Our approach to governance

At Afrox, we are accountable for our actions and strive to be transparent in all decisions and activities.

Our business is uniquely South African, and we consider its diverse aspects while managing our business in accordance with The Linde Group global best practice, encompassing business processes, management, technology, environment, employment, relations with suppliers, customers and society.

Our integrated thinking and application of good corporate governance is embedded in our organisational culture and is exhibited in the manner in which the Company oversight safetis provided. Specifically through governance principles and policies that are integrated into our operations and reviewed frequently to ensure continuous compliance and application of best practice. A robust governance structure is in place, including the presence of a lead independent non-executive director.

King III supports the inclusion of sound leadership practices, such as sustainability and good corporate citizenship, in our business structures, policies and practices. Some of our governance activities are already aligned with the King IV™ Code of Corporate Governance for South Africa, and we are making progress in applying these principles further to achieve full compliance in the next year.

Afrox governance structure

Board of directors

Independent

Dr Khotso Mokhele (61)

Lead independent director

Khotso was appointed to the Afrox Board in December 2005.

Chris Wells (68)

Independent non-executive director

Chris was appointed to the Afrox Board in November 2012.

Nomfundo Qangule (49)

Independent non-executive director

Nomfundo was appointed to the Afrox Board in July 2014.

Lean Strauss (58)

Independent non-executive director

Chris was appointed to the Afrox Board in November 2012.

Nolitha Fakude (52)

Independent non-executive director

Nolitha was appointed to the Afrox Board in March 2017 and bolsters our team with 25 years of experience across multiple organisations and diverse industries.

Non-independent directors

Sue Graham Johnston (47)

Chairperson

Sue was appointed as Chairperson of Afrox’s Board of directors.

Richard Gearing (54)

Non-executive director

Richard was appointed to the Afrox Board in August 2012.

Matthias von Plotho (47)

Non-executive director

Matthias was appointed to the Afrox Board in May 2011.

Our highest decision-making authority rests with the executive directors who take responsibility for business oversight and governance based on sound governance practices that promote profitable sustainability for us and our stakeholders.

Executive directors

Schalk Venter (50)

Managing Director

Schalk was appointed to the Afrox Board on 18 May 2015 and assumed the role of Managing Director.

Dorian Devers (41)

Financial Director

Dorian was appointed to the Afrox Board on 28 May 2015 and assumed the role of Financial Director.

Refer to www.afrox.co.za for the curricula vitae of our executive management members.

Effective control is maintained through a well-developed governance framework that provides for delegation of authority and applicable duties. The Board delegates authority to relevant Board Committees and individuals with clearly defined mandates that are reviewed annually. These Committees discharge Board responsibilities and provide in-depth focus on specific areas according to their relevant skills and expertise.

The Board delegates authority to the executive directors to manage the business and affairs of Afrox. Our executive management assists the Managing Director, subject to statutory parameters and the Board’s limits on the delegation of authority to the Managing Director. Delegated authorities are monitored and reviewed on an annual basis.

Our combined assurance model

Our approach to assurance includes three lines of defence:

Board charter

Business conduct is regulated by means of a King III-aligned Board charter that is underpinned by principles of sound corporate governance. The Board charter is currently being revised to ensure alignment with better practice and provide further guidelines for responsibility. This revision is done annually and considers changes brought about by new legislation or the business environment.

Chairperson and Managing Director

The Chairperson is an executive of the controlling shareholder, The Linde Group, and the Chief Executive of Region Africa and the UK. The Chairperson provides overall leadership of the Board and its committees. She monitors and evaluates the performance of the Managing Director in conjunction with the NGMR Committee in order to ensure the achievement of Afrox’s strategic and operational objectives. Dr Khotso Mokhele is the lead independent director, as the Chairperson is not independent.

The Board recognises that the roles of the Chairperson and the Managing Director should be separate to ensure a balance of power and authority, and applies this to ensure decision making is unfettered or polarised. The new Chairperson was appointed on 7 September 2016. Refer here for the compliance statement.

Board focus areas

After a challenging year with an increased workload as a result of oversight on the post-restructure governance, risk mitigations and business controls, the refreshed Board is set to take our business forward with a dynamic mix of expertise and talent that has proved invaluable in problem solving and oversight.

2016 focus areas

  • Tracked the benefits in financial results from the restructure.
  • Managed cost creep and accountability
  • Implemented a sales incentive scheme to enhance the performance of sales and marketing
  • BBBEE performance and transformation
  • ­Safety drivers
  • Competition Commission market inquiry
  • The Board approved gender targets of 25% for women in respect of Board representation

In 2017, the Board aims to:

  • Introduce a new risk management system to review the external environment for risks, opportunities and benefits. Thereafter, to apply these to our organisational culture from the employees up towards the Board to build a deeper understanding of sustainability.
  • Review internal and external security and compliance risks.
  • Enhance the efficiency of dedicated consults.
  • Monitor financial performance and cost recovery.
  • Build on our competitive advantages.
  • Review sales and marketing performance.
  • Drive the right culture and behaviours.
Competition Commission market inquiry feedback

The Competition Commission market inquiry into the LPG sector is ongoing. Afrox continues to provide information upon request as well as supporting information to the inquiry. Refer here for further details.

Board composition and skills

Average non-executive board member age is 53.6 years compared to 57.2 years – SA Board index1.

1 Spencer Stuart prepared the board 2015 analysis versus 2014 SA Board Index

Board meetings and attendance

Afrox held four Board meetings. Ad hoc meetings are arranged as required. During 2016, there were four regular and no special meetings.

The agenda and relevant supporting documents are distributed to directors before each Board meeting. If directors are unable to attend Board meetings, they submit comments on the agenda and general items to the committee chairperson for raising and discussion. Directors based abroad have access to video or teleconferencing facilities for participation. During the meeting, the appropriate executive director explains and motivates business items that require decisions. Unrestricted access to all Company information and records is available to all directors.

Board appointments, training and evaluation

Rotation of directors and independence

Director rotations took place as per the Company’s notice of annual general meeting (AGM). Sue Graham Johnston was appointed to the position of Chairperson of Afrox’s Board of directors, succeeding head of EMEA, Bernd Eulitz, who was appointed to the Board on 1 June 2015. Ms Graham Johnston took up her role on 7 September 2016.

Dr Mokhele has been a lead independent director for more than 10 years. The Board has collectively discussed the character, material interests and performance of Dr Mokhele, and is comfortable that he remains a highly effective and independent member of the board.

Selection process and support

The NGMR Committee makes recommendations to the Board on executive and non-executive director appointments as well as Board composition. The Board considers the recommendations and makes appointments as it deems appropriate, subject to shareholder approval at the ensuing AGM.

Afrox uses skills, acumen, experience and actual or potential level of contributions as criteria for appointments. We further review possible impacts on Afrox’s activities and racial and gender diversity. The Afrox Board approved a 25% female diversity representation target in 2016 in compliance with section 3.84 of the JSE Listings Requirements .We achieved this target by having three female directors on the Board.

All directors have access to information required to enable them to carry out their duties. They also have access to management and the Company Secretary in order to carry out their responsibilities fully and effectively.

Training and evaluations

Board members received external training on the Competition Act in September 2016, specifically on director’s responsibilities and liabilities in fulfilment of their fiduciary duties.

All new Board members go through a detailed Board induction process and occasional site visits aid employee engagement while providing site-specific information for member edification. The next site visit will occur in May 2017.

External Board evaluations are performed once every three years and are dynamic, based on business circumstances. The next external evaluation will take place in 2019.

Internal Board evaluations for the periods 2015 and 2016 were completed in February 2017. The overall outcome demonstrated that the Board and the committees are functioning effectively with constructive and positive relationships being formed between board members and management. The process identified areas of enhancement which included organisational succession planning, bolstering of the risk management function and formalising stakeholder engagements. The Board Chairperson and the respective committee chairs will put action plans in place to address these areas and evaluate the progress made at the next board appraisal. The Board will also conduct an external skills gap analysis to ensure a balanced mix of skills going forward.

Company Secretary

Cheryl Singh was appointed Company Secretary in January 2014. The Company Secretary is not a member of the Board or a prescribed officer. The Afrox Board remains satisfied that an arm’s-length relationship exists between it and the Company Secretary.

The Company Secretary provides the Board with guidance in discharging of directors’ duties and responsibilities in the context of legislation, regulation, governance procedures and requirements. The Board has access to, and is aware of, the responsibilities and duties of the Company Secretary and has committed itself to ensuring that the Company Secretary is afforded support as and when required. The Company Secretary acts as secretary to all Board-appointed committees.

In line with the JSE Listings Requirements, the Board assessed the Company Secretary on the basis of competence, qualifications and experience. The Board concluded that the Company Secretary is competent to carry out her duties and remains responsible for the appointment and removal of the Afrox Company Secretary.

Board-appointed committees

The Board delegates certain management responsibilities to Board‑appointed committees to assist in discharging its duties while remaining accountable for the performance and affairs of Afrox.

Each committee acts within agreed, written terms of reference. The Board receives minutes of committee meetings and reports from the Chairperson of each Board-appointed committee at the scheduled Board meetings.

The Chairperson of each Board-appointed committee is an independent non-executive director and members are non-executive directors. The only exceptions are the SHEQ and SET committees, where the Managing Director is an official member. Executive directors attend committee meetings by invitation.

The Audit Committee report for the year ended 31 December 2016 is included in the annual financial statements. The SET Committee report is available here.


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