Governance - Xstrata

at the AGM on 4 May 2011 can be found in the Notice of AGM. The
Board has determined that voting on all resolutions at the AGM will be
by way of a poll. Each member present in person or by proxy has one
vote for each fully paid ordinary share of which she/he is a holder.
Board committees
The terms of reference of the Audit, Remuneration, Nominations
and HSEC Committees are available on the Company’s website
www.xstrata.com.
Audit Committee
Members:
Peter Hooley (Chairman from 5 May 2010) (Independent)
Sir Steve Robson (Chairman to 5 May 2010) (Independent)
Claude Lamoureux (Independent)
David Rough (Independent)
Ian Strachan (Independent)
Responsibilities:
The Audit Committee assists the Board in discharging its
responsibilities with regard to financial reporting and external and
internal audits and controls, including: reviewing Xstrata’s annual
financial statements; considering the scope of the Company’s annual
external audit and the extent of non-audit work undertaken by
external auditors; approving the Company’s internal audit
programme; advising on the appointment of external auditors; and
reviewing the effectiveness of the Company’s risk management and
internal control systems (including bribery and fraud), risk registers
and the Group’s whistleblowing procedures.
While all members of the Committee are financially literate, Peter
Hooley is considered by the Board to have recent and relevant
financial experience.
The Chief Executive, the Chief Financial Officer, the Group Controller,
representatives of the Company’s external auditors and the Head of
Internal Audit normally attend the meetings. Other directors of the
Company and senior management may also, on invitation by the
Committee, attend and speak, but not vote, at any meeting of the
Audit Committee. In order to further enhance communication and
best practice, the Chairmen of the business unit audit committees
and the Chief Executives of the business units are also invited to
attend the Audit Committee meetings on a rotational basis. The
Audit Committee reports its activities and makes recommendations
to the Board. The Audit Committee met three times during the year
ended 31 December 2010.
A member of the Audit Committee also attends the meetings of the
business unit audit committees to help promote a co-ordinated and
consistent approach among the Group’s audit committees. During
2010 the Audit Committee:
(a) approved the 2009 preliminary results announcement and
reviewed management’s impairment testing in detail, including
the $1.9bn post tax impairment charge in respect of Xstrata
Nickel’s Australian, Norwegian and Canadian operations. The
Committee believed that the positions taken and amounts
recorded were appropriate and that assumptions were
reasonable and within the range of the latest forecasts,
where available;
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(b) reviewed the 2009 annual financial statements and the external
auditor’s detailed reports thereon, including the appropriateness
of Xstrata Group’s accounting policies, the Litigation Report, the
‘going concern’ statement, banking covenants and asset
impairment charges, and recommended approval by the Board;
(c) reviewed the external auditor’s plan and scope for the audit of
the Xstrata Group accounts, and approved their remuneration
both for audit and non-audit work, and their terms of
engagement. It also considered and approved the engagement
of the auditors in respect of a number of non-audit assignments;
(d) reviewed the 2010 interim financial statements and noted that
improved trading results and higher commodity prices had
reduced the risk of further impairment;
(e) at a meeting of the Committee in December 2010, reviewed
an impairment charge of $437m (post-tax) in respect of Xstrata
Nickel’s Araguaia project, reflecting the fact that development
of this project is not seen as a priority at this stage;
(f) recommended to the Board the reappointment of the external
auditors following confirmation of auditor objectivity and
independence, and an evaluation of their effectiveness which
rated the auditors highly;
(g) reviewed the Company’s internal financial controls and the
effectiveness of the Company’s risk management and internal
control systems. The Committee noted the introduction of a
revised Group Risk Management Policy and new Group Risk and
Change Management procedure guidelines based on ISO 31000.
The UK Corporate Governance Code requirements relating to
responsibility for determining the nature and extent of the
significant risks the Company is willing to take in achieving its
strategic objectives were noted. The Committee noted that the
Company’s internal control systems and operations were
examined and tested by the internal auditors;
(h) reviewed the plans being developed to implement the new
requirements resulting from the enactment of the UK Bribery Act
2010 and noted that, when implemented, this will bring about
a more comprehensive environment for UK companies. It was
agreed that the Audit Committee should accept delegated
responsibility from the Board for oversight of the Global Policy on
Bribery, Fraud and Corruption, and for a Code of Conduct which
covers a broader range of ethical behaviour. The Committee
reviewed the framework for the oversight of ethical issues;
(i) reviewed the structure and limits of the Xstrata Group insurance
policies, and considered these to be appropriate, and reviewed
the pensions, tax and treasury affairs of the Group;
(j) reviewed and approved the internal audit plans for 2011, the
effectiveness of the internal audit function and, at each meeting,
reviewed the reports on findings and on progress against
recommendations. At each meeting, the Audit Committee also
reviewed a report on major projects in terms of achievement of
agreed control and project management objectives delivery targets;
(k) reviewed an Ore Reserves and Mineral Resources Report, subject
to review by an independent expert, to ensure consistency of
reporting across the Group and with international standards;
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