Corporate governance

Overview

Italtile is committed to applying, in all material respects, the principles contained in the King Report on Governance for South Africa, 2009 (“King III”), which became effective on 1 March 2010, as well as the additional requirements for good corporate governance stipulated in the JSE SRI index.

King III

The JSE Listings Requirements require all JSE-listed companies to provide a narrative of how they have applied the new recommendations contained in King III, in respect of financial years commencing on or after the effective date.

During the year, the Group continued to advance its progress made in respect of applying the King III Code and the principles of integrated reporting. Ongoing measurement and reviews were conducted comparing the Group’s governance practices with those recommended in King III, in order to ensure continued improvements were made related to complying with the implications of King III.

Overall application and compliance with King III

Italtile accepts the obligation to apply the practices prescribed by King III and has resolved as a business philosophy to adopt and pursue the same. It therefore strives to meet those objectives in accordance with the content of the table below.

During 2013, the Group subscribed to the Institute of Directors Governance Assessment Instrument (“IoDSA GAI”). The following report on the application of King III is extracted from that tool, and the full report on all 75 principles of King III is included on the Italtile website www.italtile.com.

Principle		Principle description		Applied/ Partially applied/ Not applied		IoDSA GAI score		Evidence		Explanation/ Compensating practices
Principle 2.1		The Board acts as the focal point for and custodian of corporate governance		Applied		AAA		Board Charter
Principle 2.2		The Board appreciates that the strategy, risk, performance and sustainability are inseparable		Applied		AAA				Managed as part of the mandate to the Audit and Risk Committee
Principle 2.3		The Board provides effective leadership based on ethical foundation		Applied		AAA				Managed as part of the mandate to the Social and Ethics Committee
Principle 2.4		The Board ensures that the company is and is seen to be a responsible corporate citizen		Applied		AAA				Managed as part of the mandate to the Social and Ethics Committee
Principle 2.5		The Board ensures that the company ethics are managed effectively		Applied		AAA				Managed as part of the mandate to the Social and Ethics Committee
Principle 2.6		Chapter 3: Audit Committees		Applied		AAA				Please refer to the Audit and Risk Committee Report
Principle 2.7		Chapter 4: The governance of risk		Applied		AAA				Please refer to the Audit and Risk Committee Report
Principle 2.8		Chapter 5: The governance of information technology		Applied		AAA				Please refer to the Audit and Risk Committee Report
Principle 2.9		Chapter 6: Compliance with laws, rules, codes and standards		Applied		AAA				Please refer to the Audit and Risk Committee Report
Principle 2.10		Chapter 7: Internal audit		Applied		AAA				Please refer to the Audit and Risk Committee Report
Principle 2.11		Chapter 8: Governing stakeholder relationships		Applied		AAA		Board Charter
Principle 2.12		Chapter 9: Integrated reporting and disclosure		Applied		AAA
Principle 2.13		Chapter 7 and 9: The Board reports on the effectiveness of the Company’s internal controls		Applied		AAA				Please refer to the Audit and Risk Committee Report
Principle 2.14		The Board and its directors act in the best interests of the Company		Applied		AAA
Principle 2.15		The Board will/has consider/ed business rescue proceedings or other turnaround mechanisms as soon as the Company has been/may be financially distressed as defined in the Companies Act, 71 of 2008		Applied		AAA
Principle 2.16		The Board has elected a chairman of the board who is an independent non-executive director. The CEO of the Company does not also fulfil the role of chairman of the Board		Applied		AAA
Principle 2.17		The Board has appointed the Chief Executive Officer and has established a framework for the delegation of authority		Applied		AAA
Principle 2.18		The Board comprises a balance of power, with a majority of non-executive directors. The majority of non-executive directors are independent		Applied		AAA
Principle 2.19		Directors are appointed through a formal process		Applied		AAA
Principle 2.20		The induction of and ongoing training, as well as the development of directors are conducted through a formal process		Applied		AAA
Principle 2.21		The Board is assisted by a competent, suitably qualified and experienced Company Secretary		Applied		AAA				Please refer to the Governance Report
Principle 2.22		The evaluation of the Board, its committees and individual directors is performed every year		Applied		AAA
Principle 2.23		The Board delegates certain functions to well-structured committees without abdicating from its own responsibilities		Applied		AAA
Principle 2.24		A governance framework has been agreed upon between the Group and its subsidiary boards		Applied		AAA
Principle 2.25		The Company remunerates its directors and executives fairly		Applied		AAA
Principle 2.26		The Company has disclosed the remuneration of each individual director and prescribed officer		Applied		AAA				Please refer to the Directors’ Report
Principle 2.27		The shareholders have approved the Company’s remuneration policy		Applied		AAA