Corporate Governance

Hulamin views the implementation of good corporate governance practices as integral to its business and recognises the need to conduct its business with openness, integrity and accountability.

The company has complied with the provisions of the King II Report, other ;than that the majority of members of the Remuneration and Nomination Committee are not independent directors, and has complied with the Listings Requirements of the JSE Limited during the period under review. The board of directors is committed to comply in all material respects with the King III principles and best practice recommendations. Various initiatives are in progress to ensure that Hulamin will be able to report compliance with King III by the end of December 2011.

Board of directors

As set out in its charter, the board's objective is to provide responsible business leadership to the group with due regard to the interest of all stakeholders.

Hulamin has a unitary board consisting of three executive directors and eight non-executive directors of whom five are independent.The roles of M E Mkwanazi as an independent non-executive Chairman and R G Jacob as the Chief Executive Officer are separate with a clear division of responsibilities.

At board level there is a clear division of responsibilities to ensure a balance of power and authority, such that no one individual has unfettered powers of decision making.

In accordance with the company's articles of association, non-executive directors are subject to retirement by rotation at intervals of three years and may be re-elected at the annual general meeting at which they retire. Newly appointed directors hold office until the next annual general meeting at which they retire. The appointment and removal of directors, as well as changes to the composition of the board, is based on the recommendations of the Remuneration and Nomination Committee. There are no term contracts of service between any of the directors and the company or any of its subsidiaries.

Newly appointed directors are introduced to the group via a formal induction programme. In order to improve the board's effectiveness, external evaluations of the board, individual directors, board committees and the Chairman are carried out annually.

The board normally meets five times a year, with special or additional meetings convened as circumstances dictate. The responsibilities of the board are set out in the board charter.

The board's key responsibilities are:

• Review and approve corporate strategy, including business plans and budgets;
• Monitor management's implementation of the approved strategies;
• Approve major acquisitions and disposals;
• Oversight of the group's systems of internal control, governance and risk management;
• Appointment of the Chairman and Chief Executive Officer, nomination of directors and review of directors' andsenior management's remuneration, appointments and succession plans; and
• Approval of the authorities assigned to the board, its committees and management.

The quorum for board meetings is a majority of the directors.

The board is supplied with all relevant information and has unrestricted access to the management of the group and all group information, which enables the directors to adequately discharge their responsibilities. All directors and board committees have full access to the Company Secretary and may, in appropriate circumstances, take independent professional advice at the company's expense.

Board committees

The board has delegated, through formal terms of reference, specific matters to a number of committees whose members and chairman are appointed by the board. There is full disclosure of matters handled by the committees to the board. The board has an Audit and Risk Committee, a Remuneration and Nomination Committee and a Transformation Committee.

Audit and Risk Committee

The group Audit and Risk Committee consists solely of independent nonexecutive directors and has had its responsibilities expanded in 2010 to include risk management and became the Audit and Risk Committee in compliance with the recommendations of King III. Its members are T P Leeuw (Chairman), L C Cele and N N A Matyumza, the latter being appointed a member of the committee with effect from 1 March 2010. The Chief Financial Officer as well as V N Khumalo and representatives of the internal and external auditors attend committee meetings by invitation. The Company Secretary, W Fitchat is the secretary of this committee. The committee normally meets three times a year. The responsibilities of the committee are set out in written terms of reference, which are reviewed periodically.

The group Audit and Risk Committee's key responsibilities are:

• Ensuring the integrity of the financial reporting process, including sound systems of internal control and financial risk management;
• Review of Annual Reports, Interim Reports and other financial announcements, including the accounting principles and policies adopted therein and compliance to JSE regulations;
• Monitor the performance and effectiveness of the external auditors and evaluate the qualifications, expertise, resources, fees, scope of work and independence of the external auditors prior to recommending their appointment to the board and shareholders;
• Approve the internal audit work plan and oversee the conduct of the internal audit and the implementation of internal control enhancements;
• Approve any non-audit services provided by the external auditors;
• Consider the appropriateness of the expertise, resources and experience of the financial function and of the Chief Financial Officer;
• Approve the appointment of an external assurance provider in respect of the sustainability report; and
• Ensure the development and implementation of a policy and plan for a systematic, disciplined approach to evaluate and improve the effectiveness of risk management and control processes within the group.

An internal audit charter is in place which defines the function, responsibility and authority of the group's internal audit activity.

The group Audit and Risk Committee exercises its functions through liaison and communication with management and the internal and external auditors. The group Audit and Risk Committee has confirmed that it is satisfied with the independence of the external auditor for the 2010 financial year, and with the expertise and experience of the Chief Financial Officer.

Remuneration and Nomination Committee

The Remuneration and Nomination Committee consists of non-executive directors of whom one is an independent director. Its current members are J B Magwaza (Chairman), V N Khumalo and M E Mkwanazi.

The Chief Executive Officer and T K Mshengu (Human Resources executive) are invited to attend meetings of the committee.

M A Janneker (Human Resources Manager) is the secretary of this committee. The committee normally meets three times a year. The responsibilities of the committee are set out in written terms of reference, which are reviewed periodically.

The Remuneration and Nomination Committee's key responsibilities are:

• Formulation of employment and reward strategies to attract and retain executives and senior management;
• Recommend to the board the remuneration of directors and senior management; and
• Recommend to the board changes in the composition of the board and the appointment and the removal of directors. The nomination of board members to be considered at the annual general meeting of shareholders is the responsibility of the board as a whole and with a relatively small board Hulamin believes it is appropriate in its circumstances that the majority of the directors on the committee are not independent, and that the board Chairman does not act as chairman of this committee.

Transformation Committee

The Transformation Committee consists of an equal number of non-executive and executive directors of whom the Chairman is an independent director. Its members are ;L C Cele (Chairman), J B Magwaza, R G Jacob (with effect from 1 July 2010) and M Z Mkhize. T K Mshengu (Human Resources executive) and F B Bradford (executive for marketing and commercial activities) attend committee meetings by invitation.

N Mthembu (Communications Manager) is the secretary of this committee. The committee normally meets three times a year. The responsibilities of the committee are set out in written terms of reference, and are reviewed periodically. The Transformation Committee's key responsibilities are:

• Recommend to the board the strategies and policies to be adopted to ensure the group's transformation targets are achieved;
• Align the group's transformation strategy with its overall business strategy; and
• Monitor the implementation and efficacy of the employment equity, black ;management development, black equity ownership, preferential procurement, skills and enterprise development and socio-economic initiatives of the group.

Group executive committees

The group has a number of executive committees consisting of executive directors and other senior executives, with formal terms of reference approved by the board.

Executive Committee

The Executive Committee consists of the executive directors and other senior executives. The current members are R G Jacob (Chairman), F B Bradford, C D Hughes, C J Little, M Z Mkhize, H T Molale (with effect from 1 July 2011), T K Mshengu and P A Taljaard (with effect from 1 July 2011). The Company Secretary, W Fitchat is the secretary of this committee. The committee normally meets on a monthly basis. The objective of the committee is to assist Hulamin's board in discharging its responsibilities, while acting within the parameters of the authority limits agreed by the board. The responsibilities of the committee are set out in written terms of reference which are reviewed from time to time.

The Executive Committee's key responsibilities are:

• Recommend the business strategy, business plans and budgets to be adopted by the group;
• Manage the implementation and execution of the business strategies and plans approved by the board;
• Recommend major acquisitions and disposals as part of the group's ;business strategy;
• Ensure the group's systems of internal control, governance and risk management are both robust and well managed;
• Implement the approved authorities matrix within the organisation and approve the appointment of senior managers and the members of the group's other executive committees; and
• Approve the capital expenditure plans of the group, within the budget approved by the board.

Risk Management Committee

The members of the Risk Management Committee are drawn from the group's senior executives. The current members are C D Hughes (Chairman), F B Bradford, R G Jacob, A P Krull, C J Little, M Z Mkhize, H T Molale, T K Mshengu and P A Taljaard. The Company Secretary, W Fitchat is the secretary of this committee. The committee normally meets four times a year.

While the board is ultimately accountable for risk management through the Audit and Risk Committee, the implementation of the group's risk management policies and systems of internal control are an integral part of management of the group's operations.

The Risk Management Committee's key responsibilities are:

• Recommend to the board the risk management strategies and policies of the group;
• Review the integrity and appropriateness of the group's systems of risk assessment and management;
• Identifying new or emerging risks related to all aspects of the business, including fi nancial, operational and compliance risks;
• Monitor risk reduction actions;
• Review the internal controls that have been implemented to manage significant risks, and the assurance provided in respect of those controls; and
• Report on its activities to the Audit and Risk Committee.

Employment Equity Committee

The Employment Equity Committee members are drawn from the group's senior managers. Its current members are R G Jacob (Chairman), F B Bradford, V Dukhee, C D Hughes, M A Janneker, C J Little, M M F Mabe, H T Molale, M Z Mkhize, T K Mshengu, N Mthembu, R N Nyandeni and P A Taljaard. M A Janneker (Human Resources Manager) is the secretary of this committee. The committee normally meets four times a year.

The Employment Equity Committee's key responsibilities are:

• Formulate strategy, policies and targets related to employment equity;
• Monitor the implementation of the agreed strategies for employment equity; and
• Involve a diverse range of employees in employment equity decision making.

Safety, Health and Environment Committee

The Safety, Health and Environmental (SHE) Committee members are drawn from the group's senior managers. The current members are R G Jacob (Chairman), M Aldworth, F B Bradford, B Henderson, M Z Mkhize, H T Molale, T K Mshengu and P A Taljaard. The Company Secretary, W Fitchat, is the secretary of this committee. The committee normally meets on a quarterly basis.

The Safety, Health and Environment Committee's key responsibilities are:

• Review SHE performance;
• Review major SHE risks;
• Monitor actions to reduce SHE related risks;
• Identify new or emerging risks related to SHE; and
• Review of the internal controls to manage SHE risks.

Investor relations and shareholder communication

The group communicates its strategy, performance and vision through regular presentations to investors, analysts, employees and other stakeholders. In addition, management regularly meets with investors and institutional stakeholders on a one-to-one basis. The group website (www.hulamin.co.za) is also used for this purpose.

Code of ethics

The group's code of ethics requires all directors and employees to be committed to fair dealing, honesty and integrity in the conduct of its business and also outlines the group's position on gifts and entertainment. The code of ethics has been actively endorsed by the board and distributed to all employees in the group.

The code is designed to raise ethical awareness, act as a guide in day-to-day decisions and to assure customers and other stakeholders of the group's commitment to ethical behaviour.

An important element of the induction process is to communicate to new employees the code of ethics, the group's core values and its compliance procedures.

Compliance by all employees to the high moral, ethical and legal standards of the code is mandatory, and if employees become aware of, or suspect, a contravention of the code, they must promptly and confidentially report it in the prescribed manner. Appropriate action has been taken in respect of all reported instances of non-compliance with the code by employees.

Whistle-blowing

Hulamin has an established whistle-blowing policy and has an anonymous reporting facility (the Vuvuzela Ethics Line), enabling employees and other stakeholders to report fraudulent, corrupt or unethical behaviour related to any of the group's activities, without fear of victimisation and retribution. Anonymity is guaranteed and the facility is managed in compliance with the Protected Disclosures Act, No 26 of 2000.

Contact details of the Vuvuzela Ethics Line are as follows:

Toll free number: 080 225 5688
E-mail: Hulamin@hotline.co.za
Website: www.thehotline.co.za

All fraud and theft matters are reported to the Audit and Risk Committee. There were no significant frauds or thefts during the period under review.

Price-sensitive information

No director, officer or employee may deal either directly or indirectly in the company's shares on the basis of unpublished price-sensitive information regarding the company's business or affairs. In addition, no director, officer or employee in possession of price-sensitive information may trade in the company's shares during closed periods. Closed periods are from the end of the interim and annual reporting periods to the announcement of financial and operating results for the respective periods, and while the company is under a cautionary announcement.