notes to the financial statements for the year ... - Investing In Africa

East African Portland Cement Co. Ltd Annual Report and Financial Statements FY 2008/200920Internal controlsThe Board has a collective responsibility for the establishmentand maintenance of a system of internal control that providesreasonable assurance of effective and effi cient operations.However, it recognizes that any system of internal controlcan provide only reasonable and not absolute assuranceagainst material misstatement or loss.The Board attaches great importance to maintaining astrong control environment and the Company’s system ofinternal controls includes the assessment of non-fi nancialrisks and controls. The Board has reviewed the Company’sinternal control policies and procedures and is satisfi ed thatappropriate procedures are in place.The Company’s business is conducted within a developedcontrol framework, underpinned by policy statements, writtenprocedures and control manuals. This ensures that thereare written policies and procedures to identify and managerisk including operational risk, liquidity risk, regulatory risk,legal risk, reputational risk, market risk and credit risk. TheBoard has established a management structure, which clearlydefi nes roles, responsibilities and reporting lines. Delegatedauthorities are documented and communicated.The performance of the Company is reported regularlyto its management and the Board. Performance trends,forecasts as well as actual performance against budgets andprior periods are closely monitored. Financial informationis prepared using appropriate accounting policies, which areapplied consistently. Operational procedures and controlshave been established to facilitate complete accurate andtimely processing of transactions and the safeguarding ofassets. These controls also include the segregation of duties,the regular reconciliation of accounts and the valuation ofassets and positions.Code of ConductThe Board has approved a Code of Ethics, which sets outthe Company’s core values relating to the lawful and ethicalconduct of business.All employees have a copy of this Code of Ethics and areexpected to observe high standards of integrity and fairdealing in relation to customers, staff and regulators in thecommunities in which the Company operates. This formspart of a Company’s compliance structure, which sets policiesand standards for compliance with rules, regulations and legalrequirements.Relations with shareholdersThe Board recognizes the importance of good communicationswith all shareholders. The Annual General Meeting (AGM) aswell as the published annual report are used as an opportunityto communicate with all shareholders. The Companyalways gives shareholders the 21 days notice of the AGM asprovided for in the Kenyan Companies Act and shareholdersare encouraged to submit questions and also appoint proxiesto represent them where they are unable to attend. Ad hocshareholderrequests for information are handled on an on-going basisand also on the fl oor of the AGM.In upholding and protecting shareholders’ rights, the Boardrecognizes that every shareholder has a right to participateand vote at the general shareholders meeting. The Boardalso allows shareholders to seek clarity on the Company’sperformance in general meetings.The Board has engaged the services of a professional Registrarto allow for quick responses to all shareholder queries andsmooth transfer of shares.Skills and experience of the BoardOur Directors have among other attributes the followingskills and experience.•••••Corporate governanceInformation and Communication TechnologyDiverse age profi lesCement industry experienceDiverse and complementary skillsA third of the directors retire by rotation annually, and ifeligible their names are submitted for re-election in theannual general meetings.Also all director appointments are subject to confi rmation byshareholders at the annual general meeting. In addition tothe induction programme for new directors there are specifi ctraining workshops that our directors participate in that areaccredited by the Centre for Corporate Governance.Interaction with ManagementThe EAPCC Board has a high level of regular interactionwith management thereby enabling directors to infuse theirconsiderable experience, professional knowledge of thetarget market into the strategic direction. There is a policy ofopen communication between Board and Management andthis ensures that the Board is fully informed of major mattersconcerning EAPCC and its business. A procedure furtherallows for directors to suggest additional items for discussionat meetings and to call for additional information or a briefi ngon any topic prior to the meeting.Board Committee MembershipDirector Classifi cation DesignationAudit Technical Human ResourcesCommittee Committee and RemunerationCommitteePS Treasury Non executive √ √PS MOI “ √MT NSSF “ ChairmanHRRC √ √ √Managing Executive √ √DirectorD. Koros Non Executive Chairman- Independent AuditCommittee √ √T Naikuni “ ChairmanTechnicalCommittee √ √H Keith “ √ √