Corporate governance in South Africa is regulated by the King Report on Corporate Governance. First issued in 1994, the King Report was revised and expanded in 2002 (King Report II) to cover boards and directors, accounting and auditing, internal audit and risk management, non-financial matters, compliance and enforcement. The King Report II incorporates best international practice. The JSE endorsed the King Report II by requiring disclosure of compliance and non-compliance (and the reasons therefore) in the JSE listings requirements. Implats’ compliance with the King Report II is detailed and explained below.

Board of directors

Members

There are seven independent directors, one non-executive and five executive directors on the board.

Mr TV Mokgatlha is not considered to be independent given his relationship with the Royal Bafokeng Nation, a substantial shareholder of the company.

During the year, Mr S Bessit was appointed as an additional executive director on the board. There were no other appointments.

The responsibilities of the board of directors are set out under management.

The curriculum vitae of all directors to be re-elected at the AGM are set out below:

Khotso Mokhele (50) BSc (Food Science), PhD (Microbiology)
Director of Mittal Steel South Africa Limited, President and Chief Executive Officer of the National Research Foundation. Joined the board in 2004

Keith Rumble (52) (Chief Executive Officer) BSc (Hons), MSc (Geology)
Joined Richards Bay Minerals in 1980 as a smelter metallurgist where he worked his way to being appointed as General Manager in 1987. He was seconded to Rio Tinto Iron and Titanium Inc as a Director, International Sales and Marketing in June 1993, and was appointed Managing Director and Chief Executive Officer, Richards Bay Minerals in April 1996. From August 2000 to June 2001, prior to joining Implats in July 2001, as Chief Executive Officer he was President and Chief Executive of Rio Tinto Iron and Titanium Inc, based in Canada.

Lex van Vught (63) BSc (Hons) Chemistry, BComm
Became Chief Executive Officer of Chemical Services Limited in 1993. He was involved in several material acquisitions which resulted in the expansion of that company. In 1998, appointed Chief Executive Officer of AECI Limited, a position he held until his retirement in 2003. Currently Chairman of the boards of Tiger Brands Limited and the unlisted Savcio Holdings (Pty) Limited. Also, a non-executive director on the board of AECI. Joined the board in 2004 .

Thandi Orleyn (50) BJuris, BProc, LLB
Admitted attorney. Practised as an attorney for the Legal Resources Centre, Head of the Independent Mediation Service of South Africa (IMSSA) and the Commission for Conciliation Mediation and Arbitration (CCMA). Has served on the boards of the South African Reserve Bank, the Office of the Banking Ombudsman, Johannesburg Roads Agency (Pty) Limited, Toyota South Africa (Pty) Limited and Landelahni Recruitment Services (Pty) Limited. Joined the board in 2003.

Shadwick Bessit (44) NHD (Metalliferous Mining)
Held numerous production management positions in the gold mining industry. Joined the group in 2002 as a General Manager at Impala Platinum. Appointed Operations Executive: Rustenburg in June 2005 and an Executive Director on the Implats board in November 2005.

Attendance at board meetings during the year is detailed below:

Remuneration Committee

Members

John Roberts – Chairman
Thandi Orleyn
Michael McMahon

The Remuneration Committee comprises three non-executive directors and is chaired by an independent non-executive director. The chairman of the board, chief executive officer and the human resources executive are invited to attend all Remuneration Committee meetings except when their own remuneration is under consideration.

It is proposed that Ms Thandi Orleyn become the chairman of the Remuneration Committee from 1 October 2006 as part of a board responsibility rotation process and subject to her re-election as a director as outlined elsewhere in this report.

Remuneration policy and strategy

Implats strives for competitive and fair remuneration practices that recognise individual and team achievement while ensuring organisational growth and prosperity.

Remuneration comprises a balanced mix of guaranteed and performance-enhancing incentives aimed at attracting and retaining the best talent at Implats. Incentives relate to the performance of the individual, the organisation and the shareprice .

The main functions of the Remuneration Committee are to:

• determine remuneration (basic pay, share schemes and other related incentives) for executive directors and senior executives;
• benchmark remuneration practices against both local and international best practice;
• ensure the implementation of innovative policies and practices to attract and retain the best talent at executive level ;
• ensure the provision of fair, equitable and competitive conditions of service across the group;
• ensure the full implementation of a comprehensive talent management process, encompassing employee development and succession planning;
• monitor the full implementation of all transformation initiatives, which include those relating to employment equity (see table below) and the Mining Charter; and
• monitor all retirement benefits; and
• recommend the fees for non-executive directors.

Bonus Scheme

Employees from Patterson E to F levels participate in a bonus scheme, which is based on individual achievement of balanced scorecard criteria, as set by the executive team and reviewed by the Remuneration Committee. The bonus is not guaranteed and the apportionment is based on the achievement by group companies of set goals against set criteria and includes value-added elements (volumes and costs), safety improvements and transformation .

Implats Share Appreciation Bonus Plan

The Implats Share Appreciation Bonus Plan was introduced in May 2005 to replace the Implats Share Incentive Scheme (which closed in October 2004 to future issues). The plan pays out in the form of a cash bonus, linked to the increase in the Implats share price on the JSE. All employees from Patterson D to F levels participate in this scheme.

Preferred Compensation Scheme

A Preferred Compensation Scheme was introduced in 2004 as part of the company’s retention strategy and all employees from Patterson D to F Levels participated at the inception of the scheme. The company pays an amount equivalent to the annual bonus as a preferred compensation payment. This payment is taxed then invested into an endowment policy. The company contributes for up to five years and entitlement only vests provided the employee is still in the service of a group company. The scheme is used selectively for new entrants, particularly regarding the recruitment of critical skills, based on a motivation by senior management to the CEO.

A more detailed remuneration report may be found in the Directors’ Report.

Attendance at Remuneration Committee meetings during the year was as follows:

Nomination Committee

Members

Khotso Mokhele – Chairman
Fred Roux
Vivienne Mennell

Mr Khotso Mokhele was appointed chairman of the Nomination Committee on 30 June 2006.

The Committee comprises three non-executive directors. It assists the board in ensuring that the structure, size, effectiveness and composition of the board and its committees:

• are reviewed regularly;
• comprise the requisite mix of skills, experience, diversity and other qualities;
• align with the strategic direction and requirements of Implats, and
• meet the requirements of sound corporate governance.

The Nomination Committee is responsible for ensuring that the board, its directors and its committees are assessed regularly; proposing adjustments to the board and its committees, as appropriate; planning for the succession of directors; recommending appointments and re-elections of directors; establishing a formal induction process and ensuring that a training and development programme is in place for board members.

During the year, evaluation exercises were conducted on all board committees and corrective action will be taken by the committee to address issues identified. In addition, the directors retiring and available for re-election were evaluated by their fellow board members who endorsed their re-appointment.

Attendance at Nomination Committee meetings during the year was as follows:

Audit Committee

Members

Lex van Vught – Chairman
Vivienne Mennell
Thabo Mokgatlha
John Roberts

The Audit Committee comprises three independent non-executive directors and one non-executive director. Its role is to provide assurance that relevant board duties are discharged by:

• monitoring the integrity of the financial statements and other relevant external financial reports of Implats and reviewing all significant inputs, judgments and outputs in order to present a balanced and understandable assessment of the position, performance and prospects of Implats, as appropriate;
• reviewing the company's internal financial control and financial risk management systems in order to safeguard Implats' assets;
• monitoring and reviewing the effectiveness of Implats' internal audit functions; and
• recommending to the board the appointment of the external auditors, approving the remuneration and terms of engagement of the external auditors and monitoring their independence, objectivity and effectiveness, taking into consideration relevant professional and regulatory requirements.

The committee, in carrying out its tasks, has a wide range of powers to consult both internally and externally. The overriding principle is that the committee shall be provided with sufficient resources to undertake its duties.

Its terms of reference allow the investigation into any activity of the company and permit the seeking of information or advice from any employee in the course of its duties. The chairman of the Audit Committee meets at least once a year on an individual basis with the external and internal auditors, the chief executive officer and the chief financial officer without any other executive member of the board in attendance.

The Audit Committee oversees the Risk Management Committee. A ‘whistle blowing’ toll-free helpline is in place to facilitate the confidential reporting of alleged incidents which are communicated to the Chairman of the board.

During the year attendance at the Audit Committee meetings was as follows:

Safety, Health and Environmental Audit Committee

Members

Michael McMahon – Chairman
Fred Roux
Khotso Mokhele
Tony Scurr (external consultant)
Keith Rumble (executive)

A board appointed Safety, Health and Environmental (SHE) Audit Committee has been in place since 1988. Its role in term s of its mandate is to monitor and review health, safety and environmental performance and standards. The SHE Audit Committee supplements and gives support, advice and guidance on the effectiveness or otherwise of management's efforts in the areas of safety, health and the environment. The committee consists of three independent directors, one executive and a consultant. The Chairman is an independent non-executive director.

The committee meets at least once a quarter. Meetings are held alternately at operations, coinciding with visits to sites of SHE importance/relevance or at Implats' head office. At all meetings, Implats' overall performance in all areas of safety, health and the environment is critically appraised. Internal Audit regularly reviews reporting systems to ensure that accidents and injuries sustained by employees/contractors are reported timeously and effectively.

Risk management

Implats’ Risk Management Policy and the Group Risk Report are available on the Implats’ website under Corporate responsibility, Corporate governance, Group policies and Key documents .

Risk assessments

The following strategic risk assessments were undertaken and completed in FY2006:

• A fatal risk peer review of Zimplats’ operations
• Human resource baseline risk assessment
• Ambatovy baseline risk assessment
• Zimplats strategic baseline risk assessment
• Two Rivers Baseline Risk
• Ongoing project and business planning risk assessments

Risk management process and systems

Following a board self-assessment of compliance in terms of recognised best governance principles in risk management in March/April 2005, the board adopted specific initiatives that, when completed, would give the board explicit assurance of its compliance .

Set out above is a summary of the initiatives approved by the board that are necessary to give assurance of the board’s compliance with the King II Code of Corporate Practices and Conduct, as related to risk management.

Attendance at SHE Audit Committee meetings during the year were as follows:

Insurable risks

In line with group policy, a review of the group's major insurable risks and associated potential losses was undertaken during the year. The company has taken steps to ameliorate potential losses through a variety of means. A comprehensive enterprise-wide risk management programme is in operation, which incorporates an appropriate level of group self-insurance. Conventional insurance policies are utilised to provide cover for the group over and above this level of self-insurance.

Internal control system

The group maintains accounting and administrative control systems designed to provide reasonable assurance that the accounting records accurately reflect that all transactions are executed and recorded in accordance with sound business practices, the assets are safeguarded and that protection is provided against serious risk of error or loss in a cost-effective manner.

Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of these controls has occurred during the year under review.

Legislation

Impala Platinum and Marula Platinum have submitted applications for the conversion of their old order mining and prospecting rights to the Department of Minerals and Energy (DME) in compliance with the provisions of the Mineral and Petroleum Resources Development Act, Act 28 of 2002 (MPRDA). Officials of the DME have been consulted to ensure that all the requirements of the DME have been addressed, which will enable the conversions to be progressed.

The Precious Metals Act, Act 37 of 2005 was assented to on the 21 April 2006 and will come into effect on a date to be announced, presumably later in the course of 2006, when the regulations contemplated have been finalised. It is designed to promote the local beneficiation of precious metals and, together with the Diamond Amendment Act, Act 29 of 2005 (and the regulations thereto), provides for the establishment of a Precious Metals and Diamonds Regulator as well as a State Diamond Trader and Exchange, initiatives that government considers will add value to the South African mining and resources industry.

The National Treasury published a draft Royalty Bill for comment on 10 March 2003. Following extensive comments from the mining industry, the Royalty Bill was withdrawn and a new Bill is being prepared for comment. There is an industry - wide expectation that the Bill will be made available for comment later during 2006, in which event appropriate comments will be submitted to the National Treasury.

On 21 April 2006, the Department of Trade and Industry (DTI) published the Corporate Laws Amendment Bill for comment. The Bill contemplates changes to the Companies Act, Act 61 of 1973, as an interim measure pending the enactment of new legislation governing companies. The provisions of this Bill seek to give legal backing to accounting standards; provide for the appointment of auditors and audit committees as well as financial reporting standards; effect such amendments as will further the objectives of the Securities Regulation Panel; introduce a uniform standard of liability on officers performing duties in terms of the Act, and revise requirements regarding the disclosure of information. The most significant change concerns the introduction of provisions relating to the ability of companies to offer financial assistance for the purchase of the company’s shares, a material departure from the present limitations placed on companies in terms of the provisions of section 38 of the Companies Act. The expectation is that the proposed amendments will become law during 2006.

The DTI has been tasked with introducing an industry-wide code of best practice to regulate the empowerment environment in South Africa. A further draft of the code is expected to be made available for public comment during August 2006. Transformation in the mining sector is regulated by the provisions of the MPRDA and the Mining Charter. It is not anticipated that the Codes of Good Practice, when legislated, will have any material impact on empowerment requirements in the mining sector as this area appears to be well developed and applications for conversions of old order mining and prospecting rights are proceeding on the basis of existing empowerment requirements.

Talent management

The organisation is committed to the process of maximising the potential of all our employees. All developmental programmes, succession planning, career path programmes and the bursary programme take cognisance of this commitment.

Transformation

A board-level committee is tasked with the
transformation of the company to more fairly
represent the demographics of the country at all
levels of the company

Implats’ business plan includes interventions to support the transformation process within the company, to develop and empower its workforce, and to meet and exceed the requirements of the associated legislation, namely the Employment Equity Act, the MPRDA and the Mining Charter.

A Transformation Advisory Committee, which reports to the board, and operational transformation steering committees at each of the South African operations, have been established and specific numerical targets have been set over a five-year period to achieve a transformed workplace. The planned target levels and the levels of achievement are set out in the table below. Progress against targets is being made, particularly at supervisory and management levels but there is still some way to go to meet the set targets. The information presented in the table is required in terms of the Employment Equity Act, the MPRDA and the accompanying Mining Charter, the targets of which are reviewed periodically.

Further development of strategic initiatives pertaining to transformation and the effective implementation of those strategies will be driven by a newly constituted sub-committee of the board, the Transformation Committee. The Transformation Committee will comprise all the executive directors, three non-executive directors and the Human Resources Executive.

Note: The term HDSA refers to those employees so designated in terms of the MPRDA and the Mining Charter. This category is also referred to as Designated Employees in terms of the Employment Equity Act as having been historically disadvantaged and includes white women.

ESOP

A major step towards the transformation of the company was the announcement and implementation of an Employee Share Ownership Programme (ESOP) for approximately 28,000 employees in the Patterson A to C levels at all Implats’ South African operations, namely, Impala Platinum (including the mining and processing operations in Rustenburg and refining operations in Springs), Marula Platinum and the company’s head office.

The programme will be managed through a Trust and Implats will make a capital contribution of an amount sufficient to finance the acquisition of Implats shares equivalent to 3% of Implats’ share capital. Beneficiaries of the Trust will benefit from the appreciation in the value of the shares over a period of 10 years. This is a long-term investment opportunity for employees and the company as it enhances a sustainable partnership into the future.

Employee participation

The group is committed to open and transparent communication with employees and employee participation is encouraged through various short - t e rm and long-term initiatives and campaigns. Regular leadership summits facilitate communication between management and employee representatives across the organisation. In addition, representatives of all unions serve on key committees such as the Impala HIV/AIDS and Best Practice Committees.

Code of values

The group has adopted a code of values governing the manner in which it does business with its stakeholders and, in particular, covering business integrity and development, and safety of employees. The process whereby employees have committed themselves to these values has resulted in the development of the principles of that code into a ‘value statement’ which interprets those values in a practical and easily understandable form. All employees and directors are required to adhere to the ethical standards contained in this code.

Access to information

Implats has complied with the requirements of the Promotion of Access to Information Act of 2000. The corporate manuals are available on the website and from the group secretary.

Sponsor

Deutsche Bank is the corporate sponsor, in compliance with the JSE's listing requirements.

Effects and implications of the annual general meeting

The notice of the annual general meeting includes the following items:

1. To approve the annual financial statements for the year ended 30 June 2006.
2. Re-appointment as directors of the company Messrs K Mokhele , KC Rumble, LC van Vught and Ms NDB Orleyn who retire from office at the meeting. The articles of association require that at least one-third of the board retire from office annually but may be re-elected by shareholders at the annual general meeting. Re-appointment of Mr S Bessit as a director of the company. The articles of association require that additional directors appointed by the directors retire at the next annual general meeting but are eligible for re-election. The curricula vitae of the retiring directors are set out on above.
3. To grant the directors general authority to issue shares in the capital of the company subject to a maximum of 10% of the issued capital and the provisions of the Companies Act. The directors are required to issue shares in the capital of the company in terms of the employee share scheme.
4. To increase the remuneration of the non-executive directors by 5% and of the chairman of the board by 50%, in line with other increases granted within the organisation and to keep pace with market-related fees.

Special business

5. Share buy-back
   To extend for a further year the authority of the directors to buy-back a maximum of 10% of the company's issued share capital. The company bought back approximately 1.8% of the issued share capital in the 2005 financial year, utilising surplus cash to acquire shares at lower price levels.

   The special resolution requires approval by a 75% majority of members present at the meeting.

6. Subdivision of shares
   To subdivide the authorised and issued capital in the company by a factor of 8 to result in the following authorised and issued share capital:

Impala Platinum Holdings Limited - Annual Report 2006