Abridged corporate governance statement

"We are committed to integrity, ethical values and professionalism in all our activities. An essential part of this commitment is our Board's support for the highest standards of corporate governance.

The Board recognises the need to govern the Group according to the principles of the King Code of Corporate Practices and Conduct ('King III')."

Sandi Linford, Company Secretary

The Board governs according to the principles of discipline, independence, responsibility, fairness, social responsibility, transparency and accountability of directors to all stakeholders. These principles are reflected in the Group's business principles, internal controls and policies. The Board is satisfied that every effort has been made in 2011 to comply in all material aspects with King III. Where we do not comply, this is stated and explained.

Board

Vodacom has a unitary Board of 12 directors. Five directors, including the Chairman, are independent non-executive directors. Five are non-executive directors and two are executive directors. Although the majority are non-executive directors, half of our non-executive directors are not independent as recommended by King III, as they represent Vodafone. However, the Board is satisfied that the balance of power and objectivity on the Board is sufficient and does not require additional independent voices.

A Board charter sets out the responsibilities of the Board, which include:

•	oversight of the Group’s strategic direction;
•	approving major capital projects, acquisitions or divestments;
•	exercising objective judgement on the Group’s business affairs independent of management;
•	ensuring that appropriate governance structures, policies and procedures are in place;
•	ensuring the effectiveness of the Group’s internal controls;
•	reviewing and evaluating the Group’s risks;
•	approving the annual budget and business plans;
•	approving annual and interim financial results and shareholder communication; and
•	approving the senior management structure, responsibilities and succession plans.

Accountability

The Board takes overall responsibility for Vodacom’s success. Its role is to exercise leadership and sound judgement in directing the Group to achieve sustainable growth and to act in the best interests of stakeholders.

In line with best practice, the roles of Chairman and Chief Executive Officer are separate. The Chairman is responsible for leading the Board and the Chief Executive Officer for the operational management of the Group.

Directors

Vodacom’s articles of association specify that non-executive directors have no fixed term of appointment. Executive directors are subject to standard terms and conditions of employment, and a six-month notice period. Directors are also subject to retirement by rotation and re-election by shareholders at least once every three years. Any director appointed to fill a vacant position during the year must retire and stand for re-election at the first annual general meeting following his/her appointment.

Our directors have wide-ranging expertise and experience in finance, commerce and the mobile communications industry.

The articles of association require the Board to re-elect the Chairman yearly, in line with King III. Peter Moyo was re-elected on the anniversary of his appointment in May 2011.

For appointments and resignations of directors.

Independent advice

The Board recognises that there may be occasions where directors consider it necessary to take independent professional advice. This is done at the Company’s expense according to agreed procedure.

Board meetings

The Board holds a minimum of four meetings, three teleconferences and a strategy session every year. Special Board meetings are convened when necessary. A special meeting was held on 21 April 2010 to approve a trading update.

The table below records the attendance of directors at these meetings.

Name of director	Special 21.4.10	13.5.10	Telecon 28.5.10	Telecon 20.7.10	14.9.10	4.11.10	Telecon 2.2.11	10.3.11
MP Moyo
PJ Uys
MS Aziz-Joosub			x
P Bertoluzzo
TA Boardman
M Joseph			x	x
M Lundal			x
P Malabie¹			x				–	–
TM Mokgosi-Mwantembe
PJ Moleketi								x
NJ Read²	–	–	–	–
RAW Schellekens			x
RC Snow³	x				–	–	–	–
RA Shuter

Notes:

1.	P Malabie resigned on 4 November 2010.
2.	NJ Read was appointed on 13 September 2010.
3.	RC Snow resigned on 13 September 2010.

Board committees

The non-executive directors play a pivotal role on the Board's committees. All committees operate under Board-approved terms of reference, which are updated from time to time to stay abreast of developments in corporate law and governance best practice.

Executive Committee

During the year, the Executive Committee was expanded to include the Chief Executive Officer (Chairman), Chief Financial Officer, Chief Commercial Officer, Chief Human Resources Officer, Chief Officer: Corporate Affairs, Chief Executive Officer: International, Chief Technical Officer, Chief Strategic Officer, Chief Operating Officer: South Africa, Chief Officer: Legal and Regulatory and the Managing Director: South Africa. The Chief Strategic Officer and the Managing Director: South Africa begin working at Vodacom after the release of this report.

This committee is responsible for managing the Group's operations, developing strategy and policy proposals for the Board's consideration and implementing the Board's directives. It has a properly constituted mandate and terms of reference.

The committee's responsibilities include:

•	leading executives, management and employees;
•	developing the annual budget and business plans for the Board's approval; and
•	developing, implementing and monitoring policies and procedures, internal controls, governance, risk management, ethics and authority levels.

Audit, Risk and Compliance Committee

Current members: TA Boardman (Chairman), PJ Moleketi, A Kekana.

During the year, the Audit Committee revised its mandate to include risk management and is now known as the Audit, Risk and Compliance Committee.

For details on the activities of the Audit, Risk and Compliance Committee.

Remuneration Committee

Current members: TM Mokgosi-Mwantembe (Chairman), TA Boardman, NJ Read, RAW Schellekens.

Members of the Remuneration Committee during the year included:

TM Mokgosi-Mwantembe (Chairman), TA Boardman, M Lundal, RAW Schellekens.

Morten Lundal stepped down from the committee in March 2011 and was replaced by Nick Read.

The membership of the Remuneration Committee does not comply fully with King III, which advocates a majority of independent non-executive directors. Of the non-executive directors on the committee, only half are independent.

Thoko Mokgosi-Mwantembe, the Chairman of the committee, and Tom Boardman are independent non-executive directors. The Board is satisfied that Vodafone's representation on this committee is appropriate given the valuable contribution of the Vodafone directors.

The Remuneration Committee, in consultation with executive management, ensures that our directors and senior executives are fairly rewarded for their individual contributions to Group performance in line with Vodacom's remuneration policy.

In the year, the Remuneration Committee met five times with attendance as follows:

Name of director	11.5.10	Telecon 27.5.10	13.9.10	4.11.10	10.3.11
TM Mokgosi-Mwantembe
TA Boardman
M Lundal
RAW Schellekens

For further details on the activities of the Remuneration Committee.

Nomination Committee

Current members: MP Moyo (Chairman), TM Mokgosi-Mwantembe, NJ Read, RAW Schellekens.

Members of the Nomination Committee during the year included: MP Moyo (Chairman), TM Mokgosi-Mwantembe, M Lundal, RAW Schellekens.

Morten Lundal stepped down from the committee in March 2011 and was replaced by Nick Read.

The membership of the Nomination Committee does not comply fully with King III, which advocates a majority of independent non-executive directors. Of the non-executive directors on the committee, only half are independent. Peter Moyo, the Chairman of the committee, and Thoko Mokgosi-Mwantembe are independent non-executive directors. The Board is satisfied that Vodafone's representation on this committee is appropriate given the valuable contribution of the Vodafone directors.

The committee's responsibilities include:

•	identifying and evaluating suitable candidates for appointment to the Board. The authority to appoint directors remains a Board function;
•	identifying and evaluating suitable candidates for the position of Chief Executive Officer and Chief Financial Officer;
•	making recommendations on Board composition in terms of skills mix, size and the number of committees required; and
•	reviewing and approving executive succession.

A comprehensive Board evaluation, managed by an independent service provider, was conducted during the year.

Although the evaluation identified no significant weaknesses, the Board agreed to:

•	devote more time to develop a common understanding of the internal climate and culture following Vodacom’s alignment with its parent, Vodafone;
•	balance the Board’s time between operational oversight and strategy; and
•	obtain briefings from management in between meetings.

In the year, the Nomination Committee met three times with attendance as follows:

Name of director	13.9.10	4.11.10	10.3.11
MP Moyo
TM Mokgosi-Mwantembe
M Lundal
RAW Schellekens

Social and Ethics Committee

The Board established a Social and Ethics Committee with effect from 1 April 2011.

Current members: PJ Moleketi (Chairman), MP Moyo, RAW Schellekens, PJ Uys.

In line with the Companies Act, 2008 (as amended) and King III, this committee will oversee and monitor Vodacom's activities in relation to:

•	social and economic development, including the principles of the UN Global Compact, Broad-based Black Economic Empowerment, Employment Equity and the OECD’s recommendations on corruption;
•	good corporate citizenship, including the promotion of equality, prevention of unfair discrimination, corporate social responsibility, ethical behaviour and managing environmental impacts;
•	consumer relations; and
•	labour and employment, including skills development.

Company Secretary

All directors have access to the advice and services of the Company Secretary, Sandi Linford, who is responsible for ensuring the Board complies with all applicable procedures, statutes and regulations. For the Board to function effectively, all directors have full and timely access to relevant information that helps them do their duties properly. This includes corporate announcements and investor communication, and developments that may affect Vodacom and its operations. Directors have full access to management as required.

The Company Secretary is responsible for director training. The Company Secretary and Chief Executive Officer induct new directors, which includes briefings on their fiduciary and statutory responsibilities as well as on the Group's operations as required.

Shareholder relations

Vodacom maintains a proactive dialogue with shareholders to communicate its strategy and activities. This is done though a planned investor relations programme, which includes:

•	formal presentations of interim and annual results;
•	briefing meetings with major institutional shareholders after the release of results; and
•	hosting investor and analyst sessions.

Risk management

Management develops and enhances its risk and control procedures on an ongoing basis, aiming to continuously improve risk identification, assessment and monitoring. The directors consider business risks when setting strategies, approving budgets and monitoring progress against budgets.

A division reporting to the Chief Risk Officer assists in identifying, assessing and recording the strategic risks facing the Group, and where appropriate, monitors mitigating actions.

Risk is managed at three distinct levels, namely Risk Management Committees, the Risk Group and line management.

Effective risk management is integral to our ability to create and sustain value over the short, medium- and long-term.

For the risk management report, which contains the major strategic risks identified in the year.

Internal control

Management adopts internal controls, including policies, procedures and processes, to provide reasonable assurance in safeguarding assets, preventing and detecting errors, the accuracy and completeness of accounting records, and the reliability of financial statements. Internal audit provides independent, objective assurance of the internal control systems within the Group.

Code of conduct

Vodacom has a detailed code of conduct requiring all executives and employees to maintain the highest ethical standards. The code of conduct aims to ensure that Vodacom's business practices are conducted in a manner that is beyond reproach.

Vodacom strives to provide an internal environment that fosters open communication and mutual trust. During the year we established ethics committees in all our operating companies and completed an ethics risk survey across the Group. We also continued our ethics training programmes, with 81.9% of management and 64.8% of other employees having been trained. We have an anonymous whistle blowing as well as an ethics advisory contact number. During the year we received 39 anonymous reports related to employees, who were then disciplined.

For more information on our business principles.

Share dealings

Vodacom has a share dealing policy requiring all directors, senior executives and the Company Secretary to obtain prior written consent from either the Chairman or Chief Executive Officer to deal in Vodacom Group shares. The Chairman of the Board is required to obtain prior written consent from the Chairman of the Audit, Risk and Compliance Committee. Closed periods are implemented as per the JSE Listings Requirements. During these periods, the Group's directors, executives and employees are not allowed to deal in Vodacom Group shares. Additional closed periods are enforced should Vodacom be subject to any corporate activity requiring a cautionary announcement.

Information technology governance

As an ICT company, technology is core to our business. We spend a lot of time on keeping abreast of the latest developments.

Technology governance is vital to striking the right balance between holding on to our technology lead and managing our costs.

In line with King III, technology governance forms an important part of our governance structures, policies and procedures. It is also fully integrated into our strategic and business processes, and is managed by our Chief Technical Officer.

Our technology governance framework includes:

•	aligning technical strategy and business needs;
•	delivering value and managing performance;
•	information security;
•	information management; and
•	business continuity management.

For the full corporate governance report see the sustainability section on vodacom.com.

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Abridged corporate governance statement