Code of Corporate Practice and Conduct

Tanga Cement Company Limited is committed to the principles of effective corporate governance and the Board is of the opinion that the Group currently complies with the principles of good Corporate Governance.

The Board of Directors
The Board of Tanga Cement Company Limited consists of seven Directors. Apart from the Managing Director, no other Directors hold executive positions in the Group. The Board takes overall responsibility for the Group, including responsibility for identifying key risk areas, considering and monitoring investment decisions, considering significant financial matters and reviewing the performance of management against budgets and business plans. The Board is also responsible for ensuring that a comprehensive system of internal control policies and procedures is operative and for compliance with sound corporate governance principles.

The Board is chaired by a Director who has no executive functions. The roles of Chairman and Managing Director are separate, with each having set responsibilities.

The Board is confident that its members have the knowledge, talent and experience to lead the Company. The Non-Executive Directors are independent of management and exercise their independent judgment. With their depth of experience, they add value to Board deliberations.

The Board is required to meet at least four times a year. The Board delegates the day-to-day management of the business to the Managing Director, assisted by senior management. Senior management is invited to attend Board meetings and facilitates the effective control of all the Company’s operational activities, acting as a medium of communication and co-ordination between all the various business units.

All Directors have access to the Company Secretary and his services and may seek independent professional advice if necessary. It is the Company’s philosophy to manage and control its business on a decentralised basis. Senior management meets on a monthly basis to review the results, operations, key financial indicators and business strategies of the Company. Board meetings are held quarterly to deliberate the results of the Group.

Performance evaluation and reward
Details of the remuneration of Directors are disclosed in Note 12 to the consolidated financial statements. The Company utilises the results of market surveys to ensure market related salaries are paid and that market related trends are followed in terms of changes in benefits, while at the same time taking into account the intrinsic value of individual contributions. A portion of the remuneration of all managerial staff, especially senior management, is linked to the performance of their respective business units and of the Company as a whole.

Risk management and internal control
The Board accepts final responsibility for the risk management and internal control systems of the Group. It is the task of management to ensure that adequate internal financial and operational control systems are developed and maintained on an ongoing basis in order to provide reasonable assurance regarding:

The effectiveness and efficiency of operations:

• The safeguarding of the Company’s assets (including information);
• Compliance with the applicable laws, regulations and supervisory requirements;
• The reliability of the accounting records;
• Business sustainability under normal as well as adverse conditions; and
• Responsible behaviour towards all stakeholders.

The efficiency of any internal control system is dependent on the strict observance of prescribed measures. There is always a risk of non-compliance with such measures by staff. Consequently, even a strict and efficient internal control system can provide no more than a reasonable measure of assurance in respect of the above mentioned objective.

The Board assessed the internal control systems throughout the financial year ended 31 December 2011 and is of the opinion that they met acceptable criteria.

Ethical behaviour
The Company’s Code of Conduct governs all its activities, internal relations and interactions with stakeholders in accordance with its ethical values. All staff are expected to maintain the highest level of integrity and honesty in dealing with customers, suppliers, service providers and colleagues.

Compliance with the Code of Conduct is the ultimate responsibility of the Managing Director and the Company Secretary, with day-to-day monitoring delegated to line management.

The code is supplemented by the Company’s responsibility philosophy as well as its employment practices and its occupational health and safety controls.

Business ethics and organisational integrity
The Company’s Code of Conduct commits it to the highest standards of integrity, conduct and ethics in its dealings with all parties concerned, including its Directors, managers, employees, customers, suppliers, competitors, investors, shareholders and the public in general. The Directors and staff are expected to fulfil their ethical obligations in such a way that the business is run strictly according to fair and competitive commercial practices.

Financial reporting and auditing
The Directors accept final responsibility for the preparation of the annual consolidated financial statements which fairly present:

• The financial position of the Company and the Group as at the end of the year under review;
• The financial results of operations and;
• The cash flows for that period.
  

The responsibility for compiling the annual consolidated financial statements was delegated to management.

The external auditors report on whether the annual consolidated financial statements are fairly presented.

The Directors are satisfied that during the year under review:

• Adequate accounting records were maintained;
• An effective system of internal control and risk management, monitored by management, was maintained;
• Appropriate accounting policies, supported by reasonable and prudent judgments and estimates, were used consistently; and
• The consolidated financial statements were compiled in accordance with International Financial Reporting Standards and in the manner
  required by the Tanzanian Companies Act, 2002.
  

The Directors are also satisfied that no material event has occurred between the financial year-end and the date of this report.

The Directors are of the opinion that the Group has sufficient resources and commitments at its disposal to operate the business for the foreseeable future. The consolidated financial statements have been prepared on a going concern basis.

The Company is committed to the principles of effective corporate governance. The Directors also recognise the importance of integrity, transparency and ccountability. During the year the Board of Tanga Cement Company Limited had the following sub-committees to ensure a high standard of corporate governance throughout the Company.