Our governance

Board focus areas for the year

• Ongoing impact of COVID-19.
• Review and approval of significant acquisitions and disposals and other mergers and acquisitions related activity.
• Consider the DP World offer, establishing an independent board.
• Oversight of key strategic initiatives and progress.
• The approval of the group-wide ESG and climate change policies and guidelines, and the advancement of ESG reporting standards and global membership and the creation of a Corporate Social Investment (CSI)/ESG committee, a dedicated sub-committee of the social, ethics and sustainability (SES) board committee.

From the independent board chair: Graham Dempster

In terms of the Companies Act, the DP World offer required that we form the independent board to perform various functions including advising shareholders on the merits of the offer. We conducted this detailed process not only according to the exacting prescripts of the relevant legislation, but also in the full spirit of our mandated duties.

The independent board was constituted in accordance with Regulation 108 of Chapter 5 of the Takeover Regulations. According to Regulation 110 of the Takeover Regulations, it is the responsibility of an independent board to form a clear basis for the expression of an opinion to shareholders on the value and price of the consideration offered.

The independent board was constituted following receipt of the non-binding offer from DP World, and once the bona fides of the offer had been established, considering all relevant factors. The independent board was made up of all members of the main board of directors that are independent, thereby excluding the executive directors and the Imperial board chairman, who is also a B-BBEE partner to the group. As the lead independent non-executive director, I was appointed to chair the independent board.

Although an independent board can legally be constituted with only three members, we included all independent members of the Imperial board, which made for a team of seven independent non-executive directors. Given that we had 10 meetings, there was ample opportunity for all members to participate fully in the process. Key decisions were discussed exhaustively, and all our resolutions were unanimous.

One of the key functions as the independent board was to appoint an independent expert to advise on whether the offer was fair and reasonable, an expert in no way conflicted by an existing relationship with any part of the group. After rigorous evaluation and discussion, we chose Swiss multinational investment bank, UBS, renowned for their expertise in international mergers and acquisitions.

We also sought advice from various other parties, including Imperial’s appointed advisors, and took steps as required in terms of the Companies Act to reach a fully informed decision. The independent board also took responsibility for relevant considerations, in the context of the DP World offer, related to Imperial’s long-term incentive schemes and our significant B-BBEE ownership transaction, concluded during the year. These considerations are more fully described in the combined circular to shareholders in respect of DP World’s offer.

I am confident that the independent board has discharged its duties in a way that not only comply with the relevant legislative requirements, but which also reflect Imperial’s commitment to best governance practice. Also, the skillsets and experience around the table enabled us to assess all relevant factors – whether difficult to quantify or even unquantifiable – to form a cogent, transparent and unanimous opinion in respect of the fairness and reasonableness of the transaction and value ascribed to the group, in the best interest of our shareholders.

From the ALCO chair: Peter Cooper

The role of the ALCO is to keep a close watch on risks and opportunities related to liquidity, foreign exchange, interest rates and debt capital raising. Investors can take comfort that Imperial has the liquidity to continue operations in the short and medium terms; and that the allocation of surplus funds is aligned to long-term strategic goals. We also provide management with a sounding board for decision making as they navigate trade-offs in the allocation of resources. Management sets the strategy, but we interrogate that strategy and ground it in the realities and risks we see playing out over the coming years.

In one of our biggest deals, Imperial recently announced the acquisition of the J&J Group, which specialises in shifting cargo on the Beira as well as the North-South corridor between South Africa, Zimbabwe, Zambia, Mozambique, Malawi and the Democratic Republic of Congo (DRC). Here was an example of giving management a sounding board to interrogate whether the acquisition fits our strategy. Similarly, there were lengthy and searching discussions around the merits of various other investments, acquisitions and disposals; for example Deep Catch Namibia Holdings and the sale of the shipping businesses. The impact of these transactions on our balance sheet and earnings are appraised against bank covenants on our lending facilities to ensure that there is no risk of these being breached.

We are guided in these discussions by our commitment to transform Imperial into an innovative asset-right business that uses data and technology as a differentiator, while bearing in mind that hard assets will always be a necessary part of our supply chains. To get the balance right, we are looking for opportunities to deliver contract logistics and road freight with a lighter asset base. Our Innovation Venture Fund is dedicated to delivering on this aspiration to become more asset right.

I am confident in our assets and liability management disciplines and without going into detail, refer you to the chief financial officer’s (CFO) report, from page 55, which I endorse. I take heart from the DP World offer as affirming Imperial’s estimation of the long-term potential in African markets. I am satisfied that irrespective of whether the sale goes through or not, we have the appropriate funding and capital structures for the group; and our balance sheet is in excellent shape to deliver on our strategy and grow shareholder returns. On 17 September 2021, the requisite majority of Imperial shareholders voted in favour of the transaction which is still subject to regulatory approvals.

ESG is a pillar of our strategy and this committee also realises the need to have a sound long-term plan in place that gives lenders comfort and assurance that our ESG commitments are real, achievable and measurable. Management is evaluating a number of proposals from funders that incorporate ESG components for green-finance facilities.

My personal highlight for the year is how non-executives and management related to each other in achieving our goals. In the spirit of mutual respect and commitment to professional excellence we got to the right answers without having to engage in long, acrimonious arguments; and without needing to resort to tie-breaking votes. In our discussions and debates, decision makers voiced valid concerns and allowed themselves to be persuaded by the merits of the argument: for the good of Imperial and the execution of our well-rounded strategy.

From the ARC chair: Bridget Duker

The ARC leads Imperial’s corporate governance effort and is central to setting our appetite and tolerance for risk in a manner that aligns to and complements Imperial’s ‘One Imperial’ and ‘Gateway to Africa’ strategy.

To this end, the committee focuses on material threats to our business and ensures appropriate safeguards are in place, by reviewing the adequacy of our risk systems, internal control processes and supporting management’s commitment to mitigating risk. In discharging our fiduciary responsibilities to all our stakeholders, we have ensured the effectiveness of the organisation’s assurance functions and services, with a particular focus on the appointment of the external and internal auditors as providers of independent assurance on financial and related reporting.

In my first full financial year in the position of ARC chair, it has been exciting to be part of the strategic shift to ‘One Imperial’ and ‘Gateway to Africa’. I am greatly heartened by the skill and commitment of our executive team and their balance of attributes, which drives their pursuit of our vision. I have been pleased by the conversations we have had both at the ARC and board level. Our debate is robust and constructive, offering executives oversight and governance parameters to give them the confidence to take bold decisions.

As Imperial goes through its wide-reaching strategic transformation and restructuring, the consequential changes in reporting parameters are being well managed. Great care is being taken to continue providing balanced and transparent reporting to foster a deeper understanding and visibility of the impacts of the strategic decisions taken. As a result, we have confidence that the board has sufficient visibility of important operational detail on the ground. This is further strengthened by the fact that we have a non-executive director (who is a member of ARC) attending each business level financial and risk review committee (FRRC) meeting. From their reports and from our mature assurance processes, I can confirm there is corroboration that our strategy is delivering on financial expectations, and our system of internal controls is sound.

I would like to commend the FRRCs within each business. These committees are another line of defence in our combined assurance procedures. I can report that my dealings with Imperial’s FRRCs have been most encouraging. The managers on these committees display a high level of professionalism. There is a culture of accountability and care in doing what is good for Imperial as a whole, as opposed to being only concerned with one’s business.

We have seen an unprecedented level of corporate activity, which has occupied both management’s attention and the committee’s time in ensuring that this has been navigated in a manner that is above reproach with regulators, while responsibly making use of expert advisers at the appropriate times. On mergers and acquisitions, the committee engaged management on progress made in exiting certain non-core businesses and acquiring others with better strategic alignment. Our challenge to management was to resolve the residual costs of legacy businesses and redirect the savings to our strategy. Similarly, we probed how well the integration of newly acquired businesses was faring and whether the synergistic benefits were beginning to be realised. In this regard I am very happy with the progress achieved.

The committee approved Imperial’s redrafted Risk Policy, the Risk Appetite and Risk Tolerance statements, and the updated Risk Standard. You will find the full detail on these under the section Our risks and opportunities, from page 44. While we acknowledge the urgent need to integrate ESG and climate change risk management into our governance and risk management structures, this is still in its infancy on ARC’s agenda. It will be an area of key focus for the next and subsequent years. You can read more about our TCFD disclosures in our ESG report.

This committee notes the new JSE Listings Requirements that require the CEO and CFO to endorse, with a positive statement, the internal financial control environment (section 3.84(k)). A truly robust assurance process was undertaken in collaboration with external auditors, internal auditors and a network of risk and compliance functions, led by the group’s chief risk officer. The culmination of which was a confirmation of the design and implementation of sound internal financial controls, which permeate throughout the group to give credibility to our financial reporting. Our CEO and CFO, and the board by way of this committee, are well supported in assuring shareholders of our financial controls. It takes a team to produce solid reporting, which has real value in informing leadership and management decisions, and accounting accurately to stakeholders.

As reported last year, the Independent Regulatory Board for Auditors has determined that from 2023 all South African public interest entities must comply with mandatory audit firm rotation. Our preparations for this are well advanced and we will be ready for the change. Further, in November 2020, Rohan Venter resigned as company secretary and was replaced by Imperial’s group legal executive, Jeetesh Ravjee, who is acting as company secretary until a permanent replacement is found. In January 2021, we changed our JSE sponsor from Merrill Lynch to Rand Merchant Bank. In all these changes we have followed the letter and spirit of regulation.

Imperial continues to grow our capability to respond fully and timeously to changes in legislation across our jurisdictions, supported by ongoing awareness and training campaigns to sensitise staff to their obligations to company policies that support full compliance with the regulatory universe. These encompass newly promulgated acts such as General Data Protection Regulation and Protection of Personal Information Act (POPIA) and extend to risks and threats such as cyber security and other information technology risks. Imperial is well positioned to address both existing and emergent ICT legislation and regulations. The ARC continues to review data privacy and information security strategies and to monitor the implementation of cyberrelated controls.

As the world continues to manage the impacts of the COVID-19 pandemic, we take comfort from the resilience our businesses have shown during this trying period and commit to remaining vigilant in the face of new risks and threats, wherever these may appear.