2012 Integrated report - Sappi

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Governance and compensation continued Summary of how Sappi applies the principles contained in King III continued Principle Chapter 5 – IT governance IT governance 5.1. The board should be responsible for information technology (IT) governance 5.2. IT should be aligned with the performance and sustainability objectives of the company 5.3. The board should delegate to management the responsibility for the implementation of an IT governance framework 5.4. The board should monitor and evaluate significant IT investments and expenditure 5.5. IT should form an integral part of the company’s risk management 5.6. The board should ensure that information assets are managed effectively 5.7. A risk committee and audit committee should assist the board in carrying out its IT responsibilities Chapter 6 – Compliance with laws, rules, codes and standards Compliance 6.1. The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards 6.2. The board and each individual director should have a working understanding of the effect of the applicable laws, rules, codes and standards on the company and its business 6.3. Compliance risk should form an integral part of the company’s risk management process 6.4. The board should delegate to management the implementation of an effective compliance framework and processes Summary of how Sappi applies the King III principles The board is responsible for IT governance. The CIO provides regular feedback to the audit committee and board on IT governance matters. An IT steering committee exists and policies are established and implemented. Sappi promotes an ethical IT governance culture and a common IT language IT is aligned with the performance and sustainability objectives of the company from a strategic and business process perspective. There are also processes to identify and exploit opportunities to improve performance and sustainability through the use of IT The board has delegated responsibility for the implementation of an IT governance framework to management. All IT matters of a global nature are referred to a group IT council (GITCO) which makes decisions on the most appropriate technological solutions for the group. Decisions are ratified by an executive group IT steering committee All IT projects are presented to cross functional teams within the regions for sign-off. Post implementation audits are conducted on large IT projects. The CIO, on behalf of the Group IT steering committee presents to the audit committee and board regarding the value delivered by IT investment IT is represented on the group and regional risk management teams and ensures that IT risk management is aligned with the company’s risk management process. IT risk assessment updates are undertaken every six months using the group’s risk management software. Feedback on IT risks, business continuity and disaster recovery is provided by the CIO to the audit committee and the board. IT have processes to identify and comply with relevant IT laws and standards IT systems and processes have been developed for managing information assets effectively, including personal information. This includes information security, information management and privacy. The information security strategy has been approved by the board and delegated to management for implementation The audit committee which assists the board in risk management has oversight of IT risks, IT controls and related combined assurance. This includes financial reporting matters. Technology is used to improve audit coverage and efficiency Sappi has a compliance culture with a legal compliance programme which supports efforts to identify and comply with applicable laws and regulations. Compliance also forms part of Sappi’s code of ethics. The board is briefed on new regulations and reports from the legal compliance programme are provided regularly to the audit committee and board The board and individual directors are made aware of new regulations or changes that affect the company A compliance function has been established and the risk of non-compliance forms part of the risk management process Sappi has an established legal compliance programme including policies and procedures to educate, train, measure and communicate compliance matters. Material aspects of non-compliance would be disclosed in the integrated report if applicable. A sufficiently independent and skilled compliance officer has been appointed. Legal compliance works closely with ethics and risk management and the head of the legal function is a member of the executive committee and attends board and audit committee meetings 78
Principle Chapter 7 – Internal audit The need for and role of internal audit Internal audit’s approach and plan Internal audit’s status in the company 7.1. The board should ensure that there is an effective risk based internal audit 7.2. Internal audit should follow a risk-based approach to its plan 7.3. Internal audit should provide a written assessment of the effectiveness of the company’s system of internal controls and risk management 7.4. The audit committee should be responsible for overseeing internal audit 7.5. Internal audit should be strategically positioned to achieve its objectives Chapter 8 – Governing stakeholder relationships Stakeholder relationships Dispute resolution 8.1. The board should appreciate that stakeholders’ perceptions affect a company’s reputation 8.2. The board should delegate to management to proactively deal with stakeholder relationships 8.3. The board should strive to achieve the appropriate balance between its various stakeholder groupings, in the best interests of the company 8.4. Companies should ensure the equitable treatment of shareholders 8.5. Transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence 8.6. The board should ensure that disputes are resolved as effectively, efficiently and expeditiously as possible Summary of how Sappi applies the King III principles Sappi has an effective risk based internal audit function, with a charter approved by the audit committee and board. Internal audit adheres to the IIA Standards and code of ethics. Internal audit focuses on governance, risk management, the internal control framework, follows a systematic approach and investigates and reports on fraud, corruption, unethical behaviour and irregularities Internal audit is independent and objective and its audit plan is informed by the strategy and risks of the company Internal audit provides a written assessment of the effectiveness of the company’s system of internal controls and risk management, including an assessment of the financial controls to the audit committee and board. Controls and a framework for governance, risk and compliance, have been established over financial, operational, compliance and sustainability matters. Internal audit is integral to the combined assurance model both as a coordinator and assurance provider The audit committee oversees the internal audit activity, including review and approval of the audit plan, evaluation of internal audit performance, the independent quality review process, review of reports submitted by internal audit to the audit committee and resourcing. The audit committee is responsible for the appointment and dismissal of the chief audit executive Internal audit is strategically positioned to achieve its objectives, is independent, objective and reports functionally to the audit committee. The chief audit executive does not have a standing invitation to all executive committee meetings, however, is briefed on strategic and risk related developments by senior executives who do attend, and has access to minutes of meetings. The chief audit executive meets frequently with senior executives. Internal audit is appropriately skilled and resourced to fulfil its mandate The integrated report, as well as the group and regional sustainability reports, reflect the interests of the group’s stakeholders and key actions to maintain positive perceptions about the company and its activities. The board considers on an ongoing basis the feedback regarding the perceptions of particular stakeholder groups Management have been tasked by the board with the management of stakeholder relationships, including identification of important stakeholder groupings, and development of strategies and policies to manage the relationships. There are formal and informal mechanisms for constructive stakeholder engagement with the company and shareholders are encouraged to attend the AGM. Stakeholder policies as well as information on the company’s dealings with stakeholders are included in the integrated report Sappi tries to achieve an appropriate balance between various stakeholder groupings’ interests and expectations, in taking decisions in the best interests of the company Shareholders are treated equitably Sappi is committed to transparent and effective communication with all stakeholder groups. Such communication takes place through formal and informal channels; and through general as well as direct communication initiatives, including community, group and individual meetings Sappi endeavours to resolve disputes in an effective and efficient manner, through partially formalised processes and management action sappi Integrated Report 2012 79
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Sappi Group (Sappi Limited) INTEGRA
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About this report Introduction Our
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2012 was a year that positioned us
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global Sales by source 2012: US$6,3
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Non-financial highlights Specific p
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performance the region as a whole.
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The restructuring of our paper oper
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Group overview continued Q&A with R
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Focus on product development Produc
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4 electricity steam black liquor pu
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commitment Europe Our European empl
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iodiversity Sustainable fibre suppl
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Exciter value delivery was US$23.9
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market leaders > Print is particula
Page 31 and 32: Focus on innovation Knowledge, insi
Page 33 and 34: Pulp Share of sales paper pulp + di
Page 35 and 36: governance Deenadayalen (Len) Konar
Page 37 and 38: guidance Executive management Mark
Page 39 and 40: Review of operations Sappi Fine Pap
Page 41 and 42: streamlined The closure of the Bibe
Page 43 and 44: Focus on skills development Sappi c
Page 45 and 46: accelerate Capacity (’000) Divisi
Page 47 and 48: progress The year ahead The demand
Page 49 and 50: US$ million September 2012 Septembe
Page 51 and 52: Share statistics 2012 2011 2010 200
Page 53 and 54: Chief financial officer’s report
Page 55 and 56: positive Section 2 Financial perfor
Page 57 and 58: improvement Operating profit exclud
Page 59 and 60: cost reduction Taxation The tax exp
Page 61 and 62: service Sappi Fine Paper North Amer
Page 63 and 64: priority Section 4 Cash flow In the
Page 65 and 66: Defined benefit liabilities US$ mil
Page 67 and 68: Group debt profile We show the majo
Page 69 and 70: performance Section 6 Share price p
Page 71 and 72: Governance and compensation Corpora
Page 73 and 74: encourage Audit committee The audit
Page 75 and 76: Group IT steering committee The Gro
Page 77 and 78: During 2012 a board committee was e
Page 79 and 80: Governance element Principle Summar
Page 81: External assurance providers Report
Page 85 and 86: Stakeholder engagement report Sappi
Page 87 and 88: Compensation report The two large s
Page 89 and 90: strategic The primary components of
Page 91 and 92: Component Purpose Characteristics V
Page 93 and 94: competitive The policy on fatalitie
Page 95 and 96: empower Service contracts Mr Boëtt
Page 97 and 98: The dissolving wood pulp capacity c
Page 99: Focus on local communities Our busi
Page 102 and 103: Directors’ approval The directors
Page 104 and 105: Audit committee report for the year
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Page 108 and 109: Group income statements for the yea
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Annexure A - Investments at Septemb
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Glossary market pulp - pulp produce
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Glossary net operating assets - tot
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Notice to shareholders “Resolved
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Notice to shareholders “Resolved
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Notice to shareholders Annexure to
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Notice to shareholders The MOI prov
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Shareholder’s diary Annual genera
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Notes to proxy The form of proxy mu
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Inspired to co-create We operate wi
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2012 Integrated report - Sappi

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