Our governance

Corporate governance is the exercise of ethical and effective leadership by the board to achieve the governance outcomes of ethical culture, good performance, effective control and legitimacy.

Our approach to corporate governance is underpinned by our integrated governance model, which extends beyond compliance. We believe that good corporate governance supports business integrity, ethical behaviour and accountability for decisions that have economic, social and environmental impacts in the short, medium and long term.

We subscribe to, and apply, the principles of good governance contained in King IV. The board believes that the principles and recommended practices are integrated throughout the group to support the achievement of the governance outcomes.

A register of our application of the principles of King IV together with our full corporate governance report.

Our integrated governance m

Governance framework

The authority, responsibility and accountability of the group's ethics, performance and sustainability rests with the board. The board formally delegates responsibility to the CEO and in turn, to his direct reports and sequentially throughout the organisation.

Our businesses operate in diverse geographies, industries and markets with different socioeconomic, political, regulatory and technological profiles. The complex interplay of opportunities and threats within these environments are closely monitored and addressed with strategies, approved annually by the board, that ensure robust competitive positions. This diversity also necessitates differences in the nature, structure and processes of delegation, except for financial expenditure for which authority limits are consistent across the group.

Formal and informal scanning of the environment is an everyday management responsibility, and the board is regularly appraised of developments that could have a bearing on the performance and sustainability of the group. Similarly, executive management responds tactically to everyday shifts in the operating context.

Our leaders are mindful that entrepreneurial creativity and responsiveness is a competitive advantage and every effort is made to integrate governance processes in the least bureaucratic way possible. Given the dynamic nature of best governance practices, the board continually assesses the group's governance practices and procedures, and makes adjustments where necessary.

Our board

Ultimate responsibility for governance rests with our board and its committees. The group has a unitary board comprising seven non-executive directors, six of whom are independent, and two executive directors.

The group has a well-constituted and diverse board, with expertise and experience relevant to the strategy and operating context within which the group operates, and the necessary independence and oversight underpinned by strong governance and control processes that support strategic delivery and corporate reputation. The board's diverse background ensures a wide range of experience in commerce, finance, law and industry. The non-executive directors have the necessary skills and expertise to make judgements, independent of management, on areas such as strategy, performance, business development, transformation, diversity, ethics and environmental management.

The responsibilities of the board are clearly defined in a written charter. The board charter outlines a clear balance of power and authority within the board to ensure that no single director has unfettered powers of decision-making. The responsibilities of the board include guiding and approval of strategic direction, business plans and annual budgets, major acquisitions and disposals, changes to the board and other matters that have a material effect on the group or are required by legislation.

The board has adopted and regularly reviews a written policy governing the authority delegated to group management and matters reserved for decision by the board.

The group underwent material restructuring during the year, culminating in the unbundling of Motus in November 2018. As a consequence, the membership of the board and its committees were reviewed and changed significantly to be more appropriate for an international logistics and distribution business. The board and committees below and over the page reflect the current composition and memberships at publication.

Board of directors

Non-executive directors     Executive directors

P Langeni (chairman)

RJA Sparks* (lead independent director)

P Cooper*

GW Dempster*

T Skweyiya*1

NB Radebe*2

D Reich*2

   

M Akoojee

JG de Beer

* Independent.
1 Retiring from the board on 31 December 2019. Resigned as a member of the audit committee on 1 September 2019.
2 Appointed 1 September 2019.

Committee membership

Audit and risk     Remuneration     Nomination

GW Dempster

P Cooper

NB Radebe

RJA Sparks

   

RJA Sparks

P Langeni

T Skweyiya

   

P Langeni

RJA Sparks

T Skweyiya

    Asset and liability     Social, ethics and sustainability
   

P Cooper

GW Dempster

P Langeni

D Reich

M Akoojee

JG de Beer

   

T Skweyiya

P Langeni

M Akoojee

JG de Beer

GW Dempster will join the remuneration and nomination committees with effect 1 January 2020. NB Radebe joined the audit and risk committee from 1 September 2019 and D Reich joined the asset and liability committee from 1 September 2019.

A comprehensive record of attendance of current and past members can be found in the full corporate governance report.

Board highlights

66%
of directors are independent

   

Three female non-executive directors –
33% of board

29%
non-executive directors are newly appointed
    Wide range
of experience in commerce, finance, law and industry
58% of non-executive directors’ tenure below nine years and 42% nine years and over     Held six meetings, including the annual strategy meeting

Separation of roles and responsibilities

The role of the chairman of the board is clearly defined and separate from that of the CEO through the provisions of the board charter. While the board may delegate authority to the CEO in terms of the board charter, the separation of responsibilities is designed to ensure that no single person or group can have unrestricted powers and that appropriate balances of power and authority exist on the board.

Chairman     Lead independent director     Group chief executive officer
  • An experienced non-executive director.
  • Presides over the board.
  • Sets the ethical tone of the board.
  • Ensures that the board remains efficient, focused and operates as a unit.
  • Provides effective leadership of the board.
  • Ensures that all relevant information is placed before the board for decision.
  • Free of conflict at the time of his/her appointment.
  • No executive function or responsibility.
   
  • Strengthens the independence of the board.
  • Leads in the absence of the chair.
  • Acts as an intermediary between the chair and other members of the board when necessary.
  • Serves as an additional channel to deal with shareholders‘ concerns where contact through normal channels has failed to resolve concerns or is inappropriate
  • Chairs discussions and decision-making where the chairman has a conflict of interest.
  • Leads the performance appraisal of the chairman.
   
  • Responsible for the executive management of the group’s operations.
  • Reports to the board on the group’s strategy and objectives.
  • Accountable to the board and consistently strives to achieve the group’s goals within the framework of delegated authority.
  • Recommends the business plan and budgets to the board for consideration and approval.
  • Has a role and function formalised in a mandate.

Phumzile Langeni is the current non-executive chairman of the board. She is a shareholder in a B-BBEE partner of the group and is consequently not considered to be independent. The board has therefore established a formal protocol to govern potential conflicts of interest. In addition to the chairman recusing herself where matters in which she has an interest are discussed, in compliance with the Companies Act, any decisions in or regarding the B-BBEE venture that could benefit or be seen to benefit the chairman or her associates are deferred to the unconflicted members of the nomination committee in accordance with the formal protocol. This includes matters such as dividend payments and fundamental business decisions.

Board diversity

The board adopted a formal board diversity policy in 2017 governing racial and gender diversity at board level.

The board takes the policy into account when making board appointments. In accordance with the policy, the board resolved to increase female representation and now has three black female non-executive directors, comprising 33% of the board.

Changes to the board

Ms P Langeni succeeded Mr SP Kana as chairman at the 2018 AGM. Messrs SP Kana, MV Moosa and A Tugendhaft retired at the 2018 AGM, upon the approval of the unbundling of Motus by shareholders. The board thanks them for their contribution to the company.

Mr OS Arbee retired as CEO and executive director to take up that position at Motus on its unbundling in November 2018 and was succeeded by Mr M Swanepoel. Mr M Swanepoel retired as CEO on 1 February 2019 and as an executive director on 30 June 2019 and was succeeded by Mr M Akoojee. The board thanks Messrs Arbee and Swanepoel for their invaluable contributions in shaping the business over the years.

Mr JG de Beer was appointed as an executive director and group CFO in November 2018.

Mrs NB Radebe and Mr D Reich have been appointed as independent non-executive directors, effective 1 September 2019. The board welcomes them.

Mrs T Skweyiya will be retiring from the board on 31 December 2019. She resigned as a member of the audit and risk committee on 1 September 2019.

Board committees

The board has established a number of sub-committees, including statutory committees, all of which operate within written terms of reference. The performance of each committee is regularly assessed in accordance with their terms of reference. No instances of non-compliance were noted.

The committees, their membership, and attendance in the tables on the following pages reflect the position as at 30 June 2019 since all committees were reconstituted, and the audit and risk committees combined, when the group was restructured and Motus unbundled in 2018.

More information, including details on the divisional boards, is provided in the full corporate governance report.

Nomination committee

Responsibility

Provides advice and guidance on succession planning, director appointments and director induction and training.

   
  Total meetings
  P Langeni (chairman)
  RJA Sparks
  T Skweyiya
4  
4  
4  
2/2  

Key activities for F2019

  • Oversaw the unbundling of Motus.
  • Reviewed and implemented post-unbundling board and governance structures, including divisional boards.
  • Reviewed board composition, tenure and succession and appointed two new directors to the board.
  • Reviewed executive succession plans and considered the appointment of the new CEO.
  • Reviewed the group structure and strategy as a focused logistics and distribution business.
   

Board succession and appointment

Directors are appointed based on their skills, experience and expected level of contribution to, and impact on, the activities of the group. The board decides on the appointment of directors based on recommendations from the nominations committee. New directors are formally inducted to facilitate their understanding of the group.

Board appointment process

Board appointment process

Remuneration committee

Responsibility

Advises and guides the board on directors remuneration, setting and implementing the remuneration policy, approval of general composition of remuneration packages and criteria for executive bonus and incentive awards, and administration of share-based incentive schemes.

   
  Total meetings
  RJA Sparks (chairman)
  P Langeni
  T Skweyiya
4  
4  
4  
2/2  

Key activities for F2019

  • Stakeholder engagements and roadshows following less than 75% of shareholders voting at the 2018 AGM in favour of the implementation of the remuneration policy.
  • Reviewed and approved amendments to the remuneration policy and its implementation.

More information on the activities of the remuneration committee in the year can be found in the remuneration report.

Audit and risk committee

Responsibility

Assists the board in its responsibilities, covering the internal and external audit processes for the group taking into account significant risks, the adequacy and functioning of the group's internal controls and the integrity of financial reporting.

Sets the group's risk culture, framework, strategy and ensures that robust risk management processes are in place.

   
  Total meetings
  GW Dempster (chairman)
  P Cooper
  T Skweyiya
  RJA Sparks
5  
5  
2/2  
5  
5  

Key activities for F2019

The previous audit committee and risk committee were reconstituted as a single committee with combined responsibilities upon unbundling of Motus.

More information on the activities of the audit and risk committee in the year can be found below and in the full annual financial statements.

Governance in action

The substance of statutory duty

The year demanded a high level of involvement from the audit and risk committee in support of Imperial Logistics' commitment to accountability and transparency. This ensured timeous, accurate communication with stakeholders. Importantly, it also allowed the committee members to develop a far deeper insight into the health of individual operations within the group that now stands in the service of the stakeholders the committee represents.

The Companies Act requires that the audit and risk committee plays a key role in ensuring accountability and transparency. It has prescriptive power and is composed in a manner that ensures that it functions as an independent, objective body. It approves the group risk framework, strategy and appetite and monitors these, and guards the integrity of the financial statements and reporting, as an accurate reflection of the group's health. It must ensure that robust internal controls are in place to do so.

Imperial Logistics' audit and risk committee was very involved when it became clear that the decline in trading conditions had left the CPG business in South Africa no longer able to deliver a return above its WACC. The committee's obligation to stakeholders was paramount when management informed the board that CPG faced insurmountable challenges to its business model. The committee endorsed and recommended that the board approve management's strategy for dealing with the situation and advised them to communicate transparently and timeously with institutional investors and funders.

The committee took two additional steps. It commissioned an independent analysis of all decisions relating to CPG for the previous three years and provided oversight of management's review of the group's businesses that are generating a ROIC at, or below, WACC to reassess their sustainability. Members of the audit and risk committee with specific expertise attended all meetings of the divisional risk and finance committees where these reviews were discussed.

Asset and liability committee (ALCO)

Responsibility

Responsible for implementing best practice asset and liability risk management policies. Its primary objective is to manage the liquidity, debt levels, interest rate and exchange rate risk of the group within an acceptable risk profile.

   
  Total meetings
  P Cooper (chairman)
  GW Dempster
  M Akoojee
  JG de Beer
4  
2/2  
4  
4  
2/2  

Key activities for F2019

More information on the activities of the ALCO in the year can be found below.

Governance in action

The governance of balancing interests

It is the duty of the group's ALCO, a board sub-committee, to support management in implementing asset and liability risk and capital management best practices founded in an uncompromising commitment to ethics. The realities Imperial Logistics faced over the year tested this ability to balance the immediate needs of people in the group's employ with the long-term interests of all current and future stakeholders. Finding that balance demanded maturity and realism that could never be codified in policies, practices or even ethical guidelines.

Imperial Logistics benefits from highly sophisticated and extensive asset and liability management systems and risk management practices across all its divisions. At this level, funding requirements are weighed against means, risks are analysed and contingencies are considered within the guidelines and policies determined by ALCO. The insights of these committees help divisional management to maximise opportunities and overcome challenges, contributing to both day-to-day operational planning and longer-term strategy development.

The role of group ALCO focuses on asset, liability and capital management on a group basis with its main objectives being the management of capital, liquidity, interest rate, price and foreign exchange risk. It meets every quarter and follows a comprehensive risk management process. It focuses on the rise and fall of opportunities and pressure points for the group as a whole. It develops and determines risk management strategies and policies as well as exposure limits and counsels management on goals, risk tolerance and measures that are appropriate to balance opportunity and risk. ALCO provides guidance to the group treasury who is responsible for implementing its directives. It also affirms and refines management strategies for acquisitions and disposals. It is, primarily, a highly specialised advisory as well as a risk management and monitoring committee – a sounding board for management – that draws on the deep expertise of its members.

In the last year, stark economic indicators exacerbated by perpetual socio-political ills, demanded that management face uncomfortable truths that demanded difficult decisions. As their counsel, it was the committee's duty to interrogate, advise and support management when the ends of business viability and of protecting the livelihoods of many of their colleagues could no longer be met in the CPG business in South Africa.

That realisation crystallised, in particular, as CPG's ability to contribute sustainable value to Imperial Logistics dissipated due to economic shock, rising risk, client pressure and disintermediation. Strategies that had been credible before rapidly failed the pressure test of an even harsher environment. A year before, duty to company and stakeholders demanded that management follow through on turnaround strategies anchored in realistic potential. This year, maturity demanded the courage to face the reality that a culmination of adverse events – a perfect storm of increasing pressure from existing customers and failures to win new contracts – had erased that potential for CPG.

Once management had reached the conclusion that CPG could not continue to operate without jeopardising the rest of the group, ALCO assessed the impact on the group's capital structure and liquidity and took responsibility for ensuring that funders were formally, and timeously, informed of our decision to exit this business in South Africa. This proactive engagement allowed the group to confirm the expected impact with our lenders and to inform them that financial covenants would not be breached as a result of the decision. The committee also supported management in analysing the impact that impairments would have on Imperial's long-term prospects. However, the analyses left management and ALCO optimistic that the company is now stronger and has significant headroom to grow.

Social, ethics and sustainability (SES) committee

Responsibility

Assists the group in discharging its social, ethics and sustainability responsibilities and implementing practices consistent with good corporate citizenship

   
  Total meetings
  T Skweyiya (chairman)
  P Langeni
  M Akoojee
  JG de Beer
4  
4  
2/2  
4  
2/2  

Key activities for F2019

  • Monitored activities relating to good corporate citizenship, the environment, health, safety, sustainability and CSI.
  • Considered consumer relationships, including the group’s advertising, public relations and compliance with consumer protection laws.
  • Monitored labour and employment with a focus on transformation.

More information on the activities of the SES committee in the year can be found below.

Governance in action

Creating value by driving an ethical, responsible and empathetic culture

The SES committee has a statutory mandate to ensure that citizenship and stewardship are intrinsic to the group's daily business conduct. It connects and contextualises all board guidance and oversight, bringing a social conscience to decisions and it ensures that these are faithfully implemented across a broad operating base. It is the guardian of the trust that stakeholders have in the group and the protector of its reputation, which is both a licence to operate and a competitive advantage.

To ensure that the committee balances independence with practical implementation, it comprises a non-executive chairman, the non-executive chairman of the board, the group CEO, group CFO and other management participants. Together, non-executive and executive members of the committee ensure that its broad mandate, which equates to being the group's social conscience, is translated into practical policy instruments and approaches that frame board and management thinking.

Vigorous monitoring through well-established reporting lines and against relevant frameworks and indicators, ensures implementation of policy at group and divisional levels. Accountability to these frameworks is the litmus test for the group's credibility as a well-governed and ethical corporate citizen. Its aspirations as a global player and as a strategic partner to multinational clients, whose own reputation can be enhanced or damaged by those they choose to do business with, is contingent on demonstrable progress against these recognised international and local benchmarks.

In particular, the group's commitment to ethical conduct, without exception, enables it to acquire business in countries where regulation is underdeveloped and governance standards are inconsistent. It ensures that the group secures and renews business with high-quality clients and attracts high-calibre leaders and employees. Acting with uncompromising integrity begins with the group's leaders who set the correct tone from the top, and extends into its business practices, not only as a moral imperative but also a commercial one.The closure of the CPG business in South Africa was a significant event during the year, which exemplified the committee's contextual role. While the decision was unavoidable in view of the financial and competitive unviability of CPG, it was a difficult decision for the board and management. Throughout the process, the SES committee joined other board committees in ensuring that the interests of stakeholders, specifically those of employees and clients, were kept front of mind both in managing the process and especially in finding the most viable and responsible outcome – balancing what needed to happen with how it was done.

We remain committed to applying best practice safety measures and advanced safety technology to ensure the safety of our drivers and other road users. However, given the nature of our business, certain road safety incidents are not always within our control and could result in volatility in our safety statistics going forward.

The guidance, oversight, policy direction and monitoring of a broad ambit of initiatives by the SES committee give substance to its moral mandate: to balance Imperial's need to compete for limited resources in the interest of commercial success, with the need to sustain the health of the ecosystem in which the group operates, with its interconnected social, economic and natural elements. The committee accepts its duty to support stakeholders in reinforcing their own sustainability. Indeed, the challenge of the SES committee is not merely to fulfil its statutory duty to ensure that Imperial is on the prescribed track, but that the group contributes to achieving social, economic and environmental justice in its local and global spheres of influence.