Corporate governance review

Corporate governance review

We believe that achieving the highest standards of corporate governance is key to the sustainability of our business, realising our vision and strategy, as well as creating and sustaining value for all stakeholders in the short, medium and long term. We were included in the FTSE/JSE Responsible Investment Index (FTSE4Good) for the second year and obtained a 100.0% compliance rating for the governance section of the assessment.

Transition to King IV and compliance

As a responsible corporate citizen, committed to high standards of governance, ethics and integrity, we have adopted King IV. By shifting the focus to an outcomes-based approach, King IV is driving transparency, enhanced accountability, strong risk management and effective leadership – all standards we fully support. Over the past year, we aligned our business processes and standards with the principles of King IV (refer to our website for the detailed King IV checklist).

In addition, we also comply with all applicable legislation and regulations, including the Companies Act and JSE Listings Requirements.

Our governance framework

The board has established committees with specific mandates to support it in fulfilling its duties, while retaining effective control and accountability. The board has delegated day-to-day business management to our exco.

Board of directors

Board of directors
The role of the board

The board is our highest decision-making body. It approves the strategy supported by our values and monitors its implementation against performance targets and risks.

Members of the board

Please refer to page 18.

Key roles and functions

There is a clear distinction between the roles and responsibilities of the chairperson and the CEO, set out in the board charter and evidenced by the CEO having his own KPIs and employment agreement. At board level there is a clear balance of power and authority to ensure that no one director has unfetted powers in decision making.

Chairperson

The chairperson, Pierre Tredoux, leads the board and liaises between the board and management through the CEO.

Lead independent director

The board appointed Hellen El Haimer in February 2018 as the lead independent non-executive director as recommended by King IV. Hellen chairs the board in the absence of the chairperson, or where his independence is considered impaired. She can also co-ordinate the activities of independent directors and fulfil other duties as required.

Chief executive officer

The CEO is ultimately responsible for the day-to-day management of Attacq and for implementing our strategy and vision as approved by the board. Melt Hamman is also the liaison between management and the board. He was appointed full-time CEO in June 2018 after six months in an acting capacity following Morné Wilken’s resignation in October 2017.

Board attendance

In line with our memorandum of incorporation, the board is required to have quarterly meetings. In the past year, the board convened four times, with three additional special meetings (including the annual strategic session). There was 100.0% attendance for scheduled meetings and 90.0% attendance for special meetings.

Independent non-executive directors     Meetings attended     Executive directors     Meetings attended  
Pierre Tredoux (Chairperson)     7/7     Melt Hamman (was excused from attending the special meeting held in October 2017)     6/7  
Hellen El Haimer (Lead independent)     6/7            
Thys du Toit     7/7            
Ipeleng Mkhari (appointed March 2018)     2/2              
Keneilwe Moloko     5/7     Morné Wilken (was excused from attending the special meeting held in October 2017 and resigned 31 December 2017)     3/4  
Brett Nagle     7/7            
Stewart Shaw-Taylor     7/7            
Johan van der Merwe     7/7            
Board composition

The board acknowledges the importance of diversity in driving its effectiveness, targeting female representation of at least 20.0% under the company’s gender diversity policy. The board has adopted a formal policy on the promotion of race diversity, targeting at least 20.0% representation. Transformation and diversity have been a key focus for the board, assisted by the nominations committee.

Gender diversity

Gender diversity

Racial diversity

Racial diversity

All non-executive directors are independent. As per King IV, the independence of individual directors will be reviewed annually by the nominations committee.

Independence
Independence
Directors’ skills matrix at reporting date
Directors’ skills matrix at reporting date

Board tenure

AVERAGE TENURE: 5.8 years (June 2017: 5.4 years)

AVERAGE TENURE: 5.8 years (June 2017: 5.4 years)

Other key areas of expertise among the directors are engineering, surveying, construction, economics, marketing and government/public sector.

Board appointment and re-election

The board follows a formal and transparent process in appointing new directors. The nominations committee proposes any appointment to the full board for consideration. New appointees are evaluated on their skills, knowledge and experience to interrogate the company’s strategy. Any non-executive director appointed during the year may only hold office until the next annual general meeting, when they will be required to retire and offer themselves for re-election. As the only independent non-executive appointed in the financial year, Ipeleng Mkhari, will retire and stand for election at the AGM on 15 November 2018.

In terms of the company’s memorandum of incorporation, one-third of directors retire by rotation each year and are eligible for re-election by shareholders at the AGM. Accordingly, the board recommends the election of the following retiring directors: Keneilwe Moloko, Thys du Toit and Brett Nagle.

The retirement age for non-executive directors is 70. Directors older than that can remain on the board, and their performance will be reviewed annually with the nominations committee recommending they retire and be re‑elected at every AGM. The period in office of directors is reviewed individually by the board on the recommendation of this committee.

Board evaluation

To continuously improve the board’s effectiveness, the chairperson assesses board members individually and shares his views with the nominations committee. The lead independent director will assess the chairperson and table her findings at the nominations committee. Board and committee effectiveness assessments will be conducted in November 2018.

The audit and risk committee annually considers and satisfies itself on the appropriateness of the expertise and experience of the CFO. It concluded, before being appointed as CEO, in May 2018 that Melt Hamman had fulfilled his responsibilities for the 2018 financial year. After his appointment as CEO was confirmed, Raj Nana was appointed CFO on 19 June 2018. The committee satisfied itself on the appropriateness of the expertise and experience of Raj Nana as CFO on 30 August 2018.

In our board evaluation, the following areas of improvement were highlighted in our 2017 integrated report, with progress summarised below:

Board relationship with executive management

There has been progress in strengthening the relationship between the board and executive management. An informal breakfast before every board meeting enables directors to liaise and interact with executive members and senior management. Exco members and senior management are invited to attend board and committee sessions to present, and to engage further with non-executive directors.

Management succession

Our management succession plan was tested when our CEO resigned in October 2017. Our CFO, Melt Hamman, was appointed interim CEO and the board agreed that he was the most suitable successor to fulfil the role of CEO from 19 June 2018. Raj Nana, our investment officer, was identified as the likely candidate to be promoted to CFO and his appointment was confirmed by the board on 19 June 2018. Due to the company’s flat structure, there are only a few roles that require succession planning, but remedial plans are in place to steer the business until suitable candidates can be employed in positions that do arise.

Board committees

Audit and risk committee

Refer to the AFS for the audit and risk committee report.

  Members     Meetings attended     Meeting attendance for 2018 financial year     Skills and experience as at reporting date (%)
 

Independent non-executive directors

Stewart Shaw-Taylor (chairperson)

Hellen El Haimer

Keneilwe Moloko

(resigned from committee October 2018)

Brett Nagle

   




7/7

6/7

4/7


7/7

   

Four statutory meetings and three special meetings were held during the year.

The committee had several special meetings to review the financial model prior to the REIT conversion and to ensure that all relevant requirements were addressed.

Additional meetings were arranged to review the integrated report as requested by the board.

    Skills and experience as at reporting date (%)

Roles and responsibilities*     Overview for the year     Looking ahead
  • Assures the board on the reliability of financial information by monitoring external audit functions, including independence
  • Assures the board on the adequacy and efficiency of internal controls by monitoring the internal audit functio
  • Ensures significant business, financial and other risks have been identified and are being managed correctly
  • Reviews and recommends the group’s solvency and liquidity to the board for approval
  • Ensures high standards of governance, reporting and compliance
   
  • Significant focus on the REIT conversion and associated regulatory requirements and financial models.
  • Internal controls and their effectiveness
  • Half-year and year-end results for recommendation to the board for approval
  • External valuers and property valuations
  • External audit reports and material matters
  • Audit fees and effectiveness of the external audit function
  • Internal audit plan and effectiveness of the internal audit function
  • Risk policies and strategies, ensuring effective management principles are in place
  • Enterprise risk management dashboard indicating key risks and mitigants
  • Regulatory compliance as reported by the chairperson of the transformation, social and ethics committee
  • SENS releases for the half-year, yearend and REIT conversion
  • The 12-month rolling forecast cash flow and solvency and liquidity of the company for
   
  • REIT governance and compliance
  • Continued focus on the interim and annual financials, internal controls and risk management
Our strategic matters     Our risks and opportunities      
   

Meeting shareholder expectations

Liquidity

Legal and regulatory compliance

Emerging markets

     

* Refer to www.attacq.co.za for board committee charters.

Transformation, social and ethics committee
  Members     Meetings attended     Meeting attendance for 2018 financial year     Skills and experience as at reporting date (%)
 

Independent non-executive directors

Hellen El Haimer (chairperson)

Keneilwe Moloko (appointed October 2018)

Executive directors

Melt Hamman (resigned August 2018)

Raj Nana (appointed August 2018)

Jackie van Niekerk

   
4/4
 
 
2/4
4/4
 
   

Four statutory meetings and numerous special meetings were held during the year.

The special meetings are not reflected in the overall attendance for the committee.

    Skills and experience as at

Roles and responsibilities*     Overview for the year     Looking ahead
  • Monitors compliance with legislation, including recommended practices and regulations as per King IV and the Companies Act
  • Oversees and monitors activities in community development, ethics, transformation, sustainability and environmental matters, good corporate citizenship, occupational health and safety, stakeholder relationships and employment matters
   
  • Significant time understanding revised property sector charter codes and the impact on Attacq. This included additional requirements that would apply when the REIT conversion was finalised
  • Management commitment and support from the committee improved B-BBEE scores to level 2, valid until May 2019
  • The committee approved and recommended the code of ethics for directors to the board. This was adopted in May 2018. A code of ethics for employees is being finalised
  • Action plans for managing the impact of the water crisis in the Western Cape regularly reported to the committee. This is continuously monitored and redundancy plans implemented at all our buildings
   
  • Skills development and training for our people and non-Attacq staff
  • Environmental sustainability
  • Enterprise and supplier development
  • Governance, compliance with legislation, and social and ethical requirements of relevant legislation
Our strategic matters     Our risks and opportunities      
   

Meeting shareholder expectations

Cost and availability of water supply

Legal and regulatory compliance

B-BBEE score

Cost and availability of electricity

Stakeholder activism

Land invasion

     

* Refer to www.attacq.co.za for board committee charters.

Remuneration and nominations committee (remco)
  Members     Meetings attended     Meeting attendance for 2018 financial year     Skills and experience as at reporting date (%)
 

Independent non-executive directors

Johan van der Merwe (chairperson of remuneration matters)

Pierre Tredoux (chairperson of nomination matters)

Thys du Toit

   


4/5

5/5


5/5

   

Two statutory meetings and three special meetings were held during the year.

    Skills and experience as at reporting date (%)

Roles and responsibilities*     Overview for the year     Looking ahead
  • Governs reward policies and sets the foundation of remuneration principles, which in turn determine reward processes
  • Ensures remuneration is structured to be fair and equitable, and aligned with best market practices
  • Approves consolidated annual increases, bonus pool and allocation of share awards
  • Oversees good governance on executive remuneration, ensuring executive behaviour is aligned with the strategic objectives of the group and shareholder interests
  • Considers suitable nominations for appointment to the board as well as succession planning for board members and executive management
   
  • Progress with gender and race diversity on the board
  • With the REIT conversion, the committee reviewed performance criteria linked to the long-term incentive scheme to ensure synergy between the incentive’s performance target and company strategy
  • KPIs for the CFO were agreed in February 2018 and will be the metrics against which Melt Hamman will be evaluated for the review period
  • Appointment of the CEO was a key focus. Performance criteria were agreed with Melt Hamman and his performance for the 2019 financial year will be measured against these outcomes
  • In September 2017, remco reviewed company performance for that year in terms of rewarding employees. As the company’s performance did not meet targeted returns, the short-term incentive pool was significantly decreased. Refer to the remuneration implementation plan for more detail
   
  • Under King IV, remco has additional responsibilities, especially on disclosure. As such, the committee will focus on meaningful disclosure and addressing any stakeholder concerns when the remuneration policy and remuneration implementation report are presented for non-binding votes at the AGM
  • Continued focus on gender and race diversity at board level and throughout the company. This is one of the executive directors’ KPIs
  • Evaluations of the board and committees are due for review in November 2018 and will be overseen by the committee. Our lead independent director, Hellen El Haimer, will facilitate the chairperson’s review
  • The annual salary review, short and long-term incentives for the 2019 financial year will be reviewed and approved
  • The rotation of directors and directors’ fees will be recommended to board for final submission to the AGM for approval
Our strategic matters     Our risks and opportunities      
   

Meeting shareholder expectations

B-BBEE score

     

* Refer to www.attacq.co.za for board committee charters.

Investment committee

  Members     Meetings attended     Meeting attendance for 2018 financial year     Skills and experience as at reporting date (%)
 

Independent non-executive directors
Pierre Tredoux (chairperson)
Brett Nagle
Stewart Shaw-Taylor

 

Executive directors
Morné Wilken (resigned December 2017)
Melt Hamman
Raj Nana
Jackie van Niekerk
Other members
Giles Pendleton (appointed March 2018)
Peter de Villiers (appointed June 2018)

   
11/12
11/12
10/12


6/6

11/12
10/12
10/12

1/1

4/12
   

Although no statutory meetings are required, 12 meetings were held during the year.

    Skills and experience as at
reporting date (%)

Roles and responsibilities*     Overview for the year     Looking ahead
  • Reviews the group’s investment strategy, setting targets and criteria
  • Assesses investment proposals for development, acquisitions and disposals
  • Assesses bank and loan funding, including debt restructuring
   
  • The committee meets ad hoc to decide on acquisitions, developments and disposals. It focused on funding methodology, including the interest cover ratio, when approving transactions
  • A review on past investments and how these actually performed against initial approved criteria
   
  • Residential developments opportunities
  • Funding strategy, specifically the impact on future distributable earnings and interest cover ratio
  • Investment criteria
  • Performing and non-performing asset
Our strategic matters     Our risks and opportunities      
   

Meeting shareholder expectations

Emerging markets

Cost and availability of water supply

Delivery of Waterfall development

Cost and availability of electricity

Liquidity

Fibre reliability

Land invasion

     

* Refer to www.attacq.co.za for board committee charters.

Combined assurance forum

The main responsibility of the combined assurance forum is overseeing assurance providers, in support of the audit and risk committee. It also ensures the combined assurance model provides a co-ordinated approach to related activities and addresses significant risks facing the company. For more information, see our risk and opportunities.

Ethical culture

The board subscribes to the highest standards of ethical behaviour, best practices and controlling the affairs of the company. It sets a clear example for management and employees, and safeguards the company’s integrity and reputation.

The directors’ code of ethics and conduct was approved in February 2018 and the directors abide by the values underpinning all our activities. They do not condone any unethical behaviour such as corrupt, illegal or collusive practices. The board is committed to the principles outlined below:

  • Transparency: We maintain an atmosphere of openness and transparency to promote the confidence of shareholders, employees, financial service providers, regulatory bodies, the public, media and other stakeholders
  • Accountability: Our activities will withstand scrutiny by shareholders, the public, media and other stakeholders
  • Integrity and fairness: These will be hallmarks in dealing with fellow directors, shareholders and employees as well as individuals and institutions outside Attacq.

Internal audit completed our ethical review in July 2018 and the overall outcome was satisfactory, with a few minor administrative recommendations to implement. Our organisational cultural transformation journey started in 2013 when we listed on the JSE. Through continuous focus, understanding and awareness of transformation and diversity among our leadership, our progress reflects our commitment.

Conflicts of interest and share dealings

A director or prescribed officer is prohibited from using their position or access to confidential, price-sensitive information to benefit themselves or any related third party. They are also required to inform the company secretary timeously of any actual or potential conflicts of interest they may have with particular items of business, or other directorships. Comprehensive registers of all directors’ interests are continuously updated, signed by the director and details noted by other board members at every meeting.

We have a policy regulating dealings in Attacq shares by directors and relevant employees. No director or employee may deal, directly or indirectly, in the company’s shares based on unpublished, price-sensitive information or in prohibited periods as defined in the JSE Listings Requirements.

Company secretary

The board believes the company secretary, Tasja Kodde, has the required competence, qualifications and expertise to fulfil the role. Tasja is not a director of the company or any of its subsidiaries. The board is comfortable that she maintains an arm’s-length relationship with the executive team, board and individual directors as per the JSE Listings Requirements and King IV.

Governance of information and communication technology (ICT)

We believe technology and data analysis, correctly implemented, can generate time and cost savings through insights. As such, a more operational focus has been placed on ICT and is represented by the chief operating officer at board level. With the adoption of King IV, we undertook an independent assessment of our ICT governance. BDO confirmed that our ICT governance is fully compliant with principle 12 of King IV. Going forward the effective use of ICT infrastructure will be monitored through our combined assurance forum and audit and risk committee and will ultimately be overseen by the board. ICT governance will form part of the board’s responsibility for ensuring that information and ICT technologies are aligned with the strategy of the business.

Strategic operational tools have been successfully piloted and are being implemented nationally. This will ensure a consistent and high standard of service delivery to our key stakeholders, as well as valuable insights for management through data analytics. Investments have been made to enhance cybersecurity and defend against the rising global trend of cyber-attacks, as well as to align the business with King IV.

Attacq Heritage Day

Sitting: Bronwyn Osman and Thembeka Badela

Standing: Lindo Twala, Melt Hamman, Tumi Sebeela, Delsia Moloi and Aniki Mthimunye

Attacq Heritage Day  Sitting: Bronwyn Osman and Thembeka Badela Standing: Lindo Twala, Melt Hamman, Tumi Sebeela, Delsia Moloi and Aniki Mthimunye