Overview

We are driven by our desire to always operate as a responsible corporate citizen and recognise that an ethical culture underpins corporate governance and contributes to our licence to operate. Exxaro and its board of directors are committed to ensuring ethical and sustainable business practices, guided by our values. The board and management subscribe to the philosophy that corporate governance built on an ethical and values-based foundation permeates all business activities and enables us to achieve our short- and medium-term strategic objectives, while contributing to reaching Exxaro’s vision of becoming a US$20 billion company by 2020.

The board, as custodian of corporate governance, has made the office of the group company secretary responsible for implementing and monitoring compliance to associated bestpractices across the group. Our group company secretary, Mrs CH Wessels, serves as a member of the executive committee (Exco); she reports directly to the CEO and has direct access to the chairman. She works closely with internal audit, the compliance and risk management functions, the chief audit executive and our outsourced legal advisers to promote a culture of good governance and compliance in the group.

KEY OBJECTIVES
FOR 2011
ACTIVITY PROGRESS AND NEXT STEPS
Governance supporting and enabling company strategic objectives Review and improve board delegation
of authority policy and framework to ensure accountability and execution at the
appropriate level
The board approved a revised delegation of authority policy and
framework in November 2011. This will be further improved based on new Exxaro Siyaya
structures in 2012. Further focus during 2012 will
centre around training employees to ensure an understanding of boardreserved
powers and management delegations.
Provide corporate guidelines for the
codification of business rules to standardise best-practices throughout the group
The board approved a policy on the codification of business rules in
Exxaro in November 2011.

In 2012 we will concentrate on codifying new business principles and processes designed during project Siyaya to entrench the new operating
model and deliver on project objectives.

Review current board committee structures,
composition and terms of reference against best-practice, new Companies Act
requirements and revised Siyaya structure requirements
The board approved the revised board committee structure and terms of
reference in November 2011, with effect from 1 January 2012.

Detailed reporting guidelines will be developed in 2012 to ensure the board and committees have sufficient oversight over material issues.

Fully embracing the principles of King III Adressing King III readiness assessment gaps Detailed on 133 .
Entrenching an ethical culture Despite the fact that the 2009 King III readiness assessment identified
no deficiencies in respect of King III chapter 1, we initiated an anti-fraud
and corruption maturity assessment in November 2011 to establish any specific gaps 133 .
Initiate an integrated risk and compliance
process adhering to best-practice standards, supported by enabling technology
A project was initiated with our risk management advisers to address
current shortcomings in our risk management methodology and to align with industry best-practices such as ISO 31000. The first phase of
the project – identifying relevant gaps and making recommendations, was completed in 2010. The second step,
implementation of a detailed enterprise risk management framework, was completed in 2011.

The final phase, implementing enabling technology, will be concluded in 2012.

Conduct board and committee assessments To assess the skills and experience of each board member, the board and
all board committees were assessed by the group company secretary in collaboration with the chairman in November 2011. Overall feedback
suggested that individual directors, the board and committees fulfi lled
their duties and operated effectively, although some suggestions for improvement will be addressed during 2012.

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