Audit committee report

Committee overview

Composition

Committee members are elected by shareholders at the AGM on the board’s recommendation, through the nomination committee.

The board ensures a balance of skills and experience, focusing on financial literacy, to enable the committee to discharge its function. All committee members are independent non‑executive directors.

In 2025, the committee maintained its minimum membership of four independent non-executive directors.

The board is satisfied that the committee members have the necessary academic qualifications or experience in economics, law, corporate governance, finance, accounting, commerce, industry, public affairs or human resource management.

Refer to board of directors for members’ qualifications and experience.

Standing invitees to audit committee meetings include the CEO, FD, group manager: internal audit, group manager: risk, group finance manager, chief financial officer: coal, executive head: technical services and representatives from the external and internal auditors.

Other individuals, including members of management, external consultants and service providers, are invited to attend meetings of the committee from time to time, in consultation with the committee chairperson.

The internal and external auditors have unrestricted access to the audit committee.

Meetings

As determined by its terms of reference, the committee held five scheduled meetings and one special meeting in 2025.

Members		Designation		Attendance at scheduled meetings		Attendance at special meetings
Nondumiso Ketwa		Independent non-executive director and audit committee chairperson		5/5		1/1
Billy Mawasha		Independent non-executive director		5/5		1/1
Chanda Nxumalo		Independent non-executive director		5/5		1/1
Nosipho Molope		Independent non-executive director		5/5		1/1

Two additional annual sessions are held separately with the independent external auditor and internal auditor, without management present, to exchange views and concerns to further strengthen the committee’s independent oversight.

Role and purpose

The audit committee is an independent statutory committee, with members appointed annually by Exxaro’s shareholders in compliance with section 94(2) of the Companies Act and the principles of good governance. In terms of the Companies Act, the committee has an independent role and is accountable to the board and the company’s shareholders.

The committee does not assume management functions, 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 board committees. In addition to the Companies Act, the committee’s duties are guided by paragraphs 5.7(g) and (h) of the JSE Listings Requirements and King IV.

Areas of special focus that the committee provided oversight on included:

• Reviewed the judgement applied by management on accounting matters particularly as it relates to the carrying value of assets
• Assessed management’s conclusion on going concern through review of their assessment of liquidity, the debt covenants and arrangements held with financial institutions and recommended results to the board
• Assessed accounting provisions recorded relating to environmental regulatory requirements
• Assessed the effectiveness of internal control over financial reporting (IFCs)

The committee’s terms of reference govern 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
• The integrity of the integrated reporting process and content of the integrated suite of reports
• The scope and effectiveness of the external audit process
• The external auditor’s qualifications and independence
• The scope and effectiveness of the overall combined/integrated assurance process
• The efficacy of internal controls and the internal audit function
• The adequacy of the company’s insurance arrangements regarding the nature of its business and insurable risks
• The integrity and efficacy of risk management processes relating specifically to internal controls and financial reporting risks, through assurance of system controls and policies in place
• Compliance with legal and regulatory requirements to the extent that these might have an impact on financial statements

Terms of reference

The committee’s terms of reference are reviewed and approved annually by the board.

The November 2025 review ensured alignment of the terms of reference with the current status of the business. As King V was implemented on 31 October 2025, any changes required to align the terms of reference with King V will be presented to the committee in the first quarter of 2026.

Performance evaluation

While there is no regulatory requirement to conduct annual external independent performance assessments, King IV emphasises the board’s responsibility to regularly evaluate its effectiveness and that of its committees. In support of effective governance outcomes, Exxaro conducts external independent board and committee performance assessments every third year.

The internal evaluation of the committee’s performance and effectiveness was finalised in the first quarter of 2026. The result indicated a well-functioning committee that is able to effectively challenge management’s financial assumptions, judgements and disclosures to ensure accuracy and reliability in financial reporting. Artificial intelligence implementation is highlighted as an area of focus in 2026.

The committee fulfilled its mandate during 2025 and it remains an effectively functioning and contributing arm of the board.

Committee statements

FD and finance function

The committee considered and reviewed an internal assessment of Riaan Koppeschaar’s expertise and experience as FD and is satisfied that he has the appropriate competence, qualifications and experience to execute his responsibilities, including during his time as acting CEO from 4 December 2024 to 1 April 2025. The evaluation considered the appropriateness of the expertise and adequacy of resources in the finance function.

The committee is satisfied with the group’s hedge effectiveness and loan covenant position applicable to each facility within the group. It considered and approved the revised dealer limits and counterparty limits for the group’s treasury operations in the financial markets.

The committee reviewed the key reporting issues and significant balances for the interim and year-end reporting periods.

Following a deliberation of the base case and downside scenarios presented by management and having applied the solvency and liquidity test, the committee was satisfied to provide assurance to the board that the company and group satisfied the requirements of a going concern assessment and further recommended the approval of dividends and a share repurchase programme to the board.

Tax compliance status

Reports to the committee included reporting on all tax matters, such as tax audits, tax disputes with tax authorities, recognition of deferred tax assets, and the status of tax returns and payments. The committee was also appraised of global tax developments.

The committee is satisfied that the group is tax compliant.

Tax report

Regulatory updates

The committee noted the amendments to the JSE Listings Requirements, as well as the new and revised IFRS Accounting Standards and pronouncements, and their impact on the group.

The committee considered JSE proactive monitoring and thematic reviews.

Annual financial statements

The committee ensured that the finance function re-evaluated its disclosures in line with the latest accounting developments. A clear focus was placed on financial reporting risks and controls presented by geopolitical macro-economic conditions, including supply chain disruptions, inflation, interest rates and market volatility.

The group and company annual financial statements for the year ended 31 December 2025 were prepared by management, reviewed by the committee and the board and audited by the independent external auditor.

The committee is satisfied that the group and company annual financial statements for the year ended 31 December 2025 comply with the relevant provisions of the Companies Act, IFRS Accounting Standards (as issued by the International Accounting Standards Board), Financial Pronouncements (as issued by the Financial Reporting Standards Council), the SAICA Financial Reporting Guides (as issued by the Accounting Practices Committee), the JSE Listings Requirements and applicable accounting policies and practices.

The committee is satisfied that the group and company annual financial statements for the year ended 31 December 2025 fairly present a balanced view of the group and company’s financial position, financial performance and cash flows.

Effectiveness of internal financial controls

Internal control confirmations are distributed to all BUs and corporate service departments for management to confirm that no additional reporting issues need to be brought to the committee’s attention. This process verifies that internal controls are being followed in line with policies and governance requirements, identifies gaps or weaknesses, and holds BUs responsible for maintaining and reporting on their control environment.

During the year, the committee reviewed the system of internal financial reporting procedures with input from the independent internal and external auditors, as well as an ERM benchmarking exercise. The review considered all Exxaro entities within the consolidated group to ensure that the committee had access to all financial information to allow for effective preparation and reporting on the group and company annual financial statements for the year ended 31 December 2025. Informed by these reviews, the committee confirmed that no material findings indicated the ineffectiveness of internal financial reporting controls during 2025.

Independent external auditor

KPMG was the independent external auditor for 2025, with its delivery partner, AM PhakaMalele. Their reappointment was approved by shareholders through a separate resolution at the AGM on 15 May 2025, in terms of paragraph 5.7(h)(iv) of the JSE Listings Requirements.

The committee oversaw the extent of services provided by the external auditor for assurance and other services.

Assessment and recommendation

The committee evaluated the appointment of the external auditor and designated audit partner and is satisfied that KPMG meets the independence requirements outlined in section 94(8) of the Companies Act.

The committee considered the relevant information under paragraph 5.7(h)(iii) of the JSE Listings Requirements. Thus, the committee executed its responsibility to consider the suitability of the external auditor and designated individual auditor, as required by paragraphs 5.7(h)(iii), 6.36 and 6.38 and in terms of their mandate required by paragraph 6.37 of the JSE Listings Requirements.

The committee recommends KPMG, with delivery partner AM PhakaMalele, for reappointment for the ensuing year ended 31 December 2026 at the upcoming AGM on 27 May 2026 by way of a separate resolution by shareholders in terms of paragraph 5.7(h)(iv) of the JSE Listings Requirements and section 61(8) of the Companies Act.

Independent external auditor fees

During the review period, the following fees were paid to the independent external auditor:

There were no changes to the policy for engaging the external auditor to provide assurance and other services. The committee considered the Revisions to the Non-Assurance Services Provisions of the Code from the International Ethics Standards Board for Accountants and the Revisions to the Non-Assurance Services Provisions of the Code from the Independent Regulatory Board for Auditors and set the threshold for assurance and other services for the external auditor at a maximum of 20% of the statutory audit fee for any given financial year. It was confirmed that KPMG, in terms of its internal policy, will not provide any advisory or tax services to its audit clients.

The committee is satisfied with the level and extent of assurance and other services rendered by the external auditor during the year. It was confirmed that KPMG and AM PhakaMalele remained independent of Exxaro.

The committee approved the external audit plan and approach for the financial year ended 31 December 2025.

Transformation

KPMG continued to partner with AM PhakaMalele, a level 1 B-BBEE company, fulfilling Exxaro’s commitment to transformation.

Internal audit

The committee ensured that assurance provided by the internal audit function focused on the company’s key risks and added value to the organisation.

The internal audit function is partially outsourced to PwC under the management control of Exxaro’s group manager: internal audit. PwC partnered with a level 1 B-BBEE company, Ngubane Management Consultants Proprietary Limited, to fulfil the internal audit support function. The responsibilities of the internal audit function are detailed in an internal audit charter approved by the committee, which is reviewed and approved annually.

The main function of internal audit is to express an opinion on the effectiveness of governance, risk management and internal control systems within the group. It provides independent and objective consulting services designed to add value, maintain assurance and improve Exxaro’s operations.

The committee holds management accountable for ensuring corrective measures are in place to address the control deficiencies identified by internal audit or forensic investigations. The committee will continue to monitor the efficacy of these measures.

During the period under review, the committee authorised the CEO and FD to sign the management representation letter for the interim and year-end reporting periods. Internal audit also provided an assessment to support the CEO and FD in effecting their responsibility to sign the mandatory responsibility statement in terms of the JSE responsibility statement requirement Item 14, section 5.9 of the JSE Listings Requirements, which affirms that the internal control environment can be relied on in compiling the annual financial statements.

The committee considered the status of the annual internal audit plan and the results of completed audits and is pleased with the overall performance of the internal audit function and the services provided.

Internal audit plan and charter

A risk-based internal audit plan was developed in line with the internal audit methodology supported by the Institute of Internal Auditors and King IV. The committee approved the internal audit charter and internal audit plan in November 2025.

Fraud prevention and forensic reports

The committee noted the status of:

• Forensic investigations
• The 2025 fraud prevention, anti-bribery and anti-corruption programme
• Proactive assurance training conducted in collaboration with supply chain management and the ethics office at the BUs

Combined assurance

As required by King IV, assurance was broadened to cover all sources, including external assurance, internal audit, management oversight and regulatory inspections. The combined assurance model comprises five lines of assurance to differentiate the level of risk ownership and independence of assurance efforts by providers.

The model incorporates and optimises all assurance services and functions to enable an effective control environment and support the integrity of information used for internal decision making by management, the board and its committees, and the organisation’s external reports.

An annual combined assurance plan is submitted for approval to the committee, detailing all proposed assurance activities within the group, including the level of assurance. The committee ensures alignment of the combined assurance plan with internal and external audit plans. Adopted protocols include risk acceptance, level 1 finding disclosure process and risk extension requests.

The committee’s role is to review the effective establishment and operation of combined assurance within the group. To this end, the company established a combined assurance framework. The committee is satisfied that the framework coordinates all assurance functions and provides coverage for Exxaro’s risk exposures as identified and ranked by Exxaro’s risk management function, including optimisation of assurance functions aligned with King IV recommended assurance practices.

The committee is satisfied with the arrangements for ensuring an effective and efficient combined assurance model within the group.

Technology and information governance

In terms of King IV, the committee exercises oversight of technology and information governance.

The committee received reports on the group’s digital transformation and the impact of cyber risk on information technology performance to support strategy execution.

In line with the group policy framework, strategic policies were updated to support Exxaro’s strategic direction.

Several management governance forums enhance decision making, oversight and strategic direction. Foundational policies support these structures by guiding behaviour, expectations and operations.

Insurance coverage

Obtaining insurance coverage at competitive terms is increasingly challenging for companies with a large carbon footprint. This is a focal point for the committee. Exxaro has a separate captive insurance company registered in terms of the Insurance Act, 2017 (Act 18 of 2017) to manage short-term insurance arrangements, being Exxaro Insurance Company Limited.

A formal memorandum is submitted quarterly to the committee, setting out the main activities of the insurance company. The committee considered regulatory compliance, level of selfinsurance, financial position, external audit plan for 2025, investment strategy, performance of investments, insurance renewal programme and associated costs and exclusions during the period under review. The committee also reviewed Exxaro’s strategy regarding insurance coverage and self-insurance.

Legal

The committee, together with management, reviewed legal matters that could have a reputational or material financial impact on the company, including upcoming changes to legislation.

Confirmation

The committee is satisfied that it has discharged its responsibilities and fulfilled its mandate in accordance with its terms of reference, the Companies Act, the JSE Listings Requirements (paragraph 5.7(h) in particular) and King IV.

On behalf of the audit committee

Nondumiso Ketwa
Audit committee chairperson

29 April 2026