Corporate Governance

Hosken Consolidated Investments Limited (HCI) and its subsidiaries subscribe to the Code of Corporate Practices and Conduct (the code) as set out in the second King Report on Corporate Governance. HCI believes that in all material respects it complies with the major recommendations of the code and in particular those set out below.

BOARD OF DIRECTORS

The board of directors of HCI comprises five executive and six non-executive directors. The board retains control over HCI and its subsidiaries, meeting at least quarterly, to review the performance of subsidiary and associated companies and group strategy and other matters relating to the achievement of HCI’s objectives. Directors are provided with full board papers to enable them to consider the issues on which they are requested to make decisions. Four of the executive directors have entered into three year service contracts with the company. These contracts expire March 2010 and are renewable thereafter. These contracts have been approved by the remuneration committee and define the terms of employment of the executive directors. The roles of the Chairman and the Chief Executive are separated. The Chairman is an executive director which is considered acceptable in relation to the company and board which has a majority of non-executive directors.

AUDIT COMMITTEE

HCI has an audit committee which has written terms of reference setting out its scope and objectives. The members of the audit committee comprise of a majority of non-executive directors and is also chaired by a non-executive director. The external auditors have unrestricted access to this committee. The audit committee meets at least three times a year. It reviews the effectiveness of internal control in the group with reference to the findings of the external auditors. Other areas covered include the review of important accounting issues, specific disclosures in the financial statements and a review of major audit recommendations.

REMUNERATION COMMITTEE

The remuneration committee for HCI and its subsidiaries comprises non-executive directors who approve remuneration and terms of employment of executive directors and senior management.

FINANCIAL STATEMENTS

The company’s directors are responsible for preparing the financial statements and other information presented in reports to members in a manner that fairly presents the financial position and results of the operations and cash flow position of the HCI group. The annual financial statements are prepared in accordance with International Financial Reporting Standards and are based on appropriate accounting policies which have been consistently applied except where otherwise stated and are supported by reasonable and prudent judgments and estimates. Adequate accounting records have been maintained throughout the financial year under review. The external auditors are responsible for carrying out an independent examination of the financial statements in accordance with International Standards on Auditing and in the manner required by the Companies Act. After making enquiries, the directors are of the opinion that HCI and its subsidiaries will continue as going concerns for the ensuing financial year. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

MANAGEMENT REPORTING

The company has established comprehensive management reporting disciplines which include the preparation of annual budgets by HCI and its subsidiaries. Performance relative to budget and prior years is monitored on a regular basis and reported to the board of directors.

AFFIRMATIVE ACTION

HCI and its subsidiaries are committed to providing equal opportunities to all their employees, irrespective of ethnic origin or gender.