CORPORATE GOVERNANCE REVIEW The Directors confirm their commitment to the principles of discipline, transparency, accountability, responsibility and integrity, as advocated in the King Report on Corporate Governance. Through this process, the stakeholders may derive the assurance that the Ohlthaver & List Group of Companies (“the Group”) is managed according to prudently determined risk parameters in compliance with generally accepted corporate practices, with the emphasis on striking a sustainable balance between our drive for profit growth, developing our human resource base, and improving the environment in which we operate. BOARD ACCOUNTABILITY AND DELEGATED FUNCTIONS The Board of Directors maintains full and effective control over the affairs of the Group. In addition to those powers conferred on it by the Articles of Association, the Board has reserved to itself the following matters: • Setting the strategic objectives of the Group • Identifying key risks and performance areas • Determining levels of materiality, and • Monitoring the implementation of Board plans and strategies by management. The Board has a clear understanding of the key aspects regarding vision, mission, business objectives, priorities, focus areas for monitoring achievement, and accountability of the executive team for performance. The Board approves the Group’s business plans and monitors overall performance against objectives appropriate to the current stage of the business cycle and the prospects of business. The Board consists of five Executive and seven Non-executive Directors. While retaining overall accountability and subject to matters reserved to itself, the Board has delegated to the Executive Directors the authority to run the day-to-day affairs of the Group. The Board of Directors meets quarterly. A protocol for Board and corporate management meetings is in place. The purpose of this protocol is to provide guidelines for the proper conduct of Board and Group corporate management meetings. As such, these guidelines form part of the Group’s corporate governance system. Whilst the protocol seeks to maintain the standards of generally recognised codes of corporate governance, notably those contained in the King Report on Corporate Governance and its associated Code of corporate Practices and Conduct, it also reflects the unique context and requirements of the Group. GROUP OPERATIONAL MEETINGS The purpose of these meetings is to review and evaluate the Group’s performance and progress in disciplines such as finance, marketing, human capital, risk management, corporate citizenship responsibility and information technology. The meetings provide a platform for identifying opportunities and synergies within the Group and for discussing issues requiring the Group’s attention. Meetings are held quarterly. BUSINESS PERFORMANCE REVIEWS The purpose of these meetings is to conduct an in-depth review of a specific operation’s performance and progress in disciplines such as finance, marketing, human capital, risk management,corporate citizenship responsibility and information technology. Meetings are held monthly. ACCOUNTING AND REPORTING The Board places strong emphasis on achieving the highest level of financial management, accounting and reporting to stakeholders. The Directors are responsible for preparing the financial statements and other information presented in the annual report in a manner that fairly presents the state of affairs and the results of operations and cash flows of the Group. The external auditors are responsible for carrying out an independent examination of the financial statements in accordance with statements of International Standards on Auditing and reporting their opinion thereon. The Auditor’s Report is set out on page 24 herein. The financial statements set out on pages 52 to 118 have been prepared by management in accordance with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB) and interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of the IASB. The financial statements incorporate full and reasonable disclosure and are based on appropriate accounting policies which, apart from the implementation of new and revised standards, have been consistently applied and are supported by reasonable and prudent judgements and estimates. INTERNAL CONTROL Internal control is an important tool in good corporate governance. The Directors are responsible for ensuring that internal control systems exist that provide reasonable assurance regarding the safeguarding of assets and the prevention of their unauthorised use or disposition, as well as for maintaining proper accounting records and the reliability of financial and operational information used in business. In order to discharge this responsibility, the Directors appointed management to set standards and implement systems of internal control to achieve these objectives. Such controls and systems are based on establishing policies and procedures, including budgeting and forecasting disciplines and monitoring actual results against such budgets and forecasts. The policies and procedures are implemented by trained personnel and are monitored through reviews and reports from senior executives and cost centre managers and through the establishment of defalcation reporting procedures. Nothing has come to the attention of the Directors to indicate any material breakdown in the functioning of these controls, procedures and systems during the year under review. AUDIT COMMITTEE BHW Masche (Chairman) TZM Hijarunguru PE Shiimi The primary objective of the Group’s Audit Committee is to ensure that the Group is managed and controlled in accordance with good corporate governance, that management have implemented and are maintaining an effective control environment within the organisation and that internal and external audits are performed in agreement with International Standards on Auditing and in line with the additional scopes set by the Audit Committee. The Audit Committee meets at least twice a year, preferably prior to the commencement of the annual external audit or prior to the Board’s approval of the interim results, as well as after the annual external audit has been completed. The Audit Committee has outsourced the Internal Audit function to Ernst & Young, who will review the reliability and integrity of the financial and operating functions, systems of internal control and risk management, means of safeguarding assets, the efficient management of the Group’s resources and the effective conduct of its operations. The Board of Directors appoints the members of the Audit Committee, taking into consideration members’ education or business experience within the Committee’s scope of activities. Members are appointed for a three-year term, with the initial term for at least one member being two years and being one year for at least one other member. The external auditors have access to the Audit Committee and its Chairman. REMUNERATION COMMITTEE A Mushimba (Chairman) P Grüttemeyer The primary objective of the Group’s Remuneration Committee is to ensure and make recommendations to the effect that the Group’s Directors and senior executives are fairly rewarded with regard to individual contributions to the Group’s overall performance; that the remuneration of Directors and senior executives is determined by Committee members who will take due regard of the interests of the shareholders and the financial and commercial health of the Group; and that a Bonus Steering Committee is properly constituted to enable due recommendations to be made on the overall bonus performance scheme of the Group. The Remuneration Committee is at liberty to solicit the assistance of outside consultants with specialised skills and expertise to formulate and maintain an equitable compensation structure. The Board of Directors appoints the members of the Remuneration Committee, taking into consideration members’ education or business experience within the Committee’s scope of activities. Members are appointed for a three-year term, with the initial term for at least one member being two years and being one year for at least one other member. The Bonus Steering Committee acts as a sub-committee of the Remuneration Committee. It is tasked to develop, implement and maintain the bonus performance scheme throughout the Group, under the Remuneration  Committee’s guidance. One of the overriding objectives of the remuneration policy is to gradually reduce the fixed elements of management’s remuneration and to increase the variable components through performance-related  remuneration. To this end, the aim is to achieve a 60:40 relationship between fixed remuneration and variable performance-related remuneration. The Bonus Steering Committee was tasked to ensure that the variable portion of remuneration was directly linked to the achievement, or nonachievement, of key performance indicators in the respective operations. Since the Board’s strategy for an operation explicitly also addresses key performance indicators in the related business unit, it follows that the remuneration of management in the Group is more closely aligned to strategy than ever before. Although the bonus performance scheme is currently limited to executives and senior management, the objective is to gradually roll out the scheme to all levels of employees. The Bonus Steering Committee consists of the followingmembers: P Grüttemeyer (Chairman) – Chief Executive Officer H-H Diehl – Manager: Compensation (O&L Centre) G Hanke – Group Financial Director B Mukuahima – Group Human Capital Director BOARD SECRETARY Appointment and removal of the Board Secretary are matters for the Board. The Secretary ensures that, in accordance with pertinent laws, the proceedings and affairs of the Directorate and, where appropriate, members of the company are properly administered. The Secretary administers the statutory requirements of the Group in Namibia. All Directors have direct access to the Secretary at all times. THIRD-PARTY MANAGEMENT ISSUES No part of the Group’s business was managed during the year by any third party in which any Director had an interest. EMPLOYEE PARTICIPATION The Directors believe that economically viable and self-sustainable Affirmative Action is an integral part of corporate governance within the Group, and are committed to equal opportunities for all its employees regardless of their ethnic origin or gender. To this end, a formalised Affirmative Action strategy was put in place to ensure alignment with relevant equity legislation. The Group has a variety of participative structures on issues that affect employees directly or materially. These structures, set up with trade unions and/or employee representatives, are designed to achieve good employer–employee relations through the effective sharing of information, consultation and the identification and resolution of conflict. EFFECTIVE COMMUNICATION WITH ALL STAKEHOLDERS The Group subscribes to the principle of timely, balanced, relevant and understandable communication, focused on substance, and communicating regularly and systematically with all relevant parties. A comprehensive communication strategy is in place and its effectiveness is periodically reviewed by external consultants. RISK AND OPPORTUNITY MANAGEMENT The Board is committed to effective risk and opportunity identification and management. These measures ensure not only that risks and opportunities are adequately identified, evaluated and managed at the appropriate level, but also that their individual and joint impact is taken into consideration. The risk and opportunity assessment is conducted on an annual basis at respective business units to ensure that management remains aware of risks and opportunities throughout the Group. This process identifies the critical business, operational, financial and compliance exposures facing the respective operations, and the adequacy and effectiveness of control factors at all levels. The materiality levels are set at each business unit level and vary depending on the nature, scope and size of the business. In setting these levels, due consideration is given not only to financial impact, but also to the potential threat to the integrity of the business as a going concern, its reputation and the well-beingof employees and other stakeholders.