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Home » About » About Altron » Corporate Governance

Corporate Governance

To view the complete Altron Corporate Governance report - click here
Altron's Ethics Journey - click here

Altron believes that good corporate governance, which includes transparency, honesty and accountability, is key to the integrity of our organisation, including our ability to manage risk and perform at optimum levels. Underpinning our disciplined approach to governance is our determination to ensure that we maintain a balance between good governance and the spirit of entrepreneurship that has built our business over the past 50 years.

Altron pursues the long-term sustainability of its business through its core strategic values and has established clear lines of accountability for these values from board level throughout the organisation.
Our application of these values is based on our recognition that strategy, performance, sustainability and risk are inseparable. The board also considers the concerns and priorities of its wider stakeholder environment in its strategic guidance and decision-making process.
For greater depth and detail on our governance practices, please see our full governance report.

Altron is guided by the principles of good governance set out in the King Report on Governance for South Africa 2009 (King III).  As part of our compliance with the principles, our reporting approach considers the interests of our wider stakeholder community, which includes customers, suppliers, employees, regulators, custodians of environmental concerns, investors, communities and the media. By including these perspectives when formulating our strategy and reporting on it, we can ensure that we balance long-term social, environmental and economic interests with the key requirement to maximise the long-term profits of the company.

In the year under review, we continued to integrate sustainability into our business strategy assisted by our social and ethics committee.  

Attendance at Altron risk management committee meetings

Altron has been included in the JSE SRI index every year since its inception in 2004. The scope of our commitment to sustainability extends beyond South Africa. We are a signatory to the UN Global Compact, The Copenhagen Communiqué on Climate Change and participate in the Carbon and Water Disclosure Projects. We have also been admitted to the Shariah Index, which adds an additional layer of ethical requirements and thereby attracts a group of investors that would otherwise have excluded our company. Where the directors assessment has indicated that certain generally recommended practices are not in the best interests of Altron, this report follows the King III principles of explaining the reasons for our alternative approach to governance. A King III checklist is included in the full governance report.  Click here.

HOW WE GOVERN OUR BUSINESS
OUR APPROACH TO GOVERNANCE

Altron believes that good corporate governance, which includes transparency, honesty and accountability, is key to the integrity of our organisation, including our ability to manage risk and perform at optimum levels. Underpinning our disciplined approach to governance is our determination to ensure that we maintain a balance between good governance and the spirit of entrepreneurship that has built our business over the last 50 years.

We recognise that strategy, performance, sustainability and risk are inseparable. Altron pursues the long-term sustainability of its business through its core values and establishes clear lines of accountability for these values from board level throughout the organisation. The board also considers the concerns and priorities of its wider stakeholder environment in its strategic guidance and decision-making process.

To ensure that we consistently practise effective corporate governance throughout the Altron group, our board materially applies the principles of King III and the Listings Requirements of the JSE (See the King III Index).

ESTABLISHING MATERIALITY
Altron defines its material issues as those which have the potential to substantially impact on our ability to create and sustain value for our stakeholders. Our process for determining materiality is described in our integrated annual report.

GOVERNANCE AND MANAGEMENT SYSTEMS
Our board performs its governance responsibilities within a framework of policies and controls, which manage our economic, environmental and social performance and provides for effective risk assessment. The board’s responsibilities are outlined in its charter which the board reviews and adopts annually. Certain mandates, charters and terms of reference governing the board and its committees are available on the Altron website while others are available from the Altron secretariat on request. Certain of these can be found on Altron’s website.

While the board charter is closely aligned with the recommendations of King III, it is customised to suit Altron’s unique business. The charter and our memorandum of incorporation detail the responsibilities and duties of the board.

Amendments to our memorandum of incorporation were approved at the annual general meeting held on 21 July 2014 and these included the redesignation of Altron’s ordinary and participating preference shares.

All the board’s committees operate under board approved mandates and terms of reference, which are updated as necessary, to ensure their alignment with current best practice and evolving business conditions. With the exception of the executive committee, all committees are chaired by independent non-executive directors who attend our annual general meeting to respond to any shareholder queries. Every year our shareholders are required to elect the members of our audit committee at our annual general meeting, as it is a statutory committee in terms of the Companies Act. The members of our other board committees are re-appointed annually by the board at the first board meeting following the annual general meeting.

Each of the Altron group’s subsidiary companies have separate boards of directors, which the Altron board and its committees oversee and guide. The subsidiaries are also governed by the limits of authority set by the Altron board.

As we explained in our governance report in the previous financial year, during which Altech was delisted, a new board was appointed for Altron TMT. To further streamline our governance processes we now have an Altron TMT financial review and risk committee (instead of one financial review and risk committee for Altech and one for Bytes) and a Powertech financial review and risk committee. These committees report into the Altron social and ethics, risk management, and audit committees. Altron TMT also has a remuneration and nomination committee (the Altech and Bytes committees having been combined), which reports into the Altron remuneration and nomination committees, as does Powertech. The diagram shown here sets out the Altron group’s governance structure, reflecting the Altron board as having the ultimate oversight.

 

THE ROLES, RESPONSIBILITIES, COMPOSITION AND FOCUS AREAS OF OUR BOARD AND ITS COMMITTEES

The Altron board

The board met on five separate occasions during the 2014/2015 financial year, of which one was a special purpose board meeting. In addition to these board meetings, the board also held a full day strategy session.

Composition:
Directors 

Summary of roles and responsibilities 

Non-executive chairman Dr WP Venter

Role and responsibilities of the Chairman
The Chairman is responsible for, among other things:

  • the overall effectiveness of the board and its committees;
  • ensuring that the board provides effective leadership,
  • maintains ethical standards and is responsible, accountable, fair and transparent; and
  • ensuring that strategies are developed and implemented with the aim of
  • achieving sustainable economic, social and environmental performance.

To achieve this the chairman fosters a culture of openness and constructive dialogue within the board that allows for
debate and discussion and an expression of a diversity of views. He also makes himself available to shareholders for
discussions on corporate governance matters of concern to shareholders and other stakeholders.

Within Altron, the roles of Chairman and Chief Executive are separate.

Lead Independent Director MJ Leeming  Role and responsibilities of the lead independent director
Altron’s Non-executive Chairman, Dr WP Venter, who is Altron’s single largest shareholder and formerly its Executive Chairman,
cannot be classified as independent. We have therefore, in terms of the JSE Listings Requirements and King III, appointed a Lead Independent Director who;
  • mitigates any risk of potential conflicts of interest at board meetings;
  • ensures that the independent members of the board demonstrate impartiality and leadership;
  • when required, acts as a spokesperson for the various investors in Altron;
  • tests the independence and objectivity of the board’s non-executive directors annually; and
  • takes part in the annual evaluation of the Chairman’s performance and makes recommendations on his remuneration to the remuneration committee.

 

Composition:
Directors 

Summary of roles and responsibilities 

Independent non-
executive directors
NJ Adami
GG Gelink
SN Mabaso-Koyana
Dr PM Maduna
JRD Modise
DNM Mokhobo 
RS Ntuli
SN Susman

The board is responsible for directing, governing and being in effective control of the company.
As fiduciaries, board members are accountable to Altron and indirectly to its shareholders.
They also owe a duty of care and diligence to the company and, consequently, its shareholders. The board is responsible for, inter alia:

  • governing the company on behalf of its shareholders;
  • its own governance, including the appointment and training of directors, the rotation of directors and eliminating conflicts of interest;
  • developing strategy, strategic decision-making and overseeing the execution of strategy;
  • engaging with stakeholders and, in particular, ensuring that investors and potential investors are kept well-informed;
  • determining Altron’s approach to social responsibility, safety, health, the environment, ethics and risk;
  • monitoring and assessing Altron’s reputation in the market place; and
  • IT governance across the Altron group.
Non-executive director MC Berzack Summary of key focus areas during FY2015
  • the successful integration of Altron TMT;
  • entrepreneurship and salesmanship;
Executive directors RE Venter
(Chief Executive of Altron)
RJ Abraham (Chief Executive 
Officer of Bytes)
AMR Smith
(Chief Financial Officer of Altron and
Financial Director)
CG Venter (Chief Executive Officer of
Altech: Group Executive: Altron TMT)
Summary of key focus areas for FY2015
Summary of key focus areas for FY2016
  • customer focus;
  • to deliver value to shareholders (realisation of cost savings and the extraction of synergies at Altron TMT);
  • conducted an independent board evaluation; and;
  • focused less on compliance and governance which is now well-embedded within the organisation.
  • develop and oversee the implementation of a revised strategy for the group;
  • focus on the disposal of non-core assets of the group;
  • focus on realising value for shareholders and other stakeholders;
  • start the transition from a family-managed business to an independently managed structure; and
  • identify strategic equity and technology partnerships with global players.

 

Attendance at Altron board meetings

Board  Strategic
planning 
  Directors  May
2014 
(Special)
July
2014 
August
2014 
October
2014 
February
2015 
November
2014 
  Dr WP Venter (chairman) tick tick tick tick
  MJ Leeming  x  tick tick tick tick
  RE Venter  tick tick tick tick tick tick
  RJ Abraham  tick tick tick tick tick tick
  NJ Adami  tick  x tick  tick tick tick
  MC Berzack  tick tick tick tick tick tick
  GG Gelink  tick tick tick tick tick ✗ 
  SN Mabaso-Koyana  tick tick tick tick tick tick
  Dr PM Maduna  ✗  tick tick tick tick tick
  JRD Modise  ✗  tick tick tick tick tick
  DNM Mokhobo  tick tick tick tick tick tick
  RS Ntuli  tick x x tick x tick
  AMR Smith  tick tick tick tick tick tick
  SN Susman  tick tick tick tick tick tick
  CG Venter  tick tick tick tick x  tick
  tick attended.
  submitted apologies and was granted leave of absence in terms of Altron’s memorandum of incorporation.

 

Executive committee 

The executive committee meets monthly and holds additional meetings as and when required. 

Composition: 

Summary of roles and responsibilities 

Members

RE Venter (Chief Executive of Altron and Chairman
of the committee)
RJ Abraham (Chief Executive Officer of Bytes)
NM Kayton (Chief Executive Officer of Powertech)
DM Ramaphosa (Group Executive: corporate
affairs) 
Dr WH Oosthuysen (Group Executive: technology 
and strategy) 
AMR Smith (Chief Financial Officer and Executive
Financial Director of Altron)
CG Venter (Chief Executive Officer of Altech
and Group Executive: Altron TMT)

Invitees

Certain other senior executives of Altron

The executive committee is responsible for, among others:

  • implementing the Altron group’s strategy;
  • carrying out the board’s mandates and directives;
  • managing the operational activities of the Altron group;
  • monitoring operating and financial performance against set objectives; and
  • monitoring competitive forces in each area of operation.

The committee assists the chief executive in the performance of his duties by:

  • taking responsibility for operational activities of the Altron group;
  • developing operational plans, policies, procedures and budgets for consideration by the board;
  • assessing, controlling and mitigating risk; and
  • prioritising and allocating resources (cash and assets). 

Audit committee
The audit committee met three times during the 2014/2015 financial year. It convenes as and when necessary.

Composition: 

Summary of roles and responsibilities 

Members

(all of whom are independent
non-executive directors)

GG Gelink
(chairman)
NJ Adami
MJ Leeming
JRD Modise  

Invitees
– Altron Chief Executive
– Altron Chief Financial Officer
– Lead partner external auditor
– Head of internal audit
(the invitees do not have voting rights)

The Altron audit committee, which is a statutory committee, also serves as the formal audit committee for Altron TMT and Powertech.


The committee:

  • reviews the Altron group's financial statements and integrated reporting;
  • reviews the findings of the internal and external auditors and oversees the internal audit function;
  • obtains assurance on the financial statements, internal controls and sustainability information included in Altron's integrated report;
  • carries out its statutory duties as set out in section 94 of the Companies Act, 2008, which includes the duty to:
    • assess the independence of the external auditor;
    • nominate the registered external auditor for appointment;
    • determine the fees to be paid to the external auditor and their terms of engagement;
    • determine the nature and extent of any non-audit services the external auditor may provide to the group;
    • provide a report to stakeholders describing how the audit committee carried out its responsibilities during the prior year; and
    • deal with any internal or external complaints relating to accounting practices,
      internal financial controls, internal audit and the content or auditing of the company’s financial statements;
       
  • reviews and satisfies itself as to the experience and experience of Altron's financial director and the Altron group's financial functions;
  • reviews and satisfies itself that management regularly monitors compliance with Altron's code of conduct;
  • reports to the board on matters concerning the group’s accounting policies, financial control records and reporting;
  • oversees other areas as may be determined by the board.
  • reviews the following:
    • findings of the risk management committee;
    • the external auditors report for the relevant year end periods;
    • internal auditor's reports;
    • mergers and acquisitions concluded in the relevant year under review;
    • year-end audit plans and internal audit plans; and
       
  • recommends the group's going concern status.

 
Summary of key focus areas during FY2015

  • conducted evaluations of the Altron financial director, audit committee, external auditor and internal audit function;
  • focused on treasury and cash management with a view to reducing the overall level of indebtedness of the Altron group in the short-to medium term; and;
  • appointed the group’s new third party assurers for financial year ended 28 February 2015 (Environmental Resources Management Southern Africa (Pty) Ltd (ERM);

Summary of key focus areas for FY2016

  • monitor the findings of the Altron TMT and Powertech financial review and risk committees in terms of the strength of internal controls, compliance, legal and tax issues and financial performance;
  • focus on treasury and cash management with a view to reducing the overall level of indebtedness of the Altron group;
  • review and monitor potential mergers and acquisitions within the group; and
  • review the following:
    • findings of the risk management committee;
    • external auditor's report for the year ended 28 February 2016; and
    • external and internal audit reports and plans for 2016;

 

For additional information regarding the Altron remuneration committee, please see the Altron 2015 remuneration report.

Attendance at Altron remuneration committee meetings

    April
2014 
May
2014 
February
2015 
  JRD Modise (Chairman) tick  tick tick
  NJ Adami  tick tick x 
  MC Berzack  tick tick tick
  SN Susman  tick tick  tick

 

Nomination committee 

The nomination committee met twice during the 2014/2015 financial year. It convenes additional meetings as and when required.

Composition: 

Summary of roles and responsibilities 

Members

Independent non-
executive directors


Non-executive directors

Dr PM Maduna
(Chairman) 
NJ Adami
MC Berzack 
MJ Leeming 
SN Susman
Dr WP Venter  

Invitees

Altron Chief Executive
– right of attendance 
Certain senior executives of Altron

The responsibilities of the nomination committee include:

  • ensuring that Altron’s executive and senior leadership is aligned with the spirit and targets set out in the dti Codes of Good Practice;
  • identifying and evaluating suitable candidates for appointment to the Altron board and ensuring effective succession planning. The committee reviews succession plans twice a year, which is particularly important in a family business;
  • ensuring that the appointment of Altron’s directors is transparent and governed by the formal procedures set out in the committee’s mandate and terms of reference and the board charter;
  • ensuring that directors retire and are re-elected in accordance with the committee’s mandate and the company’s memorandum of incorporation;
  • reviewing and testing the independence of the non-executive directors annually;
  • reviewing and nominating the non-executive chairman for re-appointment each year;
  • nominating the audit committee members for election at the annual general meeting; and
  • considering directors' period of service on the board, performance and experience when deciding to nominate them for re-election at the annual general meeting.

In terms of paragraph 3.84(a) of the JSE Listings Requirements Dr PM Maduna is regarded as the lead independent director for purposes of the Altron nomination committee only.


Summary of key focus areas during FY2015

  • ensured that the right calibre of people fill the key positions within Altron and encouraged the attraction of top calibre employees to the group;
  • reviewed the group’s succession plan with particular emphasis on identifying previously disadvantaged individuals and the development programmes in place for potential successors;
  • conducted a performance assessment of the non-executive chairman and his re-appointment;
  • evaluated the Altron group company secretary as per the JSE Listings Requirements;
  • conducted a committee self-evaluation exercise; and;
  • developed an e-book to facilitate new director inductions.

Summary of key focus areas for FY2016

  • appoint executives in key management positions and focus on succession planning;
  • continue to focus on ensuring that the right calibre of people fill the key positions within Altron;
  • understand the new dti Codes of Good Practice and focus on succession planning in terms thereof;
  • assess the performance of the non-executive chairman and his re-appointment;
  • evaluate the Altron group company secretary as per the JSE Listings Requirements;
  • introduce the e-book to facilitate new director inductions; and
  • ensure that sufficient time gets devoted to considering and nominating potential new directors.

 

Attendance at the Nomination Committee meetings 

    July 
2014  
February 
2015  
  Dr PM Maduna (Chairman) tick tick
  NJ Adami  tick tick
  MC Berzack  tick tick
  MJ Leeming  x tick
  SN Susman  tick tick
  Dr WP Venter  tick tick
  tick attended.
xsubmitted apologies and was granted leave of absence.
 

Social and ethics committee 

The social and ethics committee met twice during the 2014/2015 financial year. It also convenes additional meetings as and when required.   

Composition: 

Summary of roles and responsibilities 

Members

Independent non
-executive directors

Non-executive director 
and executive director

Invitees
Various members of Altron's
senior management 

 

 

DNM Mokhobo
(Chairman)
MC Berzack
GG Gelink 
RE Venter 

 
The Altron social and ethics committee is responsible for monitoring, overseeing and discharging certain statutory and other obligations required of a social and ethics committee in terms of the Companies Act and otherwise, on behalf of the Altron group. The primary role of the committee, is to assist the board by supporting, advising and providing guidance on the effectiveness or otherwise of management’s efforts in respect of social, ethics and sustainable development-related matters which include:
  • ensuring a culture of ethical behaviour is embedded throughout the Altron group, in partnership with the Altron ethics office, which is run by the chief ethics officer, and assisted by the internal audit function;
  • monitoring the group's activities with regard to any relevant legislation or codes of best practice;
  • monitoring compliance with regard to social and economic development and good corporate citizenship;
  • monitoring the group's performance in terms of the environment, health and public safety, including the impact of the group’s activities and its products and services and its standing in terms of B-BBEE and employment equity;
  • overseeing stakeholder engagement including consumer relations; and
  • monitoring the group's activities in respect of the promotion of equality, prevention of unfair discrimination, reduction of corruption, transformation and social responsibility policies and strategies.

Key focus areas during FY2015

  • monitored the group's standing in terms of the 10 principles of the United Nations Global Compact (UNGC) and reported against the 10 principles in our integrated annual report;
  • updated relevant group policies;
  • reviewed and monitored reports from Altron legal and the compliance function to confirm that Altron complies with all relevant regulations and laws (Altron was not found guilty of any offences nor fined during the prior year);
  • oversaw the completion and signature by all top managers throughout the Altron group, of a compliance declaration to confirm that the Altron group had not engaged in bribery or corruption and/or anti-competitive behaviour during the prior year;
  • reviewed Altron’s processes to ensure the group complies with the new proposed Protection of Personal Information Act; and
  • conducted a committee self-evaluation exercise.

Key focus areas for FY2016

  • continue monitoring the group’s approach to anti-corruption and bribery and its standing in terms of the 10 Principles of the UNGC;
  • understand the amendments to the dti Codes of Good Practice and review recommendations from the group’s transformation committee in respect thereof;
  • continue monitoring the group’s approach to respecting human rights and oversee the development and introduction of a human rights strategy;
  • monitor the group’s donations and charitable givings policy in greater detail; and
  • oversee the introduction of an ethics strategy for the group.

 

For additional information regarding the Altron social and ethics committee, please review the Altron social and ethics committee report.

Attendance at Altron social and ethics committee meetings 

    May 
2014  
October 
2014  
  DNM Mokhobo (Chairman) x tick 
  MC Berzack  tick tick
  GG Gelink  tick tick
  RE Venter  tick tick
  tickattended.
x submitted apologies and was granted leave of absence. 
 
 

Risk management committee 

The risk management committee met twice during the 2014/2015 financial year. It convenes additional meetings as and when required.  

Composition: 

Summary of roles and responsibilities 

Members

Independent non-
executive directors

 

 

Executive directors

 

Altron group executives

 

Invitees

Various members of Altron’s
senior management 

 

 

MJ Leeming
(Chairman)
GG Gelink
SN Susman

RJ Abraham
AMR Smith
CG Venter
RE Venter
NM Kayton
DM Ramaphosa
Dr WH Oosthuysen 

The risk management committee’s role is to assist the board with the discharge of its duties regarding the identification of risks and opportunities and the assessment of the effectiveness of risk management throughout the Altron group. The range of risks considered by this committee is guided by our four core value drivers, which include financial sustainability, human capital,
products and services and external relationships. To achieve this, the committee:
  • oversees the governance of risk in conjunction with the social and ethics committee, which includes the application of the Altron group’s risk management framework and its system of internal controls (further explained in Altron’s risk management report contained in the integrated annual report) and coordinates Altron’s risk management and assurance efforts;
  • establishes a common understanding of the body of risks that the Altron group needs to address if it is to achieve its corporate objectives;
  • reviews and confirms the Altron group’s levels of risk tolerance and its risk profile at least twice a year;
  • monitors the perceived effectiveness of the Altron group’s existing controls, which includes the external verification of our risks by a range of independent assurers; and
  • monitors external developments relating to corporate accountability, including emerging and potential risks. Refer to the risk management report in the integrated annual report

Summary of key focus areas during FY2015

  • developed risk registers for Altron TMT and Powertech;
  • evaluated key risks and opportunities facing the Altron group, including the mitigation of these risks and strategies to exploit opportunities;
  • reviewed the internal audit report on risk management, ethics climate surveys, environmental compliance and the change in reporting structure as a result of the delisting of Altech;
  • reviewed measures to combat fraud, theft and dishonesty;
  • incorporated information technology risk management processes;
  • identified the need for a reputation management strategy and programme;
  • reviewed corporate governance and compliance in terms of the JSE Listings Requirements, the Companies Act and King III;
  • ensured the successful integration of Altron TMT from a social perspective;
  • reviewed risk reports from Altron treasury with specific reference to cash management and the reduction of the overall levels of indebtedness; and
  • conducted a committee self evaluation exercise.

Summary of key focus areas for FY2016

  • focus on IT security, disaster recovery and governance;
  • review and monitor the risks regarding treasury;
  • oversee the development of a reputation management strategy for the Altron group;
  • introduce a revised risk reporting structure for the group in line with Altron's sustainable business strategy; and
  • focus on the mitigation of risks associated with mergers and acquisitions. 

 

For additional information regarding Altron’s risk management process, refer to the risk management report

Attendance at Altron risk management committee meetings 
    May 
2014  
October 
2014  
  MJ Leeming (Chairman) tick tick
  GG Gelink  x tick
  SN Susman  x x
  RJ Abraham  tick tick
  NM Kayton  tick tick
  Dr WH Oosthuysen ± ±
  DM Ramaphosa ± ±
  AMR Smith  tick tick
  CG Venter  tick x
  RE Venter  tick tick
  √ attended
  xsubmitted apologies and was granted leave of absence.
  ± appointed to the committee after these dates.

OUR RISK MANAGEMENT PROCESS
Altron’s risk governance process is a top-down approach with the board overseeing and approving all risk management processes and activities. For a detailed description of how we govern risk refer to the ‘how we govern our business’(www.altron.com/iar2015/governance/govern.asp) section of this report. Although the board plays a critical role in how we manage our risks, risk identification, management and reporting is achieved via a bottom-up approach. Altron’s risk management process comprises the following three levels of reporting as indicated in the diagram:

Risk management process – level 1 refers to risk management at an operational level. Risks identified and managed at operational level are reported to the executive committees of Altron TMT and Powertech respectively. Altron’s internal audit department performs reviews at the operational levels and their findings are reported to the relevant Altron TMT and Powertech executive committees.

Risk management process – level 2 includes the reporting of risks to the sub-holding group companies’ financial review and risk committees (Altron TMT FRARC and Powertech FRARC). Major risks are elevated to the Altron Group Chief Executive (through the executive committee, which meets monthly); the Altron social and ethics committee (in respect of risks relating to the non-financial aspects of the business); the Altron risk management committee (in respect of all risks, both financial and non-financial); and the Altron audit committee. These committees meet twice a year and also oversee that the mitigation and management of the risks identified are effective and efficient. Altron’s internal audit department also assists with the risk management process at this level as reports are submitted to all the above mentioned committees.

Risk management process – level 3 includes the overall evaluation and management of risks by the Altron board. In addition, the role of internal audit is to provide assurance to the board that appropriate risk management processes and controls are in place. The board is thus ultimately responsible to ensure that the risk governance processes and the risk management processes remain adequate and effective in identifying the group’s risks and opportunities and that there is a system of efficient and effective monitoring, mitigation and management in place.

STATEMENT OF INTERNAL CONTROL
Board responsibility
The board recognises the importance of a sound system of internal control which supports the achievement of the Altron group’s policies, aims and objectives while ensuring compliance with statutory duties and responsibilities.

It acknowledges its overall responsibility for the Altron group’s system of internal controls. This includes the establishment of an appropriate control environment and framework and a review of the effectiveness, adequacy and integrity of this system.

Delegation of responsibilities
The delegation of responsibilities for both the Altron group's executive and operating management is clearly defined, which includes authorisation levels for all aspects of the business. The delegation of these responsibilities is reviewed annually.

Policies and procedures
Clearly documented policies and procedures are set out in the Altron group policy manual which is subject to regular review and updating.

Management review meetings
Management review meetings are held regularly for all operating units. Operational, financial and key management issues are identified, discussed and resolved at these meetings.

Monitoring of results
Results against budget are monitored monthly at both operational and at board level. Management follows up and takes action regarding major variances against the budget.

Code of conduct
The Altron group has an established code of ethics and code of conduct (revised in February 2015 and approved by the Altron audit committee), which sets out and reinforces corporate values and ethical behaviour.

Whistle-blowing
The Altron group has in place an anonymous whistle-blowing facility (Tip off Tim), which is independently run by Deloitte. All tip-offs are actively investigated, followed up and resolved. Our whistle-blowing guidelines policy is regularly reviewed and updated when necessary. The ethics office also has a secure email address which employees can use to report unethical behaviour or to seek advice and guidance on ethical dilemmas they may face. This email address is only accessible to the chief ethics officer. Altron regularly publishes SENS announcements in terms of section 159 of the Companies Act.

Independence of the internal audit function
Following its annual review of the internal audit function’s independence, the Altron audit committee concluded that it is satisfied that the independence of the function has not been impaired in any way. Should any significant issues be identified that warrant the removal of the head of internal audit, the matter would be decided by a majority vote of the audit committee.

King III
Both the audit committee and the head of internal audit have reviewed the King III requirements pertaining to internal audits. Both parties agree that the internal audit function complies with the requirements of the King Code.

Compliance with Institute of Internal Auditing Standards
The internal audit function adheres to the International Standards for the Professional Practice of Internal Auditing (IIA Standards). Its compliance is confirmed by means of a review, which was conducted by Deloitte in the year under review.

Audit cycle
The audit plan is established by the Altron group internal audit function, approved by the audit committee and communicated to sub-holding executive management and the respective audit and financial review and risk committees.

Special assignments are also undertaken at the request of audit committee members when deemed necessary. In these cases, appropriate arrangements are made to ensure that these additional requests do not compromise the achievement of the audit plan.

The role of internal audit
Altron's internal audit function supports the audit committee, the board and each operation of the group by independently evaluating the adequacy and effectiveness of the controls throughout the Altron group of companies, their financial reporting mechanisms and records, information systems and operations. It also provides additional assurance on the safeguarding of group assets and financial information.

The internal audit department monitors compliance with policies and procedures and reviews the effectiveness of the internal control environment. Significant findings in respect of non-compliance with policies and procedures, or weaknesses in internal controls are highlighted in the department's reports, brought to the attention of management and reported to the Altron audit committee.

Audits are carried out on all significant operating units. The frequency of an audit is determined by the assessment of risk, which includes, but is not limited to, the results of the previous audit review, operational financial contribution, and changes in key employees and systems. High-risk operations are audited annually, medium-risk sites once every 18 months, and low-risk sites once every three years. The audits are conducted in accordance with the International Standards for the Professional Practice of Internal Auditing.

The annual audit plan is reviewed and approved by the Altron audit committee. The plan includes:

  • a review of financial systems to assess the adequacy and effectiveness of the internal controls implemented and maintained by management;
  • a review of computer systems based on edition 4.1 of the internationally accredited COBIT® framework;
  • a production review aimed at assessing the adequacy and effectiveness of internal controls and compliance with these controls;
  • a health and safety review to ensure the company is complying with the requirements of the Occupational Health and Safety Act, of 1993, as amended;
  • an environmental review to determine the level of compliance with respect to general and specific environmental duties, standards and legal liabilities, including the common law, based on the identified environmental risk and on the pending law and global and local trends;
  • an energy review to assess the adequacy and effectiveness of the Altron group’s energy management systems;
  • a general security review to ensure the company is complying with the requirements of the Altron group policies and South African legislation, that company property is adequately protected and that the company provides an environment that is safe and secure for its employees; and
  • an ethics review to determine the ethical climate at particular operations.

The following standard audit opinions have been defined to allow management to place in context the opinion given in internal audit reports.

STANDARD OPINION
DEFINITION

The system of internal control is adequate and effective.
Control weaknesses identified were minimal and of a minor nature, and do not impair the overall system of internal control. 

While for the most part satisfactory, certain controls are missing or are only partial in nature. While other controls compensated in part for the weakness, timely corrective action is required by management.
The system of internal control is not significantly impaired. 

Critical controls are absent or inadequate. The weaknesses identified, taken together or independently, significantly impair the overall system of internal control.
As a result, prompt corrective action by management is necessary to bring controls up to a satisfactory level.

Control weaknesses are so significant or widespread that there is a high risk of financial loss, business interruption, breach of privacy, non-adherence to company policies or failure to meet contractual or statutory obligations.
mmediate action is required by management to implement effective controls. The overall system of internal control is materially impaired.
 

 

 

 

 

 

 

 

The following standard audit opinions have been defined to allow management to place in context the opinion given in internal audit reports.

 

STANDARD OPINION 

 

DEFINITION 

       
  GOOD 

 

The system of internal control is adequate and effective. Control weaknesses identified were minimal and of a minor nature, and do not impair the overall system of internal control. 

     
     
       
  SATISFACTORY

 

While for the most part satisfactory, certain controls are missing or are only partial in nature. While other controls compensated in part for the weakness, timely corrective action is required by management. The system of internal control is not significantly impaired. 

     
       
   CORRECTIVE ACTION REQUIRED

 

Critical controls are absent or inadequate. The weaknesses identified, taken together or independently, significantly impair the overall system of internal control. As a result, prompt corrective action by management is necessary to bring controls up to a satisfactory level.

     
       
   DEFICIENT 

 

Control weaknesses are so significant or widespread that there is a high risk of financial loss, business interruption, breach of privacy, non-adherence to company policies or failure to meet contractual or statutory obligations. Immediate action is required by management to implement effective controls. The overall system of internal control is materially impaired.

     

The Altron company secretary is responsible for administering the proceedings and affairs of the directorate (board meetings), the company and, where appropriate, owners of securities in the company, in accordance with the relevant laws.

The company secretary is available to assist all Altron directors indicvidually and collectively with advice on their responsibilities, professional development and any other relevant assistance they may require.

Altron Management Services (Pty) Ltd is the duly appointed company secretary of Altron and Mr AG Johnston performs the company secretary role. He is neither a director nor a shareholder of Altron or any of its subsidiaries and the board is comfortable that Mr Johnston maintains an arm’s length relationship with the executive team, the board and the individual directors in terms of paragraphs 3.84 (i) and (j) of the JSE Listings Requirements.

Mr Johnston has held the position of company secretary of a listed company for the past 15 years, is a qualified and admitted attorney and holds the FCIS qualification. He has never been censured by the JSE or penalised or fined for any misconduct. Having assessed his abilities, qualifications, experience and the level of competence he has demonstrated as the Altron group’s company secretary over the past ten years, in terms of the requirements of paragraphs 3.84 (i) and (j) of the JSE Listings Requirements, the nomination committee recommended his continued appointment as company secretary to the board. Mr Johnston recused himself from the meeting while the board deliberated on his suitability to act and perform the role and duties of Altron group company secretary. He was declared suitably qualified, competent and experienced to continue as the Altron’s group’s company secretary by the board on 27 February 2015.

BOARD GOVERNANCE PROCESSES

 

Process 

Approach 

 

Appointment of directors 

Directors are appointed by way of a transparent and formal procedure, governed by the mandate and terms of reference of the nomination committee and the board charter. A director’s skills, knowledge, experience in relevant sectors, qualifications, availability, number of external board appointments and what they bring to the diversity of the board are among the issues considered in the selection process, which is conducted bearing Altron’s strategic objectives in mind. Shareholders vote annually on the re-election of non-executive directors to the board who have served on the board for nine or more years and also those who are 70 years or older. The board votes on the re-appointment of the Chairman every year. 

 

Rotation of directors 

In terms of article 25.17 of the company’s memorandum of incorporation, one-third of our directors are required to retire by rotation at each annual general meeting. They may choose to offer themselves for re-election. 

 

Directors’ conflicts of interest 

In terms of the Companies Act, King III and the Altron board charter, a company director must avoid a situation in which he/she has, or can have a direct or indirect personal financial interest that conflicts or may possibly conflict with the interests of the Altron group. Procedures have been established for directors of Altron to notify the company of any actual or potential conflict situation and to declare any personal financial interests every three months. 

   

If directors find that a conflict of interest is unavoidable, then they must disclose it and recuse themselves from any decisions regarding matters where this interest may impair their judgement. 

   

The Altron group declaration of interests’ policy regulates the behaviour of all group employees. 

 

Induction and training of directors 

When we appoint new directors, they receive a formal induction to the Altron group which includes their expected duties as directors of Altron. We invest in on-going training of our board members which ensures that they remain effective in a rapidly evolving business environment. We recognise that on occasion our directors may feel the need to seek advice from independent professionals regarding the discharge of their duties. Our board charter, as well as a detailed policy contained within a board resolution, encourages our directors to seek independent advice funded by Altron. 

 

Board effectiveness 

In addition to the formal self-evaluation of its effectiveness the board conducts every second year, we conducted an independent external evaluation of our board’s effectiveness at the beginning of financial year 2015. The evaluation found that most board members felt that strategy development and monitoring, and performance monitoring has improved, but felt that more board time should be set aside for strategy development and the monitoring of performance against strategy. The evaluation found that directors contribute and participate and are open and frank in their approach and there is robust and open debate. Directors felt that the Altron board is well constituted in terms of skills and experience but that there could be more female representation on the board. The strong representation of non-executive directors on the board is seen as acting as a good check and balance on the board. The evaluation indicated that executive succession receives regular attention. Board members felt that performance targets for executives should be set earlier in the financial year. Directors felt that the ethical tone of the group was generally sound and that the family makes an effort to err on the side of caution and to be seen to be doing the right thing. They also felt that a good level of risk, governance and compliance is being applied, however they would like to see less emphasis on governance, which would give more time for the business issues. The evaluation indicated that more consideration should be given to the structure of the executive pay mix, particularly in terms of short-term and long-term incentives and that there should be greater weighting to ‘at risk’ pay in the form of long-term sharebased incentives. Board members felt that Altron properly fulfils its role with regards to the company’s stakeholders, however, it was felt that the group’s role from a community perspective needs to be more clearly articulated. Most board members felt that the acquisition of the Altech minorities and the delisting of Altech was the most significant board success over the past year. Board members felt that the committees are working well, are efficiently run and have the right members and composition. Most board members felt that there were no material shortfalls over the past year, and that the Chairman provides effective leadership of the board and that the lead independent director is doing a good job in his role. The committee chairs were highly regarded and there was high praise for the Altron company secretary.

The remuneration committee also evaluates directors annually when it reviews their remuneration packages relative to performance. The nomination committee evaluates directors who are due for retirement in terms of recommending them for re-election to shareholders.

 

Stakeholder engagement 

Stakeholder engagement is one of our key material issues. The board is responsible for communicating with our shareholders, which it does mainly via executives and departmental heads(group executive: corporate affairs and group company secretary) who are responsible for regularly engaging with analysts, investors, individual shareholders and potential investors. This is done always in terms of our group disclosure policy to avoid inadvertent disclosures during closed periods or any other prohibited period.

   

Our sustainability team engages with a wide range of stakeholders on behalf of the board on key topics such as human rights, ethics and the company’s sustainable business strategy. These stakeholders include employees, suppliers, customers and contractors. 

   

We encourage feedback and dialogue and regularly contract an independent organisation to survey the perceptions of the investor community following the release of our annual results. 

   

The Altron group’s policy governing all statutory and non-statutory disclosures made by Altron group directors and employees is reviewed annually. 

   

A detailed discussion of our stakeholder engagement is available in the integrated annual report.

 

Dealing in securities 

Altron has a policy in place which provides guidance to directors and designated employees on dealing in the company’s securities. The JSE Listings Requirements specifically prohibit directors and senior employees from buying or selling a listed company’s shares during a closed period. 


Memberships 

Memberships of associations and national/international advocacy organisations assist Altron in fulfilling its role as a good corporate citizen.

  Directors/prescribed officers Organisation 
  Mr DM Ramaphosa/Mr RE Venter Member of Business Leadership South Africa (BLSA)
  Mr JRD Modise Trustee of the Nelson Mandela Children’s Fund 
  Mr SN Susman Chairman of the Advisory Board of the University of Stellenbosch Business School
    Chairman of Conservation International (South Africa)
  Mr NM Kayton Member of the Manufacturing Circle
Director of the South African Electrotechnical Export Council (SAEEC)
  Mr AG Johnston Member of the Committee for Responsible Investing in South Africa (CRISA) 
    Certified Ethics Officer with the Ethics Institute of South Africa 
    Member of the ICGN subcommittee tasked with developing leading and best practises regarding global remuneration committees 
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Altron believes that good corporate governance, which includes transparency, honesty and accountability, is key to the integrity of our organisation, including our ability to manage risk and perform at optimum levels. Underpinning our disciplined approach to governance is our determination to ensure that we maintain a balance between good governance and the spirit of entrepreneurship that has built our business over the past 50 years.

To view the complete Altron Corporate Governance report - click here