|Annual General Meeting |
08:30 Wednesday, 25 November 2009 Massmart House,16 Peltier Drive, Sunninghill Ext 6, Sandton
|Contact the Massmart Ethics Line|
|FreeCall||0800 20 32 46|
|SMS 'please call me' to||32846 (R1 each)|
|FreeFax||0800 00 77 88|
Massmart Ethics Line
|Total calls and
Breakdown of total calls (%)
Attendance by all directors at Massmarts annual general meeting is strongly encouraged while attendance for Board Committee Chairmen is compulsory.
At the November 2008 Massmart annual general meeting the Chairmen of the Remuneration and Nominations, Audit and Risk Committees were in attendance, as were the Board Chairman, CEO and CFO. In addition nine non-executive Directors attended the annual general meeting.
The notice for any general meeting of shareholders includes an explanation of the reason for, and the effects of, any proposed special resolutions. The Companys transfer secretaries attend every general meeting of shareholders to assist with the recording of shareholders attendance and to tally the votes. The Chairman confirms with the meeting that votes will be counted by way of poll, ie all votes are counted, rather than by way of a show of hands.
Annually the Group seeks, and obtains, the approval of the shareholders in general meeting to purchase Massmart shares. This authority valid until the following years annual general meeting and subject to the Listings Requirements of the JSE Limited (JSE) allows the Group to purchase its own shares up to a maximum of 15% of the issued shares, at a price not greater than 10% above the preceding five-day weighted average. Shareholders have been asked to renew this authority at the forthcoming November 2009 annual general meeting.
During the year to June 2009 no Massmart shares were purchased on the open market by a Massmart subsidiary or by the Massmart Employee Share Trust. The amount and timing of any future purchases will be determined by the Board and are dependent on the Boards view on the intrinsic value of Massmart shares, the ruling market price from time to time, the Groups cash position and future cash requirements, and prevailing market conditions.
The Massmart Employee Share Trust acquires shares from time to time to partially mitigate the dilution caused by the Company issuing new shares when options are exercised by participants.
No director, executive or employee may deal, directly or indirectly, in Massmart shares where that person may be aware of unpublished price-sensitive information. There are strict closed periods during which all directors, executives and employees are not allowed to deal in Massmart shares. The periods begin one month prior to the end of each reporting date (these reporting dates being 31 December and 30 June) and end on the public release of the Group results. A closed period also applies from the date when Massmart issues a cautionary announcement.
In addition, all directors, executives and employees, and their associates as defined by the JSE, are not allowed to deal in Massmart shares in the final hour of trading on the JSE. All share dealings by a director, executive or employee must be authorised by either the Chief Executive Officer or Chief Financial Officer. Any dealings by the Chief Executive Officer are authorised by the Chairman, and dealings by the Chief Financial Officer are authorised by the Chief Executive Officer.
Massmart is committed to achieving the highest standards of ethical behaviour and continued its strong emphasis on promoting awareness of, and compliance with, Massmarts Code of Ethical Practice.
Massmart regularly communicates its Code of Ethical Practice to suppliers and service providers, and attempts to ensure that they comply with our ethical standards. This is achieved in various ways: suppliers and service providers are invited to make use of the independently managed ethics reporting line; and Massmarts formal trading agreements detail ethical practices that suppliers are expected to uphold (some examples: that suppliers are expected to abide by the laws and regulations of the country; that all products and services comply with legal and safety standards; and that Massmart will not tolerate the use of child labour practices or the use of illegal labour).
The CEO of Massmart regularly communicates with suppliers and reinforces Massmarts commitment to high standards of ethical conduct and its expectations of the same from suppliers. During the year there were examples where Massmart terminated the services of suppliers where they did not demonstrate the same level of commitment to organisational ethics and integrity.
Massmart has maintained its close relationship with the Ethics Institute of South Africa and a further one employee attended the Ethics Officers Certification course and two more employees were accredited as Ethics Officers.
The appointment of Ethics Officers in all Divisions and the formulation and regular meeting of the Group Ethics Forum have ensured the continued focus on the consistent application of ethics practice and training in the organisation.
The Massmart Ethics Line provides an important indication of the status of the ethics climate at Massmart. The fully independent line, the operation of which is outsourced to Deloitte & Touche, provides employees and suppliers with the opportunity to report perceived cases of unethical practice. All reports received are thoroughly investigated and acted upon under the guidance of the Group Ethics Officer who is responsible, from an ethics perspective, to the Massmart Audit Committee. Total calls and reports for the year under review were 35.9% higher than the previous year (see table alongside). Deloitte Tip-offs Anonymous has been certified by the External Whistle-blowing Hotline Services Provider Standard E01.1.1.
The Ethics Institute of South Africa was contracted by Massmart in 2008 to conduct a limited ethics audit throughout their Game stores in Africa using a shortened Organisational Ethics Indicator assessment. The assessment recorded responses with regard to formal ethics programmes, the perceptions of organisational culture and outcomes. The audit highlighted some areas for improvement in these stores and the Massdiscounters Division is attending to these areas.
In 2008 the Ethics Institute also conducted a survey on Massmarts compliance in South Africa and concluded: To the best of our knowledge, the Massmart Ethics Indicator 2008 satisfies the November 2004 revisions of the FSGO and the future King III requirements, amongst others, that organisations:
The survey highlighted that the Divisions have different concerns that need addressing and action plans are in the process of being finalised to address these issues and to further enhance our Ethics Programme.
The final version of King III was released on 1 September 2009 and the effective date of the new Code will be 1 March 2010. The Code, released for comment in early 2009, increased the emphasis on several topics including: the audit committee; sustainability, particularly integrated reporting and disclosure; risk management; internal audit; IT governance; and stakeholder relationship management.
Specific points of emphasis in the Code, which will be duly considered by the Board, include:
It is anticipated that many of the requirements of the Code will be enforced through regulations and legislation including the new Companies Act. In addition, while King II was to be implemented on a comply or explain basis, King III is to be implemented on an apply or explain basis. Massmart intends to formally address King III in the June 2010 annual report.