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Governance

Corporate governance

The board of directors recognises that good corporate governance is essential to protect the interests of all stakeholders. Business is conducted in accordance with the principles of openness, integrity and accountability, as advocated in the Code of Corporate Practices and Conduct of the 2002 King Report on Corporate Governance for South Africa (King II Report). The board is committed to applying and enforcing appropriate corporate governance principles, policies and practices within each of the Groupís operations. Ultimately, the board is the focal point of the Groupís corporate governance system, and is accountable and responsible for ensuring compliance with the King Report. The Group is in the process of reviewing the requirements set out in the King Code of Governance for South Africa, 2009 (the King III Report) and will adopt existing principles if required.

The board acknowledges its responsibility to ensure that the principles of good governance are observed, and the directors collectively and individually acknowledge their responsibilities and duties in terms of the JSE Listings Requirements and other relevant legislation.

The board has reviewed the Groupís organisational structures and corporate governance procedures and has implemented measures to ensure ongoing compliance with good corporate governance practices. Through this process, all stakeholders can be assured that the Group is being managed according to prudently determined risk parameters and in compliance with generally accepted corporate practices. The Groupís Audit Committee is mandated with monitoring the Groupís compliance with the King Reports.

Changes during the year 2010 financial year

Mr Pretorius retired as an independent non-executive director to the board on 23 October 2009 and Mr Masebelanga resigned as an executive director to the Board on 19 February 2010.

Statement of compliance

The JSE Listings Requirements require JSE listed companies to report on the extent to which they comply with the principles set out in the King II Report. The board believes that the Group complies substantially with the King II Report and the JSE Listings Requirements. An area where the recommendations of the King II Report has not been applied is that the chairpersons of the board, risk management and remuneration committees are not independent non-executive directors as defined by the King Report. Mr Crosse, non-executive chairman, chairs the Board and Mr Humphris, Group managing director, chairs the remuneration and risk management committees, respectively.

The board is of the opinion that Mr Crosseís chairmanship of the remuneration committee, and his participation in decisions concerning remuneration of directors, helps to ensure that the Groupís remuneration policy is aligned with its strategic objectives.

The board is also satisfied that, given his knowledge and authority, the Group managing director is the most appropriate person to hold the position of chairman of the risk management committee. The Board is in the process of appointing a lead independent director.

In line with King III, the Board is currently reviewing the risk management process.

The remuneration committee now only comprises non-executive directors. Executive directors, including Mr Humphris, attend committee meetings by invitation.

The board of directors

As recommended by the King II and III Reports, Omnia Holdings Limited has a unitary board structure, comprising a majority of non-executive directors independent of management. As at 31 March 2010, the board comprised 11 directors, of whom six are independent non-executive directors, two are non-executive directors and three are executive directors. The board as a whole selects and appoints new directors. A formal procedure applies to all appointments which are confirmed by shareholders at the annual general meeting.

The guidelines contained in the JSE Listings Requirements are used to test the independence and category most applicable to each director. Prior to any appointment, potential board appointees are subjected to a fit and proper test, as required by the Companies Act, 61 of 1973, and the JSE Listings Requirements.

To ensure that there is a clear division of responsibilities, the roles of chairman and managing director are separate. The chairman and the managing director jointly provide leadership and guidance to the Group.

The chairman

The board appointed Mr Crosse as non-executive chairman in 2000. As chairman, he is responsible for ensuring the integrity and effectiveness of governance practices. His role is to provide continuity, experience, governance and strategic advice. He leads the board and is responsible for representing the board to shareholders. His particular areas of responsibility include strategic planning, maintaining relationships with principals, government and customers, transformation, corporate relations, top-level contact with regulatory bodies, and advice and guidance on local and overseas acquisitions.

The chairmanís level of involvement is considered essential by the board, given the intrinsic knowledge and experience he brings to the effective running of the board and guidance of the management team.

Mr Crosse has been with Omnia for more than 30 years. His energy, enthusiasm and thorough knowledge of the chemical industry have helped guide the Group to its current success. He held the position of chairman of the Chemical and Allied Industriesí Association of South Africa (CAIA), the organisation responsible for administering Responsible Care in the South African chemical industry, for five years. He consults with and also provides strategic input and advice to the Group managing director on a regular basis.

Non-executive directors

Omniaís non-executive directors bring a diversity of experience, insight and independent judgement on issues of strategy, performance, resources and standards of conduct, while contributing to decision making through their knowledge and experience. They are individuals of high calibre and integrity who provide a depth of wisdom based on this knowledge and experience. To protect shareholdersí interests, the independent directors ensure that no one individual director has unfettered powers of decision making and authority.

Executive directors

Being involved in the day-to-day business activities of the Group, executive directors are responsible for ensuring that the decisions, strategies and views of the board are implemented. Mr Humphris was appointed as Group managing director in 1999. He reports to the board and is responsible for ensuring the smooth running of the day-to-day business of the Group, as well as guiding the implementation of policies and strategies adopted by the board. In addition, he is responsible for developing and recommending to the board a long-term strategy and vision for the Group that will generate stakeholder value, as well as developing and recommending to the board annual business plans and budgets that support the Groupís long-term strategy.

The board charter

The board has adopted a charter defining its responsibilities, the terms of which include:

  • Providing strategic direction to the Group and being responsible for adopting strategic plans (such as strategies and plans originated by management) and in particular, approving the five-year strategic plan.
  • Approving the annual business plan proposed by management.
  • Retaining full and effective control over the Group, and monitoring managementís implementation of the approved annual budget and strategies.
  • Appointing the Group managing director, who is accountable to the board.
  • Preparing the Groupís financial statements, interim report and preliminary announcement, and ensuring the integrity and presentation thereof.
  • Assessing the viability of the company and of the Group on a going-concern basis.
  • Determining director selection, orientation and evaluation.
  • Ensuring the Group has appropriate risk management, internal control and regulatory compliance procedures in place, and that these are communicated to shareholders and other stakeholders openly and promptly.
  • Establishing sub-committees of the board with clear terms of reference and responsibilities, as and when appropriate.
  • Monitoring the non-financial aspects relevant to the business.
  • Considering, and if appropriate, approving the declaration of dividends to shareholders (which are sanctioned by the shareholders when the annual financial statements are approved at the annual general meeting).
  • Finding the correct balance between conforming to governance constraints and performing in an entrepreneurial way.
  • Evaluating its own performance as a whole, the performance of management and that of sub-committees of the board, including reviewing both its charter and methods of self-evaluation from time to time.
  • Determining the appropriate code of ethics to ensure the integrity of the business affairs of the Group.

Directorsí interests in terms of other board positions and contracts are regularly declared, recorded and updated. Board members are required to recuse themselves when participating in deliberations or decision-making processes that could in any way be affected by a conflict of interest. During the year under review, none of the directors declared a material interest in any contract or arrangement entered into by the Group.

The board defines levels of materiality, reserving specific powers and delegating other matters with the necessary authority to management. The board has adopted a formal resolution framework that serves as an authority matrix guideline.

Notwithstanding the mandate given to the audit, remuneration and risk committees, the board is ultimately accountable and responsible for the performance and affairs of the Group. Delegating authority to board committees or management does not in any way mitigate or discharge the board and its directors of their duties and responsibilities.

Selection and appointment

In terms of the companyís Articles of Association, one-third of the directors retire annually and, if eligible, stand for re-election. Their names are submitted for re-election at the annual general meeting.

Non-executive directors have no service contracts with the company and are appointed for specific terms. The board has adopted a policy on the procedure for the appointment of directors. All directors are invited to assist in the identification and nomination of potential candidates. New appointments to the board are confirmed at the following annual general meeting in terms of the companyís Articles of Association.

Induction and development

Newly appointed directors undergo an induction exercise appropriate to their needs. The company secretary assists the chairman with the induction and orientation of directors, including arranging specific training if required.

The company is also committed to continuing director development in order to build on their expertise and develop a more detailed understanding of the business and the markets in which the company operates.

In addition, individual directors may, after consulting with the chairman and managing director, seek external independent professional advice on matters concerning the affairs of the Group, and in connection with the discharge of their responsibilities as directors, at the expense of the Group.

Board committees

While the Board remains accountable and responsible for the performance and affairs of the company, it delegates to management and board committees certain functions to assist the board in properly discharging its duties.

Each board committee acts within agreed, written terms of reference that are reviewed and updated from time to time. The chairperson of each board committee reports back to the board on the deliberation of the committee meeting, and minutes of board committee meetings are provided to the board for comment and noting.

Annual financial statements

The directors are responsible for the preparation of the annual financial statements. Management fulfils its responsibilities by maintaining adequate accounting records to ensure the integrity of these annual financial statements. This is accomplished by systems of internal control designed to provide reasonable assurance on the reliability thereof. Such controls provide the company with the assurance that the Groupís assets are safeguarded, transactions are executed in accordance with managementís authorisations and financial records are reliable. This is augmented by the Groupís ethics and prescribed policies and procedures which are regularly updated to take cognisance of changing circumstances in the financial and operational environment.

The company secretary

The company secretary is responsible for providing the Board collectively, and each director individually, with guidance on the discharge of their responsibilities in terms of the legislative, regulatory and governance requirements.

All the directors have unlimited access to the advice and services of the company secretary. The company secretary plays a pivotal role in the companyís corporate governance process and ensures that, in accordance with the pertinent laws, the proceedings and affairs of the Board of Directors, the company itself and, where appropriate, shareowners are properly administered. The company secretary also acts as the compliance officer and delegated information officer of the Group, and is responsible for the execution of statutory requirements applicable to those positions.

In addition, individual directors may, after consulting with the chairman and managing director, seek external independent professional advice about the Groupís business and on any matters connected with the discharge of the responsibilities as directors, at the expense of the company.

Code of conduct

Omnia prides itself on its reputation for ethical conduct which it has built among all its stakeholders over many years. This stems from the uncompromising belief that honesty, integrity, professionalism and service must underpin every relationship entered into with employees, management, customers, suppliers, the government and the communities in which the Group operates.

The Group has developed a Code of Conduct (the Code), which has been fully endorsed by the Board and applies to all directors and employees. The Code is regularly reviewed and updated as necessary to ensure that it reflects the highest standards of behaviour and professionalism. The directors believe that the ethical standards of the Group as stipulated in the Code are adequately monitored and are being met. Where there is non-compliance, the appropriate disciplinary procedures are consistently enforced as the Group responds to offences and prevents recurrence.

In summary, the Code requires that, at all times, all company personnel act with the utmost integrity and objectivity and in compliance with the letter and the spirit of both the law and company policies.

The Code is provided to each employee as part of induction training, and employees are asked to sign a declaration confirming compliance with the Code annually.

Dealing in securities

The Group has a policy in place to ensure that it is compliant with all laws and regulations governing insider trading and trading during prohibited periods. This policy and practice complies with the Securities Services Act, the JSE Listings Requirements and all other relevant legislation. In compliance with this policy and practice, the Group restricts its directors, officers and other employees from dealing in the companyís securities prior to any formal announcement in respect of its financial results or during any other period where such dealings may be considered price sensitive.

The policy also regulates the dealings by directors in Omnia Holdingsí securities, as required by the JSE Listings Requirements. This policy is implemented and monitored by the company secretary. In compliance with the JSE Listings Requirements, the chairman approves all share transactions by company directors prior to the transaction. This policy is reviewed and updated from time to time to ensure that it is compliant with any changes in legislation.

Relations with shareholders

The Group pursues dialogue with institutional investors based on constructive engagement and the mutual understanding of objectives having regard to statutory, regulatory and other directives overseeing the dissemination of information by companies and their directors.

Management is able to communicate the strategy and performance of the Group with investors and analysts through various presentations and meetings. The quality of this information is based on the standards of promptness, relevance and transparency.

The Group makes every effort to ensure that information is distributed via a broad range of communication channels; having regard to security and integrity while bearing in mind the need that critical financial information reaches all shareholders simultaneously and timeously. In communicating the Groupís strategy and results, the Group makes use of communication channels such as the Omnia website (www.omnia.co.za), Security Exchange News Service (SENS), as well as print, radio and television media.

The Board accepts its duty to present a balanced and understandable assessment of the Groupís position in reporting to stakeholders. Greater demand for transparency and accountability regarding non-financial matters is always taken into account. All stakeholders with a legitimate interest in the Groupís affairs can obtain full, fair and frank accounts of its performance.

With effect from 20 May 2010, One Capital (Pty) Ltd was appointed as the company sponsor.

The Group acknowledges the importance of its shareholders attending the annual general meeting, as it offers an opportunity for shareholders to participate in discussions relating to agenda items and to raise additional issues. Explanatory notes setting out the effects of all proposed resolutions are included in the notice of the meeting.

Directors reconsider their assessment at the year end of the Groupís ability to continue as a going concern and determine whether any of the significant factors in the assessment have changed to such an extent that the appropriateness of the going-concern assumption at the interim reporting stage has been affected. The directors have formed a judgement that there is a reasonable expectation that the Group has adequate resources to continue to operate for the foreseeable future, and therefore continue to adopt the going-concern basis in the preparation of the financial statements.

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