Governance

Chapter

Principle

Principle Description

Applied / Partially Applied / Not Applied

How the principle is applied

Chapter 1

Principle 1.1

The Board provides effective leadership base on ethical foundation

Applied

Newpark’s board considers sound corporate governance
practices to be a critical element in delivering sustainable
growth. The board recognises that it is the ultimate custodian
of corporate governance.

Chapter 1

Principle 1.2

The Board ensures that the company is and is seen to be a responsible corporate citizen

Applied

A formally appointed social and ethics committee of the board has been constituted to assist the board with social and ethics related matters.

Chapter 1

Principle 1.3

The Board ensures that the company ethics are managed effectively

Applied

The social and ethics committee will monitor the company's ethics and endeavour to ensure that such ethics pervade the culture of the company.

Chapter 2

Principle 2.1

The board acts as the focal point for and custodian of corporate governance

Applied

Newpark's board considers sound corporate governance practises to be a critical element in delivering sustainable growth. The board recognises that it is the ultimate custodian of corporate governance.

Chapter 2

Principle 2.2

The Boards appreciates that the strategy, risk, performance and sustainability are inseparable

Applied

The board is responsible for aligning strategic objectives with
performance, sustainability and risk considerations. The board
is guided by the interests of the company and takes into account
the interests of the stakeholders.

Chapter 2

Principle 2.3

The Board provides for effective leadership based on ethical foundation

Applied

Please refer to principle 1.1 above.

SAME AS PRINCIPLE 1.1 - CHAPTER 1

Chapter 2

Principle 2.4

The Board ensures that the company is and is seen as a responsible corporate citizen

Applied

Please refer to principle 1.2 above.

SAME AS PRINCIPLE 1.2 - CHAPTER 1

Chapter 2

Principle 2.5

The Boards Ensures that the company's ethics are managed effectively

Applied

Please refer to principle 1.3 above.

SAME AS PRINCIPLE 1.3 - CHAPTER 1

Chapter 2

Principle 2.6

The Board ensures that the company has an effective and independent audit committee

Applied

The board has established an audit and risk committee. The audit and risk committee is governed by a charter, which was approved by the board. The board makes appointments to the committee subject to approval by shareholders annually. The board has determined that the committee members have
the skills and experience necessary to contribute meaningfully to the committee’s deliberations. All of the members are financially literate.

SAME AS PRINCIPLE 3.1 - CHAPTER 3

Chapter 2

Principle 2.7

The Board is responsible for the governance of risk

Applied

The board oversees the management of risk and has delegated the process to the audit and risk committee. The committee monitors the adequacy and effectiveness of the company's internal and risk management process generally.

SAME AS PRINCIPLE 4.1 - CHAPTER 4

 

Chapter 2

Principle 2.8

The Boards is responsible for information technology (IT) governance

Applied

The board is responsible for IT governance. The financial director oversees the information technology function, attend the executive committee meetings and reports to the CEO.

SAME AS PRINCIPLE 5.1 - CHAPTER 5

Chapter 2

Principle 2.9

The Board ensures that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards.

Applied

Nothing has come to the attention of the Board that the group has not complied with applicable laws. The group strives to maintain abreast of all applicable laws via regular communication with its advisors. The board has adopted a legal compliance policy.

SAME AS PRINCIPLE 6.1 - CHAPTER 6

Chapter 2

Principle 2.10

The Board ensures that there is an effective risk-based internal audit

Not applied

Newpark has not established an internal audit function, as the board does not consider the cost to be justified given the company’s size and the relative simplicity of its business model. The board will consider the need for an internal audit function on an annual basis, taking advice from the audit and risk committee and the company’s external auditors.

SAME AS PRINCIPLE 7.1 - CHAPTER 7

Chapter 2

Principle 2.11

The Board appreciates that stakeholders' perceptions affect the company's reputation

Applied

The board of directors believes that stakeholders perceptions are of critical importance and to this end the board regularly communicates with a cross section of stakeholders in order to gauge perception.

SAME AS PRINCIPLE 8.1 - CHAPTER 8

Chapter 2

Principle 2.12

The Board ensures the integrity of the company's integrated report

Applied

The audit and risk committee is responsible for ensuring the integrity of the integrated report and recommending it to the board for approval.

SAME AS PRINCIPLE 9.1 - CHAPTER 9

Chapter 2

Principle 2.13

The Board reports on the effectiveness of the company's internal controls

Applied

The board is responsible for the effectiveness of internal controls.

SAME AS PRINCIPLES OF CHAPTER 7 & 9

Chapter 2

Principle 2.14

The Board and its directors act in the best interests of the company

Applied

The board and its directors always act in the best interests of the company. The board has unrestricted access to all company information, records, documents and property. Directors are required to declare conflicts of interests.

Chapter 2

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 Company's Act, 71 of 2008

Applied

The board has noted this responsibility and will deal with it in accordance with the provisions of the Companies Act 2008, as amended ("Companies Act"), King III and advice received from advisors should the need arise.

Chapter 2

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

The chairman of the board is an independent non-executive director and his role is separate from that of the CEO.

Chapter 2

Principle 2.17

The Board has appointed the Chief Executive Officer and has established a framework for the delegation of authority

Applied

The board has appointed a CEO and established a framework for the delegation of authority.

Chapter 2

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.

Partially applied

The approvals framework ensures that there is a clear balance of power between the various board members. The board comprises 2 executive and six non-executive directors, three of whom are independent.

Chapter 2

Principle 2.19

Directors are appointed through a formal process

Applied

The board undertakes the duties of a nomination committee and is responsible for the selection, appointment and approval of new directors, in a formal and transparent manner, free from any
dominance of any one particular shareholder.

Chapter 2

Principle 2.20

The induction of and ongoing training, as well as the development of directors are conducted through a formal process

Applied

Training is arranged for the Board as required.

Chapter 2

Principle 2.21

The Board is assisted by a competent, suitably qualified and experienced company secretary.

Applied

The company has appointed CIS Company Secretaries Proprietary Limited as company secretary.

Chapter 2

Principle 2.22

The evaluation of the Board, its committees and individual directors is performed every year.

Applied

The evaluation of the board, its committees and individual directors is performed annually.

Chapter 2

Principle 2.23

The Board delegates certain functions to well-structured committees without abdicating from its own responsibilities.

Applied

The board has delegated certain specific responsibilities to the remuneration committee, the audit and risk committee, the investment committee and the social and ethics committee without abdicating its own responsibilities.

Chapter 2

Principle 2.24

A governance framework has been agreed upon between the group and its subsidiary Boards

Applied

The holding company and its subsidiary operate as a single corporate group and the subsidiary is required to entrench the holding company governance framework within their day-to-day activities.

Chapter 2

Principle 2.25

The company remunerates its directors and executives fairly.

Applied

The remuneration committee approves the remuneration policy annually and ensures that the group remunerates its directors and executives fairly.

Chapter 2

Principle 2.26

The company has disclosed the remuneration of each individual director and prescribed officer.

Applied

The directors' remuneration will be disclosed for each individual director in its integrated annual report.

Chapter 2

Principle 2.27

The shareholders have approved the company's remuneration policy.

Not applied

The remuneration policy will be tabled for shareholder approval in due course.

Chapter 3

Principle 3.1

The Board has ensured that the company has an effective and independent audit committee

Applied

The committee comprises three independent non-executive directors, Howard Turner (Chairperson), Gary Harlow and David Sevel. A short curriculum vitae for each of these directors has been set out on pages 6 to 7 of the integrated report, demonstrating their suitable and relevant skills and experience.

Chapter 3

Principle 3.2

Audit committee members are suitably skilled and experienced independent non-executive directors

Applied

The audit committee members are suitably skilled and experienced directors. The audit committee consists of 3 independent non-executive directors.

Chapter 3

Principle 3.3

The audit committee is chaired by an independent non-executive director.

Applied

The audit committee is chaired by Gary David Harlow who is an independent non-executive director.

Chapter 3

Principle 3.4

The audit committee oversees integrated reporting

Applied

The audit committee is responsible for ensuring the integrity of the integrated report and recommending it to the board for approval.

Chapter 3

Principle 3.5

The audit committee has ensured that a combined assurance model has been applied which provides a coordinated approach to all assurance activities.

Applied

The audit and risk committee obtains combined assurance from the external auditors, Grant Thornton and management and ensures that the combined assurance received is appropriate to address all significant risks facing Newpark.

Chapter 3

Principle 3.6

The audit committee is satisfied with the expertise, resources and experience of the company's finance function.

Applied

The audit committee evaluates and reports on the finance function's expertise, resources and experience annually.

Chapter 3

Principle 3.7

The audit committee should be responsible for overseeing internal audit

Not applied

The audit committee continuously monitors the appropriateness of retaining independent internal auditors to periodically review activities of the group and service providers.

Chapter 3

Principle 3.8

The audit committee is an integral component of the risk management process.

Applied

As Newpark has a combined audit and risk committee, the risk management process is an integral component of the committee's duties.

Chapter 3

Principle 3.9

The audit committee is responsible for the recommending the appointment of the external auditor and overseeing the external audit process.

Applied

The audit committee oversees the external audit process and satisfies itself as to the suitability of the external auditors for re-appointment. The audit committee recommends the re-appointment of the auditors to shareholders.

Chapter 3

Principle 3.10

The audit committee has reported to the board and the shareholders as to how it has discharged its duties.

Applied

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Chapter 4

Principle 4.1

The Board is responsible for the governance of risk.

Applied

The board retains ultimate responsibility for the governance of risk. The oversight of the risk management process has been delegated to the audit and risk committee which provides feedback to the board on matters within its mandate.

Chapter 4

Principle 4.2

The Board has determined the levels of risk tolerance

Applied

The board regularly reviews Newpark's risk profile so as to ensure that risks are being managed within a tolerable level and steps are taken when necessary to address and mitigate risks.

Chapter 4

Principle 4.3

The risk committee and/or audit committee has assisted the Board in carrying out its risk responsibilities.

Applied

The board has delegated the oversight of the risk management process, including the levels of tolerance, to the audit and risk committee. The risk committee reports to the board on matters within its mandate.

Chapter 4

Principle 4.4

The Board has delegated to management the responsibility to design, implement and monitor the risk management plan.

Applied

The board has delegated the responsibility to design, implement and monitor the risk management plan to management. Management has compiled a risk management plan and a risk matrix which has been presented to and approved by the audit and risk committee.

Chapter 4

Principle 4.5

The Board has ensured that risk assessments are performed on a continual basis.

Applied

The board has delegated the oversight of the risk management process, including monitoring of continual risk assessments, to the risk committee. The risk committee reports to the board on matters within its mandate.

Chapter 4

Principle 4.6

The Board has ensured that frameworks and methodologies are implemented to increase the probability of anticipating unpredictable risks.

Applied

The risk committee is responsible for ensuring that  frameworks and methodologies are implemented to anticipate unpredictable risks as set out in the risk committee charter.

Chapter 4

Principle 4.7

The Board has ensured that management has considered and has implemented appropriate risk responses.

Applied

Management has compiled a risk management plan and a risk matrix setting out the risks and appropriate risk responses which has been presented to and approved by the risk committee.

Chapter 4

Principle 4.8

The Board has ensured the continual risk monitoring by management.

Applied

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Chapter 4

Principle 4.9

The Board has received assurance regarding the effectiveness of the risk management process.

Applied

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Chapter 4

Principle 4.10

The Board has ensured that there are processes in place which enable complete, timely, relevant, accurate and accessible risk disclosure to stakeholders.

Applied

The integrated report contains a section disclosing the key risks and risk management.

Chapter 5

Principle 5.1

The Board is responsible of information technology (IT) governance.

Applied

The board is responsible for IT governance. The financial director oversees the information technology function, attend the executive committee meetings and reports to the CEO.

Chapter 5

Principle 5.2

IT has been aligned with the performance and sustainability objectives of the company.

Applied

The board discusses IT governance at board meetings and ensures the integration of IT into the performance and sustainability objectives of the company.

Chapter 5

Principle 5.3

The Board has delegated to management the responsibility for the implementation of an IT governance framework.

Applied

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Chapter 5

Principle 5.4

The Board monitors and evaluates significant IT investments and expenditure.

Applied

Significant IT expenditure and investments are presented to the board.

Chapter 5

Principle 5.5

IT is an integral part of the company's risk management plan.

Applied

The audit risk committee assists the board in carrying out its IT responsibilities by ensuring that IT risks are considered and dealt within the risk matrix.

Chapter 5

Principle 5.6

The Board ensured that information assets are managed effectively.

Applied

The board gives IT and its information assets the necessary importance with regards to the performance and sustainability objectives of the company and in furtherance hereof it ensures that its information assets are managed effectively.

Chapter 5

Principle 5.7

A risk committee and audit committee assists the board in carrying out its IT responsibilities.

Applied

The and it and risk committee assists the board in carrying out its IT responsibilities by ensuring that IT risks are considered and dealt with in the risk matrix.

Chapter 6

Principle 6.1

The Board ensures that the company complies with applicable laws and considers adherence to non binding rules, codes and standards.

Applied

Nothing has come to the attention of the Board that the group has not complied with applicable laws. The group strives to maintain abreast of all applicable laws via regular communication with its advisors. The board has adopted a legal compliance policy.

Chapter 6

Principle 6.2

The Board and each individual director have a working understanding of the effect of applicable laws, rules, codes and standards on the company and its business.

Applied

The company's legal advisors, designated advisor and company secretary advise the company of any changes to the laws and regulations applicable to the company. Training is arranged for the board as required.

Chapter 6

Principle 6.3

Compliance risk should form an integral part of the company's risk management process.

Applied

Management has compiled a risk management plan and a risk matrix, which includes compliance risk, which has been presented to and approved by the audit and risk committee.

Chapter 6

Principle 6.4

The Board should delegate to management the implementation of an effective compliance framework and processes.

Applied

The board has delegated to executive management the implementation of an effective compliance framework and processes.

Chapter 7

Principle 7.1

The Board should ensure that there is an effective risk based internal audit.

Not applied

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Chapter 7

Principle 7.2

Internal Audit should follow a risk based approach to its plan.

Not applied

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Chapter 7

Principle 7.3

Internal Audit should provide a written assessment of the effectiveness of the company's system of internal controls and risk management.

Not applied

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Chapter 7

Principle 7.4

The audit committee should be responsible for overseeing internal audit

Not applied

The audit committee continuously monitors the appropriateness of retaining independent internal auditors to periodically review activities of the group and service providers.

SAME AS PRINCIPLE 3.7

Chapter 7

Principle 7.5

Internal audit should be strategically positioned to achieve its objectives.

Not applied

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Chapter 8

Principle 8.1

The Board should appreciate that stakeholders' perceptions affect a company's reputation.

Applied

The board of directors believes that stakeholders perceptions are of critical importance and to this end the board regularly communicates with a cross section of stakeholders in order to gauge perception.

Chapter 8

Principle 8.2

The Board should delegate to management to proactively deal with stakeholder relationships.

Applied

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Chapter 8

Principle 8.3

The Board should strive to achieve the appropriate balance between its various stakeholder groupings, in the best interests of the company.

Applied

Newpark strives to maintain a balance between the various stakeholders while acting in the best interests of the company.

Chapter 8

Principle 8.4

Companies should ensure the equitable treatment of shareholders.

Applied

The company provides timely and equitable disclosure of information to the market and all shareholders are treated equally in this regard. Information is posted on the company's website.

Chapter 8

Principle 8.5

Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence.

Applied

The company provides timely and equitable disclosure of information to the market and all unitholders are treated equally in this regard. Information is posted on the company's website.

Chapter 8

Principle 8.6

The Board should ensure that disputes are resolved effectively and expeditiously as possible.

Applied

The board ensures that all disputes are resolved effectively and expeditiously.

Chapter 9

Principle 9.1

The Board should ensure the integrity of the company's integrated report.

Applied

The audit and risk committee are responsible for ensuring the integrity of the integrated report and recommending it to the board for approval.

Chapter 9

Principle 9.2

Sustainability reporting and disclosure should be integrated with the company's financial reporting.

Applied

The audit and risk committee ensures that sustainability reporting and the financial reporting are consistent and integrated.

Chapter 9

Principle 9.3

Sustainability reporting and disclosure should be independently assured.

Not applied

The audit and risk committee will consider the appropriateness of obtaining independent assurance on the sustainability reporting based on the benefit to stakeholders and the costs of obtaining it.