Coalesse
CORPORATE GOVERNANCE



Communications with Stakeholders

Resilient is committed to ensuring timeous, effective and transparent communication with shareholders and other stakeholders as set out below.

Shareholder:

Resilient is committed to providing shareholders with timely access to applicable information. Communication with its shareholders is open, honest and transparent. Shareholders are provided with information via circulars and integrated and interim reports. Additional information is provided on Resilient's website, via SENS announcements and press releases.

Analysts:

Resilient holds semi-annual results presentations in Johannesburg and Cape Town. Our executives took a number of analysts on a tour of a number of Resilient properties.
Financiers Resilient meets with its financiers on a regular basis to discuss its requirements and theirs. Information is provided through analyst presentations, road shows, integrated reports and interim reporting.

Tenants:

Resilient strives to form mutually beneficial business relationships with its tenants. Resilient's asset managers and property managers meet with the tenants on regular basis and conduct regular site visits to Resilient's properties.

Government:

Resilient endeavours to have mutually beneficial relationships with government, its departments and parastatals. Resilient engages with local authorities both directly and via its property managers and external consultants regarding utility issues, rates clearances, zoning etc.

Industry associations:

Resilient's assest managers belong to various industry bodies including SAPOA and the SA Council of Shopping Centres and regularly attend industry conferences. Resilient is a member of the SA REIT committee and was actively involved in the REIT legislation process.

Business partners:

Resilient maintains professional working relationships with its business partners at the same time as fostering a culture of teamwork. Resilient ensures that all of its business partners fully understand its performance standards and requirements. Resilient's business partners include the property managers and both.

Communities and environment:

Resilient is committed to being a good corporate citizen and frequently evaluates the impact of its project and developments on society and the environment.

Suppliers:

Resilient maintains profession working relationships with all of its suppliers and ensures that its suppliers understand Resilient's performance standards and requirements. Where possible, Resilient will have service level agreements or terms of reference for its relationships with suppliers, which include performance expectations.

Linked Unit Issues

Following the maturing of the first tranche of the Eagle’s Eye womens’ BBBEE initiative, Resilient issued 7 812 500 (13 August 2014) and 6 097 560 (25 November 2014) shares to The Siyakha Education Trust at R64,00 and R82,00 respectively.

The Trust is a charitable trust established for the promotion of black education and is a registered public benefit organisation. The second tranche of the Eagle’s Eye womens’ BBBEE initiative matured in July 2015. As part consideration for the acquisition of Jubilee Mall, 6 578 947 shares were issued at R57,00 on 1 September 2014. On 13 November 2014,

Resilient successfully placed 9 150 326 shares at R76,50 by way of a bookbuild managed by Java Capital in terms of the authority granted to Resilient to issue shares for cash. On 22 June 2015 Resilient issued 32 696 124 shares at R85,00 per share through a rights issue to existing shareholders.

Special Resolutions Passed

Four special resolutions were passed during 2015:

1. Approval of financial assistance to related or inter-related companies It was resolved that, to the extent required by the Companies Act, the board of directors of the company may, subject to compliance with the requirements of the company’s Memorandum of Incorporation, the Companies Act and the JSE Listings Requirements, each as presently constituted and as
amended from time to time, authorise the company to provide direct or indirect financial assistance in terms of section 45 of the Companies Act by way of loans, guarantees, the provisions of security or otherwise, to any of its present or future subsidiaries and/or any other company or corporation that is or becomes related or inter-related (as defined in the Companies Act)
to the company for any purpose or in connection with any matter, such authority to endure until the next annual general meeting of the company. Similar resolutions were passed at a subsidiary level.

2. Approval of the repurchase of shares It was resolved that, subject to the Companies Act, the Memorandum of Incorporation of the company, the JSE Listings Requirements and the
restrictions set out below, the repurchase of shares of the company, either by the company or by any subsidiary of the company, is hereby authorised, on the basis that:
(1) this authority will only be valid until the company’s next annual general meeting or for 15 months from the date of this resolution, whichever period is shorter;
(2) the number of shares which may be acquired pursuant to this authority in any financial year may not in the aggregate exceed 20%, or 10% where such acquisitions are effected by a subsidiary, of the company’s share capital as at the date of this notice of annual general meeting;
(3) the repurchase of shares must be effected through the order book operated by the JSE trading system and done without any prior arrangement between the company and the counter-party;
(4) the repurchase of shares may not be made at a price greater than 10% above the weighted average of the market value for the shares for the five business days immediately preceding the date on which the transaction is effected;
(5) at any point in time, the company will only appoint one agent to effect repurchases on its behalf;
(6) the company or its subsidiary may not repurchase shares during a prohibited period as defined in paragraph 3.67 of the JSE Listings Requirements unless there is a repurchase programme in place and the dates and quantities of shares to be repurchased during the prohibited period are fixed and full details thereof have been disclosed in an announcement over SENS prior to commencement of the prohibited period; and
(7) a resolution by the board of directors is passed that the board of directors of the company authorises the repurchase, that the company and the relevant subsidiaries have passed the solvency and liquidity test as set out in section 4 of the Companies Act and that, since the test was performed, there have been no material changes to the financial position of the group.

3. Approval of the provision of financial assistance for the purchase of shares It was resolved that, subject to compliance with the requirements of the Companies Act, the Memorandum of Incorporation and the JSE Listings Requirements, the company, either as lender or as surety or guarantor for a lender, or otherwise is hereby authorised, from time to time, to provide financial assistance for the purchase of or subscription for its shares to The Siyakha Education Trust on the following terms:
(1) the maximum additional capital amount (excluding interest, costs, charges, fees and expenses) of any such amounts lent or for which suretyships or guarantees are given may not exceed R500 million;
(2) the maximum period for the repayment of any loan provided or for which suretyships or guarantees are given in terms hereof may not exceed 10 years;
(3) the minimum interest rate to be applied to any loan provided may not be less than the prime overdraft rate of interest from time to time publically quoted as such by The Standard Bank of South Africa Limited.
4. Approval of directors’ remuneration for their services as directors It was resolved that, in accordance with section 66e yea

Promotion of Access to Information Act

There were no requests for information lodged with the company in terms of the Promotion of Access to Information Act, No 2 of 2000.

Dealing in Securities by the Directors

Dealing in the company’s securities by directors and company officials is regulated and monitored as required by the JSE Listings Requirements. In addition, Resilient maintains a closed period from the end of a financial period to the date of publication of the financial results.

Information Technology ("IT") Governance

The board is ultimately responsible for IT governance. The Resilient IT function is outsourced to a third-party service provider and is governed by a service level agreement. Compliance with the service level agreement is monitored by management and the terms are reviewed on a regular basis.

There is a dedicated member of the Resilient management team who oversees the IT function, attends the executive committee meetings and reports thereat. The risks and controls over IT assets and data are considered by the risk committee.

Company Secretary

Monica Muller CA(SA) was appointed as company secretary of Resilient with effect from 5 August 2014.

The board considered her competence, qualifications and experience and, following a review undertaken by the board on the duties required of a company secretary during the year under review, the board concluded that the nature of the advice provided by the company secretary and the manner in which the company secretary executed her duties during the year indicated that she is deemed fit to continue in the role as company secretary.

She is not a director of Resilient and the board, having reviewed her relationship with the board, is of the view that Monica has an arm’s length relationship with the board.

Social and Ethics Committee

The social and ethics committee is a statutory committee whose focus is to monitor compliance with labour legislation as well as corporate social responsibilities and corporate citizenship.

The social and ethics committee consists of three independent non-executive directors and one executive director.

The social and ethics committee’s responsibilities and duties are governed by a charter that was reviewed by the board in 2014.

Risk Committee

The risk committee is mandated by the board to ensure that a sound risk management system is maintained, to assist the board in discharging its duties relating to the safeguarding of assets and to ensure that the company has implemented an effective plan for risk management that will enhance the company’s ability to achieve its strategic objectives.

The risk committee consists of three independent non-executive directors and one executive director. The risk committee’s responsibilities and duties are governed by a charter that was reviewed by the board in 2014.

Remuneration Committee

The remuneration committee is mandated by the board to set the remuneration and incentivisation of all employees, including executive directors. In addition, the remuneration committee recommends directors’ fees payable to non-executive directors and members of board sub-committees.

Further details are provided in the remuneration report on page 22 of the integrated report. The remuneration committee’s responsibilities and duties are governed by a charter that was reviewed by the board in 2014.

Nomination Committee 

The nomination committee is mandated by the board to identify suitable candidates to be appointed to the board, identify suitable board candidates in order to fill vacancies, ensure there is a succession plan in place for key management, assess the independence of non-executive directors and assess the composition of the board sub-committees.

The nomination committee recommends the individuals to the board for appointment. The nomination committee’s responsibilities and duties are governed by a charter that was reviewed by the board in 2014.

Investment Committee

All acquisitions, disposals and capital expenditure are considered by the investment committee. The investment committee approves acquisitions, disposals and capital expenditure up to pre-set limits. The investment committee consists of two independent non-executive directors and one executive director.

All members of this committee have extensive experience and technical expertise in the property industry. The investment committee’s responsibilities and duties are governed by a charter that was reviewed by the board in 2014.

Ethical Performance

A framework of financial reporting, internal and operating controls has been established by the board to ensure reasonable assurance as to accurate and timeous reporting of business information, safeguarding of group assets, compliance with laws and regulations, financial information and general operation.

The board reviewed and was satisfied with the effectiveness of the internal financial and operating controls, the process of risk management and the monitoring of legal governance compliance within the company.

Internal Audit

The company does not have a formalised internal audit department. This is primarily due to the fact that the majority of the property management functions are outsourced to external property managers who are subjected to annual external audits.

The audit committee continually examines the appropriateness of utilising independent internal auditors to periodically review activities of the company and service providers. During 2014, Resilient engaged Grant Thornton to perform reviews on controls over specific key areas.

The areas for testing were discussed with the audit committee who engaged directly with Grant Thornton in this regard.

External Audit

A key factor that may impair auditors’ independence is a lack of control over non-audit services provided by the external auditors. In essence, the external auditors’ independence is deemed to be impaired if the auditors provide a service which:


01. results in auditing of own work by the auditors
02. results in the auditors acting as a manager or employee of the group
03. puts the auditors in the role of advocate for the group
04. creates a mutuality of interest between the auditors and the group.
The company addresses this issue through three primary measures, namely:

01. disclosure of the extent and nature of non-audit services
02. the prohibition of selected services
03. prior approval by the audit committee of non-audit services.
Other safeguards encapsulated in the policy include:

01. the external auditors are required to assess periodically, in their professional judgement, whether they are independent of the group
02. the audit committee ensures that the scope of the auditors’ work is sufficient and that the auditors are fairly remunerated
03. the audit committee has primary responsibility for making recommendations to the board on the appointment, reappointment and removal of the external auditors.
The committee reviews audit plans for external audits and the outcome of the work performed in executing these plans. They further ensure that items identified for action are followed up. The external auditors report annually to the audit committee to confirm that they are and have remained independent from the group during the financial year.

The audit committee considered information pertaining to the balance between fees for audit and non-audit work for the group in 2014 and concluded that the nature and extent of non-audit fees do not present a threat to the external auditors’ independence. Furthermore, after reviewing a report from the external auditors on all their relationships with the company that might reasonably have a bearing on the external auditors’ independence and the audit engagement partner and staff’s objectivity, and the related safeguards and procedures, the committee has concluded that the external auditors’ independence was not impaired. The audit committee approved the external auditors’ terms of engagement, scope of work, the annual audit and the applicable levels of materiality. Based on written reports submitted, the committee reviewed, with the external auditors, the findings of their work and confirmed that all significant matters had been satisfactorily resolved. The committee determined that the 2014 audit was completed without any restriction on its scope.

The audit committee has satisfied itself as to the suitability of the external auditors for reappointment for the ensuing year.

Audit Committee

The primary role of the audit committee is to ensure the integrity of financial reporting and the audit process. In pursuing these objectives, the audit committee oversees relations with the external auditors. The committee also assists the board in discharging its duties relating to the safeguarding of assets, the operation of adequate systems and internal control processes, overseeing the preparation of accurate financial reports and statements in compliance with all applicable legal requirements and accounting standards, ensuring compliance with good governance practices and nomination of external auditors.

The role of the audit committee has been codified in the audit committee charter which has been approved by the board. This charter has been aligned with the requirements of King III and the Companies Act of South Africa. The audit committee presently comprises: Marthin Greyling (appointed 13 November 2002), Bryan Hopkins (chairman) (appointed 17 May 2011) and Barry van Wyk (appointed 1 December 2010), all of whom are independent non-executive directors.

The managing director, financial director and company secretary attend the committee meetings as invitees. The committee members have unlimited access to all information, documents and explanations required in the discharge of their duties, as do the external auditors. The board, in consultation with the audit committee chairman, makes appointments to the committee to fill vacancies. Members of the audit committee are subject to re-election by shareholders in general meeting on an annual basis.

The board has determined that the committee members have the skills and experience necessary to contribute meaningfully to the committee’s deliberations. In addition, the chairman has requisite experience in accounting and financial management. The audit committee has satisfied itself that no breakdown in accounting controls, procedures and systems has occurred during the year under review.

In fulfilling its responsibility of monitoring the integrity of financial reports to shareholders, the audit committee has reviewed accounting principles, policies and practices adopted in the preparation of financial information and has examined documentation relating to the annual integrated report. The clarity of disclosures included in the financial statements was reviewed by the audit committee, as was the basis for significant estimates and judgements.

The audit committee is further satisfied that the financial director, Nick Hanekom, is sufficiently competent and that the finance function has adequate resources and sufficient expertise. It is the function of the committee to review and make recommendations to the board regarding interim financial results and the integrated report prior to approval by the board.

The audit committee has complied with its legal, regulatory and other responsibilities. The audit committee recommended the integrated report to the board for approval.

Directors' Interest

A full list of directors’ interests is maintained and directors certify that the list is correct at each board meeting.

Directors recuse themselves from any discussion and decision on matters in which they have a material financial interest.

Independence of the Directors

The board of directors’ independence from the executive management team is ensured by the following:

01. separation of the roles of chairman and managing director, with the chairman being independent
02. the board being dominated by independent non-executive directors
03. the audit, investment, nomination, risk, remuneration and social and ethics committees having a majority of independent directors
04. non-executive directors not holding service contracts
05. all directors having access to the advice and services of the company secretary
06. with prior agreement from the chairman, all directors are entitled to seek independent professional advice concerning the affairs of the company at the company’s expense.
The following non-executive directors chair the various sub-committees of the board:

01. Audit - Bryan Hopkins (independent)
02. Investment - Barry van Wyk (independent)
03. Nomination - JJ Njeke (independent)
04. Risk - Umsha Reddy (independent)
05. Remuneration - Thembi Chagonda (independent)
06. Social and ethics - Umsha Reddy (independent)
The independence of the non-executive directors was assessed and all are considered to be independent in terms of the requirements of King III. Independence evaluations are done annually.

Marthin Greyling, JJ Njeke and Barry van Wyk have served on the board as independent non-executive directors for 11 years. A rigorous assessment of the independence of these directors has been completed and the criteria used to assess their independence were as set out in King III as follows:

01. whether the director is a representative of a shareholder who has the ability to control or significantly influence management or the board
02. whether the director has a direct or indirect interest in the company (including any parent or subsidiary in a consolidated group with the company) which exceeds 5% of the group’s total number of shares in issue
03. whether the director has a direct or indirect interest in the company which is less than 5% of the group’s total number of shares in issue, but is material to the director’s personal wealth
04. whether the director has been employed by the company or the group of which it currently forms part of in any executive capacity, or appointed as the designated auditor or partner in the group’s external audit firm, or senior legal adviser for the preceding three financial years
05. whether the director is a member of the immediate family of an individual who is or has during the preceding three financial years been employed by the company or the group in an executive capacity
06. whether the director is a professional adviser to the company or group other than in the capacity as a director
07. whether the director is free from any business or other relationship (contractual or statutory) which could be seen by an objective outsider to interfere materially with the director’s capacity to act in an independent manner, such as being a director of a material customer or supplier to the company
08. whether the director receives remuneration contingent upon the performance of the company.

The board assessed the independence of the non-executive directors and all of these three directors complied with the above independence criteria. The assessments indicated that the independence of character and judgement of Marthin Greyling, JJ Njeke and Barry van Wyk is not impaired or in any way affected by length of service. Independent directors who have served on the board for nine years or longer will stand for re-election on an annual basis.

Responsibility of the Board

Although certain responsibilities are delegated to committees or management executives, the board acknowledges that it is not discharged from its obligations in regard to these matters.

The board acknowledges its responsibilities as set out in the board charter in the following areas:


01. The adoption of strategic plans and ensuring that these plans are carried out by management
02. Monitoring of the operational performance of the business against predetermined budgets
03. Monitoring the performance of management at both operational and executive level
04. Ensuring that the group complies with all laws, regulations and codes of business practice
05. Ensuring a clear division of responsibilities at board level to ensure a balance of power and authority in terms of group policies

Functions of the Board

The board acknowledges that it is responsible for ensuring the following functions as set out in the board charter:

01. Good corporate governance and implementation of the code of corporate practices and conduct as set out in the King III report
02. That the group performs at an acceptable level and that its affairs are conducted in a responsible and professional manner
03. The board recognises its responsibilities to all stakeholders

Role of Directors

Ultimate control of the company rests with the board of directors while the executive management is responsible for the operational management of the company. To achieve this, the board is responsible for establishing the objectives of the company and setting a philosophy for investments, performance and ethical standards.

Although quarterly board meetings are arranged every year, additional meetings are called should circumstances require it. Seven board meetings were called during the 2014 financial year. In 2014, the chairman with the assistance of the company secretary, led a formal review of the effectiveness of the board and its committees.

Each director completed a detailed evaluation questionnaire and an analysis of the findings was presented to the board. There was agreement that the board was operating effectively. The results were positive and action plans were agreed upon where required.

Composition of the Board of Directors

The board comprises four executive directors and seven independent non-executive directors. All directors serve for a maximum period of three years and are subject to retirement by rotation and re-election by shareholders in general meeting.

Board appointments are made in terms of the policy on nominations and appointments, such appointments are transparent and a matter for the board as a whole. There are no fixed term contracts for executive directors and the notice period for termination or resignation is one calendar month. There is no restraint of trade period for executive directors.

Corporate Governance Review

The board of directors (“the board”) endorses the code of corporate practices and conduct as set out in the King III report and confirms that the group is compliant with the provisions thereof other than as set out in the King III checklist available on the company's website at www.resilient.co.za.

The board has been addressed by independent consultants to ensure that all directors are fully conversant with best practice and current thinking with regard to corporate governance.