the executive team, were discussed and agreed on at a Remuneration and Nomination Committee meeting.

The Board is responsible for monitoring and reporting on the effectiveness of the company’s system of internal control. It is assisted by the Audit and Risk Committee in the discharge of this responsibility.

The non-executive directors derive no benefit from the company other than their fees and emoluments as proposed by the Board through the Remuneration and Nomination Committee and approved by shareholders at the Group’s annual general meeting.

Independents and conflicts During the year ended 30 June 2018, none of the directors had a significant interest in any contract or arrangement entered into by the company or its subsidiaries, other than as disclosed in note 21 to the annual financial statements.

Directors are required to inform the Board timeously of conflicts or potential conflicts of interest that they may have in relation to particular items of business. Directors are obliged to excuse themselves from discussions or decisions on matters in which they have a conflict of interest, in accordance with the conflict of interest policy that is in place. A standard agenda item is included for members to declare whether any of them have any conflict of interest in respect of a matter on the agenda and included in the minutes.

When categorising the non-executive directors as independent, the interests, position, association or relationship was taken into consideration. This, together with the test of being judged from the perspective of reasonable and informed third party and other indicator in a substance-over-form basis, Ralph Patmore and Mdu Gama were found to be independent despite their tenure on the Board of more than nine years. The categorisation of directors can be found on pages 70 and 71 of the Integrated Annual Report.

Principle 10: The Board should ensure that the appointment of, and delegation to, management contributes to role clarity and the effective exercise of authority and responsibilities

The Board has approved a delegation of authority framework. The Board is satisfied that the Group is adequately resourced.



Non-executive directorsAll members of the Board have a fiduciary responsibility to represent the best interest of the Group and all of its stakeholders. The Group’s non-executive directors are individuals of a high calibre and credibility who make a significant contribution to the Board’s deliberations and decisions. They have the necessary skills and experience to exercise judgement on areas such as strategy, performance, transformation, diversity and employment equity.

The chairman The chairman’s role is to set the ethical tone for the Board and to ensure that the Board remains efficient, focused and operates as a unit. Vukile Mehana is a non-executive chairman and his role is separate from that of the chief executive officer, David Kan. Mdu Gama is the lead independent director.

Vukile Mehana provides overall leadership to the Board and the chief executive officer without limiting the principle of collective responsibility for Board decisions. He is a member of the Remuneration and Nomination Committee.

Mdu Gama, in his capacity of lead independent director, fulfils the following functions:•• leads the Board in the absence of the chairman•• serves as a sounding board for the chairman•• acts as intermediary between the chairman and other members of the Board

•• deals with shareholders’ concerns where contact through the normal channels has failed to resolve concerns, or whether such contact is inappropriate

•• strengthens independence on the Board due to the chairman not being independent

•• chairs discussions and decision-making by the Board on matters where the chairman has a conflict of interest

•• leads the performance appraisal of the chairman.

The role of the chairman, chief executive officer and lead independent are documented in the Board Charter.

Chief executive officerThe Board appoints the chief executive officer to lead and implement the execution of the approved strategy. David Kan serves as the link between management and the Board and is accountable to the Board. Board authority conferred on management is delegated through the chief executive officer against approved authority levels.

The Remuneration and Nomination Committee evaluates the performance of the chief executive officer against approved targets on an annual basis.

Company secretaryThe company secretary plays a vital role in the corporate governance of the Group and is responsible for ensuring Board compliance with procedures and regulations of a statutory nature. The company secretary ensures compliance with the JSE Listings Requirements and is responsible for the submission of the annual compliance certificate to the JSE Limited (JSE).

The company secretary ensures that, in accordance with the pertinent laws and regulatory framework, the proceedings and affairs of the Board and its members and the company itself are properly administered.

The Board satisfied itself regarding Sirkien van Schalkwyk’s work experience, performance, technical skills and overall competence in fulfilling her role as company secretary at the previous meeting of the Board (during which time she was excused from the meeting). She is a consultant and maintains an arm’s length relationship with the Board. She reports to the chairman on all statutory duties and functions performed relating to the governing body.

The company secretary is accountable to the Board to:•• ensure that Board procedures are followed and reviewed regularly

•• ensure applicable rules and regulations for the conduct of the affairs of the Board are complied with

•• maintain statutory records in accordance with legal requirements

•• guide the Board as to how its responsibilities should be properly discharged in the best interest of the company

•• keeps abreast of, and informs, the Board of current and new developments regarding best practice corporate governance thinking and practice.

Governance frameworkThe Group seeks to maintain strong corporate governance structures and processes by working within a clearly defined governance framework, thus enabling the delivery of sustainable growth to all our stakeholders. The governance framework promotes the establishment of a Board sub-committee structure with the intention of supporting the Board in the execution of its duties. The Board has delegated specific authority to each sub-committee, while still enabling elective control as well as preserving its accountability. Roles and responsibilities for each committee are defined, and the Board has approved terms of reference for the various sub-committees.



Governance reporting structure

L I M I T E D

REMUNERATION AND NOMINATION

COMMITTEE

Mustek Limited Board

SOCIAL AND ETHICSCOMMITTEE

GROUP

GROUP

Change Management Committee –

enterprise resource planning

Employment Equity

Committee

Employment Equity

Committee

Training Committee

AUDIT AND RISK

COMMITTEE

Change Management Committee –

enterprise resource planning

IT Steering Committee

GROUP

IT Executive Committee

GROUP

GROUP



Principle 8: The Board should ensure that its arrangements for delegation within its own structures promote independent judgement and assist with the balance of power and the effective discharge of duties

The Board has formally established all compulsory committees and approved all their terms of references. The Board has considered and reviewed its committees and is satisfied that they experience a suitable balance of members and objective review and decision-making over their affairs. The Board has considered and is satisfied with its committee structure, balance of authority across its committees and their reporting standards.

Board committeesThe terms of reference of committees are subject to change as and when required by the Board in order to accommodate the company’s changing needs. Roles and associated responsibilities and the composition of membership across committees are considered holistically. All committees have a minimum of three members and, as a whole, have the necessary knowledge, skills, experience and capacity to execute their duties effectively. The chairman of each Board committee reports at each scheduled meeting of the Board, and minutes of Board committee meetings are provided to the Board.

Both the directors and the members of the Board committees are supplied with full and timely information that enables them to properly discharge their responsibilities. All directors have unrestricted access to all Group information.

The chairman of each Board committee is required to attend annual general meetings to answer questions raised by shareholders.

Executive CommitteeThe Executive Committee consists of the chief executive officer, financial director and operational executives. The committee meets regularly to review current operations, identify risks and the management thereof, develop strategies and recommend policies for consideration by the Board and implement the strategy, directives and decisions of the Board.

Mustek directors and executive staff, as well as operational management, have clearly defined responsibilities and levels of authorisation for their respective area of the business. The delegation of these responsibilities is reviewed annually.

Audit and Risk CommitteeIn reviewing the committee composition during the year, it was decided that, due to the size of the company, the Audit Committee and Risk Committee would remain one committee. However, the agenda is divided into two separate sections so as to ensure that both audit and risk management responsibilities are attended to.

The committee comprises three independent non-executive directors, complying with the definition of independent in terms of the Companies Act, 2008, as amended.

The composition of the committee is annually reviewed, taking into consideration the recommendation from King IV™. The Board is satisfied that the independence, experience and qualifications of each member enables them to fulfil the committee’s mandate. The chief executive officer, managing director and financial director, partner of the external auditors and the internal auditor attend meetings by invitation. In addition to scheduled meetings, the committee meets at least once a year with the company’s internal and external auditors, without management being present.

The Audit and Risk Committee meets at least three times a year and more if necessary. The committee roles and responsibilities, as well as its composition, are set out below.

Summarised roles and responsibilities•• providing the Board with additional assurance regarding the efficiency and reliability of the financial information used by the directors to assist them in the discharge of their duties

•• reviewing interim and annual financial statements, the Integrated Annual Report and any other external reports issued by the company

•• overseeing the internal audit function•• ensuring that significant business, financial and other risks have been identified and are being managed suitably

•• ensuring independence of the external auditor and overseeing the external audit process

•• ensuring good standards of governance, reporting and compliance are in operation

•• overseeing the Group’s risk management profile.



Audit and Risk Committee members and invitees as at 30 June 2018

MembersMeeting

attendance InviteesMeeting

attendance

Lindani Dhlamini (chairman) 4/4 Chief executive officer 4/4

Mdu Gama 4/4 Managing director 4/4

Ralph Patmore 4/4 Financial director 4/4

External auditor 4/4

Internal auditor 4/4


Approval of a quality assurance improvement programme (QAIP)

•• The QAIP programme was approved by the committee for implementation during the current financial year

Enterprise resource plan (ERP) implementation

•• The committee endorsed the implementation of an ERP system, however, final implementation was delayed

Receive ISO 9001:2015 •• BSI recommended Mustek for certification of the new ISO 9001 standard of 2015 and the certificate was received


The committee is chaired by the chief executive officer and Olga-Lee Levey, the chief financial officer, is the chief information officer. The members represent all businesses of the Group to ensure consistency in use and application of IT systems and controls.

Summarised roles and responsibilities•• adopt an IT strategy to be implemented once approved by the Board

•• adopt and implement an internal IT control framework•• exploit opportunities to improve the performance and sustainability of the company through the use of IT

•• oversee the value delivery on IT and monitor the return on investments on significant IT projects

•• ensure that intellectual property contained in information systems are protected

•• ensure that adequate business arrangements are in place for disaster recovery

•• ensure that all personal information is treated by the company as an important business asset and is identified

•• ensure that an information security management system is developed and implemented.

2019 focus areas•• completion of the implementation of the new enterprise resource planning (ERP) system

•• compliance with the requirements of 22.15(h) of the JSE Listings Requirements in the appointment of the external auditor

•• adoption and compliance with the new IFRS standards.

The committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference for the reporting period.

Refer to pages 100 to 103 of the annual financial statements for the Audit and Risk Committee report for more information.

IT Steering CommitteeThe IT Steering Committee governs technology and information responsibilities as recommended by King IV™. The committee met four times during the reporting period to report on their duties in accordance with its terms of reference as approved by the Board. The committee reports to the Board via the Audit and Risk Committee.



Social and Ethics CommitteeDuring the reporting period, Ralph Patmore was appointed as member of the committee to align with the requirements of King IV™. At the same time, Hein Engelbrecht stepped down as member of the committee, but will remain a standing invitee. The committee therefore comprises two independent non-executive directors and a prescribed officer.

During the reporting period, the committee decided to have a minimum of two meetings per annum, however, the Social and Ethics Committee met three times during the

reporting period. The committee roles and responsibilities as well as its composition are set out below.

Summarised roles and responsibilities•• planning, implementing and monitoring the Group’s strategy for transformation

•• monitoring compliance with legislation•• monitoring employment equity and fair labour practices•• monitoring good corporate citizenship and the Group’s contribution to the development of communities in which it operates

Social and Ethics Committee members and invitees as at 30 June 2018

Members Meeting


attendance

Mdu Gama 3/3 Chief executive officer 3/3

Ralph Patmore* 3/3 Financial director 3/3

Spencer Chen 3/3 Internal auditor 3/3

Hein Engelbrecht* 3/3 Compliance manager 3/3

* Also attended meetings as invitee.


Develop a social media policy •• A social media policy was approved and implemented in the Group

Monitor the employment equity plan

•• The targets of year 2 of the five-year plan were met

Maintain B-BBEE rating •• Mustek managed to retain its level 1 rating and Rectron a level 2 B-BBEE contributor


2019 focus areas•• monitor implementation of the employment equity plan•• maintain or improve B-BBEE level ratings •• aligning to be ready for Protection of Personal Information Act implementation once promulgated

•• compliance with new legislation on the National Environment Management: Waste Act, 2008

•• maturing of stakeholder engagement approach.

The committee is satisfied that it has fulfilled its responsibilities in accordance with its terms of reference for the reporting period.

Refer to pages 80 to 83 of the Integrated Annual Report for the Social and Ethics Committee report.



Remuneration and Nomination CommitteeIn reviewing the committee composition during the year, it was decided that, due to the size of the company, the Remuneration Committee and Nomination Committee would remain one committee. The committee comprises two independent non-executive directors and a non-executive director.

The chief executive officer, managing director and financial director attend meetings by invitation, but may not participate in discussions on their own remuneration. The chairman of the Board is not eligible for appointment as chairman of the committee, but will preside as chairman when the committee fulfils its oversight responsibilities on nomination matters and Board/director interactions.

The Remuneration and Nomination Committee meets at least twice a year and more if necessary. The committee’s roles and responsibilities, as well as its composition are set out below.

Summarised roles and responsibilities•• identifying and nominating new directors for approval by the Board

•• ensuring that appointments to the Board are formal and transparent

•• approving the classification of directors as independent•• overseeing induction and training of directors and conducting annual performance reviews of the Board and Board committees

•• overseeing an appropriate separation between executive, non-executive and independent directors

•• ensuring proper and effective functioning of the Group’s Board committees

•• reviewing the Board’s structure, the size and composition of the various Board committees and making recommendations

•• overseeing the remuneration philosophy and practices•• overseeing and monitoring of the Mustek share appreciation rights scheme.

Remuneration and Nomination Committee members and invitees as at 30 June 2018

Members Meeting


attendance

Ralph Patmore (chairman) 2/2 Chief executive officer 2/2

Vukile Mehana (Nomination chairman) 2/2 Managing director 2/2

Mdu Gama 2/2 Financial director 2/2

Company secretary 2/2


Review and update the policy on remuneration and benefits, policy on job grading

•• The policies were updated and approved

Develop company policy on succession planning

•• Approved the company policy on succession planning

Introduce the new remuneration report to shareholders

•• The remuneration report, including the remuneration policy and implementation report is included in this Integrated Annual Report and will be tabled to shareholders for approval as two separate resolutions at the company’s annual general meeting

Gender and race representation on the Board

•• The committee set voluntary targets in terms of race and gender representation on the Board and approved a policy for implementation


2019 focus areas•• Implement the long-term succession plan•• Implement the job grading system.

Refer to pages 86 to 91 of the Integrated Annual Report for the Remuneration and Nomination Committee report, included in the remuneration policy and implementation report.



Principle 9: The Board should ensure that the evaluation of its own performance and that of its committees, its chair and its individual members, supports continued improvement in its performance and effectiveness

EvaluationThe Board assumes responsibility for the evaluation of its own performance and that of its committees, its chair and its individual members. The Board conducts this evaluation every second year.

Governance functional areas

Principle 11: The Board should govern risk in a way that supports the Group in setting and achieving its strategic objectives

Risk managementThe Board has set the direction for how risk should be approached, addressed this through the adoption of appropriate policies and has delegated the responsibility for monitoring risk to its Audit and Risk Committee. Risk appetite and tolerance parameters, as well as the potential opportunities posed by risks are taken into account for strategy development and in determining the key performance indicators. Risks are continually being identified, assessed, mitigated and managed through a formal review process and recorded in the risk register.

Principle 12: The Board should govern technology and information in a way that supports the Group setting and achieving its strategic objectives

Technology and information governanceThe Board has reviewed and is satisfied that the monitoring and management of information and technology is effectively attended to internally or by outsourced service providers, given the nature of the Group’s business and proportionality considerations. Technology and information governance is overseen by the IT Steering Committee, reporting to the Audit and Risk Committee.

The Group IT function ensures the integration of people, technology, information and processes across the Group. Technology and information risks are integrated into the risk register and reported on quarterly.

Principle 13: The Board should govern compliance with applicable laws and adopted, non-binding rules, codes and standards in a way that supports the Group being ethical and a good corporate citizen

Compliance governanceThe Board has set the direction for how governance and compliance should be approached and addressed through practice, Board work plans, structured agendas and reports from its committees. The monitoring of compliance has been delegated to the Social and Ethics Committee.

There have been no material or repeated regulatory penalties, sanctions or fines imposed on the Group, the Board, its members or officers for any contravention of, or non-compliance with statutory obligations.

Principle 14: The Board should ensure that the company remunerates fairly, responsibly and transparently so as to promote the achievement of strategic objectives and positive outcomes in the short and medium term

The Group’s remuneration policy aims to attract, retain and motivate skilled and performing employees to execute the Group’s strategy. The remuneration philosophy and framework is predominantly guided by the business strategy. During the reporting period, the remuneration policy and framework was enhanced in line with King IV™ in a conscious effort to give effect to the principles of fair, responsible and transparent remuneration.

Going forward, the remuneration policy and our implementation report will be put to shareholders as two separate non-binding advisory votes at the company’s annual general meeting annually.

The Board has considered its remuneration policy and is satisfied that the organisation remunerates fairly, responsibly and transparency to promote sustainable value creation.



Principle 15: The Board 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 the Group’s external reports

The Board has set the direction for how assurance services and functions should be approached and addressed through the delegation of this responsibility to its Audit and Risk Committee. The role of the internal audit function is clarified through an Internal Audit Charter. The Board has considered the resulting internal and external controls of the organisation and is assured with the integrity of the information used in its reports.

Stakeholder relationships

Principle 16: In the execution of its governance role and responsibilities, the Board should adopt a stakeholder-inclusive approach that balances the needs, interests and expectations of material stakeholders in the best interest of the Board over time

Communication and engagement with stakeholders is vital to ensure transparency. The Board is committed to appropriate disclosure in its communication and interaction with stakeholders. The chief executive officer and financial director act as chief spokespersons for the company and all investor-related correspondence is dealt with by them.

It is the policy of the Group to pursue dialogue with institutional investors, engaging constructively within the frameworks provided by statutory and regulatory environments with regard to the dissemination of information. This helps ensure a fair accurate representation and valuation of the company and its performance.

The company’s annual general meeting provides an important platform for engagement with shareholders as attendance of these meetings offers them an opportunity to participate in discussions relating to company agenda items and to raise potential issues and concerns. Explanatory notes setting out the effects and all proposed resolutions will be included in the notice of annual general meeting.

Refer to pages 57 to 60 of the Integrated Annual Report for more information regarding stakeholder relationships.


L I M I T E D

www.mustek.co.za

Documents

LIMITED - mustek.co.za · ustek Corporate Governance Report, including the King IV™ application register 02. CORPORATE GOVERNANCE REPORT INCLUDING THE KING IV™ APPLICATION REGISTER