Governance
King IV application register

Outcome and number

Ethical culture 1.1 to 1.3

Principle		Applicable policies and processes
The governing body should set the tone and lead ethically and effectively [1.1]		Board charter: annual review of board charter process began in 2020 and was finalised in the first quarter of 2021 Board subcommittees' terms of reference review process began in 2020 and was finalised in the first quarter of 2021 Appointment of directors after assessment of skills and competence as well as background checks by nomination committee The board applies a zero tolerance approach to actions taken without integrity
The governing body should ensure that the organisation's ethics are managed effectively [1.2]		Completion of group-wide roll-out of anti-bribery and anti-corruption programme An integrity survey was conducted throughout the organisation in 2020 and learnings will be actioned in 2021 Group-wide roll-out of the conflict of interest policy and system continued in 2020
The governing body should ensure that the organisation is and is seen to be a responsible corporate citizen [1.3]		Sustainability KPIs are ranked equally with financial KPIs to track achievement of strategic objectives KPIs are monitored quarterly by the board and respective board committees Sustainability KPIs include environmental, social, compliance and human capital considerations Exxaro's growth strategy includes social impact investments to ensure creation of an equitable society A climate position statement has been reviewed and an implementation journey began to ensure that the five culture themes and four associated values become a truly lived experience for employees

Outcome and number

Performance and value creation 2.1 and 2.2

Principle		Applicable policies and processes
The governing body should lead the value creation process by appreciating that strategy, risk and opportunity, performance and sustainable development are inseparable elements [2.1]		Reviews and approves Exxaro's strategy annually Reviews and approves sustainability KPIs annually Conducts a strategic deep dive every two years Assesses strategic risks annually Links KPIs to materials issues and assigns risk thresholds to every KPI Tracks performance against every KPI quarterly Approves the enterprise risk management framework and risk appetite Monitors the impact of external and internal events for their effects on the strategic risk profile
The governing body should ensure that reports and other disclosures enable stakeholders to make an informed assessment of the performance of the organisation and its ability to create value in a sustainable manner [2.2]		The integrated report is based on integrated reporting throughout the year The integrated report sets out the strategic objectives, the business model, the material matters that impact the business, and the risks that prevent the organisation from achieving its objectives The sustainability, risk and compliance committee oversees the integrated reporting process The audit committee assesses material matters and reviews financial materiality annually The audit committee reviews the integrity of the integrated report The board approves the integrated report and the financial statements annually

Outcome and number

Adequate and effective control 3.1 to 4.5

Principle		Applicable policies and processes
The governing body should serve as the focal point and custodian of corporate governance in the organisation [3.1]		The board as a whole remains accountable for corporate governance Governance is a standing agenda item at every board meeting The board entrenches corporate governance throughout the organisation at all levels of decision making The board reviews its charter annually The board conducts mandatory governance sessions for directors and executive management twice a year Subsidiary directors receive formal training annually
The governing body should ensure, in its composition, a balance of the skills, experience, diversity, independence and knowledge needed to discharge its role and responsibilities [3.2]		The remuneration and nomination committee ensures that the board's composition comprises the appropriate level of skills, experience, diversity, independence and knowledge Two governance-focused sessions are scheduled with the board annually The remuneration and nomination committee reviews its terms of reference annually An approved skills and experience matrix facilitates directors' appointments The board approves diversity and inclusion targets Directors receive a formal appointment letter Directors declare any outside interests on appointment and before any meetings commence with annual reviews of these declarations by the social and ethics committee The board appoints the lead independent director A formal division exists between the CEO and chairperson's duties as per the board charter The board reviewed its charter in 2020
The governing body should consider creating additional governing structures to assist with balancing power and effective discharge of responsibilities without abdicating accountability [3.3]		The board has delegated certain powers to the audit, social and ethics, sustainability, risk and compliance, remuneration and nomination, and investment committees All board committees have formally approved terms of reference, which are reviewed annually The board assesses the composition of board committees annually The composition of board committees complies with the Companies Act, Exxaro's MoI, King IV and each committee's terms of reference
The governing body should ensure that the appointment of and delegation to competent executive management contributes to an effective arrangement through which authority and responsibilities are exercised [3.4]		A clear division of power exists between the CEO and chairperson as per the approved board charter The board monitors the performance of the executives The executive committee has formal terms of reference The board approves the delegation of authority and reviews it at least annually The board appoints the company secretary The board assesses the company secretary's performance annually
The governing body should ensure that the evaluation of its own performance and that of its committees, its chair and its individual members supports continuous improvement in its performance and effectiveness [3.5]		The board conducted a high-level independent assessment through questionnaires and one-on-one interviews in 2020 The chairperson conducts a formal assessment The chairperson oversees a formal implementation plan to address potential shortcomings Two governance board sessions are arranged throughout the year
The governing body should govern risk and opportunity in a way that supports the organisation in defining core purpose, and to set and achieve strategic objectives [4.1]		The board approves and periodically reviews the enterprise risk management framework The board links Exxaro's strategy, risks, risk appetite and performance via the strategic performance dashboard Exxaro subjects the risk management process to independent assurance annually
The governing body should govern technology and information in a way that supports the organisation in defining core purpose, and to set and achieve strategic objectives [4.2]		The audit committee delegates information technology (IT) governance to the information management steering committee The information management steering committee has formal terms of reference and its scope includes reviewing the IT strategy in support of the overall business, and reviewing IT risks, IT audit findings and IT compliance The information management steering committee reports to the audit committee quarterly
The governing body should govern compliance with laws and ensure consideration of adherence to non-binding rules, codes and standards [4.3]		The board formally approves the compliance policy The board fully integrates the compliance process with the risk process The board conducts compliance awareness of high legal risks annually Exxaro subjects the compliance process to independent assurance annually Exxaro developed CSA questionnaires to enable managers to assess compliance with licence to operate requirements
The governing body should ensure that the organisation remunerates fairly, responsibly and transparently to promote the creation of value in a sustainable manner [4.4]		The remuneration and nomination committee determines strategy and policy Shareholders vote on the remuneration policy at AGM Formal engagement takes place with shareholders Exxaro subjected the remuneration policy to an independent assessment, and changed the STI and LTI principles after engagement with shareholders
The governing body should ensure that assurance results in an effective control environment and integrity of reports for better decision making [4.5]		The audit committee approves the internal audit charter and plan annually The audit committee approves the external audit plan annually Exxaro has a risk-based internal and external audit report Combined assurance, with formally approved terms of reference, ensures coordination of assurance activities The audit committee monitors all findings Internal audit performance forms part of every executive member's KPIs The board appointed a chief audit officer, independent of management, who chairs the CAF

Outcome and number

Trust, good reputation and legitimacy 5.1

Principle		Applicable policies and processes
As part of its decision making in the best interests of the organisation, the governing body should ensure that a stakeholder-inclusive approach is adopted, which takes into account and balances legitimate and reasonable needs, interests and expectations.		The board approved a formal stakeholder policy The social and ethics committee monitors stakeholder relations An adequately resourced executive holistically manages stakeholder affairs All operations have an approved stakeholder engagement plan All directors attend the AGM