Governance structure and management systems

Social, ethics and sustainability committee

The role of the social, ethics and sustainability committee encompasses all aspects of sustainability.

The committee performs statutory duties as set out in the Companies Act, 71 of 2008, for Imperial Holdings Limited and on behalf of subsidiary companies in the group. In addition to its statutory duties, it assists the company in discharging its social, ethics and sustainability responsibilities and implementing practices consistent with good corporate citizenship, with particular focus on the following:

The committee has a standard agenda item at every meeting covering material breaches of the group’s code of ethics, if any, as well as the steps taken to prevent such breaches. No material breaches of the group’s code of ethics were reported during the year. Additional details regarding the group’s approach to business integrity and ethics are contained on pages 32 to 33.

During the year, the committee discharged its statutory duties as set out in the Act and Regulations thereto by monitoring the company’s activities relating to:

The committee comprises non-executive directors who are not involved in the day-to-day business of the group, executive directors as well as other members of the management of the company and is chaired by a non-executive director.

The table details attendance of social, ethics and sustainability committee meetings during the year.

Number of meetings during the year	4
Valli Moosa*	4
Osman Arbee	4
Hubert Brody	4
Manny de Can	1
Berenice Francis	4
Thulani Gcabashe*	3
Ray Levin	3
Philip Michaux	3
Moeketsi Mosola	3
Rafiek Sharfu	4
Jurie Strydom	1/1
Marius Swanepoel	3
Oshy Tugendhaft*	4
Rohan Ven	4

Subsidiary and divisional boards

In accordance with the decentralised nature of the group’s operations, many subsidiary and divisional boards manage the day-to-day affairs within their areas of responsibility, subject to board-approved authority limits. The Imperial Holdings board ratifies appointments to the boards of major subsidiaries.

Company secretary

The board considers the company secretary, whose qualifications are set out in the table on page 24, to be competent with appropriate qualifications and experience. The competence of the company secretary was considered by the remuneration and nomination committee in accordance with 3.8 4(i) of the JSE Listings Requirements. The company secretary is not a director of the company and thus maintains an arm’s length relationship with the board

Accountability and audit

Going concern

The group audit committee considers the facts and assumptions used in the assessment of the going-concern status of the group at financial year-end. This provides assurance to the directors in confirming their assessment that the annual financial statements are properly prepared on the going-concern basis.

Internal financial controls

The directors acknowledge that they are responsible for instituting internal control systems that provide reasonable assurance on safeguarding assets and preventing their unauthorised use or disposal, as well as maintenance of proper accounting records that give reasonable assurance on the reliability of financial information produced.

Internal audit

The internal audit department’s responsibilities are defined in a written charter approved by the board.

Internal audit is an independent, objective assurance and consulting activity established to add value and improve the group’s operations. It helps the group accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the adequacy and effectiveness of risk management, control and governance processes.

The internal audit activities of the group are coordinated by the group’s chief audit executive based at the corporate office, who reports to the chief executive and has unrestricted access to the group audit committee and its chairman. The group chief audit executive reports formally at all audit committee meetings during the year. The audit plan for the wider group is developed using a risk-based approach and is approved by the group audit committee. The group chief audit executive also attends and coordinates the activities of all divisional finance and risk review committees and attends all group risk committee meetings to ensure that internal audit work focuses on the risks identified through the relevant processes.

Based on the internal audit work performed in terms of the approved combined internal audit plan for the year, the scope of work, the results of tests, and the overall audit opinion ratings for the audited areas, together with feedback on follow-up audits, internal audit concluded that nothing came to its attention to indicate that there was any material breakdown in the system of internal control in the group during the year to render the control environment ineffective.

From the results of a follow up on a risk management strategic assessment review conducted by PricewaterhouseCoopers Inc., internal audit concluded that they were satisfied with the governance structures and processes regarding risk management across the group, and the degree to which management has embraced risk management.

As recommended in King III, group internal audit documented a review of the group’s internal financial controls and concluded that nothing came to its attention to indicate significant internal financial control design deficiencies or to indicate that such controls were ineffective during the period reviewed.

Financial reporting

Imperial has a comprehensive system for reporting financial results to the board each quarter and to the executive committee monthly. Each division prepares detailed monthly management accounts, budgets and three-year plans approved by the board. Performance against budget is monitored and variances analysed. Profit and cash flow forecasts to the end of the year are reviewed and include an analysis of material changes. A comprehensive system enables management to monitor trends and measure productive use of capital. Accounting policies are disseminated throughout the group to ensure compliance.

Insider trading

No group director or employee with inside information about the group may deal, directly or indirectly, in Imperial’s securities, which include allocations of and dealings in the group’s share incentive schemes. The board has determined certain closed periods during which directors and other senior management officials of the group may not deal, directly or indirectly, in the group’s securities. In addition, the group has adopted a policy requiring directors, executive committee members, the company secretary and directors of major subsidiaries to obtain permission from designated individuals before trading in the group’s securities.

Business integrity and ethics

The board has adopted a written code of ethics for the group.

Without satisfactory profits and a strong financial foundation, it would not be possible to fulfil our responsibilities to shareholders, employees, society, and those with whom we do business. However, our corporate actions are not governed solely by economic criteria, but also take into account social, environmental and political considerations.

We strive to innovate and adopt best practice, wherever we operate, working in consultation with stakeholders.

Management and employees operate within a framework that requires complying with all applicable laws and maintaining the highest integrity in conducting the group’s busines

Our core value is to act with uncompromising honesty and integrity. Our code of ethics provides guidance to all staff, management and directors of Imperial and its subsidiaries on adhering to this core value, although we recognise that no single code can address every situation individuals are likely to encounter. As such, this code is not a substitute for employees’ responsibility and accountability to exercise good judgement and obtain guidance on appropriate business conduct.

Our divisions also include aspects of ethics in their induction programmes. In addition, the group conducts climate surveys among its employees and ethics form an integral part of the surveys.

The group also maintains a confidential tip-off facility where any instances of criminal activity or breaches of the code of ethics can anonymously be reported. Reports in this regard are considered by divisional management structures, internal audit and responsible board committees.

Our code of ethics

Employment and labour rights

The group subscribes to the principle of fair labour practices at our workplaces, and our conditions of service comply with applicable laws and industry standards.

The group recognises representative trade unions and has established forums for communication.

Safety, health and environmental stewardship

We report regularly at executive and board level on our safety, health and environmental (SHE) performance. Senior executives and line management are accountable for the group’s SHE issues and for allocating adequate financial and human resources within their operations to address these matters. We work to keep SHE at the forefront of workplace concerns.

Our objective is to prevent fatalities, work-related injuries and health impairment of our employees.

Work-related fatalities are comprehensively investigated by management and considered by the social, ethics and sustainability committee.

We recognise the need for environmental stewardship to minimise consumption of natural resources and waste generation, and to minimise the impact of our operations on the environment.

More detail on the group’s principles of conduct, policies and practices appears in the sustainability report on the group website: www.imperial.co.za and the compact disc in this report.