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44 Telkom Annual Report 2009 Corporate governance (continued) Board committees specialise in distinctive business areas services. The committee examines, reviews financial results and recommends same to the Board for approval. A quorum for a meeting is two members. As at March 31, 2009, the committee comprised four non-executive directors of which three are considered independent: Mr PCS Luthuli (independent) Mr RJ Huntley Mr DD Barber (independent) Mr PG Joubert (independent) The new terms of reference of the committee were approved during the year. At the time of the Chief Financial Officer’s appointment on December 8, 2008 the audit and risk committee satisfied itself of the appropriateness of his credentials, professionalism, technical competency and experience. The audit and risk committee will conduct a similar review on an annual basis as required by the JSE Listings Requirements. The internal and external auditors have unlimited access to the Chairman of the audit and risk committee. The audit and risk committee is satisfied that Ernst & Young is independent in accordance with section 270A of the Corporate Laws Amendment Act, and nominated the re-appointment of Ernst & Young as registered auditors for the 2009/2010 financial year. Nominations committee The nomination committee, which must have a minimum of three members and is chaired by an independent non-executive director, consists of Mr PCS Luthuli (Chairman), Ms ST Arnold and Mr B du Plessis. A quorum for a meeting is two members. The committee makes recommendations to the Board on the composition of the Board, and the balance between executive, nonexecutive and independent non-executive directors with regard to all aspects of diversity and experience. The committee is responsible for identifying and nominating candidates and formulating succession plans for the approval of the Board. In addition, the committee recommends to the Board continuation (or not) of services of any director who has reached the retirement age as well as directors who are retiring by rotation, for re-election. Investment and strategy committee The investment and strategy committee, consists of Mr DD Barber (Chairman), Dr E Spio-Garbrah, Mr RJ Huntley, Mr RJ September, Mr PG Nelson and Dr VB Lawrence. The function of the committee is to assist the Board in evaluating investments, corporate actions and key funding and financial proposals. Human resources review and remuneration committee (HRRRC) The committee consists entirely of nonexecutive directors. Mr B du Plessis, an independent non-executive director, was appointed as Chairman of the HRRRC as of June 2008. The HRRRC comprises the following non-executive directors, of which two must be independent: Mr B du Plessis (Chairman) Mr PG Joubert (independent) Ms KST Matthews Mr E Spio-Garbrah The HRRRC held four scheduled meetings and one special meeting during the financial year. This committee, in consultation with management, ensures that the Group’s directors and senior executives are fairly rewarded for their individual contribution to the Group’s performance. In fulfilling its duties, the HRRRC gives consideration to industry and local benchmarks to ensure that remuneration packages remain competitive. Senior executives receive a salary, short-term incentive and an allocation in terms of the rules of the Conditional Share Plan. Medical and retirement benefits are also offered. Remuneration packages are reviewed annually and performance bonuses are linked both to individual performance and to the performance of the Group. Non-executive directors are paid fees for their services as directors of the Company and for their participation as members of the Board committees. Board effectiveness An appraisal of the effectiveness of the Board was conducted externally during the year. The appraisal was benchmarked against the strategic requirements of Telkom SA to ensure the capacity to deliver these requirements and strengthen the diversity and sector expertise of directors. The appraisal was positive and its recommendation will be followed through implementation.
Share dealings In line with JSE Listings Requirements and the Group’s insider trading policy, executives who wish to trade in Telkom securities are required to obtain prior written approval from the Chairman of the Board and the Group Company Secretary before dealing in Telkom securities. The Group operates closed periods as defined in the JSE Listings Requirements. Additional closed periods are enforced, when required, in terms of corporate activities as and when these occur. Compliance with Sarbanes-Oxley The Sarbanes-Oxley Act of 2002 was passed in the United States of America to protect investors by improving the accuracy and reliability of corporate disclosures, accounting practices and corporate governance. Telkom, as a listed company on the New York Stock Exchange (NYSE), registered in terms of the US Securities Exchange Act of 1934, is required to comply with the Sarbanes-Oxley Act. Telkom is committed to good corporate governance practices and compliance with the Act as directed by the US Securities and Exchange Commission (SEC). Telkom’s Sarbanes-Oxley steering committee represents divisions directly impacted by the requirements of the Act. Working closely with line management, a Sarbanes- Oxley compliance team is responsible for ensuring that risks and controls that may impact on the integrity of financial reporting are properly documented, reviewed and reported on. The independent external auditor attested to and reported on management’s assessment of the effectiveness of internal control over financial reporting for the year ended March 31, 2009. The Chief Executive Officer and the Chief Financial Officer (CFO) have certified that the requirements of Section 302 have been met for the year ended March 31, 2009. In addition to the Sarbanes-Oxley Act, the NYSE corporate governance rules, approved by the SEC, permit NYSE-listed companies that are foreign private issuers, such as Telkom, to follow home-country practices in lieu of the requirements applicable to listed US companies, subject to certain exceptions. In particular, foreign private issuers must have an audit committee that satisfies the requirements of Rule 10A-3 under the Securities Exchange Act of 1934, as amended and must disclose the significant ways in which their corporate governance practices differ from those followed by US companies under the NYSE listing standards. In addition, the CEO of a foreign private issuer must promptly notify the NYSE in writing after any executive officer of the listed company becomes aware of any material non-compliance with any applicable provisions of the NYSE corporate governance standards and foreign private issuers must submit an annual and interim written affirmation to the NYSE with regard to compliance with the foregoing requirements and certain changes to their audit committees. As a foreign private issuer the definition of independence of directors for Telkom is only relevant to the audit committee and is included in Rule 10A-3 of the US Security Exchange Act. This states that each member of the audit committee must be a member of the Board and should be independent as defined in Rule 10A-3 (b)(1)(ii) of the US Securities Exchange Act. A member of an audit committee of a listed issuer may not, other than in his capacity as a member of the audit committee, the Board, or any other Board committee: Telkom Annual Report 2009 45 • Accept directly or indirectly any consulting, advisory or other compensation from the listed entity; and • Be an affiliated person of the listed entity. An affiliated person of an issuer is a person who directly, or indirectly, through one or more intermediaries, controls, or is controlled by or is under common control with the issuer. Rule 10A-3(b)(1)(iv)(E) of the US Securities Exchange Act provides an exemption from the prohibition on being an affiliated person of the issuer for an audit committee member of a foreign private issuer, who is a representative or designee of a foreign governmental entity that is an affiliate of the foreign private issuer if the member is not an executive officer of the foreign private issuer. Group overview Management review Sustainability review Performance review Financial statements Company Financial Information
Page 1 and 2: We are... one of Africa’s largest
Page 3 and 4: Telkom shareholding as at March 31,
Page 5 and 6: Grow profitable revenue through wir
Page 7 and 8: 600 500 400 300 200 100 0 07 08 09
Page 9 and 10: The telecommunications industry Con
Page 11 and 12: egulation that stipulated standard
Page 13 and 14: a - Euros a - Euros a - Euros 0.25
Page 15 and 16: ated management team with experienc
Page 17 and 18: The regulatory environment The regu
Page 19 and 20: On target for 2010 Telkom Annual Re
Page 21 and 22: Online impairments, the fixed-line
Page 23 and 24: • Remodelling - reaching for new
Page 25 and 26: in this annual report has been upda
Page 27 and 28: Capital expenditure for the Group i
Page 29 and 30: More than100 years of combined tele
Page 31 and 32: Management team Telkom Annual Repor
Page 33 and 34: Telkom Annual Report 2009 33 Age at
Page 35 and 36: uild a partnership with communities
Page 37 and 38: Customers: Through our Customer Cen
Page 39 and 40: • Interfacing with the media Whil
Page 41 and 42: Partnering with Human Resources Gro
Page 43: The members’ resignations and app
Page 47 and 48: NYSE rules Telkom practice Telkom A
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Page 51 and 52: Telkom Annual Report 2009 51 Enterp
Page 53 and 54: provider, we practice a risk manage
Page 55 and 56: egulate the business of dealers in
Page 57 and 58: addressing a number of significant
Page 59 and 60: There was a major Over the past dec
Page 61 and 62: payment policy that facilitates the
Page 63 and 64: Headcount movement Compensation and
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Page 67 and 68: 14,500 union members participated i
Page 69 and 70: were admitted to the university in
Page 71 and 72: ole in exposing students to the rea
Page 73 and 74: Sick leave indices • We saved R2
Page 75 and 76: These will be augmented by another
Page 77 and 78: Some of the key deliverables are:
Page 79 and 80: Fittingly, the initiative was launc
Page 81 and 82: Sponsorships Sponsorships continue
Page 83 and 84: Item Comment and reference Governan
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Page 87 and 88: Operational review History and deve
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Page 91 and 92: Traffic was adversely affected in b
Page 93 and 94: Telkom’s focus on bringing new in
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esponse of the CDMA operators to ou
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MWEB Africa On April 21, 2009, we a
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VPN model that allows other service
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services and also to support Telkom
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Telkom’s fixed-line voice busines
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Results of operations The Telkom Gr
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EBITDA can be reconciled to operati
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Telkom Annual Report 2009 109 Finan
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Fixed-line operating revenue increa
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The following table sets forth info
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Interconnection revenue Year ended
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Telkom Annual Report 2009 117 Fixed
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Fixed-line payments to other networ
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Service fees increased in the year
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Vodacom’s operating revenue from
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our fixed-line business, which were
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Vodacom’s selling, general and ad
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The increase in other operating rev
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commercial paper bills, as well as
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The following table sets forth our
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challeng Consolidated financial sta
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138 Telkom Annual Report 2009
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140 Telkom Annual Report 2009 Direc
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146 Telkom Annual Report 2009 Notes
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346 VOTING AND PROXIES Ordinary sha
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Notes Telkom Annual Report 2009 1.
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