Corporate Governance

Statement of compliance

The Board of Murray & Roberts Holdings Limited (Board) is committed to the principles of the Code of Corporate Practices and Conduct (Code) as set out in the King Report on Corporate Governance for South Africa 2002 (King II). In supporting the Code, the Board recognises the need to conduct the business of the Group with openness, integrity and accountability. A corporate governance framework has been in operation in the Group for many years and is reviewed from time to time and updated where appropriate. The Board is of the opinion that Murray & Roberts complies with the Code.

Following the release of the King Report on Governance for South Africa 2009 (King III) on 1 September 2009, the Group will review its corporate governance practices and apply the recommended principles accordingly. MP Chaba has been appointed to the new role of group head of assurance following the recommendation of King III in respect of the appointment of a chief audit executive. This role will consolidate all aspects of the Group’s risk management, internal audit, health, safety and environment, technical and project review, and systems compliance.

Board of Directors

At the date of this annual report, Murray & Roberts has a unitary Board with 15 directors, 10 of whom are independent non-executive and five of whom are executive.

The Board is responsible for approving the strategic direction of the Group and is governed by a charter that sets out the framework of its accountability, responsibility and duty to the company. The Board is committed to corporate governance best practice above the minimum requirements set by the Code.

The Board conducts its business in the best interest of the company and ensures that the Group performs in the best interests of its broader stakeholder group, including present and future investors in the Group, its customers and clients, its business partners, employees and the societies in which it operates.

In order to address its accountability and responsibility, the Board:

– risk management and internal controls

– health, safety and environmental performance

– executive and general remuneration

– external and internal communications

– director selection, orientation and evaluation

Directors adhere to a Code of Conduct which incorporates agreed standards of accepted behaviour and guidance in decision making, promotes integration and co-ordination and reaffirms the directors’ commitment to the Group.

During the year, non-executive directors were paid an annual retainer of R140 000 each with a deduction for non-attendance of R12 000 per meeting. Five scheduled and one special meeting were held during the year. Non-executive directors were paid R24 000 per special board meeting.

Based on a review of non-executive directors’ fees undertaken during the year, it is proposed that shareholders approve a revised remuneration structure, at the annual general meeting on Wednesday, 21 October 2009, that non-executive directors be paid a fixed annual fee of R150 000. The deduction for non-attendance and ad hoc fee for special board meetings increases to R13 000 and R26 000 respectively.

The proposal is based on a minimum of five scheduled meetings a year and takes into account additional committee workload.

Board meetings

The Board meets at least five times a year in formal meetings. In addition, the directors meet ahead of the scheduled meeting at which the Group’s budget and business plan is examined in the context of the approved strategy. At this meeting, senior executives in the Group engage with the directors in a broad conversation on implementation of the Group’s strategy.

The Board has adopted a policy to visit key operations on an annual basis. All directors are kept informed between meetings of major developments affecting the Group.

The record of attendance by each director at the board meetings held during the year under review is reflected in the table on page 105 of this report.

Changes to the board

Non-executive directors JJM van Zyl and MJ Shaw reached the mandatory retirement age for directors and retired at the annual general meeting in October 2008.

Non-executive directors ADVC Knott-Craig and M Sello were appointed to the Board in November 2008 and February 2009 respectively.

KE Smith retired as an executive director at the annual general meeting to concentrate on his executive responsibility for the Group’s Southern Africa construction operations.

Subsequent to year-end, the Board appointed executive directors MP Chaba, with effect from 1 September 2009, and TG Fowler in September 2009. The Board further resolved to appoint O Fenn as an executive director on commencement of his employment in November 2009.

Chairman and group chief executive

The roles of chairman and group chief executive are separate and they operate under separate mandates issued by the Board that clearly differentiate the division of responsibilities within the company ensuring a balance of power and authority.

The chairman, who is an independent non-executive director, presides over the Board, providing it with effective and directed leadership and ensuring that all relevant information and facts are placed before the Board for decision.

The group chief executive is charged with the responsibility of the ongoing operations of the Group. He develops the Group’s long term strategy and recommends the business plan and budgets to the Board for consideration.

The group chief executive and the chairman are appointed by the Board. The Board is responsible for the annual appraisal of the chairman and the remuneration & human resources committee is responsible for the annual appraisal of the group chief executive.

The remuneration & human resources committee assesses the remuneration of the Board, chairman and group chief executive and the nomination committee is responsible for succession planning of the Board.

Board committees

The Board has established and mandated a number of committees to perform work on its behalf in various key areas affecting the business of the Group.

These committees are:

The Board and each committee give attention to both new and existing matters of governance and compliance within their respective mandates. A statement from the chairman of the Board and chairman of each committee is included in this annual report.

Each committee operates according to terms of reference approved by the Board. With the exception of the executive committee, all other committees are chaired by independent non-executive directors of the Board.

An internal evaluation of each Board committee was conducted during the year under review.

The independent non-executive directors complement the executive directors through the diverse range of skills and experience they bring from their involvement in other businesses and sectors. They bring independent perspectives on corporate governance and general strategy to the Board as a whole.

The record of attendance by each member of the respective committees for the year under review is reflected in the tables on page 105 of this report.

A review of applicable mandates and terms of reference will be conducted to take into account King III and the Companies Act 71 of 2008 which is due to come into effect in 2010.

Selection of directors

The Board has approved a policy on the criteria for the selection of directors and the nomination and evaluation processes to be followed.

The nomination committee considers and makes appropriate recommendations regarding appointments to the Board. This process encompasses an evaluation of skills, knowledge and experience, considers transformation imperatives and ensures the retention of appropriate long term memory on the Board. All recommended appointments to the Board are made in terms of a formal and transparent process.

Independent advice

All directors are entitled to seek professional independent advice at the Group’s expense.

Board effectiveness

An appraisal of the effectiveness of the Board was conducted internally during the year. The appraisal was benchmarked against the strategic requirements of Murray & Roberts to ensure the capacity to deliver these requirements and strengthen the diversity and sector expertise of directors. The appraisal was positive and its recommendations are being followed through for implementation. The appraisal next year will be conducted externally.

Orientation program

It has been the practice of the Group to ensure that non-executive directors appointed to the Board engage in a comprehensive induction process to familiarise themselves with the Group. The process includes visits to key operations in the company and extensive discussions with group leaders.

Group secretary

All directors have access to the advice and services of the group secretary who is responsible for ensuring the proper administration of the Board and corporate governance procedures. The group secretary provides guidance to the directors on their responsibilities within the prevailing regulatory and statutory environment and the manner in which such responsibilities should be discharged.

Executive committee

The directors of Murray & Roberts Limited and Murray & Roberts International Limited serve as the executive committee of the Board. Meetings are chaired by the group chief executive and group financial director, respectively. The directors support the group chief executive in his responsibility to:

Risk management, systems of control and internal audit

The Board promotes the rational engagement of risk in return for commensurate reward and is responsible for ensuring that risk management, including related systems of internal control, are formalised throughout the Group. These systems of risk management, internal control and internal auditing aim to promote the efficient management of operations, protection of the Group’s assets, legislative compliance, business continuity, reliable reporting and the interests of all stakeholders. Details of the Group’s risk management status are set out on page 102 of this report.

Share dealings

The Group has an insider trading policy that requires directors and officers who could be expected to have access to price sensitive information, to be precluded from dealing in the Group’s shares as well as the shares of Clough Limited for a period of approximately two months prior to the release of the Group’s interim results and a period of three months prior to the release of the Group’s annual results.

To ensure that dealings are not carried out at a time when other price sensitive information may be known, directors and officers must at all times obtain permission from the chairman, group chief executive or group financial director before dealing in the shares of the Group. Approved dealings in the Group’s shares by directors are disclosed to the JSE and published on the Stock Exchange News Services (SENS) of the JSE Limited. All approved dealings are reported in arrears to the regular meetings of the Board.

Sponsor

During the period under review, Deutsche Securities (SA) (Pty) Limited was appointed sponsor. The previous sponsor was Merrill Lynch South Africa (Pty) Limited.