Corporate governance

The Board is committed to ethical leadership and best practice corporate governance principles. EOH's strong leadership team continues to rebuild the EOH business and brand, underpinned by the principles of ethical and transparent leadership. The Board exercises oversight and through probity ensures that sound corporate  governance continues to be embedded throughout the business and subsidiaries.

The Board monitors the awareness and governance training programmes and compliance attestations rolled out to the entire EOH employee universe. EOH has supplemented its own knowledge and training platforms by appointing best practice experts, in each of  the sub-fields of governance. Further, EOH is working closely with the University of Stellenbosch Centre for Corporate Governance to capture the learnings from its historic practices to embed these learnings into its programmes, so that the mistakes of the past are not repeated within EOH. This case study will be an essential tool in the EOH governance arsenal. The EOH governance solutions are informed by this work so that the governance solution is tailored to the compliance and governance needs and requirements of EOH.

COMPOSITION OF THE BOARD

EOH has a unitary Board with the necessary collective knowledge and balance of skills, experience, resources and diversity to guide the business effectively. The Board's composition promotes the balance of authority and precludes any one director from dominating decision making.

At the date of this report, the Board comprised 11 directors, three of whom are Executive Directors, seven are independent Non-executive Directors and one Non-executive Director is not classified as independent. Seven of the Board members are black and five are women.

The directors bring to the Board a wide range of experience and expertise and, in the case of the independent non-executives, an independent perspective and judgement on issues of policy, strategy and performance. The Board believes that the current composition reflects an appropriate balance of knowledge, skills, experience, diversity and independence to effectively guide the business. Directors are classified as Executive Directors if they are full-time employees of EOH.

The Chairman and the CEO are appointed by the Board. Their roles are formally defined and separate. The Chairman is primarily responsible for leading the Board and for ensuring that the Board plays an effective role, facilitating communication with shareholders and fostering constructive relations between the Executive and Non-executive Directors. The Chairman is considered to be independent. The CEO serves as a bridge between the Board and the executive management team and is responsible for the commercial and operational management of the Group, which includes providing leadership to the executive team, who execute the approved strategy.

Andrew Mthembu was appointed Chairman of EOH with effect from 7 February 2020, following the passing of Dr Xolani Mkhwanazi.

The Nomination Committee manages the succession and rotation of directors. They are mandated to identify potential candidates for the Board should a director retire, resign or be disqualified and removed. The committee assesses the appropriateness of candidates in terms of their experience, skills and considers all facets of diversity to determine the optimal composition and balance of the Board. Selection, induction and ongoing training of directors is formalised and a basic succession plan is in place for key executives in the event of any resignations.

Newly appointed directors are ratified at the next annual general meeting (AGM) following their appointment.

INDEPENDENCE OF NON-EXECUTIVE DIRECTORS

The Board is satisfied that apart from one Non-executive Director who represents the Company's black empowerment partner, the Non-executive Directors, through the length of their tenure, their disclosure of their conflicts of interest and actual conduct at Board and committee meetings, are independent. At present, there are no directors who have served for a period of nine years and therefore further independence assessments are not required.

In terms of the Company's memorandum of incorporation ('MoI'), one-third of the Non-executive Directors are required to 'retire' at each AGM and, if they are eligible and available for
re-election, their names are put forward for re-election by the shareholders at the next AGM. The Non-executive Directors who have been in office for the longest period since their appointment are required to 'retire' in terms of the rotation policy.

DIVERSITY AND INCLUSIVITY POLICY OF THE BOARD

We recognise and embrace the benefits of a diverse Board and believe that diversity at Board level is an essential component for sustaining a competitive advantage. Race, age and gender diversity, underpinned by the relevant skills as well as business, geographic and academic experience and background, enhance the composition of a truly diverse Board.

The Board is committed to ensuring a diverse and inclusive Board and the Company's diversity and inclusivity policy forms part of the Board Charter. Board appointments are made on merit, having due regard for the benefits of diversity.

At the date of this report, the Board comprised 11 directors, 45% of whom are women with four women being of African and Indian descent, of varying ages and academic backgrounds.

ROLE AND RESPONSIBILITIES OF THE BOARD

The role of the Board is to provide sufficient oversight and probity to enable management to achieve the long-term sustainability and success of EOH for the benefit of all stakeholders, underpinned by the EOH Code of Ethics and Company policies. The Company's MOI, Board Charter and the Delegation of Authorities Framework articulate the duties, responsibilities and powers of the Board, matters reserved for the Board, together with the appropriate delegation of Board authority and mandates.

Annually, the Board approves the long and short-term strategy of EOH and assesses how business is conducted. Once strategic targets are agreed, the Board monitors and reviews these strategic targets and objectives, approves material capital expenditure, evaluates and approves or rejects the acquisitions and disposals of Company assets, monitors internal controls, the reporting against the approved risk management framework and IT governance. The EOH exco is responsible for managing the Group's operations and the execution of the Group's overall strategy, which is presented to the Board for approval.

Board Charter

The EOH Board Charter aligns with the recommendations of King  IV and outlines the powers, responsibilities, induction and ongoing development requirements of Board members.

The Board Charter details the responsibilities of the Board, which include:

• input into the Group's strategic direction;
• providing effective leadership based on an ethical foundation and a sound GRC framework;
• ensuring the Group conducts itself in accordance with the principles of fairness, accountability, transparency, responsibility, competence and integrity;
• ensuring an appropriate GRC framework is in place and applied across the Group;
• ensuring the Code of Ethics is adopted and implemented across the Group;
• ensuring the Group is, and is seen to be, a responsible corporate citizen;
• defining levels of materiality and risk tolerance;
• governing risk and opportunities in a way that supports the Group achieving its goals;
• ensuring the adequacy and effectiveness of the Group's internal control systems and procedures;
• ensuring appropriate technology systems are in place;
• approving the annual budget and operating plan of the Group;
• approving EOH's annual financial statements and public pronouncements on financial performance and ensuring the integrity of such reports;
• considering and, if appropriate, declaring distributions in accordance with the provisions of the Companies Act;
• ensuring that the Group remunerates fairly, responsibly and transparently;
• communicating with internal and external stakeholders in a transparent and timely manner; and
• ensuring the overall sustainability of the Group.

The Board is satisfied that it has fulfilled its responsibilities defined in the charter for the year under review.

BOARD EFFECTIVENESS

Board committees conducted reviews which were documented in the minutes of the meetings. The next formal Board evaluation will be conducted in FY2022 aligned to the bi-annual cycle of evaluation directed by the Board Charter.

PERFORMANCE MONITORING

Key performance measures and targets for assessing the achievement of strategic objectives and positive outcomes over the short, medium and long term are defined within the EOH reporting framework. The respective Board subcommittees perform ongoing oversight over the implementation of the Group and operational strategies and their value drivers. The exco performs oversight and monitoring of operational budgets, plans and targets by management against agreed performance measures and targets.

EOH SECRETARIAL SERVICES (PTY) LTD

Board committees

The Board delegates certain functions to committees without abdicating any of its responsibilities. The committees are chaired by Non-executive Directors and operate under Board-approved terms of reference.

The Board has six committees: The membership of each committee comprises Non-executive Directors. The Executive Directors have standing invitations to attend these committees.

Audit Committee: Members are elected by shareholders at the Company's AGM (see further activities of the Audit Committee in its  report).

Governance and Risk Committee: See further activities of the Governance and Risk Committee in its report.

Information and Technology Committee: See further activities of the Information and Technology Committee in its report.

Nomination and Remuneration Committee: See further activities of the Nomination and Remuneration Committee in its report.

Social and Ethics Committee: See further activities of the Social and Ethics Committee in its report.

Asset Disposal and Strategic Acquisition Committee: See further activities of the ADASA Committee in its report.

Company Secretary

Historically, the Company Secretary was EOH Secretarial Services (Pty) Ltd, represented by Neill O'Brien. Neill O'Brien retired on 1  June 2021. Thiroshnee Naidoo was appointed as the Company Secretary on 1 June 2021. The Board is satisfied that the Company Secretary is suitably qualified, competent and experienced to provide the required support and guidance.

The Company Secretary supports the Chairman and directors and has direct access to and ongoing communication with the Chairman. All directors have access to the services of the Company Secretary and may obtain independent professional advice. The Board believes this provides the necessary access to corporate governance advice. The Company Secretary is not a director of the Company or its subsidiaries and also acts as secretary of the Board committees.

SUBSIDIARY BOARDS

EOH's wholly owned subsidiaries each have their own board of directors. The boards of the subsidiaries and the management committees of the various operating divisions have the necessary mix of skills and experience.

The Board response to King IV

King IV advocates an outcomes-based approach and defines corporate governance as the exercise of ethical and effective leadership towards the achievement of the following governance outcomes:

• Ethical culture
• Good performance
• Effective control
• Legitimacy

EOH is committed to maintaining a high standard of corporate governance and continuously engages with some of the leading governance institutions to assist in the design and implementation of King IV. We implemented a governance tool during 2019, which was used to assess our application of the corporate governance principles as recommended by King IV. An annual assessment is undertaken to assess ourselves against these principles. We have adopted a substance-over-form approach with regards to alignment with King IV to avoid tick-box compliance and also because this approach accommodates the achievement of the recommended King IV outcome/governance standards by applying practices other than those specifically detailed in the King IV report.

EOH met its reporting requirements relating to the JSE Listings Requirements and the Companies Act (as amended). EOH remains compliant with the Companies Act, particularly with reference to the incorporation provisions, and operates in conformity with the Company's MOI.

Ethical culture

The Board is committed to driving the strategy, based on an ethical foundation, to support a sustainable business that acts in the best interests of the Group, society, the environment and its stakeholders. The Board sets the tone for an ethical organisation through its Code of Ethics and has discharged its responsibilities by ensuring that a robust and resilient GRC framework is in place. There are systems, procedures and monitoring structures in place to ensure the effectiveness of this framework. The directors of EOH are competent and act ethically in discharging their responsibility to provide strategic direction and effective governance in terms of the Board Charter and EOH's MoI.

The Board commits to the Constitution of the Republic of South Africa (including the Bill of Rights) and embraces the principles of fairness, accountability, integrity and transparency.

The Group has adopted an overarching formal Code of Ethics founded on our values of 'Authenticity', 'Partnership', 'Adaptability', 'Ingenuity', and 'Mastery'. All employees have a duty to act in accordance with these values and thereby to maintain and enhance the reputation of the Group.

The EOH Code of Conduct was developed around the principles of ethical leadership and was adopted by the Board. The code commits EOH and its employees to the highest ethical standards of conduct particularly in relation to non-discriminatory practices, unethical practices, bad behaviour and confidentiality of personal information.

Our decisions and actions are guided by our core values:

• Partnership
• Mastery
• Authenticity
• Ingenuity
• Adaptability

The EOH exco is responsible for ensuring that these values are adhered to throughout the Group and the Board's Social and Ethics Committee ensures the application of these principles.

Continuous training, aligned to the principles of the Code of Ethics training through a series of animated online training interventions, was rolled out during the course of the year. Awareness training based on both the law and regulations, together with EOH policies, is also provided to employees regarding gifts and entertainment and declaration of interests. In all, 98% of the total EOH staff complement completed the mandatory training programme, which included individual attestations at the end of each training module. The Group Compliance function oversees and assists with the enforcement of the policies and processes.

CONFLICTS OF INTEREST

Board members are under a legal duty to prevent any conflict of interest with Company business and to make full disclosure of any areas of potential conflict. At the beginning of each Board and Board committee meeting, members of the Board are invited to disclose their conflicts to any item on the agenda of that meeting so that the proper process as dictated by the Companies Act may be followed. The Company Secretary maintains a register of directors' interests and directors are also required to declare their interests annually in order to determine whether there are any conflicts with their duties and the interests of EOH. The directors have certified that they have no material interest in any transaction of any significance with the Company or any of its subsidiaries.

In line with our value of transparency, all employees and directors of the Company are expected to make a declaration of any perceived or actual conflict of interest when a gift or courtesy of significant value is accepted and to ensure a commitment and adherence to the Code of Conduct and relevant legislation.

DIRECTORS' INTERESTS IN EOH SHARES

It is not a requirement of the Company's MoI or the Board Charter that directors own shares in the Company. The shares held by the directors as at 31 July 2021 are disclosed on Our six sustainability themes of the annual financial statements.

Trading in Company shares

EOH has a personal account dealing policy outlining the processes to be followed should directors and senior executives want to trade in Company shares. Directors and senior executives are prohibited from trading in EOH shares during closed periods, which commence on 1 February and 1 August each year and remain in force until the publication of the interim and final results respectively. Closed periods also include any period during which the Company trades under a cautionary announcement. The Company Secretary informs the Board, management and the entire employee population at the commencement and end of closed periods. All directors' trading in EOH shares require the prior approval of the Group CEO or Group Financial Director. No director can approve his own trading of EOH shares. The Group Compliance department retains a record of all such share dealings and dealings are published on SENS as required by terms of the JSE Listings Requirements.

WHISTLEBLOWING

EOH aims to create a climate where workplace concerns and irregularities including suspected fraud and corruption, can be reported by employees safely and without fear of retribution and victimisation. This is formalised in the Code of Ethics and other related governance policies.

EOH utilises the Expose IT app, which provides a secure, completely anonymous and confidential channel for employees, suppliers, customers and any other stakeholders to report concerns regarding wrongdoing at EOH. Reports received through the app will be monitored by an independent entity. The app is available on both Apple and Android.

A ZERO-TOLERANCE CORRUPTION AND BRIBERY POLICY

EOH has a zero-tolerance policy towards bad behaviour and unethical practices. The bidding process is governed through a joint bid compliance management process and only accredited third-party partners and suppliers are used. EOH has adopted the ISO 37001 (the International Standard on Anti-bribery and Corruption) standard and is aligning its processes with the standard. Third-party due diligence has been implemented for all new customer, supplier and partner on-boarding across the Group.

GROUP PERFORMANCE

The directors individually and collectively are responsible for realising the Group's strategic objectives and for managing risks and  opportunities to ensure an ongoing sustainable business.

EOH's exco is responsible for working with the CEO to implement the strategies and policies of the Group. The Board oversees and monitors, with the support of its committees, the implementation and execution by management of the policies and procedures in order to ensure that the Group achieves its objectives.

The Group's business model incorporates the environmental, social and governance aspects of sustainability. Implementation is  supported by formal policies governing environmental, corporate social investment, ethical and remuneration matters, all of which form key components of the value-creation process.

The Board is responsible for ensuring that the Group's reporting on its financial performance is reported fairly, with the assistance of the Audit Committee and the external auditor.

BUSINESS CONTINUITY AND RESILIENCE MANAGEMENT

The COVID-19 pandemic required EOH to reassess business continuity plans in place and make adjustments for full remote working. Lessons learnt from the pandemic will be analysed and continuous improvement made to our business continuity plans to ensure these plans are robust and fit-for-purpose.

EFFECTIVE CONTROL

The Board is responsible for governance and enterprise risk management and determines how risk is approached and addressed across the Group. The Audit Committee assists the Board by providing an independent and objective view on the Group's financial, accounting and control mechanisms. The Governance and Risk Committee assists with considering business risks and the mitigation of these risks as well as the Group's compliance with all relevant statutory and regulatory requirements.

The Board is also responsible for ensuring that the information and technology needs of the businesses are in place and effectively governed. The Information and Technology Committee assists in this regard.

The directors are also responsible for the systems of internal control. These are designed to provide reasonable, but not absolute, assurance as to the reliability of the annual financial statements, and to adequately safeguard, verify and maintain accountability of assets, as well as prevent and detect material misstatement and loss. Management believes that a strong internal control environment is critical to the success of EOH. Management is aware of the material breakdowns in the control environment in the past and is working to remediate this. However, there is still significant room for improvements in the control environment, both  from a design and effectiveness standpoint.

The Board, supported by the Audit Committee, approved the internal audit charter as well as the internal audit plan.

The internal audit function is carried out by the Company's internal audit department, with external expertise used where appropriate. An integrated risk-based approach guides the development of the internal audit allocation of resources as the third line of defence.

The process by which directors are selected and their performance regularly reviewed, ensures that the Board collectively has the necessary ethical culture, range of skills, technical knowledge and experience to perform effective oversight of the Group.

LEGITIMACY

EOH's systematic and integrated approach to stakeholder engagement aims to create the necessary channels to stay informed about stakeholders' key concerns and create transparency about the challenges the Group faces and progress in addressing these. The Board, through its committees, ensures that the interests of all stakeholders are addressed.

Our strategy aims to build greater confidence with all stakeholders through good governance, strong financial performance, transparency and increased disclosure. The Group's enhanced reporting framework defines the disclosure and reporting requirements to:

• stakeholders and regulators;
• external communication protocol;
• monitoring and reporting requirements of the Group in terms of report frequency, content coverage and audience/stakeholders;
• audit, risk and assurance escalation, reporting and disclosure requirements; and
• all remuneration practices in relation to directors and the executive.

REPUTATION AND BRAND MANAGEMENT

The EOH of the future is foremost committed to protect and promote its reputation and brand. A formal reputation and brand management strategy provides clear guidelines on building and retaining a strong brand. It covers the measures taken by EOH to avoid conflicts of interest and to train its employees accordingly. EOH's relationships with its vendors and suppliers are based on strong partnerships, transparency and ethical conduct.

Attendance

The Board meets quarterly and on an ad hoc basis when considered necessary. Board meetings are convened by formal notice incorporating agendas and accompanied by background material relating to matters to be discussed at each meeting to enable the directors to prepare in advance.

	Board	Audit Committee	Risk and Governance Committee	Social and Ethics Committee	Remuneration and Nomination Committee	Technology and Information Committee	Asset Disposal and Strategic Acquisition Committee
Number of meetings	11	6	3	3	5	3	5
Executive directors
Stephen van Coller (Group CEO)	11	6	3	3		3	5
Megan Pydigadu (Group CFO)	11	6	3	3		3	5
Fatima Newman (Group CRO)	11	6	3	3		3
Non-executive directors
Andrew Mthembu	10	6	3			3	5
Moretlo Molefi*	5			1	2	1
Ismail Mamoojee*	6	4		1		1
Jesmane Boggenpoel~	11	6	3			2
Mike Bosman	11	6	3		5	3	5
Sipho Ngidi	11		3	3	5
Andrew Marshall$~	10	2				2	5
Jabu Moleketi***#	10			2	3
Bharti Harie**	6			2	3
N Molope**#	5	2	2	2

*	Resigned 20 January 2021
**	Appointed 1 January 2021
***	Appointed 1 September 2020
$	Appointed to the ARC 20 January 2021
~	Appointed to the IT Committee 2 February 2021
#	Appointed to the SAEC 2 February 2021