Audit committee

Audit committee report (ESG report)

Composition as at 31 December 2023

Role and purpose

The committee is an independent, statutory committee whose members are appointed annually by Exxaro's shareholders in compliance with section 94 of the Companies Act and the principles of good governance. In terms of the Companies Act, this committee has an independent role with accountability to the board and shareholders of the company. The committee does not assume the functions of management, which remain the responsibility of the executive directors, prescribed officers and other members of senior management, nor does it assume accountability for the functions performed by other committees of the board. In addition to the Companies Act, the committee's duties are guided by the JSE Listings Requirements and King IV.

The committee is governed by its terms of reference that codify its role and responsibilities. To assist the board, the committee plays an essential role in providing independent oversight of the:

• Quality and integrity of the financial statements and related public announcements
• Integrity and content of the integrated reporting process
• Qualification and independence of the external auditor
• Scope and effectiveness of the external audit function
• Scope and effectiveness of the overall combined/integrated assurance process
• Effectiveness of internal controls and the internal audit function
• Assessment of the adequacy of Exxaro's insurance arrangements regarding the nature of our business and insurable risks
• Integrity and efficacy of the risk management process relating specifically to internal controls and financial reporting risks through assurance over system controls and policies in place

Terms of reference

The board reviewed and approved the committee's terms of reference, which align with legislation, regulations, King IV and the Institute of Directors South Africa's guidance for audit committees.

Monitoring implementation of the strategy concerning the deployment of new post-modern enterprise resource planning solutions to ensure acceptable cost, risk and alignment with the Exxaro strategy

Ensuring alignment of the combined assurance process, internal audit plan and external audit plan in terms of a risk-based approach

Reviewing Exxaro's future strategy regarding insurance cover and self-insurance, taking into consideration global resistance to thermal coal and insurance markets

Enhancing the committee composition and skills set

Monitoring and considering the impact of cybersecurity risks and use of AI in the finance and internal control environment

Managing talent challenges in the finance and internal audit functions in response to the global war for talent

Reviewing the transition from a predominantly outsourced model to a co-sourcing internal audit model, ensuring Exxaro's transformation objectives are achieved

Confirmation

The committee, in carrying out its duties, has due regard to its terms of reference, the Companies Act and the JSE Listings Requirements as well as the principles and recommended practices of King IV. The committee is satisfied that it has considered and discharged its responsibilities in accordance with its terms of reference and confirms that it fulfilled its mandate and responsibilities in terms of the Companies Act, the JSE Listings Requirements (paragraph 3.84(g) in particular) and King IV.