RCL Foods : 2023 Corporate Governance Report (0.19mb)

STATEMENT OF COMPLIANCE

RCL FOODS supports the governance outcomes, principles and practices as set out in the King IV Code of Corporate Governance. For the period under review, the Board is of the opinion that RCL FOODS has operated in accordance with the requirements of King IV. The Group's application of the applicable principles is explained in our King IV Application Register. The Board is further satisfied that it has met the requirements of the Companies Act of South Africa and the JSE Listings Requirements and has fulfilled its responsibilities in accordance with its approved Board Charter.

The Group advocates the ethical attributes of integrity, competence, responsibility, fairness, and transparency. The Board is tasked with ensuring that these values and characteristics are embodied within the Group through ethical and effective leadership. The Board is held accountable for providing ethical and effective leadership, and an annual evaluation is performed to assess the effectiveness of the Board (along with its Committees and individual members) in this regard.

The full King IV Application Register is available on the RCL FOODS website at www.rclfoods.com/financial-results-and-reports-2023

BOARD OF DIRECTORS

The Group has a unitary Board of 12 directors, of whom seven are independent non-executive directors, three are non-executive directors and two are executive directors. Mr PJ Neethling is an alternate non-executive director to Mr JJ Durand. The Chairperson of the Board, Mr JJ Durand, is not independent given his role as Chief Executive Officer (CEO) of Remgro Limited (which owns a majority share in RCL FOODS), but the Board deemed this appointment appropriate and key to achieving the business objectives of RCL FOODS. The roles of Chairperson and CEO are separate, and a clear division of responsibility exists between the two.

BOARD COMPOSITION

The Board conducts the affairs of the Group on the basis of the diverse industry knowledge and experience of its members and ensures that its composition is appropriate for the effective execution of its responsibilities. The Board ensures that an appropriate balance of power and authority exists so that no individual or block of individuals has unfettered decision-making powers or undue influence on the Board. To ensure good governance, and as recommended by King IV, the Lead Independent Director assumes Chairpersonship in instances where the Chairperson is not independent or is conflicted. Mr GM Steyn has served as Lead Independent Director since 13 November 2020.

Details of the RCL FOODS directorate are provided on pages 56 and 57 of the Abridged Integrated Annual Report, which is available on our website at www.rclfoods.com/financial-results-and-reports-2023

GOVERNANCE STRUCTURE

BOARD

Provides strategic

direction to the Group

RCL FOODS LIMITED CORPORATE GOVERNANCE REPORT 2023

BOARD RESPONSIBILITIES AND MEETING ATTENDANCE

The Board is the custodian of corporate governance by providing effective leadership based on an ethical foundation. The roles and responsibilities of the Board are set out in a formal Board Charter, which is reviewed annually.

The complete terms of reference of the Board are detailed in the Board Charter, which is available on our website at www.rclfoods.com/governance/corporate-governance/

governance-documents

Directors who are unable to attend meetings tender their apologies and reasons for non-attendance in advance and provide feedback to the Chairperson prior to the meeting.

2023 KEY ACTIVITIES

• Approved the Group strategy and ratified the business plan for the 2024 financial year.
• Approved the half-year and year-end financial results and JSE announcements.
• Approved the Integrated Annual Report.
• Discussed and considered material issues relating to execution of strategy.
• Approved non-executive directors' fees for tabling at the Annual General Meeting.
• Considered the declaration of directors' personal financial interests.
• Approved major transactions and capital expenditure.
• Considered committee report-backs to the Board.

• Independent non-executive director

• Non-executivedirector
  # Executive director
  + Retired 9 November 2022
  < Appointed 9 November 2022

ACCESS TO RECORDS AND

INDEPENDENT ADVICE

Directors have unrestricted access to all Group information, records, documents and property. Non-executive directors have access to management and may meet separately with management, without the attendance of executive directors. All Directors have access to the advice and services of the Company Secretary, and Directors may obtain independent professional advice at the Group's expense, should they deem this necessary.

COMPANY SECRETARY

The Board is cognisant of the duties of the Company Secretary who is accordingly empowered to properly fulfil those duties. Ms LG Kelso is the Company Secretary and in addition to the statutory duties, she fulfils the following functions in line with the Board Charter:

• induction of directors;
• provision of guidance to the Board and individual directors on their duties and responsibilities, and the proper discharge thereof;
• ensures compliance with statutory and regulatory requirements; and
• acts as the primary point of contact between shareholders and the Group.

The Board assessed and was satisfied that the Company Secretary is competent and has the requisite qualifications and experience to effectively execute her duties. The Company Secretary maintains an arm's-length relationship with the Board. The Company Secretary is not a director of the Company and is not related to any of the Directors.

DIRECTORS' INDEPENDENCE

All independent non-executive directors are subject to an annual independence evaluation by the Board. The Board considers whether the director is independent in character and judgement and whether there are any relationships or circumstances which are likely to affect, or could appear to affect, the director's independence. On the basis of the findings of this evaluation, the Board is of the opinion that Messrs NP Mageza, DTV Msibi, GM Steyn, GC Zondi, GCJ Tielenius Kruythoff, Ms GP Dingaan, and Dr PM Moumakwa are independent. All directors are required to declare, on an annual basis, any interest in proposed transactions or arrangements with the Group. In addition, all other material interests are required to be disclosed by directors as and when they arise.

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APPOINTMENTS TO THE BOARD

The Board has adopted a policy on the promotion of broader diversity at Board level, specifically focusing on the promotion of the diversity attributes of gender, race, culture, age, field of knowledge, skills and experience, this policy will be considered and applied in making appointments to the Board. Procedures for appointment to the Board are formal and transparent, and a matter for the Remuneration and Nominations Committee. This Committee consists of four non-executive directors, and the Chairperson of the Board (ex-officio) and meets four times a year. Mr NP Mageza is the Chairperson for remuneration matters, and the other members are Messrs

1. Durand, GM Steyn and DTV Msibi, and Dr PM Moumakwa. The Lead Independent Director of the Board serves as Chairperson of the Committee for nomination matters. The Chief Executive Officer and Chief Human Resources Officer also attend meetings of the Remuneration and Nominations Committee as permanent invitees.

The Committee considers the Board's composition, retirements and appointments of additional and replacement directors. Executive directors are appointed to the Board on the basis of skill, experience and level of contribution to the Group, and are responsible for the running of the business.

Non-executive directors are selected on the basis of industry knowledge, professional skills and experience, and consideration and application of the Board diversity policy. One new director appointment was made during the 2023 financial year, and the Remuneration and Nominations Committee considered and applied the policy in recommending the appointment of Ms GP Dingaan, to replace Mrs CJ Hess. On their appointment to the Board, new directors visit the Group's businesses and meet with senior management, as appropriate, to facilitate their understanding of the Group and their fiduciary responsibilities. The Board has reviewed its required mix of skills and experience, as well as other qualities such as demographics and diversity, in order to assess its effectiveness and that of its Committees and individual directors.

Mrs CJ Hess retired by rotation, and did not make herself available for re-election as a director at the Company's Annual General Meeting on 9 November 2022 and Ms GP Dingaan was appointed as a non-executive director, with effect from 9 November 2022.

In accordance with the Memorandum of Incorporation, not less than one-third of the directors are subject to retirement and re-election by shareholders on an annual basis, as well as any director who has held office for three years since his last election. As a result of these requirements, the following directors will retire by rotation at the 2023 Annual General Meeting: Messrs PR Louw, GM Steyn, GC Zondi, and Dr PM Moumakwa. All retiring directors have made themselves available for re-election.

BOARD EFFECTIVENESS

For the period under review, the Company Secretary facilitated a performance evaluation of the Board and its committees based on the principles of King IV. These are formal evaluations, which annually assess the effectiveness of the following categories:

• Board composition and meetings;
• Board Committees;
• Board information;
• Board orientation and development;
• Board functioning and processes;
• Chairperson; and
• Individual evaluation.

The results of the assessments were consolidated by the Company Secretary, and the Chairperson of the Board is responsible for determining any actions required to enhance the effectiveness of the Board. The Board is satisfied that the evaluation process supports its performance and effectiveness.

BOARD COMMITTEES

RCL FOODS is committed to achieving the highest level of corporate governance and ethical business behaviour, in order to create sustainable value for its stakeholders. The directors recognise that good corporate governance is about leadership and that it is necessary to conduct the enterprise with integrity and in compliance with legislation, regulations and best practices relevant to the Group's business. Governance in the Group extends beyond mere legislative and regulatory compliance, and the directors strive to entrench an enterprise-wide culture of good governance and ethical conduct. For RCL FOODS, corporate governance incorporates the structures, processes and practices that the Board uses to assist it in managing and directing the Group's operations.

Board committees assist the Board in discharging its responsibilities. The role and responsibility of each Board committee is set out in its formal charter, which defines its terms of reference, duration and functions, clearly agreed upon reporting responsibilities and the scope of authority for each committee. Committees are free to obtain independent external professional advice as and when necessary, and are subject to evaluation by the Board to ascertain their performance and effectiveness.

The complete terms of reference of each of the Board committees are detailed in the individual committee charters available on our website at www.rclfoods.com/governance/corporate-governance/ governance-documents

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AUDIT COMMITTEE

The Audit Committee oversees the integrity of the Group's financial standing. It also reviews the internal financial controls to satisfy itself that they are adequate and effective. In addition, it approves the external audit fees, ensures that the internal audit function is independent and effective, provides oversight of risk management processes, and makes certain that the finance processes are effective.

Directors who are unable to attend meetings tender their apologies and reasons for non-attendance in advance and provide feedback to the Chairperson prior to the meeting.

Further details of the risk management process are included on pages 10 to 12 of this report. The material risks impacting the Group are included as part of the Abridged Integrated Annual Report available on our website at

www.rclfoods.com/financial-results-and-reports-2023

Directors who are unable to attend meetings tender their apologies and reasons for non-attendance in advance and provide feedback to the Chairperson prior to the meeting.

1. Appointed 9 November 2022
2. Retired on 9 November2022
3. PricewaterhouseCoopers Inc. (PwC)
4. Ernst & Young Inc. (EY)

* Retired 9 November 2022

1. Appointed 9 November 2022
2. PricewaterhouseCoopers Inc. (PwC)
3. Ernst & Young Inc. (EY)

The Chief Executive Officer, Chief Financial Officer, Internal Audit Director, and Group Finance Director are invitees to Committee meetings.

The Committee is satisfied that it has fulfilled its responsibilities in accordance with its approved Committee Charter.

The detailed report of the Audit Committee has been included in the Abridged Integrated Annual Report on pages 93 to 95, available on our website at www.rclfoods.com/financial-results-and-reports-2023

RISK COMMITTEE

The Risk Committee is responsible for overseeing the adequacy and overall effectiveness of the Group's risk management function and its implementation by management.

The Committee is satisfied that it has fulfilled its responsibilities in accordance with its approved Committee Charter.

2023 KEY ACTIVITIES

• Reviewed the risk profile to ensure its alignment with Group strategic objectives.
• Considered changes in the risk profile of the Group and its business units, and their impact on the business.
• Reviewed strategic risks for all divisions, confirming mitigation strategies developed by management, including business continuity planning for grid failure.
• Specific focus on safety culture on sites across the Group.
• Reviewed assurance results of the combined assurance model against approved monitoring plans.
• Reviewed the Group's sustainability strategy and received updates on:
• • Progress against sustainability targets; and
  • The status of the implementation of key sustainability projects relating to energy and water conservation.
• Interacted directly with broker representatives, and evaluated the insurance programme to ensure that all insurable risks were covered where practical.
• Key IT focus areas, including cyber security and other digital projects were assessed.
• Key legal matters were reviewed.

The Chief Business Services and Risk Officer, Internal Audit Director, Group Digital and Information Director, Group Finance Director, Group Services Legal Director, Group Risk Executive, Rainbow Managing Director, Vector Logistics Managing Director, and Group Sustainability Executive are invitees to Risk Committee meetings.

RCL FOODS LIMITED CORPORATE GOVERNANCE REPORT 2023

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