Integrated Report


 
Corporate governance statement
 
 

Corporate governance includes the structures, processes and practices that the Board of Directors use to direct and manage operations of Aspen or the Group.

The Board is accountable to shareholders and other stakeholders and is ultimately responsible for the implementation of sound corporate governance practices throughout the Group. Aspen’s Board of Directors is committed to ensuring that the Group adheres to high standards of corporate governance in the conduct of its business.

In an environment of increasing regulatory pressure, the Board is ever mindful of the need to maintain an appropriate balance between the governance expectations of investors, regulators, government and other stakeholders, and the market demands that the Group deliver competitive financial returns to its shareholders.

Governance in the Group extends beyond mere legislative and regulatory compliance and management strives to entrench an enterprise-wide culture of good governance aimed at ensuring that decisions are taken in a transparent manner, within an ethical framework that promotes the responsible consideration of all stakeholders, while also holding decision-makers appropriately accountable. In line with the philosophy that good corporate governance is an evolving discipline, governance structures, practices and processes are actively monitored and revised from time-to-time to reflect best practice.

Implementation Of King Iii And The New Companies Act

The implementation of King III during the current financial year, together with the implementation of the new South African Companies Act, 2008 (“Companies Act”) from 1 May 2011, required the Group to undertake a review of prevailing corporate governance practices in the form of a comprehensive “gap analysis“ which enabled the identification of areas of non-compliance. The most material areas of non- or under-compliance identified in this process were:
  • disclosure of executive remuneration;
  • enhanced reporting relating to sustainability issues;
  • the implementation of information technology governance procedures; and
  • shareholder consideration of the Group’s Remuneration Policy.

As a result of this process, the annual work plans of the Board and the Board committees were revised to ensure that, where relevant, responsibility for the implementation of corrective action has been vested with a clearly identified forum to be dealt with at any one or more particular meeting in its annual calendar of events. So for example, the Group has developed a Remuneration Policy which will be tabled for an advisory vote of shareholders at the annual general meeting on 1 December 2011.

A number of the gaps identified, for instance the disclosure of executive remuneration and the enhanced sustainability reporting, are also addressed in this Annual Report. A full analysis of the Group’s current compliance with King III is included here of this Annual Report.

Statement of Governance Compliance

The directors are of the opinion that, save as specifically disclosed here referred to above, the Group has complied, in all material respects with the requirements of King III and the corporate governance provisions prescribed by the JSE Listings Requirements.

Highlights of significant governance changes

As indicated earlier, the Group’s corporate governance practices are reviewed on an ongoing basis to ensure alignment with internal developments and to ensure ongoing adherence to legislation, regulation and global governance trends. The following enhancements were made to the Group’s governance framework during the reporting period:
  • reviewing the Board Charter, Terms of Reference of the Board committees and relevant Group policies and procedures in light of the King III requirements and implementing amendments where necessary;
  • adoption of revised work plans for the Board and all of the Board committees based on the updated Charter and Terms of Reference; and
  • evaluations of the Board, its committees, Chairman, Group Chief Executive and non-executive directors.

THE BOARD OF DIRECTORS

Aspen is led by a unitary Board of directors, currently constituted as required in terms of the Companies Act, and the Company’s Memorandum and Articles of Association. Following the implementation of the Companies Act with effect from 1 May 2011, the structure and composition of the Board has been reviewed to determine whether any changes are required to bring it into line with the requirements of the Companies Act. As a result, the Group will be looking to bolster the number of independent non-executive directors.

Board composition, appointment and independence of non-executive directors

The Board currently comprises 10 directors, of whom two are executive directors and the remainder are non-executives. Four of these are considered independent non-executive directors within the criteria determined by King III.

The composition of the Board ensures that there is a balance of power and authority in decision-making processes. Non-executive directors are appointed by the Board in terms of a formally documented and transparent process which takes place under the guidance of the Remuneration & Nomination Committee. Non-executive directors are selected on the basis of their skills, business experience, reputation and qualifications. Gender and racial diversity is also considered in the appointment of new directors. The non-executive directors collectively bring a wealth of skills, knowledge and experience from their own fields of business to the Board, ensuring that the Board’s consideration of matters of strategy, policy and performance are always robust, informed and constructive. The terms and conditions of appointment of each of the non-executive directors are contained in a letter of appointment which, together with the Board Charter, forms the basis of the director’s appointment. The Remuneration & Nomination Committee is responsible for making recommendation to the Board for the identification and removal of underperforming or unsuitable directors, should this prove necessary.

In terms of the Company’s Memorandum and Articles of Association, one-third of the non-executive directors retire by rotation at each annual general meeting. Directors who retire may, if eligible, offer themselves for re-election. The names of the directors who retire by rotation at the next annual general meeting appear in the notice of annual general meeting. The re-election of retiring directors by shareholders is subject to a recommendation by the Remuneration & Nomination Committee, following an evaluation of those directors’ performance. Directors who may be appointed during a reporting period must have their appointments ratified at the next annual general meeting.

Non-executive directors have no fixed term of appointment, however, the Board Charter provides for the automatic retirement of a director at the age of 70. At the Board’s discretion, the retiring director may thereafter be invited to serve as a non-executive director on a year-on-year basis. There are no fixed term service contracts in place for the executive directors and their tenure is subject to the normal terms and conditions on which the Company appoints members of senior management.

The fees of the non-executive directors are independent of the Group’s financial performance. In line with the recommendations of King III, the fees payable to the non-executive directors were approved by a resolution of Aspen’s shareholders at the Company’s annual general meeting in November 2010. Pursuant to the implementation of the Companies Act, approval will be sought by special resolution for the payment of non-executive directors’ fees for the 2012 financial year at the annual general meeting due to be held on 1 December 2011.

The independence of the non-executive directors is tested on a regular basis to ensure that there is no business or other, relationships which could materially interfere with a director’s capacity to act independently. At least once annually, Aspen actively solicits details of its directors’ interests in the Group, their external shareholdings and other directorships so as to determine whether there are any actual or potential conflicts of interest. A register containing the directors’ declarations of interest is kept by the Company Secretary and is available for inspection by any of the directors on request. In addition, the agenda at each scheduled Board meeting allows the Board to consider any conflicts arising from changes to the directors’ declarations of interests. The Board has satisfied itself that no relationships exist which could adversely affect the classification of its independent non-executive directors, and accordingly that the classification of each of the directors is appropriate. The independence of John Buchanan was independently assessed by the remaining members of the Remuneration & Nomination Committee, due to his having served on the Board of Aspen for nine years. This assessment concluded that there is no question of his ongoing qualification as an independent non-executive director. A brief curriculum vitae, and the classification of each director, appears here.

Director induction, training and access to information

Newly appointed directors are required to participate in an induction programme co-ordinated by the Chairman together with the Company Secretary. In addition to providing an orientation in respect of the Group’s operations, directors are guided in their fiduciary duties, provided with information relating to the relevant statutory and regulatory frameworks and introduced to key members of management. The programme also makes directors aware of relevant policies such as those relating to dealing in the Company’s securities, the duty to declare conflicts of interest and the Company’s Code of Conduct.

The Company Secretary is also responsible for ensuring that directors are kept abreast of relevant legislative and regulatory developments as well as significant information impacting the Group’s operating environment. Training sessions for non-executive directors are held regularly, with a total of nine sessions held during the year. These sessions are presented by senior management or subject experts and are designed to keep directors updated of developments in the Group and the territories in which it operates as well as other relevant matters.

To facilitate the proper functioning of the Board, all directors have unrestricted access to all Group information, records, documents and facilities through the office of the Company Secretary. In addition, non-executive directors have unrestricted access to members of management and, where appropriate, are entitled to access the external auditors without members of management being present. Directors, after discussion with the Chairman, may also seek independent professional advice at the Group’s expense should they deem it necessary for the proper execution of their directorial role.

Board mandate

A formally documented and approved Board Charter outlines the composition, scope of authority, responsibilities, powers and functioning of the Board. The Board Charter is reviewed at least once annually to ensure that it remains relevant, appropriate and in line with governance best practice. The key responsibilities of the Board include:
  • to approve and review the strategic direction of the Group and monitor the execution of strategic plans;
  • to approve and oversee major capital expenditure, acquisitions and disposals;
  • to consider financial reports and to review and approve annual budgets and business plans;
  • to monitor the financial performance of the Group and to approve annual and interim financial reports and dividends;
  • to identify and monitor key risk areas;
  • to review risk management strategies and ensure the implementation of effective internal controls;
  • to approve the appointment and replacement, where necessary, of the Group Chief Executive and other senior executives and to oversee succession planning;
  • to approve the nomination of directors and to monitor the performance of all the directors, including the Chairman and the Group Chief Executive;
  • to make decisions on key issues or matters at levels deemed material to the Group and to delegate authority for the day-to-day running of the business of the Group to management; and
  • to identify and oversee the Group’s communication with key stakeholders.

Board leadership

The Chairman of the Board is appointed by the directors, annually after each annual general meeting of shareholders, and remains in office for a period of one year at a time. The Chairman is absent during the discussion of, and the vote on, her reappointment.

The Board is currently led by Judy Dlamini, a non-executive director. In line with the recommendations of King III, the Board has appointed Roy Andersen as the Lead Independent Director to act in instances where the Chairman may have a conflict of interest. As with the chairmanship, the appointment of the Lead Independent Director is made by the Board annually, after each annual general meeting. Both the Chairman and the Lead Independent Director have formally mandated roles and responsibilities and are subject to an annual evaluation of their performance.

The roles of the Chairman of the Board and the Group Chief Executive are separate and clearly defined, such that no one individual director has unfettered powers of decision-making.

Succession planning

The Board has delegated succession planning for the Group Chief Executive, Deputy Group Chief Executive and senior executives to the Remuneration & Nomination Committee with direct input, as appropriate, from the Chairman and the Group Chief Executive. Succession plans are integrated into the key performance areas at management and executive levels and reported to the Board twice each year.

Board meetings

The Board meets at least once every quarter. Additional meetings may be convened to discuss specific issues which arise between scheduled Board meetings. The Board compiles an annual work plan to ensure all relevant matters for Board consideration are prioritised, included on the agenda and addressed at the appropriate time. Five meetings were held in the year under review. A table showing the attendance by directors at Board and Board Committee meetings is set out here.

Board meetings are convened by formal notice to the directors. There are comprehensive management reporting disciplines in place with strategic, financial, operational, risk and governance reports tabled. A Board pack, containing detailed proposals and management reports, is distributed by the Company Secretary to all directors in a timely manner in advance of scheduled meetings, and directors are afforded ample opportunity to study the material presented and to request additional information from management where necessary.

Decisions taken at Board meetings are decided by a majority of votes, with each director having one vote. Where resolutions need to be taken between Board meetings, a written proposal is circulated to, and requires signature by all directors to be valid. A resolution passed in this manner is effective as at the date of signature of the last-signing of the directors and is formally noted at the next Board meeting.

Board committees

The Board has established the following Board committees, each with specific Terms of Reference, to assist it in the execution of its role:
  • Audit
  • Risk & Sustainability
  • Remuneration & Nomination
  • Transformation

Composition of the Board and its committees is as follows:


All of the Board committees are constituted in accordance with the recommendations of King III and, with the exception of the Transformation Committee, each is chaired by a non-executive director.

The Terms of Reference of each of the Board committees is approved annually by the Board and specifies the committee’s constitution, mandate, relationship and accountability to the Board. The Company Secretary is the secretary to all committees of the Board and assists in ensuring that the committees operate within the limits of their respective mandates, in terms of an agreed annual work plan and that a formal process of reporting is in place.

Regular meetings of the Board’s committees are scheduled, in advance, in the Group’s corporate calendar. In addition, any of the committees may convene ad hoc meetings should the business of the Group so require. A table setting out the number of meetings held by each committee and the directors’ attendance at those meetings appears here. The Board committees report formally to the Board at each Board meeting following any meeting of a committee.

With the implementation of the Companies Act from May 2011, the constitution of the Audit Committee will be reviewed with the members required to be elected by shareholders at the next annual general meeting.

Detailed reports on the role and performance of each of the Board committees are included on here.

Evaluation of Board performance

An evaluation of the performance of the Board, the Board committees, the Chairman, the Group Chief Executive, the Company Secretary and of each of the individual directors is conducted annually. The evaluations carried out in 2011 focused on:
  • the effectiveness of Board composition, governance processes and procedures;
  • the effectiveness of the Board committees in discharging their respective mandates;
  • the effectiveness of the Chairman of the Board in her role as Chairman;
  • the effectiveness and contributions of each of the directors;
  • the effectiveness of the Group Chief Executive; and
  • the effectiveness of the Company Secretary.

The evaluations were designed to gain an insight into how each of the directors of the Board believes the Board is meeting its objectives. The evaluations provided guidelines for evaluating the Board’s effectiveness and focused on areas where the Board’s performance may possibly be enhanced or improved, as well as assessing the individual contributions of the directors.

Responses were collated by the Company Secretary and reported to the Chairman.

The findings of the evaluation carried out at the end of the 2011 period indicated that the Board believes that:
  • through the monthly training sessions, the non-executive directors have a proper understanding of the business as a whole and the key factors and drivers that will determine the success or failure of the Group;
  • the directors play a constructive role in testing and refining policies and strategies proposed by management;
  • the Board provides a challenging yet supportive environment for management;
  • the Board committees were found to be properly constituted, provide clear and specific guidance to the Board within their respective mandates and assist the Board in its responsibility to ensure the proper governance of the Company and that the chairmen of the committees are effective; and
  • the evaluation of the Chairman revealed that she provides effective leadership.

As a result of the evaluation, it was agreed that the Board would be kept appropriately informed of developments between Board meetings, with the introduction of monthly updates commencing in the new financial year.

The Company Secretary

The Company Secretary is also the Group Governance Officer and plays a pivotal role in the corporate governance of the Group. The Company Secretary attends all Board and committee meetings and provides the Board and directors, collectively and individually, with guidance on the execution of their governance role.

All directors have access to the advice and services of the Company Secretary. The Company Secretary is accountable to the Board as a whole.

CORPORATE VALUES AND ETHICS

Aspen’s values of Integrity, Innovation, Excellence, Commitment and Teamwork are fundamental to its business philosophy and guide the way the Group conducts its business and interacts with all stakeholders.

Aspen’s induction programme educates new employees on the ethics, values and the business philosophy of the Group. All new employees are given a copy of, and are required to sign an acceptance of, the Code of Conduct on commencement of their employment with the Group. The Code of Conduct is available to all employees on the Group’s intranet and is also contained in the employee handbook.

The Group conducts its business in a highly regulated environment, however, one in which the potential for unethical marketing and promotional practices remains inherent. Aspen endorses the ethical marketing of medicines and subscribes to the rigorous application of the Marketing Code of Practice of the Pharmaceutical Industry Association of South Africa. The Group has a written policy in terms of which employees of the Group, including directors, are prohibited from accepting other than nominal gifts or hospitality or participation in events sponsored by current or prospective customers or suppliers. Any employee who receives a gift or other benefit exceeding the local currency equivalent of USD200 is required to disclose this in writing to the Company Secretary. A Group-wide register of gifts will be maintained by the Company Secretary and will be made available for inspection by the Board or any member of senior management on request.

Political party support

Aspen does not make payments or other contributions to political parties, organisations or their representatives or take part in party politics. Employees are free to participate in the political process in their private capacity provided it does not constitute a breach of the principles set out in the Code of Conduct and/or the relevant employee’s obligations to Aspen under contracts of employment and does not negatively influence their productivity or the credibility of the Group.

Tip-Offs Anonymous Hotline

Aspen endeavours to promote a culture of openness and transparency throughout the Group and employees and other stakeholders are encouraged to report unethical and other transgressions of which they become aware. The Group has an independently operated, toll-free ethics hotline to which reports may be made anonymously. During the year, this hotline was extended to include other territories in which the Group operates. Further information on the ethics hotline, Tip-Offs Anonymous, appears in the separate report of the Audit Committee.

Conflicts of Interest

The Board has adopted formal policies to regulate conflicts of interest and trading in the Company’s securities. The latter policy, which incorporates the requirements of the JSE Listings Requirements and the Securities Services Act, 2004 (as amended), prohibits any trade in the Company’s shares by any director or employee of the Group during a closed period. The Group currently has two formal closed periods, commencing 24 hours prior to the close of the interim reporting period (31 December) and the financial year-end (30 June) up to the end of 24 hours after the respective results announcement is made. In addition, the Group may declare other closed periods or restrict dealing in the Company’s shares at any other time if directors and employees have access to potentially price-sensitive information which is not in the public domain.

At all other times, directors (including directors of any subsidiary) and the Company Secretary may only trade with prior written approval from the Chairman. Such approval is sought and co-ordinated through the office of the Company Secretary. An announcement of all directors’ share dealings is published in compliance with the JSE Listings Requirements.

human rights

Aspen’s Code of Conduct requires all employees and others to be treated with fairness, equality and respect to foster an open, transparent, progressive and trusting environment which is free from prejudice, discrimination, bias, harassment and/or violation. The reference to discrimination includes gender, race, physical health, sexual orientation and/or belief systems. All employees sign the Code of Conduct.

Suppliers and service providers are required to sign the Ethical Standards and Human Rights Undertaking which is contained in all new supplier and service provider contracts. In signing this document, signatories warrant that:
  • they do not use or engage in child labour;
  • no forced labour is used;
  • a safe and healthy workplace is provided for employees;
  • employees are not discriminated against;
  • no corporal punishment, any form of abuse nor cruelty is applied nor supported;
  • each employee is paid at least a minimum wage or a fair representation of the prevailing industry wage;
  • all laws on working hours and employment rights relevant to the business are complied with; and
  • employees are free to join and form independent trade unions and have the freedom of association.

In accordance with BBBEE Codes in South Africa, Aspen’s Transformation Policy promotes employment equity and the provision of advancement opportunities to historically disadvantaged individuals. During the year, no incidents of discrimination were identified in the Group (2010: zero).

Aspen’s employees are free to belong to employee trade unions and collective bargaining groups. In South Africa 29% of Aspen’s permanent employees belong to CEPPWAWU – a strategic Black Economic Empowerment shareholder in the Group. Approximately 1% of employees belong to the South African Chemical Workers’ Union. All employees at the pharmaceutical sites in South Africa are affiliated to the National Bargaining Council for the Chemical Industry.

In East Africa, 26% of Aspen’s permanent employees are members of the trade union and approximately 90% of employees are members of the collective bargaining unit, excluding directors and expatriates.

At Aspen Bad Oldesloe, membership of the trade union is a voluntary decision made by each employee. It is estimated that approximately 30% of staff belong to the German Chemical Industry Trade Union.

At Aspen Brazil, 100% of the employees belong to Sinfar or Traquimfar trade unions. At Aspen Mexico, 16% of the current employee base is unionised. Working conditions, remuneration and benefits are subject to a collective labour agreement which is reviewed annually. There are no unionised members at Aspen Venezuela. A Council of Representatives, elected by the employees, meets on a regular basis on matters impacting employee welfare. Furthermore, an employee representative body negotiates the basic salary, salary increases and other benefits on behalf of employees in the pharmaceutical and allied industry, once validated by the Venezuelan Government. This negotiation process takes place every two to three years.

All material operational changes are communicated to the relevant employee trade unions as and when required within legislated timeframes.

LEGISLATIVE COMPLIANCE

The Board is ultimately responsible for overseeing the Group’s compliance with laws, rules, codes and standards in terms of King III. The Board has delegated to management the responsibility for the implementation of an effective legislative compliance framework and processes as envisaged by King III. The Board has considered the compliance framework that has been established by management and has satisfied itself that it is adequate for the requirements of King III. Aspen has appointed a Group Legal Officer who fulfils the function of Group Compliance Officer in providing the Board with assurance that the Group is compliant with applicable laws and regulations. This is an independent, objective assurance and consulting activity designed to give operational effect to the principles of King III.

The Group Compliance Officer’s function includes:
  • identifying and advising the Group on existing and new legislation applicable to the Group’s business in the jurisdictions where it operates companies; and
  • developing and implementing the annual Legislative Compliance Audit Plan across the Group.

A Legislative Compliance Policy has been implemented and will be reviewed annually.

Developments in legislation and the implementation of new legislation in jurisdictions where Aspen operates companies is monitored by the Aspen Legal Department. The Group Compliance Officer reports twice per year to the Risk & Sustainability Committee and the Board. The Group Compliance Officer has unrestricted access to management, employees, activities and all information considered necessary for the proper execution of legislative compliance.

Based on the principal laws effective during the year, there are no material areas of non-compliance within the Group. No fines were incurred nor were there any prosecutions of Group companies or directors and officers for failure to comply with any applicable legislation or codes of conduct.

The Group complies with the following non-binding rules, codes and standards on a voluntary basis:

Australia
  • Australian Self Medication Industry Association Codes
  • Medical Technology Association of Australia Codes, including the Medical Devices Code
  • Medicines Australia Code
  • Generic Medicines Industry Association Code of Practice

South Africa

Trade associations
Aspen is a voluntary member of the following trade associations:
  • Pharmaceuticals Made in South Africa
  • Self-Medication Manufacturers Association of South Africa
  • The Health Products Association of Southern Africa
  • The Infant Feeding Association of South Africa
  • Cosmetic, Toiletry & Fragrance Association of South Africa
Food Quality and Safety
  • ISO 22000:2008
  • BSi PAS220
  • ISO 9001
  • ISO 17025:2005
  • SANS 10049:2011
Industry
  • Marketing Code for Medicines (Pharmaceutical Council of South Africa)
  • Constitution of Pharmaceuticals Manufactured in South Africa
  • Constitution of Self Medication Association of South Africa
Regulative
  • MCC: Guidelines on Proprietary Names for Medicinal Products
  • WHO: Guidance on International Non-proprietary Names

Europe

Aspen Pharma Trading Ltd adheres to:
  • Irish Pharmaceutical Healthcare Association Code of Marketing Practice
  • European Union directive 2001/83/EC
  • Statutory Instrument, S.I of 2007, 2008 and 2009
  • Pharmaceutical Price Regulation Scheme (UK)

ENGAGEMENT WITH STAKEHOLDERS

The Board acknowledges it is ultimately responsible for the management of relationships with the Group’s major stakeholders. The Board receives formal feedback from management on a quarterly basis as to the nature of interaction with stakeholders.

A summary of engagement with key stakeholders is contained here.

THE BOARD COMMITTEES

The individual reports of each of the Board committees are set out below.

Audit Committee

The Terms of Reference of the Audit Committee charge the Committee, inter alia, with the following responsibilities:
  • overseeing of Integrated Reporting, having regard to all factors and risks that may impact the report;
  • reviewing of the Annual Financial Statements and comment thereon in the Integrated Report;
  • expressing a formal opinion on the Company’s going concern status in the Integrated Report;
  • ensuring that a combined assurance model is applied to provide a co-ordinated approach to all assurance activities;
  • reviewing the expertise, resources and experience of the Group’s finance function and disclosing the results of the review in the Integrated Report;
  • overseeing the internal audit function of the Group;
  • playing an integral part in the risk management process;
  • recommending the external auditors and overseeing the external audit process; and
  • reporting to the Group’s stakeholders and the Board on the effectiveness of the Group’s internal financial controls.

Refer to the Report of the Audit Committee contained here for the effectiveness of the internal audit function, activities of the Audit Committee and discharge of the Audit Committee’s responsibility in respect of its review of controls.

Risk & Sustainability Committee

The Risk & Sustainability Committee ensures the integration of risk management and sustainability factors into the Group’s overall corporate governance practices. The Committee is chaired by Rafique Bagus, an independent non-executive director. Its members are Judy Dlamini, the Chairman of the Board, David Nurek, a non-executive director and John Buchanan, the Chairman of the Audit Committee. The Board is satisfied that the composition of the Committee allows the Board to ensure that issues affecting both the Audit and Risk & Sustainability committees are dealt with and, if necessary, deferred to the most appropriate of the committees.

The Committee’s current Terms of Reference require that the Committee:
  • ensures the development, implementation, monitoring and regular review of an effective Risk Management Policy throughout the Group;
  • ensures continuous identification and assessment of risks and ensures that management considers and implements appropriate risk responses in accordance with the approved Risk Management Policy;
  • assesses the key sustainability performance measures of the Group, taking consideration of all relevant economic, environmental and social factors and ensures the implementation of a Sustainability Policy for Board approval;
  • ensures timely comprehensive reporting to the Board of sustainability issues; and
  • takes responsibility for ensuring that the risk and sustainability factors disclosed in the Group’s Annual Report are relevant, reliable, complete and accurate.

During the year under review, the Committee oversaw the development of, and the approval by the Board of, a Group Risk Policy and a Stakeholder Engagement Policy. A Group Risk and Sustainability Manager has been appointed to oversee the risk management process and to provide training to executive management of each operating division relating to risk identification and mitigation. Assurance in respect of the integrity of the risk management process and the efficacy of risk mitigation controls is provided by the Group internal audit function on an annual basis. Further details of this process are set out in the report of the Audit Committee. The Committee considered and approved key performance indicators of sustainability which are reported here of the Integrated Report. Key issues arising from Risk & Sustainability Committee meetings are brought to the attention of the Audit Committee by John Buchanan, who chairs the Audit Committee and is also a member of the Risk & Sustainability Committee.

Transformation Committee

The Transformation Committee is chaired by the Group Chief Executive, Stephen Saad. Its other members are Judy Dlamini, Sindi Zilwa, Rafique Bagus and Gus Attridge.

The Transformation Committee is tasked to assist the Board in the following areas:
  • recommending overall empowerment targets and strategies for the South African business operations of the Group;
  • directing and monitoring compliance with BBBEE legislation and overseeing the development and implementation of diversity management programmes; and
  • ensuring that budgets set are realistic and sufficient to allow the Group to achieve its empowerment objectives.
The Committee had previously identified enterprise development, socio-economic development and skills development as areas of the BBBEE scorecard requiring attention. In this regard, the Committee is pleased to report that the following milestones were reached during the year under review:
  • extensive progress was made in respect of enterprise development which will increase the Group’s rating score in terms of the BBBEE scorecard;
  • attention is also being given to the training of previously disadvantaged employees at higher levels of management; and
  • a list of critical and core skills is being identified and training initiated to reduce skills development gaps.

Further details on the activities of the Committee appear in the Transformation Report included here.

Remuneration & Nomination Committee

The Remuneration & Nomination Committee is chaired by Roy Andersen, the Lead Independent Director. Its other members are Judy Dlamini, the Chairman of the Board, and John Buchanan, an independent non-executive director. The Board has satisfied itself that all members of the Committee have the skills necessary to carry out their obligations under the Committee’s Terms of Reference.

Pursuant to its current Terms of Reference, which are reviewed annually, the Committee is responsible, inter alia, for:
  • ensuring a formal process for the identification and recommendation to the Board of appropriately qualified candidates to serve as Board and/or committee members, overseeing the Board induction process and the regular training and development of directors;
  • monitoring the annual evaluation of the Board’s and executive directors’ performance, and, where required, assisting in the development or removal of under- or non-performing directors;
  • overseeing the process of succession planning for the executive directors and other key executives throughout the Group;<//
  • ensuring that the Group Remuneration Policy and practices, including the parameters of fixed and variable remuneration, increases, and that bonuses are fair, appropriate and market related and that they reward and recognise individual contributions to the overall achievement of the Group’s strategic objectives;
  • ensuring that all benefits, including retirement benefits and other financial arrangements, are justified and correctly valued; and
  • determining performance targets for the Group Chief Executive and Deputy Group Chief Executive.

In line with the recommendations of King III, the Committee has supervised the development of a Group-wide Remuneration Policy which will be submitted to a vote by shareholders at the annual general meeting on 1 December 2011. Persuant to the recommendations in King III, Aspen will canvass shareholder opinion in respect of this policy by way of a non-binding advisory vote only.

The Remuneration Report of the Group is set out here.

GOING CONCERN

The Annual Financial Statements contained in this Annual Report have been prepared on the going concern basis. The Board has considered:
  • the appropriateness of the capital structure, funding and liquidity ratios of the Group, given the nature of the Group’s business and operations;
  • the Group’s continued ability to meet the solvency and liquidity requirements as set out in section 4 of the Companies Act; and
  • the appropriateness of the going concern basis of reporting the Group’s results, and its likely continuing appropriateness in the ensuing 12 months.
DIRECTORS’ ATTENDANCE AT BOARD AND COMMITTEE MEETINGS  
The table below sets out the attendance by the directors at the Board and committee meetings held during the reporting period:  
  Director   Board  
(5 meetings,  
including 1 strategic  
meeting) 
Audit  
Committee  
(5 meetings) 
Risk &  
Sustainability  
Committee  
(3 meetings) 
Remuneration  
& Nomination  
Committee  
(3 meetings) 
Transformation  
Committee  
(2 meetings) 
  Roy Andersen   5   5   n/a   3   n/a  
  Gus Attridge   5   5* 3   3* 2  
  Rafique Bagus   5   n/a   3   n/a   2  
  John Buchanan   5   5   2   3   n/a  
  Judy Dlamini   5   n/a   3   3   2  
  Abbas Hussain   4   n/a   n/a   n/a   n/a  
  Chris Mortimer   5   n/a   n/a   n/a   n/a  
  David Nurek   5   n/a   3   n/a   n/a  
  Stephen Saad   5   n/a   n/a   3* 2  
  Sindi Zilwa   5   4   n/a   n/a   2  
  * Executive directors attend meetings of the Audit and Remuneration & Nomination committees by invitation only.