Board responsibility
The Board of Directors is responsible for governing the risk management processes and the quality of internal control systems in the Group in accordance with corporate governance best practice. The Board is supported in these tasks by the Committees of the Board and their sub-Committees, and risk management functions that monitor risk and receive reports, which allow it to review the effectiveness of the Group’s risk management policies. Levels of the risk management governance structures for the Group are:- Audit and Risk Management Committee of AFGRI and specific sub-Committees
- The Group Enterprise-wide Risk Management Committee
- Enterprise-wide Risk Management Committee for each Division
- Risk Management Committees of business units and subsidiaries, where deemed necessary.
Having evaluated the process of risk management, the Board is of the opinion that an adequate and effective system of risk management and control is in place to provide reasonable assurance that significant risks have been mitigated to an acceptable level.
Credit Committee
Members:
JPR Mbau (Chairman)
DD de Beer
JJ Claassen
JA van der Schyff
CP Venter
The Committee consists of three non-executive directors (two being independent) and two executive directors. The Credit Committee is responsible for the development and implementation of credit policy and procedures throughout the Group.
Together with executive management, this Committee meets at least quarterly to review the Group’s credit exposure and to ensure that the necessary procedures are in place to limit credit risk to both existing and prospective customers. More detail regarding the management of credit risk is provided in the Accounting policies under “Financial risk management”.
Directors’ Nomination Committee
Members:
FJ van der Merwe (Chairman)
DD de Beer
KL Thoka
JJ Ferreira
MM Moloele
The main responsibilities of the Committee are to review the membership of the Board and the performance of executive directors on an annual basis, having regard to the current and future needs of the Company, and to make recommendations on Board composition and appointments. Such appointments are formal and transparent and a matter for the Board as a whole.
Share Dealing Committee
Members:
DD de Beer (Chairman)
JPR Mbau
In terms of the JSE Listings Requirements, a Share Dealing Committee was constituted to approve share dealings and trades undertaken by the Company’s directors and officers. Records of the requests and approvals are held with the Company Secretary.
Management reporting
There are comprehensive management reporting disciplines in place, which include the preparation of annual budgets by all operating units. The Chief Executive Officer and Financial Director approve individual operational budgets, while the Group budget is reviewed by the Board of Directors of the Company. Monthly results and the financial status of operating units are reported against approved budgets and compared to prior year results.
Profit projections and cash flow forecasts are updated monthly, while working capital and borrowing levels are monitored on an ongoing basis.
Internal control
The Group maintains internal controls and systems designed to provide reasonable assurance as to the integrity and reliability of the financial statements and to adequately safeguard, verify and maintain accountability for its assets.
Such controls are based on established policies and procedures and are implemented by trained personnel with an appropriate segregation of duties. The internal audit function is performed by KPMG and internal resources. The internal audit function operates under the direction of the Group Audit and Risk Management Committee, which approves the scope of the work to be performed. Significant findings are reported to both executive management and the Audit Committee. Corrective action is taken to address internal control deficiencies identified in the execution of the work.
PricewaterhouseCoopers Inc acts as external auditors.
Nothing has come to the attention of the directors, or the auditors that indicated material breakdowns in the functioning of the Group’s key internal controls and systems during the period under review.
Going concern
The financial statements set out in this annual report have been prepared in accordance with International Financial Reporting Standards. They are based on appropriate accounting policies that have been applied consistently.
Having reviewed AFGRI’s financial projections and details of its banking facilities, the directors believe that the Group will continue as a going concern in the year ahead.
Communication to stakeholders
AFGRI is committed to a process of continuing dialogue with its investors. AFGRI is pro-active in the distribution of information to relevant parties through the JSE SENS communications system, printed and electronic media releases and the statutory publication of its financial results. All stakeholders are communicated with on a regular basis.
The Board encourages all shareholders to attend the shareholders’ meetings as this is the ideal opportunity to voice their opinions.
The Group is committed to transparency.
Employee participation
AFGRI employs a variety of participative structures to deal with issues that affect employees directly and materially. These include structures to drive productivity improvements, safety Committees and other participative forums.
The Group is committed to creating a working environment in which employees are encouraged to become involved in its affairs and to obtain a sound understanding of its activities. This is achieved through employee forums operating throughout the Group, and the regular publication of internal communiqués.
Code of ethics
AFGRI subscribes to an independently managed ethics and fraud hotline service to facilitate the reporting of possible fraudulent, corrupt and unethical behaviour in the Group. The hotline is available 24 hours a day, seven days a week, 365 days a year, for the use by the Group’s employees and third parties. All incidents involving potentially fraudulent activities are investigated and corrective action is taken. Procedures are adapted when deemed prudent to prevent further incidence of unethical behaviour.
A code of ethics has been adopted which requires all employees to participate in the Group’s commitment to high moral, ethical and legal standards.
This code controls the Group’s responsibilities towards shareholders, customers, suppliers and the broad community, as well as the personal actions of directors, management and other employees.
The Group maintains a closed period of one month prior to the financial year-end and interim period end until the public release of these results, during which period no executive director or employee may, directly or indirectly, trade in the shares of AFGRI Limited. The closed period for non-executive directors runs from year-end and interim period end until the results have been released publicly. Additional periods may be declared “closed” from time to time if circumstances warrant this action.
Disclosure
The annual report deals adequately with disclosures pertaining to the annual financial statements, auditors’ responsibilities, accounting records, internal control, risk management, accounting policies, adherence to accounting standards, going concern issues and adherence to codes of governance and the JSE Listings Requirements.
Attendance at Board and Committee meetings
| Board member | Board meetings |
Audit and Risk Committee |
Credit Committee |
Remuneration Committee |
| Number of meetings | 5 | 4 | 5 | 5 |
| CA Apsey | 4 | – | – | – |
| JJ Claassen | 5 | 4 | 5 | – |
| DD de Beer | 5 | 4 | 5 | – |
| JJ Ferreira | 5 | – | – | 5 |
| JPR Mbau | 3 | 4 | 5 | – |
| MI Mogari | 4 | – | – | – |
| MM Moloele | 2 | – | 3 | |
| KL Thoka | 5 | – | – | 5 |
| FJ van der Merwe | 5 | 4 | – | 5 |
| JA van der Schyff 1,3 | 4 | – | 2 | – |
| CP Venter 2,3 | 3 | – | 2 | – |
| Total membership | 11 | 4 | 5 | 4 |
| 1 | Mr Van der Schyff was appointed to the Board with effect from 15 September 2008. |
| 2 | Mr Venter was appointed to the Board with effect from 1 October 2008. |
| 3 | Messrs Venter and Mr Van der Schyff were appointed to the Credit Committee with effect from 24 February 2009. |